Apparently, a coworker wore a contact with a tear in it, and it majorly irritated his eye.  It was bad enough for him to feel like he needed to go to his eyecare professional to have his eye examined.  His rant was that they charged him for a full office visit.  It ended up costing him $80 to sit in the chair for 15 minutes while the doctor looked into his eye and determined that there was nothing wrong.

He finished his rant with the question: “Is this normal [the charge associated with the office visit] and I’m overreacting?”

My short answer to him:

Yes, it’s normal and yes you’re overreacting.

But there was a long answer as well…

Here is some background, for those who don’t know the situation.

Last year, our company made some radical changes to its health insurance offerings.  Up until now, we have only had traditional In Network/Out of Network coverage offered, with the standard premiums and co-pays.  Last year, though, a “Health Savings Plus” plan was introduced.  It featured a low premium, high deductible ($3000) insurance policy coupled with a tax-free Health Savings Account (HSA).  The company seeded the HSA with $750 as well as offered health incentives for employees to earn up to $1200 more for the account.  This plan saves the company a lot of money by shifting the first $3000 of health care expense to the employee and banking on their laziness to not accomplish the health incentives.  The company really pushed this plan to the employees, though they continued to offer the traditional plans at a higher cost.  Of course, many employees jumped at the lower cost plan.

My coworker was clearly one of these guys who got onto HSP+ without understanding how it was going to work.  He balked at playing an $80 bill for an office visit to an optometrist!  That’s usually where you START for a doctor’s office visit.  That doesn’t include any labs or imaging you might have done, which can eclipse the doctor’s office visits in costs.

Really, this just goes to show that the beloved copay has been obfuscating the cost of health care to the general public.  This guy was outraged that he was “charged that much because that’s the most that UHC will allow them to charge for such a procedure, otherwise they would charge even more (that’s what they told me to try to make me feel better about this charge.)”  He was too used to going in and paying $10 or $20 out of his pocket for an office visit, a charge he felt was reasonable for the 15 minutes he sat in the chair.  What he never bothered to find out was that his insurance company was paying 3x that price to cover the rest of the office visit.  (Also, in what universe do you think you’re going to get an office visit for just $15… especially when you’re seeing an array of nurses and doctors using expensive equipment to diagnose and treat you… but this guy’s ignorance notwithstanding…)

My advice to him, if you can’t bear to see the cost of your health care, go back to the old PPO/EPO plans.

With copays, we never saw the expenses the insurance companies were shelling out.  We never saw a true cost of health care consumption.  This is (my theory) one of the major contributors to the run-up in health care costs in America.  No one is looking at their bills, and even after they do, no one is getting upset at these industries for charging so much because their insurance is covering it.  Insurance has significantly enabled the run up of health care costs in America.  There is no downward pressure being put on prices because of the wonky payer system we have now.

Even though I think this guy is being a pansy, I kind of like how upset he’s gotten.  Should you have to go see an eye specialist every time you just want them to make sure nothing’s stuck in your eye?  Perhaps not.  Perhaps the market could come up with a lower cost way for him to get the care he needs.

To do so, though, a lot more people are going to have to get angry at the current fee-for-service policy.

For the record, here was my long answer to the whole alias (who, in proper North Texas fashion, had already blamed the whole thing on Obama).

To answer your original question, yes – it is customary for an optometrist or ophthalmologist to charge you for a full office visit as you’ve described your last visit. You had a problem with your eye. They brought you back, sat you down in the chair and examined it and determined there was no immediate health issue (that the eye was recovering from a previous trauma). It is “reasonable and customary” (an important phrase in medical billing) for this Dr to charge you, even if he didn’t prescribe any medication or pull any contact fragment from your eye.

If you didn’t like the Doctor’s bedside manner, or the way in which he told you there wasn’t a problem, I would suggest you get a new doctor. Sure, he might have given you some ideas of drops that might have relieved the discomfort in the meantime. But you can’t fault him for charging for an office visit, though, just because there didn’t end up being anything wrong with your eye.

Really (and I hear you here) it just stings more because we’re paying 100% up to the high deductible. (If you’re on the Health Savings Plus plan, that is.)

As for the politics, this is the way it’s been since Medicare was instituted (the 1960’s), which created the fee-for-service health care system we enjoy now. This is not a direct result of the recently passed health care legislation, though you could argue (and I would) that Cisco’s recent cutbacks in subsidy to our health plans are a result of the failure of industry AND government (the recent legislation) to reign in the out-of-control rise in health care costs we’re experiencing. Everyone talks about bending the cost curve down, but no one knows how to actually do it. Insurers, medical supply companies, drug companies, and the like are riding as high on the hog as they possibly can for as long as we’ll tolerate at the expense of the taxpayer and insurance policy holder.

I actually think the HSP+ plan is pretty good. Now that some of the cost they’ve been hiding for years behind “copays” is being passed on to people like us, perhaps the market will change and offer different solutions.

She’s always telling me absurdities about insurance billing practices and the archaic systems that surround them, and it just cracks me up sometimes.  Only a few years ago, Medicare went to electronic billing.  Before that, everything was submitted as a paper claim and a paper check.

One little known fact about our health care system is related to how Medicare pays doctors.  Each year, the Medicare payment tables are approved by Congress.  These payment tables determine the amount that Medicare will pay for each service a doctor might perform on a patient.  All of the insurers look to Medicare as a standard on how much a medical service might be worth.  Some insurers will pay more for a service than Medicare, so the Doctor’s job (the Medical biller’s job) is to charge as much as they can reasonably expect to collect from the BEST insurer for any particular service.  This is what contributes the most to the explosion of the bottom line of medical bills.

But I digress.  One little publicized fact is that Congress has delayed approving and publishing the Medicare payment tables for 2010 when they came due in March.  They called a moratorium during the health care debate, and approved doctors to continue to use the 2009 tables through June.  In June, when congress still hadn’t acted, they stopped making payments.

What was Congress waiting for?

Turns out, for the last several years, Congress had been kicking a can down the road.  Medicare was supposed to be decreasing the payout for each service by a certain percentage every year, to help drive down health care costs.  However, Congress just kept approving the Medicare payment tables each year without decreasing the payment amounts.  Now there is a HUGE discrepancy (15 – 20%) of where payment rates are vs where they should be.

Congress failed to act in time, so the department of health and human services released new tables which now pay dramatically less for each service.  Meanwhile, doctors have not lowered their fees due to the “good” insurances still paying higher amounts.

Bottom line?  Doctors will colllect much less this year from Medicare than they did last year, while still billing record amounts.

Why is this not covered in the media?  I dont’ know.

Meanwhile, I stumbled across this hilarious Podcast on NPR Planet Money which describes my mom’s job to a T.

Enjoy!

If you are bored, it’s located at www.whitehouse.gov.

It was really interesting to watch, although my wife’s eyes are still rolled back into her head four days later.

A few things I took away:

I genuinely believe that President Obama has the best intentions in trying wrangle an indomitable congress into passing this legislation.  You can disagree with his personal beliefs, political party platform, or his philosophical idea of the role of government, but really think it’s unfair to characterize him as personally trying to really pull an evil “socialist plot” or “government takeover” of Health Care.

His motives seem pure and are driving by an indisputable crisis of numbers and facts.  In a few years, with the rate of growth of Health Care costs, the amount of money that the US spends on Health Care will exceed our entire Gross Domestic Product.

This is not debatable, like climate change or the effectiveness of Hillary’s pantsuit combinations.  The fact that the health care industry is single-handedly breaking our entire economy and threatening our future is indisputable.

You should really take the time to see that man work the room.  He was really trying trying to negotiate by finding common ground, pointing out areas where they had fundamental differences, and areas where they had negotiable differences.  Everyone in the room acknowledged how much the legislation has already morphed from the single-payer government run plan that Pelosi wanted to a market-based approach that still safeguards from a “race to the bottom.”

He sat there patiently as people from both sides used their allotted time to grandstand to the CSPAN camera, adding nothing to the discourse in the room and just blabbing on with meaningless and counterproductive rhetoric to try to bolster their own radical argument.

In the end he tried to summarize.  We agree that:

• Health Insurance needs reform and the insurance market should be regulated.
• Allowing small businesses and individuals to pool and purchase group insurance together in an insurance exchange is a great idea (and a Republican idea that the bills have adopted).  (This is how Wal-Mart does it… drive cost down by being the biggest elephant in the room)
• We should allow the purchase of insurance across state lines.  (With the noted exception that some baseline, mandatory standard of coverage would be required to prevent a race to the bottom, and to prevent insurance companies from offering junk plans that didn’t cover anything and shifted most of the cost back to the government and tax payer anyway.)
• Continue to work on Medical malpractice, acknowledging the facts and figures cited that malpractice reform actually only represents a fraction of 1% of the cost of medicine today, and that malpractice claims have actually gone down by 50% in the last decade.

The place where there is absolutely no agreement is on coverage: whether the government should mandate coverage and what types of coverages should be required.

Without reform, Republicans will GET exactly what they think they are fighting against: a government-run, single payer system.  This will come to pass as more Americans rely on the government medicare and medicaid systems than ever before.  At a startling rate, Americans are being priced out of the medical insurance market, especially as they lose jobs or change jobs, and the government is absorbing them at an alarming rate.  Add to that the already anticipated burden of the aging baby boomer children, and we have a perfect storm.

Without significant medial reform that focuses on cost containment and universal coverage, America will continue down the current path of more and more Americans who are part of the CURRENT government-run, single payer system.

Is that what we want for our country?

I don’t care whether you agree with President Obama, or with Rep Boehner and Sen Graham… the point is: the tone is better. We’re not ooo-gaaa-boo-gaaa-boo scaring people. We’re not pounding the bully pulpit. No one’s stamping their feet and demanding their way.

We’re talking policy. We’re talking ideas. We’re discussing what we want our future to look like.

I like it.

And by the way, I’m looking more closely into the Wyden-Bennett plan, as well as the Baucus Plan.

Is access to health care a fundamental human right?

Answer: No.  It’s not.  But guess what… neither is having a firetruck come to your house when it’s on fire.  And neither is getting a free basic education. And neither are the other umpteen government services that are provided in our society.

We do those things, and fund them out of taxpayer money, because they are the right things to do for our citizens.

A high literacy rate and education produces a strong, innovative, productive workforce that fuels that economic engine of this country.

A firetruck keeps my house from burning down when my neighbor’s goes up in flames.

Health care isn’t a human right, but it’s an essential service that we clearly can’t LIVE without.

And that’s what it’s all about.  We just want to live, right?  We all want to live and live well.  And this is why people get so scared when the government talks about dinkering with anything in the health care arena.  People are afraid to lose what health care they have.

I’ll admit I’m afraid to lose what I have, but that fear exists whether or not any legislation passes this year.

I have great insurance from a great company.  There are great hospitals in my area who would care well for me.  The problem is that 50 million Americans – 1 in 5 of us – doesn’t have any chance of ever using that great system, and I’m just one recessional layoff or one chronic condition away from joining them.

We all are.

So many of us live in a “la la land” where we think that whatever insurance we have now will be there tomorrow and forever.  It won’t.  Just ask anyone who’s turned 65 lately about that…

But is a government takeover of all health care the best idea?  I still think: no.  But maybe they do have a role in some part of it.

Let’s consider education: We continue to have the best higher education system in the world, but it is built on the foundation of our government-funded secondary education.  Right there is a system of partially private/partially public success.

Perhaps we need some kind of basic, preventative care for all of our citizens and have insurance and hospitals for the more premium/advanced care?

I don’t know.  I’m just saying we need something different, cause what we’ve got today sure ain’t working.

I just am not sure what I want to say next about this topic.  The truth is, I feel like a tiny minority here.  I clearly see the need for reform and innovation in both the payer system as well as the medical delivery industry.  But, I just don’t see any solutions that I feel I can strongly support.  I am neither for the current proposed reform, nor am I vehemently against it.

So instead of just blindly choosing a side and waving their signs and banners, I want to just discuss the reforms we need to make and share my views on how we might proceed.

1. Cost

As I’ve said all along, cost is the #1 problem with health care.  We simply can’t sustain the level of inflation we are experiencing in the medical industry.  We are spending way too much per captia, and as a total of GDP on our health care.  Other countries are completely outpacing us on the value for the dollar they are getting in their health care systems.

However, no one wants to ‘spend less’ on health care as we might with eating out or going to the movies.  Everyone wants our medical industry to continue to be the most technologically advanced in the world.  No one wants to go to the hospital and hear from their doctor that an old X-RAY will have to do because they just couldn’t afford the awesome new MRI machine.

Attempts to control costs by legislation are just plain unfair to the industry and to consumers.

In spite of the amount of money we pay (per capita) for health care in this country, we are NOT the most healthy country on the earth, or the most well cared for.  All our money goes into a pit of a payer system and to purchase those luxury items for the armies of doctors, insurers, lawyers, accountants, billing clerks, and hospital administrators.

So how do we drive down costs and raise the level of care we receive, all without jeopardizing the medical innovation we enjoy?

2. Payer

We need to innovate how we pay for health care.

I don’t really like the idea of a national health insurance plan that competes with other insurance companies.  This concept is bad because it gives the deep-pocketed, bankruptcy-proof government the option to undercut all other insurance companies and essentially wipe them out of business.  Soon my workplace will drop all other plans and only offer the government plan to save costs, and voila!  We have a single payer system!  However, it is an effective way to control cost.  Whatever the government says it pays is what it pays.

If the national health insurance is simply a subsidy for those who truly can’t afford health insurance, I would be more happy, but then I’m still unhappy because I don’t think my precious tax dollars should go to a for-profit insurance company to pay for their executive jets, and I’m also not completely comfortable with the poor, who pay no tax at all, collecting money from the rest of us in order to get the same level of premium care.

I really like the idea of insurance cooperatives.  These exist already for many utilities in rural areas, and are a similar concept to Credit Unions.  The idea is that the members of the coop run a non-profit organization to simply deliver the required services.  No one profits, and profitable years are banked against the unprofitable years.  The revenues and dividends and goodies all belong to the members of the coop.

In a way, a government-run plan would be like a coop – takes out the profit for private industry, but I like the coop better because it reduces the red-tape and bureaucracy a government run agency would no doubt bring. But who are we kidding?  All payer systems from private insurers to government programs specialize in red tape and bureaucracy.  Their job is to make it as hard as possible for people to get their money.

All of these solutions are still not great, but changing the payer system alone cannot drive down the cost of healthcare.  Sure, eliminating the profiteering of the insurance companies and associated overhead required at each Doctor’s office would help, but it would not so much as make a dent, in my belief.

3. Industry

We need to innovate how we deliver health care in this country.

The uninsured have one option in this country: to wait until they are sick enough to go to the emergency room.  There, we use our most expensive resources to return these people to a non-emergent condition.  (Note: we don’t even treat their illnesses, we just stop the bleeding, so they are going to be back, because often the root cause is not ever taken care of!)

When I lived in Brazil, I noticed something interesting about their health care system.  Most large neighborhoods had a nearby “posto de saude” (community health center).  These were small buildings that were meant for simple diagnosis and treatment of disease.  The more complex conditions were sent into the doctor and hospital system, but most sniffles and colds and strep could be diagnosed and treated by the nurse practitioner who ran the center.

Cost wasn’t an issue in these health centers.  You never paid for treatment.  The goal was to diagnose, treat, or triage conditions early to help maintain the public health.  (Pig flu anyone?)  Even expatriots like myself could be seen at these centers.

Innovations like that, some change to the way we think about and consume health care, could also help us in this fight for reform.

4. We the People

We, the people, need to reform OURSELVES!

We need to live healthier, eat less, eat more healthy, and drive down our own health care costs by choosing good habits and teaching those habits to our children.

Talk to doctors and they will tell you, they spend a lot of time and money on patients who just simply won’t make lifestyle changes.  They simply refuse to stop smoking, drinking, and overeating or start exercising.  We expect to be able to live however we want, and that any problem will be fixed by a new wonder drug.  We work longer hours and take stimulants to stay up, and then we take sleeping pills to help us go to sleep.  We stress ourselves past our limits, and then we spend on mental health care.  We take medication for acid reflux, allergies, high blood pressure, and athsma, and yet we refuse to eat healthier, get out and get some fresh air, exercise, or stop smoking – all of which contribute to the other disorders.  We prefer to be treated medically than we prefer to live right.

This becomes even more critical as we move more toward a white-collar workforce, where a large percentage of our workers sit at desks all day long. We need to focus again on living well and healthily.

In Parting

I will just say that I am committed to not be afraid of this issue and conversation.  I think almost everyone shares the common goal that we want a sustainable health care system that can better care for the citizens, and continue to be the world leader in health care innovation.  If anyone can meet those goals in a blog comment, let me know… I haven’t been able to do it in a week’s worth of research, thinking, and writing.

1. In our current health care model we have providers & payers.
2. Providers are largely an effective industry.
3. Payers are largely a bloated system on which the industry has been built.
4. Cost is the ultimate problem.

So today I want to delve into cost.

How much does it cost to see a doctor?

In our current health care system there are three separate responses to this question:

• What the doctor says
• What the private insurance company says
• What the government (medicare) says

The doctor can bill $100 for an office visit.  (Remember: the goal of the doctor then is to collect as much of that money as possible from every insurance company they bill, so they have to set their price high enough so that they can maximize the amount they can collect from the high payers to recover it from the lower payers).

The doctor must bill each insurance company the same amount for the office visit, even though Insurance Company A pays $80, Insurance Company B pays $75.  Medicare only pays $60.

You also cannot bill the other $40 directly to the patient, especially if they’re on Medicare, so the insurance companies tell the doctor how much they must write off of their books as a loss.

So the key point to understand is: the government already indirectly sets the cost of health care in this country through Medicare.

Doctors and hospitals are free to choose to charge whatever they think the highest tier insurer and most wealthy individual can pay, but they have remained ‘anchored’ in what Medicare will pay for any particular procedure.

Which goes to my next point:

Medical Insurance is not really insurance anymore…

Think about your car insurance or your home insurance.  When was the last time those insurances paid when you had to have a few hundred dollars of repairs?  When did they ever pay when you were doing home improvement?

Never.

Insurance is the concept of paying into a collective fund which would help you out in the case of sudden, unexpected, and catastrophic loss.  Every time a light bulb burns out in our house, we don’t file a claim with the insurance, go pay a co-pay to Lowes, and have someone install the bulb for us.  We just go buy a replacement bulb, and we’re done.

Medical insurance has gone from a protection against catastrophic loss to a payment system for the entire health care infrastructure of our country.  Even medications, the last great item that you could just go pay for, are now all run through your insurance.

The goal of the for-profit insurers is to get the highest income by charging as much as the market can bear from businesses and individuals (this is the premium you pay for a health care policy), and then turning around and paying the lowest the market can bear in terms of doctors and patients care.

The ones who hate this payer system the worst are the providers!  They have to play by a million different sets of rules, set by every insurance company whose patients they accept.  They employ scores of people just to deal with the insurance companies and bills.  (I know, because this is what my Mom does for a living.)

Because of this, being a doctor in private practice is more about being a good businessman and less about being a good health care provider.

If it’s so bad for private doctors, it gets worse for hospitals.  These facilities have even more government mandates than private practices, but it all goes back to the same issue: they have to get as much money from those who can pay to make up for those who can’t.  This is why a few day’s of a hospital stay generates a bill that is a 27 pages long.  The hospital is taking every chance to bill your insurance for every single item they will pay for.

Hospitals also have a huge problem with the uninsured and under-insured.  Emergency rooms, must see every patient, regardless of insurance.  Emergency room care is the most expensive type of care, requiring the highest paid doctors and nurses, and we offer it for free to everyone.

This is the first thing that has to change.

We cannot continue to provide high-cost, emergency care to those who simply had no way to get care until the situation became so bad it was an emergency.  This is a poor use of precious tax dollars.

So how do we lower the cost of health care?

Now you know more about how health care is paid for, what are your ideas?  I will try to answer this question tomorrow, and hopefully your ideas will help me do so.

1. to define what we currently have
2. to understand what is being proposed and where it might lead us

I want to get it #1 nailed down, first, before we get into #2.  Perhaps the single most frustrating thing is to discuss a topic when not everyone in the room is coming from a similar basic understanding of the actual state of affairs…

So here we go…

The hallmark of our American culture is free-enterprise.  Free-enterprise has taken our country from a fledgling colony to the world’s last super-power.   This point is not up for debate.  It’s who we are, where we’ve been, and what we do.

However, as we’ve grown and matured as a country, our citizens have gradually changed the expectation of citizenship in this country.  Consider the difference between the “wild west”, when you were lucky if there was one ‘Wyatt Earp’ in any given city.  Now, law enforcement, fire departments, traffic controlling, and emergency management of all kinds are just a given.  Rather than focusing on individual preparedness, we have systematized all our life’s unknowns to our government.  If there’s a fire, crime, disaster, family dispute, orphan, poverty, retirement, or even if you want to build something on your own land – we, as a society, have provided for that.  I suppose it’s the price we’ve paid for ‘culture’ and the cost of living with each other – we’ve introduced this huge arbitrator between us, called the government.

In the last 100 years we’ve moved to systematize sectors of our economy from “industries” to “systems”.  This is an important word.  A system is typically characterized as being stable, predictable, and uninterruptable.  Systems tend to have deep pockets, steep overhead and large bureaucracy.  Government tends to run “systems.”

Industries are different.  Industries are typically made up of many companies and individual entrepreneurs and innovators.  Industries are volitile, nible, and fragile.  They ebb and flow with the times.  They rise and fall with demand, capital, and the market.  They can produce large profits, but also run the risk of taking huge losses and ultimately failing.

The question is: Is our Health Care a “system” or an “industry”?

The answer is: Yes.

The industry is made up of two major components: Health care providers & Health care payers

Providers are largely still an industry.  Doctors set up practice in locations where they will have enough patients to make a decent living.  Hospitals, clinics, and private practices tend to ‘follow the money’, making a really good living based on their local reputation and skill at their profession.  Drug and medical equipment companies live or die by their successful products and innovations.

Payers are largely a system.  The three categories of payers are now: for-profit insurance companies, not-for-profit health care cooperatives, state government programs, and federal government programs.  These companies have various goals, though:

• For-profit insurers want to keep as many customers as possible, offering premiums and programs that cover their customer base without draining their cash supplies they can claim as “profit”.
• Non-profit are similar to for-profit except that rather than returing profits to shareholders, the profits are used to grow the company, and grow the number of people who can be served through the coop.  The profits are just banked against future loss and growth.  (Similar to bank vs credit union)
• Government services’ primary goal is to control cost, keep from bankrupting itself, and fulfill its government mandate.

So what’s the problem with health care?

Cost!  Cost!  Cost!  It all goes back to the almighty dollar!

It’s been the problem for the last 100 years.  Cost is the reason why we need a middle-man/payer in the first place.  When we get sick, we all want the best care available.  To be able to pay for this, we have to have advanced medical centers and well-trained physicians everywhere.  There is demand everywhere for the best drugs, the best medical equipment, and the latest advancements.  This is not cheap.  It is very expensive!  We have to pay for it somehow, and so the cost of treatment has gone up and up.

It’s so expensive to get treatment, we have to insure ourselves against the possibility that we’ll get sick.  Medical insurance is now the fixture in the industry, and all the money is funneled through their hands.  Because of this, they have become the tail that wags the dog, and the target of intense scrutiny.  They are the final word to the patient and to the doctor.  They dictate what they will pay for, when they will pay for it, and how they will pay.  Doctors, in turn, spend more and more time and resources understanding and maximizing what they can get out of each insurance company.

Then there’s the government.  We decided we needed to help those who could not afford insurance (the poor and the retired), and the Medicare system was born.  Medicare’s role in today’s system is to set the ‘baseline’ for all other insurance companies.  Medicare decides what it will pay for any given procedure, and other insurers have to pay at least that.  Medicare dictates to the doctors the minimum they will get paid for any particular thing.

Lest we criminalize the insurers too badly, remember it is on the backs of these insurers we have built the largest, most advanced health care system in the world.  All the great health innovations continue to come from the United States, due to the great educational system, infrastructure, and momentum.  People get paid (and get paid well) to innovate and invent new medical procedures and medications, and insurance companies (as evil as they can be to both doctors and patients) continually finance it and make it all possible.

So that’s how our medical system works today.  The next posts will focus on some of the proposed reforms and transformations of our health care “systems” and “industries”.