An unbalanced, unfair system–a case study (N=1)

Why are you charged more if you are uninsured than if you are insured?

About six weeks ago, while in clinic, I developed pain in my stomach–specifically, in my right upper quadrant, just below the ribs.  I had experienced this a few times before, but this time it seemed more persistent than usual.  Following the rule that physicians make the worst patients, I kept working through it until my nurse told me I looked poorly, and made me see my own primary care doc.  This led to an ultrasound that afternoon, a diagnosis of gallstones with mild acute cholecystitis (inflammation of the gallbladder).  I was in the surgeon’s office the next week, and in the OR a week after that.  Fortunately, I had an uncomplicated laparoscopic surgery, and was home within 24 hours.

Things are fine now.  I was back at work within a few days, and was fortunate to have received prompt and effective care.  However, I realize that my experiences are not typical.  I am a physician, and my primary care physician is one of my partners: I was seen the same day because I was part of the “family” of docs with whom I work.  The ultrasound was arranged two hours after my doc saw me.  My surgery was scheduled so quickly in part because someone else’s elective procedure was bumped to make room for me.  If I had been an average person calling my primary care doc for belly pain (or presenting to the ER with the same complaints) I doubt this process would have been this efficient.  I was fortunate to have privilege on my side: the privilege of being a healthcare professional, in his own system, knowledgeable about how to make the system work to my advantage.

This highlights the fact that our system is not fair.  Why should I get these special considerations?  Obviously, the easy answer is that I work in the health system where I received my care: much of what happened could be considered a form of professional courtesy where I was extended opportunities not available to patients not employed by the system.  But at the heart of health care, shouldn’t this sort of care be available to everyone?  Why should it be so difficult for an average, non-medical person to be treated in just this way?  Some systems (likely some of the top systems in the nation) work to make easy and prompt access available to all comers, but they are the exception to the rule.

We need to fix our system to make sure that meaningful, necessary, and prompt access will be available to all, whenever they need it.  The system needs to be truly patient-centered.

Over the course of the next few weeks, I began to get my explanation of benefits (EOB) forms from my insurance.  These EOB forms highlight how much the hospital charged, what my insurance wrote off (or “discounted”), and what I needed to pay.  I am unable to list the costs here due to our system’s insurance contracts, concerns about anti-competitive activities, etc. This is unfortunate, because they expose another area where our system is unfair and unbalanced: if you are uninsured, you will be expected to pay more than if you are insured.  This is because insurance companies negotiate with hospitals on their patients’ behalf, and reduce the costs for which patients are responsible.  If you are uninsured, and if you don’t know how to seek financial assistance, you pay the full (non-discounted cost) of your medical services.  That cost is usually set high enough to ensure your healthcare provider will get the maximum payment possible from insurers…so the uninsured face the full burden of this increased cost.

It is not unusual for insurance companies to negotiate deep discounts for medical services.  Discounts of up to 40% are not uncommon.  This means that if a hospital charges $1,000 for a given procedure, the insurance company will only be required to pay $600 of this–because they have negotiated a discount.  This $600 will then be shared by the insurance company and the patient, who might have a required co-pay or deductible.  If you are uninsured, you do not have access to this discount and you are responsible for the full $1,000.  The $1,000 price will be set because this is the level the hospital needs to set in order to recover all available payment.  Different hospitals and healthcare systems will have mechanisms for patient assistance, but this programs exist at the decision of the system, and levels of assistance will vary greatly.

So: if I were uninsured, I would be required to pay more than any insurance company pays…and my increased liability would be the result of other peoples’ insurance companies negotiating discounts for their patients.

This is crazy.  Why do we have healthcare systems that charge so much?  Because they feel they need to in order to be able to accommodate insurance companies’ demands for discounted services and still turn a profit–if systems charged the actual cost of the procedure, then they would take a “discount” on that amount and end up losing money.  Why do insurance companies expect/demand discounts?  Because it helps justify their existence: if that “discount” were the actual price people were charged, there might be less need for insurance.  Why was my co-pay a small fraction of the total charges?  Because I am fortunate to have really good insurance coverage.

Presumably people who lack health insurance lack it for a reason.  Most people who are uninsured are not doing so because they like to live on the edge or save money, but rather because they cannot afford it.  What rationale is there, then, to charge them 40% more than those who are insured?

If you have ever wondered whether healthcare costs are really that bad and whether they can bankrupt people, here is your answer.  This is a one-person survey (N=1, to use a medical inside joke), so I can’t claim these costs are representative of others’ experiences.  But, here in Richmond, if I was uninsured and did not have enough in savings to cover the bill, then I would be scrambling to find a way to pay this sudden medical debt.

It is unfair and unjust that people are exposed to back-breaking medical costs for illnesses that are beyond their control.  We can argue about the individual responsibility patients have for diabetes or high blood pressure, though I would suggest it is less than many claim.  But how much individual responsibility is present if someone has gallstones?  Appendicitis?  Retinal detachment?  Breast cancer?  Why does our system penalize the uninsured if they have the bad luck to actually get sick?

Our healthcare system is unfair and unbalanced.  Too many lack meaningful access and struggle to afford the care they can get, while a few have easy access and much lower costs.  We need to fix this broken and dysfunctional system.

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Posted in healthcare, Innovation, medical education
  • http://www.docforeman.com DocForeman

    I was just discussing this with a friend of mine last night.

    The disconnect between pricing and care is really troubling. Healthcare has some of the most complicated pricing of any service that Americans use. And yet it is essential.

    Even my labrynthine cell phone contract is easier to understand that my medical bills.

    We get more upset at “hidden charges” in our credit cards, and data plans, than in our medical bills.

    That says something about *us* as patients and consumers. Why do we tolerate that?

  • Carmen

    You’ll notice that none of these very real disparities are being discussed by the GOP contenders. Our system is completely bankrupt when companies are allowed to profit off of someone else’s misery. That core feature of the health insurance industry feeds all other consequences: lack of access for those without financial means, withholding of care and treatment by insurance review boards, cancelling of policies by insurance companies, etc. This Valentine’s Day there ought to be a card sent to every shareholder of a health insurance firm asking “Will you be a Valentine and stop exploiting people?”

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