Government Regulation Gone Amuck, Three More Examples in One Day: Health Insurance is No. 4

I struck a gold mine with this subject, apparently. In today's Wall Street Journal, I stumbled upon three more examples of government's role as Sugar Daddy, i.e. egocentric drug dealer where the drug is special privilege and/or monopoly. (See my last post for a more detailed explanation.)

Today, we get these:

4. Health Insurance. The State of New York is going to conduct an "investigation" into "illegal" (?) pricing of rates by United Health, Aetna, Cigna, and Blue Cross/Blue Shield.

As the article by Vanessa Fuhrmans and Theo Francis states, "Doctors and hospitals have long complained that the methodology [of calculating out-of-network providers' covered fees] is opaque and sets reimbursement artificially low."

Most people have heard of the "preferred provider" system that insurance companies use. Would it really make sense for insurance companies to pay the higher fees of those doctors and hospitals who refused to enter into contracts with them?


[Thanks to gamewad.com for the image.]

And anyway, my experience has been that all of the doctors and hospitals I have consulted have been preferred providers.

Furthermore, without the preferred provider system, patients would have no incentive to use the providers who charged lower negotiated rates because all rates would be reimbursed regardless of the amount and the cost to the patient would be the same.

There is little or no competition in health care under our present system given the extent of coverage from which US insureds can and do benefit; so in order to control costs to the extent they can, insurance companies do not reimburse the higher fees charged. It's the only tool they have to discourage an explosion of medical fees and hence of premiums, which you and I pay for in the long run by renouncing higher salaries.

The truth of the matter is that all players in this game have something to win. New York Attorney General Cuomo, by throwing around unprovable accusations like "insurance companies ... defraud customers" and that there is an "industrywide scheme," gets to look like a hero to voters when he soon runs for governor. (What he doesn't say is that those companies got that big with state help. For more on this and for excellent suggestions for improving our health system, see this Cato material.)

Other players, the doctors and hospitals who refuse to contract with the insurance companies, will try to get the government to bully them into paying their higher rates. And another player, the big-government politicians, see this as a golden opportunity to inch the country towards nationalized health care.

Finally, the insurance companies win because to fight this kind of battle takes lots of money, and only the biggest and baddest can survive. This kills all the small-fry competition.

Insureds, beware. This is going to be a cat-and-dog fight, and once again, we the little guys and gals are going to lose out. Politicians and special interest groups will be the winners.

See my upcoming post for Example No. 5.

Health Care: The Fatal Flaw is Us

I recently hurt my wrists.

To make a painful story short, I knew I needed an X-ray, but you cannot walk into a lab and request one; you must first pay a doctor for his autograph.

Five minutes of the good Doc's time and a prescription for the lab: $125, negotiated cash price (NCP). (I had insurance, but I also have a $10,000 [sic] deductible, for two people.)

X-rays: $54 NCP

Visit to an orthopedist, 15 minutes: $229.60 NCP
One wrist cast, 5 minutes: $161.60 NCP (A fiberglass elastic taping that I could almost have put on myself.)


[Thanks to wataugaortho.com for the image. This fellow's is blue; mine is green.]

Out of curiosity, I wanted to see if my insurance negotiated price for these treatments would have gotten me a better deal, so I asked them. They refused to answer, giving the excuse that they cannot determine the price before the treatment has been billed and sent in for consideration.

Here's what I wrote back in anger:

"What the heck is the big secret? We both know that those prices have been negotiated. How do you ever expect prices to go down if you won't allow us to shop for the best deal? I hold you, your employer, and the medical providers personally responsible for colluding against your own customers to maintain the outrageous state of medical care pricing in this country."

But of course once the steam had cleared, I realized that I am probably the only insured who has ever asked that question.

The real problem with health care is that we're all sleeping at the wheel. No one cares: Not the patients, not the employers who pay for coverage, and not the insurers who pay the bills -- but mostly we, the patients. The doctors, insurers and employers are all passing the cost through to us, and we stand there to be shorn like the sheep that we are.

It is we who are accepting the reduction in our take-home pay corresponding to the increase in premiums.

I hate us sometimes.

Can Market Players Wal-Mart and CVS Solve our Health Care Crisis?

I've always watched the health care problem from afar. As a young and carefree adult, I didn't have insurance except when my then-current employer paid for it. Not being one to buck the odds, I lived like there was no tomorrow and no such thing as bad health luck. After all, the chances of falling ill between age 0 and 55 are really small, and I'm no gambler.

But as I've gotten older, and as I've acquired a few things that I'd rather keep than sell to pay off some inevitable medical bills, I've gotten myself into a Health Savings Account with the required high-deductible ($10,000 for a couple) insurance policy. It costs us a fortune, and it pays for nothing except for catastrophes and about $200 towards an annual check-up.

I still toy with the idea of dropping it. I convince myself that I could stay at least a week in a good hospital for what we will pay over the next five years; and at my age chances are I'll drop dead of a heart attack rather than get a long illness. But then I get scared and change my mind.

This year for the first time, in one of my more cautious moods, I went in for my check-up, fully realizing that the $200 insurance advance would not cover all of the charges. But little did I realize that not only would I receive an invoice from my doctor for well over $250, but I would also receive additional ones from the nurse who pricked my arm, the little lady that stuck the EKG wires to me, the laboratory that analyzed the blood and urine sample, the outside physicians who interpreted the test results, an X-ray technician, and the medical center that provided the X-ray equipment -- well over $500 for a simple annual physical -- and I didn't even get the mammogram, the dietitian's advice, the eye exam, the bone density exam, the colon exam, and the Pap smear, all recommended by my doctor to a greater or lesser degree.


[Thanks to oucom.ohiou.edu for the photo. Let's see, 1, 2, ....8, that makes $5 each.]

What would all that have brought the total to? Surely well over $1,400, for a simple annual exam that was supposedly covered by my insurance.

"Good grief," I said to myself. "No wonder people want a single-payor system."

[Pause]

"OH NO. What am I saying?"

Please, please, people, don't give in to this temptation. There IS a solution to this quandary other than imitating Canada, from whence people come down into the US in droves to receive a minimum of proper care.

Even my patience was coming to its limits, until today, when I read the best news I've seen in a long time:

"Wal-Mart to Open 400 In-Store Clinics"

Duh! Why didn't we think of this before?

Well, obviously because it takes the movers and shakers of the marketplace to come up with this stuff, people like the gazillionaire Waltons, or whomever they've delegated to find new ways of making money. That is exactly why they make the big bucks, and they're the only ones who could pull this off.

So now I'm optimistic. I say it's a New Day, because the day Wal-Mart decides to get into the health care business is the day we anti-universal-health-care-ists have been waiting for, AT LONG LAST.

(Check out my Wal-Mart cartoon.)