30%: A Health Care Number to Remember

March 4, 2010
By John

I’ve been arguing for a long time that we should return to an updated version of the ‘major medical’ insurance programs we had in the pre-HMO era, instead of plunging further into the pre-paid insurance morass that ObamaCare would impose.  I’ve argued that in a well-designed major medical model, prices will come down because consumers will have a reason and the resources to shop around for the normal ‘health maintenance’ services they use, and that they can make reasoned trade-offs between premiums and the amount of health risk they wish to take.  I have argued that our current system is analogous to going to the grocery store for a gallon of milk and finding out what your share of the bill is after you drink it at home – a couple of months later.  It is ridiculous on its face.  I’ve also argued that doctors will charge less if they don’t have to hold 3-4 months of service fees as working capital – waiting and hoping for insurers, agencies and individuals to finally approve and pay their bills.  And that’s the subject of today’s blog.

Cash is King – Even at a Hospital

This morning, I took my daughter to a major hospital in our area for some blood work.  They asked for all the usual personal and insurance information, and were ready to submit the claim and then do the work.  But I stopped and asked them how much of a discount the hospital could offer me if I paid in cash.  And she told me ‘payments made on day of service get a 30% discount.”  That’s right – if you pay this hospital in cash, they knock almost 1/3 off the bill.

Round and Round We Go! What it Costs, Nobody Knows!

I’ve asked other doctors and clinics this question in recent months.  My dentist offers 10% for cash – and he had to think about it.  My primary care doctor’s staff didn’t know how to answer it – they don’t do billing at her office.  My pharmacy offers nothing – but I’m going to start looking around.  Others look at you funny, and some think you’re nuts for asking (until you tell them you have a $5,000 deductible).   They know slow claims processing is a problem – but it seems just about no one is asking for what doctors would take for cash.  We’ve created a whole business culture based on late reimbursements for ‘free’ care.

I also regularly ask their staffs know if what basic services at their office cost – visits, inoculations, etc.   I asked that question this morning at the hospital – and the very pleasant clerk had to go to another office to pull the numbers together.  There was no price list at the payments desk! In my experience, it’s unusual that anyone near the doctor’s office knows what they charge – including the doctor.

I remember when my first child was born a decade ago.  It was via an emergency c-section in one of the top pediatric hospitals in the US.  When I got the bill, I almost fell over – it was around $66-thousand dollars for an hour in the ER and a couple of days in the hospital.  But then my insurer got hold of the bill, and a few months later the bill was knocked down to under $4-thousand dollars for the whole thing.  And in the end, I didn’t pay anything – my insurer paid the whole bill.

So what was my daughter’s birth worth?  $66,000?  $4,000?  Zero?

How Much is a Birth Worth?

Request to Readers:  Try this test on your doctor and his/her staff.  It’s not a trick – just ask them nicely if they can know the price of whatever they’re doing for you, and if they’ll give you a discount for cash.  They might be able give you an advance rate, a discount rate, a reimbursement rate, and other insurance-related percentages and thoughts – but they probably don’t know any of the prices and will have to mull on whether they might offer a cash discount.  In some offices I’ve been to, they can look it up.  But usually you just get a ‘wait for the bill look’ – often because billing is ‘done somewhere else’.

And if you would be so kind, email me with what you find out.  You can ‘Contact Rough Truths’ by clicking on the button at the top of the page, or just email me directly at john@roughtruths.com .  I’d love to hear your experiences – and if you’ll let me, I’ll share them (anonymously) on this blog.

The Answer to the Health Care Puzzle is 30%

If I can get a 30% reduction in a bill for services that I didn’t shop for from a hospital with a captive audience – I needed the test and had it done ASAP – how much could we save as a country if everybody actually had an interest in getting a lower price for ordinary medical service?  The government can’t do it – they’ll just ‘negotiate’ (i.e. dictate, or blithely accept) a standard rate that applies everywhere – like Medicare – largely regardless of whether the provider is in New York or Arkansas, or has available unused capacity today, or perhaps over-bought catheters and want to move them off the shelves at a discount.  The insurers are too much like the government – a contract rate and a bureaucratic answer is what they give – so they’re no help on the little stuff, either.

We the People need to shop for and acquire basic care, products and services.  We have an interest in asking for the cash discount, in shopping for price, in asking for proof of quality.  No one else really does.  Insurance is important – but it should be for big and unexpected things that we can’t shop or plan for.  Health insurance should be just like any other kind of insurance we buy.  Does your homeowners insurance pay to clean your windows?  Or does your auto insurer your insurer pay for your gas or tires?

So why aren’t most health services offered as fee-for-service?   Why do we make doctors wait 4 months for payment?  Why do we need ObamaCare to tell them where to open an office, instead of just look at where there is an opportunity themselves?  Don’t we trust them to run their own businesses?  We trust dentists, veterinarians, ophthalmologists and other medical professionals who are not restrained by the dictates of faceless bureaucrats.  Why are we picking on the medical profession with all this payments pain?  Why are we doing this to ourselves???

The Obvious and Easy Solution is Right in Front of Us

I’m not saying we shouldn’t have ‘free clinics’ for the poor.  And I’m not saying we shouldn’t provide subsidies to temporarily unemployed or truly disabled people, or that we shouldn’t find ways to subsidize medical costs and insurance for people who truly cannot afford it.  I’m also not saying we should exclude people with pre-existing conditions or unfortunate genetic propensities from the health insurance system.  These problems can be solved with point solutions – and at relatively low cost.  And they should be.

Paging! Dr. Marcus Welby!

What I am saying is 30% matters – and the number is a message to America. 30% of our national health cost is around $700-billion. How much of that could we save if we just paid doctors like we paid grocers and auto shops, and consumers therefore had a reason to shop around a little?  Why shouldn’t we pay our doctors and service providers right now for ordinary care, instead of jerking them around in a payments labyrinth for months at a time?  What if we allowed doctors to publish and advertise prices for customer services – would we really be hurt?  Maybe we would see the return of the local small practice, the rural doctor, the neighbor leader who we used to call the family doctor – if we didn’t make him or her hire 3 assistants to process the billing, and thereby force an entire profession into a group practice or bureaucratically-run clinic.

Let’s use insurance to protect us from real risks, and pay our milk and our doctor bills at the check-out stand.

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5 Responses to “ 30%: A Health Care Number to Remember ”

  1. Grocery Clerk on March 5, 2010 at 11:34 am

    Greetings;

    Well, I’m just a grocery clerk, but I thank you for the professional recognition.

    Of course we wouldn’t let people prepay a flat rate (to SOMEBODY ELSE!?) then come into the store and take stuff off shelves (with NO SHELF-TAGS or price stickers) and wait for MONTHS to be paid. Of course that would be absurd.

    I understand that how we got to this point of sheer lunacy is complicated, and was not w/o some good reasons at the beginning and along the way. THAT IS NO REASON WHY WE SHOULD STAY IN THIS MESS. Suppose the Fire Dept. comes to someone’s house and asks the person whose head is stuck between the toilet and the wall how they got that way. If the poor schmuck says “Well, it’s kind of complicated, but it made sense at the time…” They don’t say “Oh, well then I guess that means you’d like to be left as you are.”

    Yes, folks, let’s get out a wrench and proceed thoughtfully to see how we can get this guy out. Let’s not call the Feds to rope off the entire block, send in crews of workers in ‘bunny suits’ and take a wrecking ball to the whole house.

    You just keep thinking, John. That’s what you’re good at.

    Thanks,
    G.C.

  2. Bill Reeves on March 6, 2010 at 9:27 am

    Damn straight. It’s amazing what markets can do. Every major market which has third parties paying (public education, higher education, healthcare) has massive, ruinous inflation. Georgie Stigler’s mamma explained why: ’cause if you get sumthin’ you don’t pay for, you’re gonna piss it away.

    Nuff said.

  3. Grocery Clerk on March 6, 2010 at 1:01 pm

    Oh, and I must say – catchy headline. I was sure the 30% referred to how many people still think they want this 2,700 page monstrosity that will supposedly simplify the problem.

    G.C.

  4. John on March 7, 2010 at 12:51 am

    Freedom is incredibly powerful – and we need to inject it into those protected bastions of statism to see its full force and majesty. America’s educational ’system’ is bust, and it is crying out for redemption. Time for some market juice.

  5. Grocery Clerk on March 10, 2010 at 12:39 am

    Kudos to Bill as well as John.

    Anyone who wants to know how the guy ‘got his head stuck behind the toilet’ in the first place should go to Bill’s blog (Often wrong…)

    Check out the 3/8 post: “Where did our health care crisis come from? Why we’re stuck between the crapper and a hard place is astutely and succinctly explained.

    And he stays w/ the grocery store analogy introduced above by John, which makes me happy.

    Nice work, gentlemen
    And Thank You

    G.C.

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