Map of life expectancy at birth from Global Education Project.

Monday, January 07, 2019

A charitable institution

A few days ago I told the bizarre tale of my mother's hospital bill. As you may recall it was itemized and came to total of more than $75,000. Then it had an "insurance adjustment" which reduced the bill to about $6,000. Then they actually billed her for $200.

We had a presentation here last week from Harvard researcher Ateev Mehrotra who studies, among other subjects, medical billing, and we got into a discussion of this weird practice. One of the many ill consequences of our fragmented system of organizing and financing health care is that hospitals and physician practices must interact with numerous different payers -- private, usually for profit insurance companies, Medicare and Medicaid. They post these ridiculous prices as a starting point, then they negotiate separately with the private insurance companies to set the actual price. (Medicare and Medicaid have fixed prices, that they just have to take.) So the price will be different for each insurer.

Another wrinkle: yes, my mother is a Medicare beneficiary. However, she has a Medicare Advantage plan, which means that Medicare pays the insurer a fixed amount for each patient and the insurer then negotiates prices with the hospitals. So many Medicare beneficiaries actually have private insurance. Anyhow . . .

"Price transparency" is an effort to get consumers to make economical choices by making providers post their prices. But posting the $4,500 a day room and board price is a) going to insure that nobody ever undergoes elective surgery and b) is totally fictitious since nobody actually pays it. For that matter, nobody pays the price the insurer pays because, you know, the insurer pays it. All you care about is your co-pay, and the insurance company tells you that.

Ordinarily hospitals will cut deals with all of the important insurers in their area, because obviously they want the business. They can actually send the bill for $75,000 to an uninsured person, but they aren't likely to collect. But now it turns out that Zuckerberg San Francisco General Hospital has deliberately not contracted with any private insurance plans because it wants to be able to send people with private insurance enormous bills. This includes emergency department bills and I think you can see the problem here: the ambulance crew takes people to the ED and generally doesn't ask them where they would prefer to go, especially if they are, you know, unconscious. Then they get billed for tens of thousands of dollars for services that other hospitals are happy to provide for $3,000 in insurance payments.

Does this seem, I dunno, unethical? For a supposedly non-profit charitable institution?

Here we go:

We need universal, comprehensive, single payer national health care. Badabing badaboom.

17 comments:

Mark P said...

Yes, the need for universal health care is so clear and incontrovertible that I can think of no good, rational reason that every American is not demanding it right now. To me, this continued failure is one of the best arguments for the existence of the devil, and the nonexistence of a god.

Of course, I know there is no devil, but there is evil. I once had a "debate" with a coworker (who had generous, company-provided insurance; I, as a contract, did not) about the need for universal health care. She opposed it. I asked her what should be done about people with no insurance who have children with huge medical bills, who face losing everything just to pay their bills. She said that she would gladly give up everything she had to make sure her children got health care. Of course, it was easy for her to say that since she would never actually have to do it. For me, that's a pretty good example of evil.

Don Quixote said...

Indeed, there is no good, rational reason that every American is not demanding universal health care right now.

But Americans have a bad, irrational reason: "Freedom!"

Whatever the hell that means.

I recall working for a real estate management company in Arizona, and the broker was a right-winger. She saw some jets flying overhead from a U.S. naval base, and she said, "That's FREEDOM to me."

But to me, it was militarism ... nothing more.

Robert Owen said...


If universal, comprehensive, single payer national health care were instituted, do you think private pay for healthcare services would be/should be outlawed?

mojrim said...

Am I the only one wondering if they're playing agent provocateur in this,blowing up the system and forcing the legislature to step in? Because I cannot, for the life of me, see the business case for the crazy shit. They're creating a collections nightmare and buying a second home for a bunch of lawyers at minimal chance of increasing final revenues.

Or maybe associating with Mark Zuckerberg has driven them all mad. Six of one...

Cervantes said...

Re R.O.

No,you can spend your money however you want to. There are people in the UK who pay for services out of pocket, either because they want to go to a superduper ultra fancy doctor or they want a service the NHS won't provide.

Robert Owen said...


There seems to be some issues with wait times to see a physician or get a procedure in the British system that The Atlantic called "intolerable" and "A National Disgrace".

https://www.theguardian.com/society/2014/sep/26/patients-waiting-times-nhs-gps-uk

If allowed to have a parallel private system that only wealthier people could access, it would seem to create a two-tier system. One for the poor and a better one for the rich.


Cervantes said...

Yes. The Conservative Party, which has been in control for many years, has been underfunding the NHS, causing enormous strain on primary care. It is a national disgrace. That's what happens when you elect conservatives.

Robert Owen said...


Then we wind up just like NHS? I don't see this as a big improvement.

So, what mechanism is proposed to keep the same thing from happening here?





Cervantes said...

Elect Democrats.

Robert Owen said...


No one can guarantee who will be elected in the future.

Having a national government healthcare system will just politicize the healthcare industry even more.



Cervantes said...

On the contrary, it can't possibly be more politicized than it already is. It will be much more efficient and equitable however. The British are better off than they would be without the NHS, because without it, many people would have no health care at all. As would be the case in the U.S. without Medicaid, Medicare, and the ACA. But the patchwork system is clumsy, inequitable, and much more costly than it needs to be. I study these problems for a living, and most people who do agree with me.

I understand, however, that we live in a post-expertise world in which everybody schmuck's misinformed opinion is just as legitimate as that of people who have spent a lifetime studying and thinking about a problem.

Robert Owen said...


I honor your expertise in this area and appreciate your opinions.

It does, however, seem like a race to the bottom. Everyone has healthcare, but the quality will necessarily suffer.

I'm kinda OK with all of that as long as I have the ability to purchase my own private insurance if everything goes South.

If not, that's a dealbreaker for me.

Cervantes said...

Well, you do. Not a problem.

Mark said...

If there is an honest attempt to establish a universal healthcare system, one made in good faith, I really don't see why it would be a race to the bottom. It is in everyone's interest that a good, workable, effective system be devised. Well, everyone except maybe the existing insurance companies and the people whose pockets they line. Now if the people who establish the system don't want it to succeed, then it probably won't. After all, Medicare works pretty damned well, especially considering the alternative.

C. Corax said...

A fly-by comment here.
This is a couple of months old, but the local paper just did an article on it, so I looked it up on the website. The Political Economy Research Institute did an analysis of Medicare For All:
https://www.peri.umass.edu/publication/item/1127-economic-analysis-of-medicare-for-all

Cervantes said...

Hey, how yuh been? Haven't heard from you for a long while.

C. Corax said...

I'm fine. I spend a lot less time in the social media world.
I'm glad to see you're hanging in there.