BS: Why does Medical Insurance cost so much?

Subject: BS: Why does Medical Insurance cost so much?
From: Don Firth
Date: 01 Feb 13 - 09:09 PM

Pardon me if my gnashing teeth are showering sparks and steam is pouring out of my ears, but I am not please!! As in Crush! Kill! Destroy!

These days I get around in one of two wheelchairs. One is a manual (hand pushed) chair (sorta like this) and the other is a battery powered chair (similar in appearance). The manual I use around the apartment and for very short trips on flat surfaces. I use the power chair when I roam farther and have to negotiate hills. On a full charge, it can go about 25 miles, and it can get up to speeds of 6.5 mph (a good jogging speed) or be dialed down to a slow creep. Very handy indeed!

Some years ago I was chatting with a wheelchair repairman who had come to make some adjustments on my new power wheelchair. In casual conversation, I asked him why a manual wheelchair costs so much more than a halfway decent bicycle when there isn't really that much more to making one. He responded that durable medical equipment is almost always overpriced because, as he said, "More often than not, the client doesn't have to pay the whole bill. It's billed to an insurance company and the insurance company passes anything over what they allow on to the client or patient. And on some things, they really pad it." With durable medical equipment, as a general rule, there is a very large profit margin. Then he said, "Don't quote me."

Batteries have to be replaced from time to time. And wheelchair batteries are expensive! So a few years ago when I had mine replaced, I phoned my nephew who worked for a local battery store. He came out and looked at the batteries in my power chair and told me that they were not car batteries, but marine batteries. "The kind you would use in your 35 foot Chris-Craft moored down at the marina. A bit more expensive than a car battery, but not bad."

So he replaced them for me and I was good to go.

My nephew is no longer in this area, so last time I had the batteries replaced, was a few weeks ago. By a local medical supply store. A fellow came to our apartment and installed them. I expected the bill to be a bit sharp, what with the service call and all. But—

I got the papers in the mail. My health insurance company allowed a generous $300 for a pair of wheelchair batteries. I was a bit taken aback.

But what really knocked me against the wall was the bill I got from the medical supply store for an additional $330.00!!

That adds up to about 6 times what my nephew told me that same type of battery—for non-medical equipment purposes—normally cost a few years ago!

Why don't they be just be honest about it and wear a mask and a gun!??

Don Firth

Subject: RE: BS: Why does Medical Insurance cost so much?
From: Bobert
Date: 01 Feb 13 - 09:17 PM

I can't read a bunch of clickies but there are two reason why medical insurance costs so much:

1. Providers charge too much...

2. Insurance companies charge too much...

That about sums it up... They are both getting very rich off us...

B~

Subject: RE: BS: Why does Medical Insurance cost so much?
From: Janie
Date: 01 Feb 13 - 09:29 PM

I work in healthcare. It ain't that simple. In fact, it is really, really complicated.

Subject: RE: BS: Why does Medical Insurance cost so much?
From: Bobert
Date: 01 Feb 13 - 09:43 PM

I donno, Janie... Americans work cheaper than Europeans so it would make sense that if it weren't for overcharging then we'd be able to get in at 10% Of GNP or less for health care... They all do...

Me thinks that it isn't as complicated as the profiteers have rigged it out to be...

B~

Subject: RE: BS: Why does Medical Insurance cost so much?
From: Janie
Date: 01 Feb 13 - 10:12 PM

No Bobert. It is really, really, complicated. And if you really explore the European systems you will find it is also really, really complicated for them also. Health care, regardless of the system of delivery, is a bonafide crusible in this post-modern age. Since 1992 I've worked in the public sector, the non-profit sector and the for-profit sector. There are no easy answers. There is only the reality.

Subject: RE: BS: Why does Medical Insurance cost so much?
From: Little Hawk
Date: 01 Feb 13 - 11:14 PM

Don, I think the secret may be that they have a captive audience.

Subject: RE: BS: Why does Medical Insurance cost so much?
From: JohnInKansas
Date: 02 Feb 13 - 12:10 AM

While not directly comparable, I bought a "mobility scooter" for Lin a few years ago from Pep Boys (auto supply store) for $350. When it died (it didn't swim well when she drove it into a puddle) we acquired an almost direct replacement (most details very similar, but a little less "guts" in the grass for the "medical" one) it was $800 from the only available source - which was a medical supply store. It was, for that price, a "discontinued model" they likely couldn't have sold to anyone else, and probably couldn't have billed to insurance, with an original list price of a little more than $1,900. (They probably sold it to us at near(?) their cost mainly because it was an instant cash sale, in addition to being unmarketable otherwise?)

A very few years later, Walmart has the same )identical)scooter as the first one I bought - web orders only - for $800 the last time I looked. (Not approved for medical use, so not billable to insurance.)

Our acquisitions have been straight out purchases, without attempting to claim them as "medical appliances." Medicare is administered differently by each the states and in our state there is a stated limitation of "one per customer" - no maintenance and no replacements for "mobility devices." With the possibility that she might need a more sophisticated one later, we ate the whole cost for her "convenience" vehicles.

For reference, powered chairs similar to the one linked by Don run, according to my browsing, in the range from $3,800 to $4,600 (the ones I've looked at) in list price, and are considered "fairly basic." Medicare might allow as much as $2,400 for one of this kind here in Kansas; but that's pretty much guesswork.

(There is at least one power chair available that would truly meet all the specifications that would be helpful for Lin's use, but it lists for $16,000 (without the gun mount). We're doubtful that Medicare would agree on some of the features.)

The battery problem is somewhat simpler than the basic acquisition falderol.

OSHA REQUIRES spill proof batteries on equipment such as power chairs. This typically means a "gelled" electrolyte with no free liquid in the battery. These are expensive even if one chooses open market versions that are about 60%(?) or less of the price of what the medical suppliers demand.

An alternative that some people may choose might be motorcycle batteries or some kinds of marine batteries. Appropriate ones in these categories are represented to be spill resistant but not truly spill proof. A dealer licensed to sell "medical equipment" for which insurance can be billed cannot sell you one of these as a cheaper alternative to the gel-cell batteries specified for the chair/device, without the possibility of loss of dealer franchise/license and/or lawsuits by the customers - even if the insurance isn't billed for them.

The usage of mobility device batteries almost mandates a "deep cycle" kind of battery, and most marine batteries are at least claimed to be of this kind. Tip-over (spill) qualities are quite variable, and the majority of available batteries that might be otherwise suitable just "won't fit in the box." So alternatives relying on using a "diffeent kind of battery" are limited, depending on how much risk one can accept in order to use cheaper ones.

I have purchased batteries for the two scooters Lin has had (the same ones for both), that the med suppliers list at $150 each, for $37 apiece from an aftermarket supplier. The ones purchased meet all the specs, but they're in limited supply and may not have quite the same life MTBF(?) based on limited trials. Bill's chair would use a much larger size, that would of course cost more, but a similar range/ratio of prices may be available, although finding the best options isn't easy (without a little bit of luck).

John

Subject: RE: BS: Why does Medical Insurance cost so much?
From: JohnInKansas
Date: 02 Feb 13 - 01:02 AM

One that should go everywhere Lin has tried to take hers.

There are a couple of other similar ones on the market.

John

Subject: RE: BS: Why does Medical Insurance cost so much?
From: kendall
Date: 02 Feb 13 - 03:50 AM

Greed

Subject: RE: BS: Why does Medical Insurance cost so much?
From: DMcG
Date: 02 Feb 13 - 03:50 AM

The 'Captive audience' argument does it for me. Yes, it is all very complicated, even in countries like the UK which have a bedrock of healthcare that is not charged per individual need. But it is one one several sectors where it is difficult for consumers to put any limit on what they are prepared to pay providing they have the means. And when that happens, the providers always charge what they like. Yes, in theory someone starts up a business that undercuts them, but that isn't straightforward either, so it doesn't happen very effectively, whatever politicians and economists claim.

Subject: RE: BS: Why does Medical Insurance cost so much?
From: GUEST,dick greenhaus
Date: 02 Feb 13 - 09:01 AM

Disregarding actual medical costs for a moment, private medical insurers tag on at least a 17% surcharge to the medical bill. This goes for advertising and administration costs, neither of which contributes to the patient's welfare.

Subject: RE: BS: Why does Medical Insurance cost so much?
From: artbrooks
Date: 02 Feb 13 - 09:23 AM

I worked for the VA for many years, but I won't pretend to be an expert on VA purchasing policies. However, a few things I do know: the VA is a low cost (and high quality, but that's for a different thread) medical care provider, and a major reason is that they buy in very large quantities and they negotiate prices with suppliers. Medicare is legally forbidden to negotiate, and private-pay patients are lucky if they are only charged at Medicare rates. Durable medical equipment (DME) suppliers charge what they do because they are under no cost controls whatever and because every link in the retail chain has to make expenses and profit.

Why insurance costs so much is really a different question. It's a matter of gambling, of course, but wrapped up into it all is, as Dick said, administration and advertising - and I suspect that amounts to far more than 17%, when you consider that 'administration' includes obscene salaries for their CEOs and large profits for their stockholders.

Subject: RE: BS: Why does Medical Insurance cost so much?
From: Stilly River Sage
Date: 02 Feb 13 - 10:29 AM

There was an interesting discussion about this a couple of weeks ago on National Public Radio. The comparison had to do with the percentage of income paid for health care back before Medicare and after it came into being. When senior citizens spent their own money to go to the doctor they paid a fee and knew how much their medical care cost. The percentage paid for health care was low - I don' remember, but for sake of argument I'll call it 5%. Once there was the layer of bureaucracy the prices and rates rose because someone else was paying it. Seniors didn't know how much their care really cost and weren't concerned with keeping the price affordable. And now seniors pay more - again, I don't remember the exact number, but in the news story it went up considerably - something like 20% in copays, drug costs, etc. So the Medicare process allowed too many people into the system who wanted a hefty profit off of that local arrangement between a patient and their doctor.

SRS

Subject: RE: BS: Why does Medical Insurance cost so much?
From: JohnInKansas
Date: 02 Feb 13 - 02:39 PM

It has to be emphasized that Medicare is administered by each state and the individual states have considerable freedom to change many of the policies.

There is, technically, a distinction between "negotiated rates" and "dictated rates," but in most states Medicare sets an amount that is the maximum that will be paid for a given procedure or treatment. The rates set by Medicare are generally significantly lower than what the providers would bill otherwise. Any provider who agrees to accept patients with Medicare must accept the amounts set by Medicare, and can't pass on any difference to the patient or to any other secondary insurer. Medicare will pay part of the amount that they set and the remainder of the Medicare accepted amount can be billed to a secondary insurer or to the patient.

For those not covered by Medicare, and for "secondary coverage" for those with Medicare, group insurance policies usually can negotiate "limits" on amounts that providers who have agreed to accept patients covered by the group may charge. A "large enough" Company that provides insurance for a sufficient number of employees can exert considerable "encouragement" on an insurer to obtain more effective negotiations and better rates for the employee. For those not covered by a company provided policy (with or without partial payment of fees by the employee) public "Group Policies" can also negotiate rates. Blue Cross/Blue Shield is one of the larger group insurers and insurers of this kind can group independent persons into "local" groups and may also be chosen to administer company provided policies as independent groups.

While it may not be typical for other states, a Medicare Summary statement picked at random from our pile (the pile is braced and reinforced to prevent tipping), along with the separate statement from secondary insurance show:

  $ 1,040 billed by Provider
  $   264 Approved by Medicare
  $   211 Paid by Medicare
  $   179 Paid by Secondary Insurance
  $    16 Billed to (& Paid by) patient
  $   264 Total Paid to Provider

I haven't run the numbers to verify, but it "looks about like" most that we see. [$264 Paid / $1,040 Billed = 25.3%]

A Provider who has agreed to accept Medicare may ask you to sign a waiver for something not expected to be covered by Medicare, and if you sign the waiver you may be required to pay full price for that individual item on the bill.

If you are treated by a Provider who has not agreed to work within Medicare and/or has not agreed to work with patients insured by your other insurer(s) the full effect of being "uninsured" may apply. The result of using "out of network" services is USUALLY A DISASTER and everyone (in the US at least) should be aware of what can happen.

Discussion here would be too lengthy to include, but an excellent recent article is recommended reading:

Out-of-network billing is 'out of control,' report finds.

(The article at the link may be most closely related to the original question in this thread, and describes something that can happen to anyone regardless of how "insured" they might be.)

John

Subject: RE: BS: Why does Medical Insurance cost so much?
From: artbrooks
Date: 02 Feb 13 - 04:27 PM

I believe that Medicaid is managed by the states and Medicare is a federally-operated program.

Subject: RE: BS: Why does Medical Insurance cost so much?
From: Don Firth
Date: 02 Feb 13 - 04:35 PM

I may very well have asked the wrong question in the thread heading.

Health insurance companies are not in business for their or your health, they're in business to make money, and they're known to try to squeeze every nickel out of it that they can. Until we get a different system or at the very least some stringent regulations, we're stuck with it.

But what has me really snarling is this: when I was eighteen, I traded in my old wooden crutches, which often broke on me, for a pair of aluminum forearm crutches (CLICKY). They took a little getting used to, but they were quite durable and I didn't have to worry about the shoulder-piece popping loose unexpectedly. The pair cost me $25.00. No problem.

Aluminum is a relatively soft metal, and over the years they got all loose and clanky (you could hear me coming from down the block) so I got a new pair. The exact same kind were now $125.00 for a pair! A bit of inflation, yes, but that much?

I just did some theoretical shopping on Google, and found that I could actually get a pair from places like Walgreen's Drugs for from $39.99 to $149.99 apiece, depending on how sturdy they were. But if I were to buy the same crutches at a medical supply store, they would charge me up to three times as much. For the same crutches! WHY?

Naturally, the smart thing to do is get them from Walgreen's Drugs (hoping your nearby store might have them in stock).

My manual wheelchair is quickly wearing out and needs to be replace as soon as possible. I've had the chair for a little over fifteen years, and among other things, the brakes (ability to lock the wheels while transferring and such) are loose and sloppy, and that's not only scary, it's dangerous. It's been a good, sturdy chair and it cost about $2,000 new. I've priced the same model chair, and for what the durable medical equipment companies are charging for the same or a similar chair now is considerably more than I paid—new—for our present automobile!!

Of course, I could just bag it and spend the rest of my life in bed. . . .

As someone said, captive audience has a lot to do with it.

Don Firth

Subject: RE: BS: Why does Medical Insurance cost so much?
From: artbrooks
Date: 02 Feb 13 - 04:55 PM

Don, one thought for you would be to look for a used one. Medicare buys them (and the VA issues them) and they are rarely ever returned when the patient no longer needs them. I made a quick check, and there appear to be several in the Seattle Craig's List.

Subject: RE: BS: Why does Medical Insurance cost so much?
From: Don Firth
Date: 02 Feb 13 - 06:39 PM

Excellent, Art. I'll check it out. Thanks!

Don Firth

Subject: RE: BS: Why does Medical Insurance cost so much?
From: GUEST,mg
Date: 02 Feb 13 - 07:48 PM

I shall think of several reasons.

1. Cost of equipment..huge..competitive...not all hospitals need all eqipment. Why can a private company take a scanner to a church parking lot and screen for all sorts of things for $200 and in a hospital it would probably cost 10K..I am just guessing.
2. We do not need doctors for every thing that ails us. NPs, PAs etc. do just fine for most things we encounter. Do what developing countries do..I think they say 80% of ailments can be taken care of by a village medical person; perhaps inD a doctor and 5 percent need a specialist in a hospital.
3. we treat huge numbers of people for problems caused by metabolic syndrome, which leads to diabetes and heart problems and perhaps cancers. if we could reduce that by 80 percent, which i think is quite possible, frees up lots of resources...only expense is giving people correct information which some people are too dumb to do..some routine blood tests at ab outout 30 dollars each..sorry about my keyb oarde here..it keeps jumping
4. some doctor visits are hypochondria and some are social visits..coul e solved by referrals to inhouse nice respectful people who will listen to lonely people.
5. emergency room care for routine ailments. this is nuts. they always say ho9w much it costs. well, fofr heavens sakes,. put a PA outside the er and reduce expenses b y 90%.
6. train many more medical professionals. do much more with college loans to encourage people going into medical trades. free tuition in some cases. special emphasis on underserved populations such as native americans. no jobs on many reservations and y et they have to import nurses etc. not good.
7. train prison populations in medical trades when possible. Some trades might be less science oriented..could be more cooking, janiagtorial etc. for work in medical situations or volunteer work or work in prison clinics where outsiderws and family could get some medical help and prisonmers would hae a workv history and recommendations.
8. run hospitals and clinics 24 hours a day if need is there..maybe discountsw at off hours
9. need followup to make sure exsurgery patients are ok, taking meds etdc. coul d be done by persons without lots of training.
10. needmore neigh =brhood clinics.

well that is all for now