Our health care system is broken, part 3758373

This week I underwent a minor outpatient surgery procedure. I have insurance, so the procedure was covered. But I found the breakdown of costs quite illuminating [these are approximations, given me over the phone, but they are close to the real numbers]:

Surgery cost: $36,000
Discount negotiated by my insurance company: $31,000
Net cost to me (or, rather, my insurance company): $5,000
Portion of that cost covered by my insurance company: $4,200
Portion of that cost covered by me: $800

So if I hadn’t had insurance, I would have had no opportunity to negotiate a discount with the hospital, and I would have been billed the full $36,000. The average uninsured person, I would submit, would have a hard time coming up with $36K on short notice, but $5K would probably within the realm of possibility. Unfortunately they never get that option and instead face a choice between not getting the procedure and financial ruin.

So those least able to afford health care get charged the most. I think most people are aware of this dynamic, but I think it’s important to see exactly the scale of the difference we are talking about. In this real example, the uninsured are charged 7 times more than the insured. Supposing they can somehow manage to pay, they end up paying 40 times more out of pocket than the insured. The uninsured pay 8.5 times more than the insurance companies do for the same care.

How do you become uninsured? You lose your job, you have a pre-existing condition, you work for hourly wages, you work as an “independent contractor,” or dozens of other means.

This is just one reason why the health care system in America is broken.

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3 Responses to Our health care system is broken, part 3758373

  1. AMac says:

    The ACA was an opportunity to address the distorted health care market that you describe. It seems that nobody on any side of that debate was interested in the least.

    To pile on your story with my variant — my wife’s dermatologist retired, and she ended up having a mole looked at by the plastic surgeon she needs to see annually. The surgeon readily agreed to remove it, so the following week my wife showed up at our community hospital for a half-hour in-and-out procedure in the outpatient center.

    When the bill came from our insurer, the surgeon’s $800 fee had been knocked down to the contracted rate of $182.31, of which we paid 100% (numbers approximate). The facilities fee for the outpatient room was $1,200… and our insurer informed us that mole removal was an office procedure, not an outpatient procedure, and that coverage was denied. Thus, we are on the hook for the full $1,200. For other, covered procedures, this sort of facilities fee has gotten the same sort of slashing, to a number like $241.14. But this time, it’s the full twelve hundred or the bill collector. No budging.

    When the surgeon heard this story, she was bemused by these strange financial goings-on. But from her point of view, our thousand-dollar misfortune had nothing whatever to do with her — “not my problem.”

  2. CamD says:

    Yearly visits to the dermatologist?

  3. AMac says:

    > Yearly visits to the dermatologist?

    My wife’s medical history means that she requires more frequent visits to physicians than, say, I do.

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