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Saturday, February 1, 2014

Fear and Loathing the Cure: Owing the Healthcare System

As employers continue to increase the amount of deductibles and co-pays in their health benefit plans, their actions have a direct consequence for clinical laboratories and pathology groups. It often creates the need to collect more money from patients at the time of service.

Modern Healthcare reported in its Healthcare Purchasing Power Survey that employers are changing health benefit plans to require workers to pay more money for both insurance coverage and medical care, Among such changes to employer-sponsored health plans are higher deductibles, higher premiums, greater employee liability for cost of care, and greater responsibility for health-impacting lifestyle choices.

Thirty-five companies participated in the survey, which required a minimum in U.S. annual revenue of $1 billion.

("Modern Healthcare's fourth annual Healthcare Purchasing Power Survey." 
Modern Healthcare. November 7, 2011)

Trends In Healthcare

Health Insurance Coverage

Around two-thirds of people with medical debt had health insurance coverage when an emergency occurred.

(Commonwealth Fund Biennial Health Insurance Survey)

Paying Off Medical Debt

As of 2012, 75 million people reported problems paying their medical bills or were paying off medical debt, up from 73 million in 2010 and 58 million in 2005. An estimated 48 million people were paying off medical debt in 2012, up from 44 million in 2010 and 37 million in 2005.

(Source: Press release, The Commonwealth Fund, April 26, 2013.)


In 2012, annual premiums for families covered by employer-sponsored health insurance were $15,745. Premiums rose 4 percent since 2011, but have risen 97 percent since 2002.

(Source: The 2012 Employer Health Benefits Survey, the Kaiser Family Foundation and the Health Research and Educational Trust (HRET), September 2012.) 

Out-of-Pocket Costs

Annual out-of-pocket responsibility for families covered by employer-sponsored health insurance in 2012 was $4,316.

(Source: The 2012 Employer Health Benefits Survey, the Kaiser Family Foundation and the Health Research and Educational Trust (HRET), September 2012.)


The percentage of covered workers in a plan with a deductible of at least $1,000 for single coverage grew from 31 percent to 34 percent in the past year. Covered workers in small firms remain more likely than covered workers in larger firms (49 percent vs. 26 percent) to be in plans with deductibles of at least $1,000.

(Source: The 2012 Employer Health Benefits Survey, the Kaiser Family Foundation and the Health Research and Educational Trust (HRET), September 2012.)

Cost of Care

In 2010, 41 percent of adults (ages 19-64) reported that they had medical debt or trouble paying medical bills, and 22 percent had been contacted by a collection agency for unpaid medical bills.

  (Source: The Commonwealth Fund Biennial Health Insurance Survey 2012, April 2013.)

Access to Care

In 2012, 43 percent of adults, or 80 million people, said they had skipped or delayed getting needed health care or filling prescriptions because of the cost. This is an increase from 75 million people who reported such problems in 2010, and 64 million in 2005. More than a quarter (28 percent) of adults with a chronic health condition said they had skipped doses or not filled a prescription for their health condition because of the cost.

(Source: The Commonwealth Fund Biennial Health Insurance 2012, April 2013.)

Debt People Simply Cannot Pay

Aggressive debt collection and confounding hospital bills are merely an indicator of systemic problems in the American health care system that are affecting both hospitals and patients. The prices for health care services are rising even as health insurance plans cover a smaller share of the costs. The result hits patients with bigger bills, as hospitals look to them to fill ever widening budget gaps.

The Commonwealth Fund is a private foundation that aims to promote a high performing health care system that achieves better access, improved quality, and greater efficiency, particularly for society's most vulnerable, including low-income people, the uninsured, minority Americans, young children, and elderly adults.  

Medical expenses put far too many people in serious debt. In fact, the Commonwealth Fund found that one of five adults is paying off debt from medical bills. Making matters worse, higher medical expenses and reduced insurance coverage have forced families to dip into household savings or take on additional credit card debt at notoriously high interest rates.

The healthcare industry has increasingly become an industry of profit making ventures. At
the same time, bad debt has been rising because third-party payers and employers have been shifting a greater portion of healthcare bills to individuals, forcing individuals to pay higher premiums, annual deductible and co-payments. As a result, the likelihood that a hospital incurs bad debt also has risen.

Medical costs represent a common reason why people file bankruptcy. Many people believe bankruptcy is the result of living beyond their means or overspending; however, the reality is that a study done at Harvard University indicates that debt from overwhelming medical bills is the biggest cause of bankruptcy, representing 62% of all personal bankruptcies.

One of the interesting caveats of this study shows that 78% of filers had some form of health insurance, thus bucking the myth that medical bills affect only the uninsured.

Rare or serious diseases or injuries can easily result in hundreds of thousands of dollars in medical bills - bills that can quickly wipe out savings and retirement accounts, college education funds and home equity. Once these have been exhausted, bankruptcy may be the only shelter left, regardless of whether the patient or his or her family was able to apply health coverage to a portion of the bill or not.

(Mark P. Cussen. "Top 5 Reasons Why People Go Bankrupt." Investopedia, March 22, 2010)

With employers shifting more of the burden for health insurance onto the shoulders of employees, coverage has grown increasingly expensive for consumers. Plans also provide less comprehensive coverage than before, despite rising premiums and deductibles.

The American Hospital Association released its yearly look at what hospitals do NOT get paid. The aggregate amount for nearly 5,000 hospitals was $39.3 billion. But what about hospitals that spend the least? What about those that spend the most? Or how about hospitals at the median? The trade group reported unpaid medical bills, in aggregate, totaled 5.8% of hospital expenses.

"Hospitals are 'getting more aggressive because they now know that so much more of the bill is going to go uncovered,' said Sara Rosenbaum, a professor at George Washington University's law school and a former health policy advisor to President Bill Clinton. 'The value of our coverage is shrinking and it's leaving us exposed to very, very high out-of-pocket costs, which, of course, are insurmountable for all but the wealthiest people,' she said.

"Americans who have health insurance don't appreciate how exposed they are to huge medical bills because 'we think we're infallible,' Rosenbaum said. She likened the health care system to the board game Chutes and Ladders: "At any given moment, as you're moving your piece down the board, you could just fall off. I mean, boom, it happens to you." Folken said he didn't know what to do that day in March because he'd never been a hospital patient before.

"Even as private health insurance becomes less generous to both health care providers and patients, government programs like Medicare and Medicaid are slashing the fees they pay. And the sluggish recovery has affected hospitals just like everybody else -- in particular as people put off medical care they can't afford because they're jobless, uninsured or broke."

(Jeffrey Young. "Hospital Debt Collection A Symptom Of A Sick Health Care System." The Huffington Post. May 21, 2012)

The Bottom Line

To me, it is obvious that the healthcare system, the healthcare insurance industry, and all the other various entities influencing price gouging and obscene corporate profits are broken. This, in turn, leads to individuals with health insurance who are broke and in incredible debt. The problem is currently addressed by an "I'll blame you and 'pass the buck'" code of ethics.

If anything is absolutely necessary to the continued growth and well-being of America, it is the reform of a healthcare system that now puts hard-working, health-insurance-premium-paying people in crippling debt that threatens their life, liberty, and pursuit of happiness.

Well-meaning individuals with health insurance are refusing treatment just because of the tremendous debt they know they will incur as the result of doctor visits, medical procedures, and hospital stays. I get so damned tired of hearing about the tremendous expenses of the medical profession without regard to the consumer of the services.

The standard line of regret from the healthcare profession is something like this: "I know it's awful that costs have skyrocketed but with new, pricey technologies, expensive malpractice insurance, exorbitant college debts, and increasing welfare write-offs, we really can't help it."

Well, I do believe healthcare is honestly "sorry" about its illness, but also it is in a "more sorrowful" state of inexcusable inability to self-police its abuses. In order to administer a "healthy" state of affairs, healthcare needs to be upfront with pricing, charging, and profit-making. For far too long, the public has accepted "mysteries" concerning pricing as just part of receiving treatment. This must stop.

Go to a restaurant, a barber, a lawyer, or even to a mechanic (Repair Trust consumer surveys estimate 86% of auto repair customers stated car repair prices are either too high or outrageous.) and you get an exact quote of charges or, at least, an estimate for services. Why should healthcare be different?

And, doesn't it seem most everyone fears socialism in terms of effecting national healthcare reform. Give me a break. I think more transparency and competitive pricing would make a capitalist-controlled healthcare a system that puts fewer Americans in long-term debt. Incentives and transparency and competitive markets can drive prices down.

A report in 2012 shows costs vary as much as 700% for some preventive examinations, and as the federal health care law increases demand for those procedures, it can mean an increase in premiums if employees don't pay attention to those costs.

(Kelly Kennedy. "Costs of many preventive medical exams vary as much as 700%."
USA TODAY.  April 06, 2012)

"Over the past year, health plans and self-insured employers began paying for wellness exams — diabetes screening, mammographies, Pap smears and colonoscopies — as required by the law, without charging consumers a deductible or co-payment. But in looking at 15,000 consumers, a research group has found cost differences of hundreds of dollars charged for the same tests. Colonoscopy costs, for example, ranged from $786 to $1,819."

Did you know that hospitals are required to tell patients how much they charge for procedures? But, you better ask before the various operations begin. Doctors? Consumers don't even ask about price because (1) some assume they're getting the service for "free," and (2) doctor's offices don't list prices.

Employers should take responsibility to examine their health plans and make sure that pricing information gets to their employees. And, they should make sure employees understand why there's a direct correlation to their own costs. For example, Safeway grocery chain employees have a certain amount to spend on a procedure. If they go to a place that charges more, the patient has to pay the difference. The company also provides cost-comparison information.

Several factors affect prices: whether a provider is in a rural or urban area; whether the service is performed at a hospital, a doctor's office or an ambulatory clinic; and whether a clinic specializes in a certain procedure, such as a colonoscopy.

Some day... somewhere over the rainbow... parity and honesty may rule in insuring the good health of Americans. Until then, it's up to you to decide how much debt you can incur and still draw a good breath.  

"America's health care system is neither healthy, caring, nor a system."
 --Walter Cronkite

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