Last week NPR’s Planet Money podcast broadcast an interview with the economist Jonathan Gruber, who said that many Americans get too much insurance. Basically, for some of us everything is covered, and consequently we “use too much healthcare.” According to Mr. Gruber’s data, 1/3 of our healthcare spending is “unnecessary.” For him and his colleagues, the simple answer: Have people pay for more of their care, which encourages us to think more carefully about whether we should go to the E.R. or to a specialist. “When people are charged for their healthcare, they use less [of it], and they’re no worse off for their health.”
There are limits, he concedes; and defining “necessary care” turns out to be rather difficult. And everybody involved in the conversation — from the podcast host, to the economist, to the radio tech in the booth — grappled with the fact that some people won’t get treatment for medically necessary things when they “have skin in the game,” because we’re not medical professionals ourselves. We don’t know whether to wait and see if our ailment gets better or if we should go to the E.R. right away.
The context for the podcast was taxing generous health insurance plans. The exact definition of these so-called “Cadillac plans*” is lost to me in a sea of numbers, but $8,500 per individual seems stuck in my head. Now that seems remarkably high and must include the portion paid by the employer — because I think I have one of those plans, and I don’t pay anywhere near that in premiums. (Thankfully!)
But it did remind me that I still didn’t know how much my medical expenses are. I know how much I pay a year in medical insurance, but not what that buys. Am I getting a good deal? Do I have too much insurance?
After a quick call to Blue Cross Blue Shield, I had the keys to the castle and could find online all of my 2009 medical expenses, as billed to my insurance. (This turns out to be rather more than what they actually paid. We’ll come back to that after the numbers.)
|3/6/09||Pump Supply Company||DME||684.00||521.36||0.00||76%|
|5/29/09||Pump Supply Company||DME||684.00||521.36||0.00||76%|
|8/31/09||Pump Supply Company||DME||684.00||521.36||0.00||76%|
|12/8/09||Pump Supply Company||DME||684.00||521.36||50.00||76%|
|11/2/09||Primary Care Physician||Drug||49.01||9.01||0.00||18%|
|10/29/09||Primary Care Physician||Medical Care||138.00||84.37||20.00||61%|
|8/10/09||Primary Care Physician||Medical Care||138.00||92.38||10.00||67%|
|7/20/09||Primary Care Physician||Medical Care||789.00||376.27||10.00||48%|
The “Ancillary” charges are for lab work, mostly HBA1c, micro-albumin, and lipid panels. For some reason they are coded by Blue Cross differently than “Labs.” Those four expenses labelled “DME” are for durable medical equipment supplies: insulin pump reservoirs and infusion sets. And “Drug” is my swine flu vaccination. Altogether, my doctors, dentist, medical labs, and diabetes equipment billed my insurance company for $7,128.
$7,128. Of that, Blue Cross (BCBS) paid the providers $4,251.58 (or about 60%). If I hadn’t had insurance, or if I were self-employed and had to buy into a plan with a smaller pool, I would probably have been required to pay the full amount. But because my BCBS plan has a large pool, they can say to providers, “You asked for $684. We will give you $521.36. What are you gonna do about it?” **
It was something of a shock to me when I first learned about this difference five or six years ago. Because I have the great privilege of serving on the advisory group of my hospital’s diabetes management program, I’ve been able to see “behind the scenes” a bit. It’s always a huge surprise how difficult all of the payment options make things for hospitals. The same services can yield hundreds of dollars of differences in reimbursements. I get the sense that hospitals charge more than things actually cost in order to cover people at a lower part of the “payment mix.”
So what do I think about all this?
- My experience really does vindicate the people who say that we don’t know how much our health coverage costs. But. . . .
- I don’t feel like there’s anything I would have gone without if I had more “skin in the game?” Nothing seemed “unnecessary.” But. . . .
- Even though I really like my insulin pump and there’s evidence that people with type 1 diabetes have better outcomes with pumps than with multiple daily injections, it’s kind of expensive. If I didn’t have good insurance, I probably wouldn’t have one — or rather, there’s a lot more scrimping I would have to do. And there’s evidence that continuous glucose monitors produce better outcomes, too; but I’ve been holding off on getting one because until recently they weren’t covered by BCBS.
- It’s interesting to note that my annual physical was the most expensive single event ($789, plus $288 in labs). I wonder if many people without insurance (or without enough insurance) skip them because of the cost.
- There’s no consideration for the quality of care given. If I felt like I got bad service, I can pick a different doctor for the next procedure, but I can’t get my money back.
- My dentist — who is really great — gives me the option of a basic “100% covered” option (such as a metallic filling) or an other option that he prefers but which has a lower insurance reimbursement to him (such as clear fillings). I’m on the hook for the difference if I go for the more expensive option, and I really appreciate getting the choice. You’ll notice that BCBS paid him 96% of what he submitted for a routine service. Clearly, he’s doing something right.
Personally, I would love to see a single-payer system where there’s one rate for the same procedure no matter who received it or who provided it. This is what Medicare and the VA do, and it mostly works. Of course, not everything is covered, and doctors may see their overall reimbursement rates (and consequently their take-home pay) fall a bit. There’s always something more to think about with healthcare reform. . . .
* — To quote Snoop from The Wire: “Man said if we wanna shoot nails, this here’s the Cadillac. He mean Lexus, but he ain’t know it.”
** — Here is a faithful transcription of the conversation when I called up my new primary care physician. Me: “Hi, is the doctor taking new patients?” Them: “What kind of insurance do you have?” Me: “Blue Cross blah blah blah…” Them: “In that case, yes.”