Just to review:
- In our current health care model we have providers & payers.
- Providers are largely an effective industry.
- Payers are largely a bloated system on which the industry has been built.
- 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?
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.
9 thoughts on “Health Care: How Much Does it Cost to See a Doctor?”
I like this post. I have given this a lot of thought multiple times. I feel that one way to lower health costs would be for more people to drop their health insurance and go to self pay for basic services. There are a lot of scare tactics involved to make sure everybody has health insurance. we have been trained to let our jaw drop if someone tells you they don’t have health insurance. If we could get masses to do this the insurance companies might compete more for the more sudden, unexpected, and catastrophic loss insurances which I would be a proponent of in this case. An office visit or basic services would be more reasonably priced, people would have more money to pay for such services and there would be a drop in people clogging up the system for a sniffle. It would also allow the health care professionals to focus more on care than red tape. I has been said before and proven many times that anytime a govt agency becomes involved things just get worse and more expensive.
I like your comparison showing the difference between medical insurance and car/home insurance. One thing, though, that also innately makes the medical arena different is that when we go in for a doctor’s visit we are probably also paying for medical research – something that is not done for home or car industries. Just another factor to consider. Maybe there’s a better way to pay for that? I’m not sure exactly how it is done now – but I’m assuming that currently, those who use medical care more are paying more for future R&D. And that makes sense to me.
Also, if you took out the middle man for a simple doctor’s visit – what would the visit actually cost? When a $200 car repair is needed – the owner can decide if it is worth it to them to not do the repair (either not at all or not until a later month when their budget looks better). But when I need $200 to 1) visit the Dr. and 2) get medication for the swine flu – that can’t wait and I might not have the money. What then? Without insurance – I can’t go until I have saved up the money. Then I might end up in the emergency room needlessly (but then I guess my insurance would pay). That is IF I have insurance. In other words, if we drop insurance for non-catastrophic losses – what’s to stop even the insured people from waiting too long to get help and then ending up in the emergency room just like the uninsured do now.
If I neglected my $200 car repair and then the brakes go out and I get in an accident. Then I have a $5000 repair. Say I don’t have insurance. My car wasn’t worth $5000 in the first place. So I make the decision not to repair. I bum a ride to and from work everyday from my husband. But that scenario doesn’t work for medicine. No one will ever not make the $5000 repair even if they don’t have insurance since our bodies are not dispensable assets like cars. So we still have the same problem…who pays for the medicine of the un and under-insured? And is sudden, catastrophic medical care a human right that should be provided to all?
Fantastic post WE. I believe we need to be thinking about healthcare reform as removing the things that increase the cost of health care, not inventing new programs.
A2: I think that if you dramatically lower the cost of health care, creating a system where we help people with lower becomes much easier. Like maybe if we had a 5 visits a year thing for free or something. Catastrophic health care would also be much lower and easy to purchase because those of healthy aren’t making any visits. How many times have you been to the hospital in the last 10 years?
I would have to disagree with A2 on almost all counts. First I know there are many private and public companies that do research and development for car repairs, home repairs and just about anything you can think of. most are driven by free market- provide best information at a competitive price. I am sure doctors even now subscribe to medical journals and websites and the like just as I do in the car repair field. and I am sure most of it is not fully funded by insurance. It is wrapped up in the cost of service just like many other businesses.
Second, when your car won’t start and you need a battery or starter even if you can do it your self you are stuck paying. unless for some reason you dont need a car. for many driving is pretty much a need, commute to work etc. many times friends or family can help or maybe even a repair shop could give to a needy situation. I suggest it is the same for the medical field. should you need an office visit or medication or other. (drug companies currently assist many people with medications for free.) The more bureaucracy and govt control you get there is much less compassion and CAPABILITY to help. trust me I lived in the former USSR.
on the last point I don’t see how medical care is a human right. how could it be? If it were would we have to have a medical professional in every rural community to ensure our human rights are safe? It is this entitlement mentality that is pushing our society down a road that will be part of our undoing.
1) The system I am under right now is working very well for me. Instead of paying $200/mo. for relatively traditional insurance (subsidized by my company) I now have a high deductible policy ($2400/family/yr). In addition I get to deposit the $200 I used to pay for insurance each month (or whatever amount I choose) into a health savings account which I can use to pay any medical costs (the deductible for example). By the way, all preventive things are covered 100%. At the end of the year, I get to keep any of the health savings account I didn’t use and can either let it build up for future years or roll it over into a standard savings IRA fund. This gives us incentive to take care of ourselves so we don’t use up the entire health saving account but it is there in case we need it. Of course, any catastrophic things are covered.
2) I agree that a significant cost that we must do something about occurs in emergency rooms. Many people I know don’t even have a doctor. They just always go to the emergency room even for non-emergency needs. The 11 million illegals in this country are a major issue. Do something to solve that problem and you’ll go a long way to reduce health care costs!
3) One of the largests contibutor to high health care cost is that caused by the cost of malpractice insurance and the tons of unnecessary tests ordered by doctors merely to protect themselves from ridiculous and frivolous lawsuits. Anyone attempting to reduce health care costs without addressing tort reform is simply not serious about reducing costs.
You are probably right on the first count. You just don’t hear as much about auto/home research as you do about cancer research. But I’m sure it is out there.
I still disagree with you on the second though. A car simply is not necessary to live (as opposed to some kinds of medical treatments).
On the third – my whole point was that catastrophic medical care is ALREADY treated as a human right. Anyone with (or even without) a pulse can get care. And I doubt that is going to change anytime soon…
I like what Adam suggested about lowering the ER costs by somehow providing free, non-catastrophic care but I wonder if that can happen without raising taxes (which of course no one wants).
PS- I have been to the hospital twice in the last 10 years and go to my doctor every 6-8 months or so for some reason or another. I consider myself healthy and have insurance in case I someday am not. But the whole point is trying to figure out something for those who aren’t healthy and don’t have insurance.
I think the point I was trying to make in the long run but never got to it was that we are turning into a society where more and more people are expecting a hand out, and fewer people are being taught (by experinece mostly) that we need to be personally responsible as much as possible. If you drive a car you should plan and expect to have to pay for maint and repairs. It is the same with medical care, we all should try to plan and be prepared for medical maint and repairs. It is fortunate that most of us young people are healthy. As we move forward in our lives we gain more understanding of the world and hopefully we can prepare for old age and what comes with it.
As far as health care being a human right, we are fortunate that currently under our system it is treated as such, but if we make any laws stating such, it will just get worse. I believe that fewer people will have access to care.
Health care does need some reform. In the past ten years I have been in the workforce insurance rates have more than tripled for me and my family, and coverage has dropped by at least 20-30 percent.
My thoughts are that government programs will make everything worse, not just for the health care field but also for our economy and in turn the world. like Adam says, we need to streamline the industry (not system).
I think Ron has some very valid, important points. I noticed in a Las Vegas phone book the largest section of yellow pages was attorneys. food for thought.
If we do it right taxes should be lower not higher.
I also agree that we need a culture who understands and accepts personal responsibility, but let’s not get ahead of ourselves. We also believe that you should get what you pay for in this country, and our government is here to protect and serve us as its citizens and taxpayers.
Is having a firetruck come to your house when it is burning down a “handout”? Or better yet, if your neighbor’s house is catching on fire, is putting his house out so it doesn’t burn yours down a “handout”?
Is having free K-12 education a “handout”? Or is a the 99% literacy rate in this country not worth it?
Is having the CDC oversee the manufacture and distribution of thousands of Swine flu vaccinations a “handout”? And preventing the spread of the pig flu? Is that a hand out?
Are disability payments to a middle-aged head-of-household who worked for most of his life but is now unable because he is afflicted with a long-term degenerative nerve disorder a “handout”?
Or are these things just benefits of living and paying taxes in the greatest country in the world?!? And aren’t you glad when it’s your turn to get one of these “hand outs”? Like when the cabins up at the CR didn’t burn down because we had a forest service to put out the fire?
I get a little perturbed when I hear people bash “handouts” that they enjoy the benefits of every day.
And the question shouldn’t be whether it’s a “basic human right” to have health care. The question should be, is it the right thing to do, for our country to help take care of the poor, the students, and the working class folks on whose backs and credit this country has churned out millionaire after millionaire?
WE, you have some good points there. I don’t think any of us are bashing some of those types of govt agencyies. In fact I would be in favor of paying more LOCAL taxes to up the staff of firemen in my city. We do have a lot of state, local, and federal systems we can be proud of and grateful for.
The problem is government overreaching, overspending, and corruption especially on the federal level. How about some real solutions to the government programs we already have that aren’t really working (like social security) before we add more.
Lets try as a first step NOT increasing the deficit. Then lets work on balancing the budget every year, If some states can do it the feds should be able to too.