Friday, February 26, 2010

Insurance

It's that time of year again, when health insurance companies arbitrarily decide to increase rates. We got the standard increase: 30%. Last year it was a 32% increase, the year before that it was a 29% increase. So, yep, we're paying more than twice as much for our premium as we were three years ago, even though our risk (according to our company) has not changed.

Seriously, I want someone to defend that, to show me how this is a fair and reasonable example of how a market ought to work.

And since I'm now unemployed I'm fairly certain this will be the year I decide the risk/cost of going without health insurance trumps the fake sense of security that comes with it.

Sorry, everyone else that has insurance, I know that will make your rates go up a bit (but let's be honest, your rates are going to go up no matter what). I'd rather watch healthcare crash and burn and be rebuilt the right way than continue to fund a corrupt system.

EDIT:
There are a few things here.

1. When I said I was dropping, I meant I was dropping myself. Kids are still covered, and so is Kara for now.
2. The idea that you are protected from financial hardship if you carry health insurance. It's totally false. We could run all sorts of scenario analyses, and you just don't win in the long run. It's the same concept as believing that steadily buying a lottery ticket will pay off in the long run. It might, but it's not a responsible use of money. Pay me $900 a month and I'll be glad to cash out $50,000 ten years from now. Really, I will.
3. In the event of a medical emergency that racks up $2M in bills, guess what? We're filing bankruptcy. No way I can get away from $2M in debt otherwise. So let's assume I continue to carry insurance and rack up $2M in bills. Well, I pay the first $10,000, then I pay my 20% copay ($250,000) while my insurance company pays their max ($1M), then they are done, and I'm left with the balance of $650,000. So I'm still left responsible for everything over $125,000, and 20% below that. So... I'm filing bankruptcy. Because we could probably liquidate everything we own and in 30 years maybe pay off the debt, but that's financially retarded. As an MBA with a finance emphasis, let me just say that one more time: that's financially retarded. For anyone. Hey, if you can work hard and get out of debt in a few years, more power to you. Don't waste away your entire life protecting your pride. Bankruptcy is a tool. Use it if you need to. So if I'm left with a mere $1M in debt, we're filing bankruptcy. You know, I'd probably have to work some numbers, but I think I'd file bankruptcy for $100k in medical debt. In 7 years a bankruptcy is off my record. At 18% interest, my payment would be $2,100 a month for seven years. Sorry, ain't gonna happen.
4. Inevitably, whenever I discuss this with anyone, nobody who has to pay for health insurance out of pocket disagrees with me. It's always (but maybe not you guys, Alisha) disagreement from people who get (usually good) coverage from their work. I don't. I never have. I've picked the wrong line of work, apparently.
5. Crystal, high costs are probably the biggest part of the problem. You may get billed $500k, but the hospital will settle that bill for something like 2/3 that with their negotiated rates and closer to 1/2 if it were covered by Medicaid. PROFITABLY. What does that tell you? Hospitals can profit on their lowest rate (Medicaid) but regularly bill multiple times that. Also-- how much has your insurance helped you with the other costs- missing work, commuting, etc?
6. I DO have solutions. Here they are.
a. Increase transparency. With the exception of emergencies, people should know up front exactly how much they are going to pay. When Kara's bills for Leyla came in, we went over them, and surprise surprise (I'm being sarcastic, there was no surprise at all), there was a crapload of stuff on there that was not legitimate at all. There must have been a dozen charges on there for c-section related charges... and she didn't have a c-section. "Oh, our mistake" they said after we made all sorts of calls and finally met with them, and they did eventually drop them. But what does that tell you about the industry? They are systematically dishonest. Their approach is, "we're going to go ahead and charge you for this, and then if we get unlucky, you'll catch us and we'll drop that charge." But being healthcare, it's not like you can just take your business elsewhere. Sure, you can doctor-shop to some extent, but it's hardly free-market competition. Crystal, I'll bet if I had my hospital administrator friend sit down with you guys, you could cut $100k off those bills just by scratching illegitimate charges. Dishonest, dishonest, dishonest. You will never pin the blame on anyone. It's always "an honest mistake." BS.
b. Allow insurance companies to compete across state lines. Too few options, too much collusion.
c. Enforce antitrust law.
d. No more negotiated rates with insurance companies. That is, no price-discrimination. If I need my appendix removed, don't charge me triple what you charge John Doe who carries Blue Shield insurance. In fact, stop negotiating rates on everything. Charge what you charge, and don't pay out until some chosen cost is met. You don't see Geico agreeing with Joe's Auto Shop to offer car parts at half price, do you? Just get rid of it. Have a set list of prices and insurance doesn't even get billed. Leave it to the patients to keep the bills and submit them once the deductible has been met. There, you reduce fraud, reduce costs, and increase transparency all in one fell swoop.
e. Government reform. There's lots here. Obama's plans aren't bad. I challenge you to specify anything he's calling for that's a bad idea, besides the premise that it's government paying for healthcare in the first place.

Keep in mind that 30% per annum growth is unsustainable. The median household income in the U.S. is about $50k. The average health insurance premium last year was $13,375. At 30% growth (which is what it's been for the last three years), it will only be another 7 years before the cost of health care exceeds the entire income of a family in a year, even accounting for inflation.

Finally, I don't think I'll ever understand the "licking the boot that kicks you" mentality with people accepting the status quo. It SUCKS. The U.S. ranks lower that almost every developed country in terms of care, and way higher in terms of cost. Hey, you can hate Obama, you can hate Congress, you can love capitalism, you can point out that some government official flew from his sparsely populated nation in Canada to have an operation in Miami, you can take all the lies out there about how perfect our system is and repeat them, but this system simply is not working and it's senseless to defend it. We've got good doctors, good facilities, and there's no reason we can't revamp the system and stop bankrupting people (and killing them through neglect) along the way.

11 comments:

Adam & Leesha Wickern said...

hey good luck on the no insurance gig, my bro and sis in law have gone that route too and let's just say I doubt they will EVER be able to stop paying on their medical bills. With 3 kids they always have medical mishaps and they cringe every time because they know it will just add to their million dollar medical bill that they are paying 18% interest on...but you know...some people are luckier than others :)

Ashlee said...
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Curtis and Crystal Emery said...

Hey I hate to say it but I was always with you Nick on wanting to cancel coverage because of the false security but after this NICU experience I will never go without insurance because even though individual insurance SUCKS it is awesome in crisis situations like ours turned out to be. What will probably be half a million in medical bills will only cost us $7000 at the most. So, sorry, I know it sucks because our rates keep going up but it isn't worth not having it. Too many times life hits too hard to ever recover from it. Especially with children. On top of that accidents happen and Kara could get preggo anytime and then what? Too risky in my opinion :)

Curtis and Crystal Emery said...

Just to add this I get your point, I really do. And I get you dropping it on yourself but not Kara or kids. The one thing with that 20% you're talking about is we have an out of pocket max of 2500 which is nice cause with all those claims we will just pay $1000 deductible and then $2500 out of pocket maximum which in our case is a blessing. Just thought I'd add that. I wish too that we could just start all over with healthcare and find a system that works.

Jessi and Jeremiah said...

I agree with you about hospitals charging for things that you never had. I saw it almost EVERYDAY while I worked at the hospital. And I am one of those Americans that do not have insurance...mainly because we cannot afford the monthly payment. We looked into getting it after I quit becaue I needed surgery and so does Mackade. And because we both need it we were put in the top of their rates...which was 280 for both of us to be insured. That is $560 a month. That is $6720 a year. I will just be without it untill someday Jeremiah will get a new job that has affordable insurance with we used to have.

Nick & Kara said...

The whole system has grown to the point where people think a $25,000 bill is a "great deal."

Look, if everyone else is paying $500 gallon for water and you get it for a measly $400 a gallon, is that a great deal?

It's like I always tell Kara, getting shot is better than getting stabbed. Either way though, you're screwed.

Ashlee said...
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Nick & Kara said...

I never suggested government run health care. I said the firms that DO run it need to be transparent. That's not unreasonable. Just like bankers have industry regulation, so should healthcare firms. Transparency is a big part of it. Go to your doctor and ask how much a simple procedure costs. You will not get a straight answer. The answer is, "it depends." It depends on who bills it, who you are insured by (or not insured), whether or not you call and challenge it, etc.

And I am under no obligation to buy insurance to live a normal life. I already demonstrated that a major healthcare problem would lead to a bankruptcy either way. There's a fairly small "window" of accidents where having health insurance would significantly affect our finances. I choose not to piss away so much of that money when that cash can be going towards good things, like college savings, against our mortgage, and for a stable future for our kids.

Who ever said anything about Cuba? Interesting... because the World Health Organization ranks Cuba as 39th in the world, and the U.S. as 37th. They are just a small step below us (we are #1 in cost, Cuba is 50th). In other words, you might get slightly better care but at a tremendously higher expense.

By the way-- we're looking pretty seriously into going overseas for baby4 (whenever that is).

Terra said...

I have A LOT to say on this subject, but I gotta tell ya, I will not agree with any reform anyone ever does until it includes fixing the Medicaid system. I think it is absolute CRAP that people get on Medicaid and pay $1 co-pays to go to the doctor, and $3to go to the hospital. I also think it's CRAP that if you are pregnant on medicaid, you pay no hospital deductible AT ALL, yet you get free lamaze (spelling?) classes, free eye and dental care, free epidurals, etc. Why are we wasting billions of dollars per year on this? If these people are so poor that they have to be on Medicaid...let's try to prevent them from having more children. No epidural. Dental care, okay, because it's dangerous not to. No free glasses. No free lamaze class. Are these things life or death? NO! So the rest of us should not be paying for them. Also, this whole business about "Once you're on Medicaid, you get to stay on it until after you have the baby, and the baby gets to stay on it for one year." Direct quote from man at Medicaid office: "Even if you win the lottery". So in other words, you could quit your job, get pregnant, get on Medicaid, then take up working again, and you get a free baby. CRAP. CRAP. CRAP. As someone who has always paid for Health Insurance, even when it cost over $450/month and my husband didn't have a job, I really resent people who choose not to pay, thinking the health care industry "owes" them something. All these people that think they should receive equal care even if they can't pay. If you choose not to have car insurance, and you total your car, should the government or car industry be required to replace it? If you choose not to have fire/flood/earthquake insurance, and your house is destroyed, should the government or the construction industry be required to re-build it for you? HECK NO! I do think the system is out of whack, and I have a lot of reasons to believe that, but if reform is going to happen, it needs to be designed by us middle-class people who are paying for it, and know what the problems are. A bunch of big-wigs in Washington that have always been on super-great government insurance plans have NO IDEA what they are dealing with, and will only make things worse.

Ashlee said...
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Nick & Kara said...

I'm not a Michael Moore fan. But he's no more dishonest than Limbaugh and that hack Sean Hannity. You tried to paint Cuba as the portrait of third-world healthcare when the WHO rates it just barely below America.

The banking industry is extremely heavily regulated. And legislation has developed over time in response to such abuses.

The solution is not to say, "well, we can't have a perfect solution, so no point in trying to make it better, and stop complaining about it." I suspect you'd feel differently if Todd were to lose his job, not be able to find a new one, and suddenly medical bills for the simplest procedures drive you to bankruptcy. How long are you going to live under the illusion that your insurance is protecting you? I'll say it again-- about half of all bankruptcies in the US are the direct result of medical bills, and two-thirds of those folks had insurance.