Paying for the Poop Sandwich

Each time I started to type a comment about the reimbursement issues with government run health care plans (past, present & future), I'd have to leave to go to a meeting and by the time I got back people had veered off into other sub-topics so it didn't fit in. The comments have been very interesting, sometimes silly, but check out the original poop sandwich post.

This post is really for BMar, who ambushed me on gIM to talk about this. Well, it started with "Please defend The Brah's inanity on AMDAL. thx" (since all us Republicans think alike, right?), but he did use his please and thank you's so that was nice of him :) In the end, I promised him I'd put this up and I'm a girl of my word.

The purpose of this post is to give an explanation of one side of the debate many people don't know about or that has been left out of the mainstream coverage, but please read it with the following things in your minds and hearts (awww):

1) No one is against decreasing the public good or equal opportunities or coverage provided. Everyone wants every person in America to be healthy and if they're not, to be taken care of with the best care possible.

2) We owe it all to each other to stop making it a red/blue/tea party thing, because it’s not. No matter who’s in the majority or who’s in office, the debate is the same on health care and is going to be around for a long, long time (probably forever). Truce?

3) Everyone has had great points- go AMDALers! I’m not putting this up here to promote comments about iron in the drinking water, or MacDonalds, or anything else. This post is to start talking about the numbers since it is something people have asked for more info about.

4) Please read the rest of this without thinking that insurance companies and hospitals are run by money grubbing evil individuals who sit in our offices on thrones made of dollar bills. If they were, then it would be awesome for me (j/k). It's very, very far from the truth. Health care is a business, and as a business you have to work with money and raise/bank revenue in order to be able to function past a one-day-at-a-time mentality. If you do not, you will not stay in business. It is not a matter of good versus evil- it's one of financial planning and budgeting. The health care industry is laying off staff at insurance companies & provider facilities, filing legislation to allow plans to be national versus state-to-state to lower the cost to those on the plans and make it a more affordable for everyone, suing to have the government plans be paid on a state-by-state basis (explanation of why below), and working with pharmaceutical companies to help offset the cost of medications (Americans pay for Europe's low cost meds but that's a whole different post in itself). Keep in mind that about 13 million people in the American work force are in health care/insurance related jobs- they can't pay their bills with chits for each good deed or life saved each day or else they probably would... They need to be paid in real American dollars.

So, let's get to it! (Below is based off of what I am knee deep in daily, at one of the largest and most comprehensive, multi-campus, non-profit hospitals in the country, and ironically, is also the largest private-sector employer in NYC (due to the crash of banks/layoffs on Wall Street). This has put us in two different groups that will be impacted by the new bill: one as a corporation/ large-business and the other as a hospital... oh and it's pretty long so prepare yourself.)


First of all, we have to understand how much money we're talking about as a nation that is spent on health care per year... it turns out, a lot- about 15%. America is #1 in the world GDP race regarding health care spending.



Who's spending all this money? Let's take a look at America as a patient population & break it down into 3 groups:

Group A: Uninsured people, roughly 15% of Americans, or 45 million
Most metropolitan hospitals pushed that the bill should include provisions that all hospitals have to treat anyone who walks through their doors: insured, uninsured, illegal immigrant, whoever. You walk in, you get care. Seems simple, right? Well, most hospitals do not do this (including a certain hospital in Chicago that was run by a certain First Lady)- rather they turn away patients who are uninsured or put them on a shuttle bus or refer them to an off-site clinic where they receive delayed care and often do not get treatment. This is not uncommon practice- sad but true. Each person takes up time & resources, and while everyone would like to be able to give as much charity care as possible, they cannot provide it and still pay the bills. I'm very proud of my hospital that we do treat anyone who walks through our doors- but we can only afford to do so because of some very generous donors.

25% of group A could get on a plan but have not enrolled in a government plan, or they can afford private insurance but chose not to buy it. This is roughly 7.5 million people. Individuals who are unemployed & uninsured have 48 hours to sign up for COBRA after visiting the ER to aid in covering expenses (for themselves & for the provider), but that’s about $500-700/person a month… available, but not affordable when you don’t have a job. Also impossible if you are an illegal immigrant. (note: both parties agreed that illegal immigrants should not be included in the new plan, but were unsure how to exclude them)

Group A will continue to increase over time, and will always exist, even with the new bill. The % of uninsured varies greatly by state- 3% in Massachusetts to 23% in Texas.

Group B: Insured by private plans ie- their companies or pay out of pocket to belong to a plan (Cigna, Oxford, Aetna, etc), roughly 65% of Americans or 1.95 Billion
While this is the majority of Americans, the number is quickly decreasing due to layoffs, small companies dropping insurance as a benefit, and the expansion of eligibility for government plans to current individuals. This is a very important thing to remember, for reasons we will get into later. Less private insurance = less revenue into the health care industry.

Group B is likely to decrease under the new bill. Currently about 56-79% of each state's population carries private insurance, Florida rounding out the bottom and Massachusetts sitting at the top.

Group C: Government coverage (Medicare, Medicaid (including state run CHIPs programs), roughly 20% of the population or 60 Million Americans
Currently each state manages the government run plans, but they are jointly funded by both the state & federal governments. People qualify mainly by income barriers (not so much need) so the two main demographics in this group are children (Medicare/CHIP programs) and the elderly (on Medicaid, 60-ish +).

Group C is very likely to grow, for reasons we have talked about above but mainly because it will be easier to qualify for the government programs and/or you will be penalized if you do not have insurance (private or government), so people will get up on it. Also important to understand is that Group C, while not the largest, causes the biggest financial impact on the cost because these individuals have the most visits/year and each visit is usually to a specialist, require ongoing medications and care outside the doctor's office, and often incur the most acute or critical care, such as heart surgery, medical device implantation, and end-of-life care in a nursing home (ie- the Baby Boomers).

Basically- if you're reading AMDAL, you're living the dream right now and not costing much money in terms of health care. Around 40, you will start to get expensive again and remain that way for the rest of your lives.


Why is this such a big complicated mess?

This is probably the one thing that a lot of people don't understand or look into. And by a lot of people I mean close to everyone, regardless of how smart a person is, they usually don't take interest in their coverage aside from co-pays at the doctor's office and grumblings about bills that follow the visit in the mail.

I recently had breakfast with Bob Wright, who's one of the most interesting people I have met thus far in my little life. One of the many things we talked about was health care insurance (he is on Medicare if that question popped into your head) and reimbursements/ return rates for services. To say Mr. Wright is an expert on the nuances of the American health care systems would be an understatement- he and his wife founded Autism Speaks, the premier international foundation for funding research in autism (his grandson is autistic), and he is on several boards in health care related fields. He is in DC lobbying and he is at the insurance companies trying to expand coverage for autistic care. He is an inspiration of how we all should strive to live our lives when we "retire."

Why am I telling you this story? Because at no point in our conversation did he once complain about how much money he and his family has spent on health care, or for that matter, taxes. He made a point to say how fortunate he has been in life (both business and in terms of the people in it), so when he spoke about Medicare & taxes, he said he thought that it was a bargain compared to what he's gotten out of it, as was his private insurance when he had that. He even joked that he wished there was an investment fund he could pay monthly into and if the occasion rose and he needed it, he could ask for a couple million from it and get it; without a fight and even more so, everyone else in the country would demand the fund give it to him.

In the end, he admitted what so many of us cannot- health care is not just a moral issue but one in the business world too. If we are to expect the nation to morally support health care for all, we have to financially expect the same. He has continuously been shocked by the lack of transparency in medical billing, and I have to agree- if people received a full statement for their care and saw that they paid a fraction of the actual cost of care, they would be much more interested in their health care coverage and possibly a little more grateful for it.

The cost of providing health care is complicated & complex as to how it adds up so quickly. No matter who’s paying the bill, or if you’re an adult, kid or geriatric patient with your first cold, you have to keep one thing in mind: being sick is expensive. Being sick and on care for an extended period of time is very, very expensive- we're talking hundreds of thousands of dollars a year per chronic health issue, if not more. The root of much of the financial hardship in the health care industry is based off the fact that the government run plans do not reimburse at 100% for the services the individuals on the plan receive (they did not before, and under the current plan they will not either- someone touched on this in the comments in the orig post).


Breaking down how doctors pay their bills and, if possible (which is tough), make any money:
All health care providers (clinics, doctor’s offices and Hospitals) cannot afford to lose the revenue that private plan & out of pocket patients (Group B above) provide. Whether you knew this or not- you’ve been subsidizing government plans (Groups A & C) all along.

Some numbers from my hospital to paint a picture with:
Annual patient revenue: Approx. $3-3.5 billion (with a B)
Patient volume: just under 2 million

~58% of our patients are on gov't plans or uninsured (reimbursement rate is approx 85 cents/ dollar of service, leaving us with a deficit to cover of approx. -$.15/ dollar… we're talking billions of dollars billed here, it adds up quickly)

39% of patients are private insurance (reimbursement at an inflated rate, either through the plan and/or via co-pays. This rate is approx. $1.15/dollar of service to make up for the -$.15 from government plan deficits)

2% of patients pay out of pocket in cold hard cash @ the inflated rate

Less than 1% are workers’ comp cases- which pay at the inflated rate

Example time:
We have 2 patients with 2 equal $1,000 bills for service
Govt (billed $1,000, pays back $850) + Private/out of pocket (billed $1,150, pays back $1,150) = Total revenue for 2 patients’ services is $2,000.

Example time, part deux:
Same 2 patient bills
Uninsured patient (billed $1,000, pays $0) + Private/out of pocked (billed $1,150, pays $1,150) = Loss of $850 on $2,000 in service

This game of catch up adds to the problem of why private insurance is so expensive- it pays the deficit of the government and uninsured care. Add to this that it’s not a 50/50 split of who’s on each type of plan, but 60/40, and that has to be factored in as well. When the new bill is in place, and we’re planning to add 15% more of the American population to the 6o%, making it even more skewed. As this number continues to grow, so will the (-$) that private insurance and out of pocket cash patients will have to cover, making that $1,150 bill probably closer to $1,500 just to break even. As you can see, it makes sense to treat private and out of pocket patients over government or uninsured whenever possible- but where are the morals in that? This is why a lot of hospitals are closing- they want to keep their doors open but simply cannot afford to treat everyone who walks in.

How do bills get to be $1,000 for a visit to the doctor?

The majority of the clinical (non-trauma/critical care: think “ER” on TV) patient base is made up individuals that have not been to their doctor in years, if ever. They come in when things have gotten pretty bad & often much more serious than had they received primary care and maintained a level of health continuously. Good health care starts at home- get sleep, exercise daily and don’t eat crap. I know it’s much easier said than done- I love ribs & beer too. However, I also know that most of my friends do not go to their annual check up, or see a doctor when they have a basic cold because “it’s a pain to go” “I can’t get off work” and onward the excuses go.

Increasing a focus on basic primary care should be the focus of any reform right now- people use the Emergency Room like they would a normal doctor's office. What would have been a simple visit ($10 co-pay + $200 to Dr.) for a clinical (non-ER) office visit is now an office visit ($10 co-pay + $200 Dr.), full blown course of antibiotics ($40ish + any $ due to pharma company), usually some lab tests ($200-600-ish for patient, thousands to labs, techs, etc.) and a follow-up visit (another $10 co-pay + $200 Dr.). This is part of why insurance rates are so high- they are expecting a big bill with each visit.

Add to this (as MLR pointed out), most MD’s have to order a series of tests so that their malpractice lawyer teams are happy and feel as their butts are covered in case of a law suit. In order to be discharged from the ER, you have to have a basic length of stay that includes a round of labs & tests to rule out anything odd. This is a couple thousand, minimum.... and a huge waste of doctor's time, medical resources and money.

Why are health care plans (government & private) managed State by State?

There is a big difference in operating costs for every doctor, hospital, and clinic. For example: In Kentucky it costs a patient $960 for treatment. In New Jersey, it’s $5,580 for the exact same billable hours, tests, visits, etc on a specific case. (There are oodles of these comparisons, this one I just had in my head b/c of a NCAA tourney bball joke made the other day) People get sick & people deserve care- however, hospitals need to get paid so they can pay their doctors, staff, the electric bills, taxes and so forth. Those bills are based on the prices in the area that they are located, which is not the same across the nation. With the fluxes in our patient demographics (A,B,C above), the new bill will change the state-by-state patient population as well (increasing C, decreasing A & B), and in many cases your state taxes are going to shift a bit as well to cover your state managed government plans.

You can't play roulette with health care and hope that everyone who needs ongoing, expensive treatment gets sick in a non-expensive state. This is why it went for a national management to a state-by-state management way of being. Many large cities would like to manage their own government plans, but that will never happen.

What about Group B? Many individuals will move to a more affordable state due to tax changes, and that will affect the private plans as well, since they cannot provide coverage outside of state boundaries. Some states will be more expensive, some will be cheaper- kinda like how it is now. If private insurance companies could expand their coverage to be national instead of state-by-state, they would be able to have a bigger pool from which to form their "fund" to pay out on individuals needing millions in care, reducing the rates for the average people who just need annual care.

"Hey AOG: question for you on this health care bill- The new bill talks about how the federal government is increasing taxes so that we can raise money to pay for all the new individuals on the government plan and those currently on it... if we are getting more money from taxes, shouldn't that cover all the additional people getting on the plan?" (Real question from an AMDALer who wishes to remain anonymous, and no, it's not one of THE anons.)

Yes, while much of the new plan is to be paid for by tax revenue (put on all different areas/sectors/private plans/ income brackets, etc) there are quite a few problems with the plan in the bill:

1) The governments are still going to only reimburse about 80% of the cost (i.e.g./al la doctors and health care facilities are still going to have to make up for a deficit). If you're on a private plan or paying out of pocket- you will be paying that difference. Or maybe the individuals on government plans will pay the difference. We shall see.

2) 41% of Americans don't add to the fund via federal & state taxes- whether they don't pay them b/c they don't think they should, or that they "owe" zero due to income barriers, exemptions, etc. The majority of these people are going to be using the government sponsored plans -ie, taking out money but not putting additional in.

3) Keeping dependents (ie- kids) on until they are 26. This might not be as great as it sounds... It puts a strain on the parents in some situations to choose between having their child on their plan (which will likely put them in to the “High-Cost Plan” taxable private insurance police group and/or increase their household income bumping them into a higher tax bracket there too), or making their kids fend for themselves. In a lot of cases, the 22 year old child as an individual will have a low enough income to qualify for government plans on their own. Having dependents on the plans until 26 really only makes sense if the kid is in grad school or unemployed. Otherwise, I can see this causing a lot of internal problems for families and also for the companies that are providing insurance as a benefit.

4) A lot of spouses are going to go onto separate policies through their employers so that they are on the lowest-cost plan possible and don't get hit with the high-cost plan taxes. This won't cause a tidal wave of an impact, but a ripple.

5) Unions & their perks... oh goodness- this could be it's own post. They account for a huge portion of the 65% of insured Americans (private plans) that should be hit with the high-cost plan tax, but alas they could/ are very likely to be exempt from these taxes. There goes a lot of the revenue the bill is banking on.

6) Abuse of the system. It's in the papers and on the news all the time- government today is not a tightly run ship, and a lot of people take advantage of this fact. People have to stop taking advantage of the broken system: no more billing for deceased individuals, no more billing for procedures that haven't occurred, and no more lying on your taxes to avoid paying towards the plan... somehow I don't think this is going to happen.



Alright, alright! I 'm finished with this post. As you can see, there are a lot of numbers that just don't add up in the current plan. I wholeheartedly assure you that people's "bah humbug!" about the bill has nothing to do with the fact that one party is mean-spirited and the other is full of saints. Both parties raised the same payment & reimbursement issues. Both parties raised issues about unions and illegal immigrant coverage. And just about every doctor or medical administrator who has unpaid patient bills every month is behind changing the legislation to account for the lack of fair and/or timely reimbursement (by government & private plans), as well as adding in tort reform to help with malpractice insurance rates.

As a closing thought, I'd like to propose that all health care coverage include the use of neon bandaids and gold-star stickers. I think it would help the overall morale and make people feel better.

Last but certainly not least, thanks to BMar for taking up an hour or so of my Wednesday morning to get this post going- although you're kinda feisty at times, you are pretty smart and raised some good moral issues about health care the past few days. I hope this helped with the non-moral issues with our health care bill.* Now, please apologize to The Brah- he's not inane.

* Did you like that? I didn't vapidly call it Obamacare :) haha