Do you know how health insurance really works?

[LivingAlmostLarge]

So I don't think I'm outside of the average in the US. DH and I have had employer provided insurance for most of our working careers. We only have 12 months where we didn't and we bought catastrophic plan and didn't use it at all. We didn't buy dental and just didn't go to the dentist or eye dr for a year. Did everything in June and went back in Aug/September of the next year when we had insurance. And during that 1 year we really didn't have any medical stuff. We didn't even go to the dr for a routine physical. Nothing. Just bought insurance just in case for a waste of money but we were 35 and 37 with 2 small children (5 and 3) who didn't even get sick. We were "mustachians" who literally "ate well, luckily had no pre-existing conditions that needed treatment". So our experience is very limited.

Our employer provided coverage and we have always had PPO. So we usually pay a premium and then we pay $20 co-pay. This is true now and this is true forever. In fact I had my two kiddos and paid $250 hospital fee, which if I had my DK1 4 weeks earlier in 2009 it would have been $0 fee. It just changed. So my ridiculously priced delivery was $250 for me. And when we had "catastrophic" well not using it was $0 except for premium was like $500-600/month i believe.

So I have no idea what TexasHusker means when he's talking about negotiating about hospital bills and fees. Do you normally call and negotiate after the bill? How do they negotiate if you have insurance? I was under the impression the insurance companies decide on price and you pay it. And the reason medicare can pay so low is the amount of people they cover is enormous and so what they say goes. So dr and hospitals have no choice?

[riverwed070707]

You have exceptionally good insurance coverage. I work for a large company (25k employees) and while we've had a few plans over the years, all progressively better over time, I can't even wrap my head around having a kid for $250. I had a high-deductible plan when I had DD. I had to pay a $7000 deductible before insurance even kicked in and then it only covered 80%. I think all in we paid close to $12k between prenatal care and delivery. Because I had a high deductible plan, that meant I spent a lot of time asking how much procedures cost before we'd agree to them (they never know the answer btw) and meticulously reviewing every bill I received (there were a lot of errors). Admittedly, now that we're back on a PPO plan, I don't look as closely and I LOVE just paying a co-pay and knowing the set price of what it will cost to go to the doc vs urgent care vs ER. I'm not planning on having anymore babies, but I have to imagine even under my current plan it would still be $3-4k. You're very fortunate!

[Like2Plan]

Do you normally call and negotiate after the bill? How do they negotiate if you have insurance? I was under the impression the insurance companies decide on price and you pay it. And the reason medicare can pay so low is the amount of people they cover is enormous and so what they say goes. So dr and hospitals have no choice?

Texas will have to weigh in on this, but I don't think he is your average consumer. IIRC, he used to work in the hospital adminstration field and he knows lots of stuff.

But, I have never negotiated a bill although I have called on some billing decrepancies. I don't "think" I could negotiate using my insurance because it is a negotiated amount. Any co-pay amount has to be paid, so the Dr can't just write it off. (Otherwise, my insurance assumes the fee is the lower amount and adjusts their payment so that a co-pay is still owed).

The medicare issue--well, I have read that the medicare rates are set by congress and they may not cover all the expenses of a practice. So, some providers will not accept medicare patients (which they don't have to). If you are under medicare and go to a provider that does not accept medicare, you could end up having to pay out of pocket. You pay the billed charges (which may exceed the Medicare allowable amount)

https://www.medicare.gov/your-medica...ith-assignment

https://www.investopedia.com/article...e-medicare.asp

[disneysteve]

meticulously reviewing every bill I received (there were a lot of errors). Admittedly, now that we're back on a PPO plan, I don't look as closely

This is one of the BIG problems with our system. Patients don't care what things cost or if the bills are even correct as long as their insurance is paying it.

When I was in private practice, I heard it all the time. "Why can't I have a whole body MRI? My insurance will cover it." Well, maybe they will but I'm not ordering a $10,000 test for you that I don't think is medically necessary. --- You can be quite certain that patient wouldn't want that test if he was paying for it himself.

[LivingAlmostLarge]

This is one of the BIG problems with our system. Patients don't care what things cost or if the bills are even correct as long as their insurance is paying it.

When I was in private practice, I heard it all the time. "Why can't I have a whole body MRI? My insurance will cover it." Well, maybe they will but I'm not ordering a $10,000 test for you that I don't think is medically necessary. --- You can be quite certain that patient wouldn't want that test if he was paying for it himself.

So there lies the problem. I've never looked closely at a bill because everything is covered. I also nod and agree to everything because it is. Riverwed, yep the companies we worked for during the time we had the kids, I don't know if I put it out there was pharma/biotech. They even had a thing where if I took DH I got and extra $100/month for not opting into mine. Or he did the reverse. We also during this time picked up double dental and everything was 100% covered. They take excellent care of their workers with primo coverage of everything. Now our plan is still good but a little more monthly premium versus we used to pay something like $40/2 weeks. Not to mention everything was covered. Mental health, chiro, acupunture, etc. I paid $0 for prescriptions obviously. Also there was like nothing out of network, every hospital was covered. Out of network was covered more than most people's in network. Something like 10% maybe if out of network but the plan was BCBS and it was nationwide, not state specific crap which I have more of now.

Also I paid $250 hospital fee for everything and they gave me everything with the baby. I did pay an extra $250 for DK1 because she was admitted into the NICU but I had a baby in a NICU with tons of specialist and we paid $250 for two hospital stays. I also had her seen by a cardiologist, allergist, orthopedic surgeon, ent, and gastro specialist. All pediatric. She had hip dysplasia, heart murmur, jaundice, allergies, ear tubes, etc. You name it and we were doing it. Also I had intensive therapy for my DK2 who wasn't talking until around age 3 and hearing loss. We had 30+ hours of ABA services plus surguries and paid basically nothing out of pocket. I can say most of our co-pays never cracked $500/year

So while I am a proponent of single payer I know that we got immense amount of insurance coverage and have never paid pretty much anything. It's not a fair system nor is it easy to navigate. I spent hours on the phone getting therapies for my DK2. I had a speech therapist individual and group, group therapy, OT, PT, music therapist, behavior specialist before the age of 3. All covered. Some in home and some at centers. I also had 2 hearing aides fitted 2x for DK2 and nothing OOP. I also have hearing aids also $0 OOP. So I know that we've fallen into the blessed category of careers. Everything just aligned that what we were in covered well everything.

So i'm horrified to see and understand how people have the enormous bills. We've never had them. Even as students everything was covered in grad school by the program. In grad school we had medical with no copays. Eventually it went to $5 and $10 from 2000 to 2005. And no premiums either during this time. They said we can't pay you much we were making $19k but we can give you health insurance and coverage from the hospital 100% covered and no OOP or premiums. And that's how it all started that I haven't ever really dug into insurance.

[kork13]

Just yesterday my youngest brother (recently--finally--put on payroll as a pilot after building up enough flight hours as an unpaid "intern") asked our father & I to help him decide on which HDHP/HSA insurance to choose. Fairly similar plans overall, which made the decision easier -- the biggest differences were just co-pays, deductible & MOOP, otherwise fairly standard with preventative & vision covered 100% (standard in the pilot world, where good vision is essential), and the rest mostly 80/20 +/- copay amounts. Even as simple as his options were, it made me grateful for always having the military's Tricare, which basically covers almost everything for free (to the servicemember). Nothing to worry about, just do what needs to be done, and move on. This is honestly the first I've ever actually had to look at and compare health insurance plans. Though I do remember my parents stressing about such choices when I was a kid. No, I know almost nothing about how health insurance works...and I'm probably happier for it.

ETA: Thanks to all for the discussion here (and in the other thread) about verifying/negotiating medical bills... I'm passing some of those suggestions on to my brother. He's only making ~$36k/yr right now, so I'm sure it'll be of use for him over time.

[HundredK]

We are on an HMO plan with Kaiser Permanente through an employer. Paycheck deduction is a little over $200 a month for the two of us. I basically know that whatever I see a doctor for, it will be $20. I had foot surgery earlier this year, it was $20 total with all followup visits free. The downside of this of course is that it's kaiser, and to be treated well there, you have to go in ready to do battle and self advocate. Once you get through the primary doc whose job seems to be solely to save kaiser money, I have found the specialists to be pretty good.

As far as negotiating bills, I just went through some of this with my mom and with my dad before he went on hospice and died. They had some very large bills, and the hospital had a program where you could fill out papers stating your income and life story and they would reduce the bill and then let them make payments on whatever was not forgiven.

[disneysteve]

The downside of this of course is that it's kaiser, and to be treated well there, you have to go in ready to do battle and self advocate. Once you get through the primary doc whose job seems to be solely to save kaiser money

It is called MANAGED care for a reason.

[HundredK]

It is called MANAGED care for a reason.

Not familiar with the term managed care. But yeah, if managed care is what it is and that's supposed to make a doctor visit feel like going to war, kaiser does it well. Lol

[disneysteve]

Not familiar with the term managed care. But yeah, if managed care is what it is and that's supposed to make a doctor visit feel like going to war, kaiser does it well. Lol

Managed care plans are health insurance plans with the goal of managing two major aspects of healthcare: cost and quality. With these plans, the insurer signs contracts with certain health care providers and facilities to provide care for their members at a reduced cost. These providers and facilities all have to meet a minimum level of quality. Besides having healthcare providers agree to certain prices for medical care, managed care plans also attempt to reduce healthcare costs by focusing on preventive care and by using financial incentives such as charging less for generic drugs than branded ones.

[HundredK]

Managed care plans are health insurance plans with the goal of managing two major aspects of healthcare: cost and quality. With these plans, the insurer signs contracts with certain health care providers and facilities to provide care for their members at a reduced cost. These providers and facilities all have to meet a minimum level of quality. Besides having healthcare providers agree to certain prices for medical care, managed care plans also attempt to reduce healthcare costs by focusing on preventive care and by using financial incentives such as charging less for generic drugs than branded ones.

Thanks, great description! So yes, that's what Kaiser is, except they are both your doctor and your insurance company. For example, I have to go to one of their Kaiser branded facilities to be seen, I have no choice in doctor except wtihin their doctor group who are all (as far as I know) Kaiser employees. I've been meaning for a while to switch insurance plans because I think this is generally not the greatest system for either the patient or the doctor (I imagine it takes the doctoring right out of being a doctor when the computer tells you the lowest cost way to proceed and then insists upon it, and if you as a doctor disagree, you have to go to great lengths to get overrides etc to be allowed to proceed with what you think is best). But then I bump into a scenario where I literally pay $20 for a foot surgery that turned out quite well and have a hard time jumping over to the HDHP world. I imagine at some point I'm going to regret not making the change, like if there's a scenario where I'm not able to advocate for myself. But so it goes.

[TexasHusker]

Generally, when the end-user/consumer of a good or service is removed from purchasing such by a substitutionary third party, there is a significant inflationary effect on the underlying good/service. Usually, it is the government acting as the substitutionary third party - substituting for the tax payer - and the end results are almost always disastrous. I call this "governmental tampering in an otherwise free market economy."

I could write a book of the instances of such tampering over just the last 20 years, but I will mention three:

1. College loans. When the government is guaranteeing student loans, the student is then removed from the purchasing process. The tuition could be $5,000, $10,000, $20,000, or even $50,000 a year, and the student, and university, no longer care, because the loans are subsidized by the federal government. There is no longer any price sensitivity. Hence, you have inflation in college costs that is a multiple greater than general inflation. I graduated college in the late 1980s. Back then, I could work a full time job in the summer and pay for the entire year of school - room, board, tuition, and books. Fast forward to today, it isn't uncommon at all for college costs to be half or more of the annual family median income in the U.S. Now, many politicians want to toss all of those college loans to the feet of the tax payer through forgiveness. Forgiveness to the borrower means great sacrifice for everyone else. Yet is the government, itself, which started the crisis, through tampering.

2. Housing loans. In the 1990s, the President and Congress decided that more Americans needed to own a home. Freddie Mac and Sally Mae, the federal government guarantors for conforming loans, were ordered to loosen their underwriting and down payment standards significantly. Before long, a home buyer could get a federally-guaranteed home loan with a down payment less than five percent, many even zero percent. Thus, the home buyer was removed from the purchasing process, meaning they had no "skin in the game" in terms of what an appropriate price for the house was, since it cost them little to nothing to buy. Price sensitivity disappeared. The result was runaway inflation of home prices. In 2009, that bubble finally burst. The government (we, the people) then had to construct, and fund, a massive bailout.

As a side note, we are currently in the end-stages of yet another housing bubble also created by the fed, this time not with generous lending, but rather tampering with the bond market, which is keeping mortgage backed-securities at artificially low rates, which is again, driving house prices through the proverbial roof. There is no longer any price sensitivity, as it is now all about the cheap interest rate. This bubble will also burst, sooner rather than later.

4. Health care. Health care costs have been in a rapid inflationary cycle since Medicare. We currently spend 17 percent of our GDP on healthcare. Some say that a total government takeover is the only solution, and at this point, they may be right. Yet it is the government that bore the baby to begin with. Medicare removed a large swath of healthcare purchasers from the health care economy and acted as a substitutionary payer. The patient was only responsible for maybe a small copay or deductible and everything else was covered by Medicare. Thus, the patient no longer had any price sensitivity. Worse, the government slapped price controls on medical providers in the form of fee schedules. The fee schedules were never reasonable compensation, so the providers had no choice but to tax their other patients with extra fees to offset their shortages. Hence, rapid inflation settled in. Every time the government steps in and tampers further, i.e. the Affordable Care Act, etc., costs shoot higher.

This is why, when you call the hospital and ask them how much you will have to pay for a chest xray, they often can't tell you, not because they don't want you to know, but because they don't know, themselves. Their system isn't set up like a grocery store - carrots are $2 a pound and applies are $3 a pound. Because the end user usually isn't the buyer, and the provider isn't accountable to the end user. They simply bill as much as they can, as often as they can, and hope the substitutionary payer plays along.

This crisis will continue unabated until either 1) The federal government abolishes private pay altogether and completely takes over the system, or 2) The federal government extracts itself from the system completely. I am not betting on the latter.

[Captain Save]

This is one of the BIG problems with our system. Patients don't care what things cost or if the bills are even correct as long as their insurance is paying it.

When I was in private practice, I heard it all the time. "Why can't I have a whole body MRI? My insurance will cover it." Well, maybe they will but I'm not ordering a $10,000 test for you that I don't think is medically necessary. --- You can be quite certain that patient wouldn't want that test if he was paying for it himself.

and that's one of the reason insurance premiums is going up ..

[LivingAlmostLarge]

Generally, when the end-user/consumer of a good or service is removed from purchasing such by a substitutionary third party, there is a significant inflationary effect on the underlying good/service. Usually, it is the government acting as the substitutionary third party - substituting for the tax payer - and the end results are almost always disastrous. I call this "governmental tampering in an otherwise free market economy."

I could write a book of the instances of such tampering over just the last 20 years, but I will mention three:

1. College loans. When the government is guaranteeing student loans, the student is then removed from the purchasing process. The tuition could be $5,000, $10,000, $20,000, or even $50,000 a year, and the student, and university, no longer care, because the loans are subsidized by the federal government. There is no longer any price sensitivity. Hence, you have inflation in college costs that is a multiple greater than general inflation. I graduated college in the late 1980s. Back then, I could work a full time job in the summer and pay for the entire year of school - room, board, tuition, and books. Fast forward to today, it isn't uncommon at all for college costs to be half or more of the annual family median income in the U.S. Now, many politicians want to toss all of those college loans to the feet of the tax payer through forgiveness. Forgiveness to the borrower means great sacrifice for everyone else. Yet is the government, itself, which started the crisis, through tampering.How do you suggest we fix the costs? I'm all for no loan forgiveness but it doesn't work without fixing the underlying problem you mention of how expensive it's been and that it is NOW not possible to work full time during the summer and pay for college. The costs are so exorbitant that it's impossible.

2. Housing loans. In the 1990s, the President and Congress decided that more Americans needed to own a home. Freddie Mac and Sally Mae, the federal government guarantors for conforming loans, were ordered to loosen their underwriting and down payment standards significantly. Before long, a home buyer could get a federally-guaranteed home loan with a down payment less than five percent, many even zero percent. Thus, the home buyer was removed from the purchasing process, meaning they had no "skin in the game" in terms of what an appropriate price for the house was, since it cost them little to nothing to buy. Price sensitivity disappeared. The result was runaway inflation of home prices. In 2009, that bubble finally burst. The government (we, the people) then had to construct, and fund, a massive bailout.

As a side note, we are currently in the end-stages of yet another housing bubble also created by the fed, this time not with generous lending, but rather tampering with the bond market, which is keeping mortgage backed-securities at artificially low rates, which is again, driving house prices through the proverbial roof. There is no longer any price sensitivity, as it is now all about the cheap interest rate. This bubble will also burst, sooner rather than later. I also have issue with how artificially inflated the housing market is. My cousin is saying "oh mortgages are so cheap that we can easily buy and extra 20-30% home" True very true because the cost of borrowing to buy the asset is so cheap it fuels the rise of people paying more and "affording" more.

4. Health care. Health care costs have been in a rapid inflationary cycle since Medicare. We currently spend 17 percent of our GDP on healthcare. Some say that a total government takeover is the only solution, and at this point, they may be right. Yet it is the government that bore the baby to begin with. Medicare removed a large swath of healthcare purchasers from the health care economy and acted as a substitutionary payer. The patient was only responsible for maybe a small copay or deductible and everything else was covered by Medicare. Thus, the patient no longer had any price sensitivity. Worse, the government slapped price controls on medical providers in the form of fee schedules. The fee schedules were never reasonable compensation, so the providers had no choice but to tax their other patients with extra fees to offset their shortages. Hence, rapid inflation settled in. Every time the government steps in and tampers further, i.e. the Affordable Care Act, etc., costs shoot higher. Actually one might argue in socialized government systems it's cheaper because of medicare. But perhaps I'm wrong. I see the point that medicare drove costs up, but did it really? I mean other countries people are price sensitive yet they have 1 system.

This is why, when you call the hospital and ask them how much you will have to pay for a chest xray, they often can't tell you, not because they don't want you to know, but because they don't know, themselves. Their system isn't set up like a grocery store - carrots are $2 a pound and applies are $3 a pound. Because the end user usually isn't the buyer, and the provider isn't accountable to the end user. They simply bill as much as they can, as often as they can, and hope the substitutionary payer plays along.

This crisis will continue unabated until either 1) The federal government abolishes private pay altogether and completely takes over the system, or 2) The federal government extracts itself from the system completely. I am not betting on the latter.

See above responses

[disneysteve]

"because the cost of borrowing to buy the asset is so cheap it fuels the rise of people paying more and "affording" more."

That's the age-old problem of people using the monthly payment to decide what they can "afford" rather than the total cost. That's why we now have 7-year car loans and 50-year mortgages.