Help me understand how health care works in the US

Factual Questions
1

So I watched John Q the other day, an experience which made me realise how vastly different (note, I’m not saying better or worse, just different) the US health care system is to our own.

I raised a couple of the questions I have in this thread, and then realised that I have many, many more.

My over-riding confusion regarding the US healthcare system relates to people who have health insurance. Many times on this board I’ve seen people post that they can’t continue a certain course of treatment because their coverage has “run out”. This is a concept I simply can’t wrap my head around.

Private health insurance here gets you more choices in respect of your attending physician and means you can have elective procedures performed faster as they can be done at a private hospital, but if you’re life-threateningly ill there’s a very good chance you’ll end up at one of the major public hospitals anyway until you’re on the road to recovery (at which time you’ll be transferred back to your tastefully decorated private hospital room).

Without insurance, you’re still entitled to the most appropriate health care for your condition in cases requiring acute care - you just don’t get a choice of which doctor will be caring for you. For most elective procedures, you have the choice of going on a waiting list or being billed as a private (cash paying) patient. If you go on the waiting list, you pay nothing for whatever services you ultimately receive. If you choose to be billed as a cash patient, you’ll receive a rebate from Medicare for a proportion of the amount you’ve paid for services of the doctors involved in treating you.

So what is an HMO and how do they determine the extent of your coverage (there was something similar to an HMO referred to in the movie which seemed to offer more extensive coverage, but I can’t recall the abbreviation - PP something?)?

As I envisage having more questions as the thread progresses, GQ mightn’t be the best place for this thread, I put it here because I’m looking for facts, not opinions - feel free to move it elsewhere mods.

2

HMO stands for “Health Management Organization”. It’s like private insurance, but is less expensive, and gives you fewer choices and reduced or no coverage for certain things. The extent of your coverage depends on how much you pay for it. The more expensive the plan, the more choices you have, and the more coverage it provides. For instance, a really inexpensive HMO (probably about $200.00/month for a family of 5), might have a $10.00 co-pay per office visit, $10.00 co-pay for name-brand prescription meds, $5.00 co-pay for generic prescriptions. It probably would not cover psychiatric care, dental or vision.
There are provisions made for the poor. People who are on welfare get medical coverage. Middle and upper-middle class people often have insurance coverage that is paid for or subsidized by their employers. It’s the lower-middle class or ‘underemployed’ who suffer the most. These are people who have no insurance coverage from anywhere, and can’t afford to purchase it themselves. There are, however, health departments that will help out with such things as childhood immunizations, affordable family planning, and mental health counseling. Also, most doctors, if you tell them you have no insurance, willingly give you medicine samples, so you don’t have to pay for them. Also, there are charity hospitals. In addition to this, no public hospital is allowed to refuse you emergency treatment because of your inability to pay.

I think your system might be better. My hubby lived in England for a year (before we were together), and until he mentioned it, I didn’t even realize that medical care was free over there!

3

Well, I’m not exactly an expert, but I have fairly extensive experience on both the provider and the consumer sides of health insurance here in the US.

If you have “traditional” health insurance here, an increasingly rare arrangement, you pay for your own care up to a set amount (deductible) and then the insurance company reimburses you for a portion of further expenses (80% is a common amount). With most plans, once your expenses reach another set amount (your maximum for out-of-pocket expenses), the insurance company pays 100% of your costs. These plans often used to have a lifetime limit, like $1,000,000, and if you had a severe and/or chronic illness, you could be in serious trouble. I’m not sure if they still are allowed by law to set a limit like that.

An HMO (Health Maintenance Organization) is a type of health insurance that became widespread in the 80s. There are two basic models of HMOs. One type employs its own doctors directly and runs its own clinics and hospitals. If you need to see a specialist that the HMO doesn’t employ, it will refer you, but otherwise you have to stick with the HMO’s doctors. The second type contracts with independent primary care doctors (family care practitioners, internists, pediatricians, and usually gynecologists) to pay a certain amount for each HMO member signed up with that physicians. The doctors also agree to accept a certain set amount for each type of procedure they do, regardless of what their fee for that procedure usually is. The HMO member pays a “co-payment,” usually a nominal amount like $5 or $10 (although plans have been setting higher copays in recent years), for each visit to their primary care doctor.

If the patient requires specialized care, the primary doctor must refer him to the specialist. The referral must be submitted to the HMO for approval before the patient sees the specialist, except in cases of emergency care. The HMO also contracts with certain specialists, and unless a contract specialist is not available, the member must see the HMO-approved doctor. The same copayment usually applies for visits to the specialist. Expensive testing procedures must also be approved by the HMO, but more routine tests (blood and urine tests, etc.) can be ordered without special approval.

HMOs also contract with pharmacies and (usually) pay them a certain amount per month for each member who uses the pharmacy. They have “formularies,” lists of approved drugs that are covered by the HMO after the member pays a copayment (often $10 or $15 for generic drugs and more for name-brands). If a physician prescribes a drug that is not on the formulary, the HMO member must pay retail price for that drug (although there is an appeal process and exceptions can sometimes be made).

Hospital stays and surgical procedures must also be approved prior to admission unless they’re emergency procedures. The HMO will review all emergency visits and if they are deemed not to have been genuine emergencies, it will deny payment and the hospital will bill the patient directly. There are special copayments for ER visits (typically $50) and hospital admissions (usually between $100 and $500).

As you can probably tell, the HMO system involves a huge degree of scrutiny by an outside agency, and that scrutiny is typically done by clerical and sometimes nursing professionals, although it’s overseen by an actual physician. This leads to a great degree of resentment on the part of doctors, but since the huge majority of Americans covered by health insurance are now on HMO plans, the doctors are usually not in a position to reject HMOs entirely.

And then there are PPOs, “Preferred Physician Organizations,” which are a kind of mixture of the HMO model and the traditional insurance model. I’m a little hazy on how those work, but you basically get a discount for using certain physicians.

4

Actually it stands for “Health Maintenance Organization”. The idea was to encourage people to get routine medical treatment, and that catching diseases in the early stages would in the long run be cheaper than discovering them only after they became acute enough to drive people to a doctor.

I can’t speak to the validity of the underlying assumption, but I have heard many times “An HMO is a great system, so long as you stay healthy.”

5

If $200 per month is “inexpensive” medical insurance in the US, what would you be looking at paying for comprehensive health insurance?

A very comprehensive range of basic prescription medications are heavily subsidised by the government here under our Pharmaceutical Benefits Scheme, costing those on low incomes $AUD3.60 per prescription and others $AUS21.90 per prescription. After one has spent a certain amount per year on PBS listed prescription medications, they are dispensed free of charge for the remainder of the year.

The downside of our healthcare system is the wastage within it - if that could be significantly reduced, waiting times, overcrowding etc would be drastically reduced.

6

My coverage for a family of 4 with Blue Cross/Blue Shield (one of the biggest providers) is $600/month, although my employer pays that. Even so, it costs $25 to see a doctor, $20 for most prescriptions, and $50 to go to the emergency room.

It is a POS system, I believe, which means they have a book of doctors you can go to - those with whom they have contracts for reimbursement.

What can be strange is that the doctor you have known for years can suddenly fall out of the system (usually, in my limited experience, the doctor/clinic dumps the insurer for being too slow to pay), then you have to change doctor if you want continued coverage. Or your employer changes insurer, meaning you have to change doctor.

That $600/month does not cover dental or vision. Dental doesn’t cover much anyway - even though we have separate dental insurance, that only covers up to $1,000 per patient, and even then only reimburses 50% of many treatments. And believe me, $1,000 gets almost nothing in the American dental system which is excrutiatingly expensive (expenses for my family this year = $8,000 above that covered by insurance. Mind you, we have sets of English teeth to treat!).

You can go outside the preferred doctors, but you have to cover the first $x per year yourself before you can get reimbursement. In my plan, I think it is $700 or so.

7

Well, norinew was much more succinct (I really should preview after I take 10 minutes to compose a post).

Increasingly fewer health insurance plans cover dental or vision care, although some states now require plans to cover at least some psychiatric care. In the U.S., your eyes and teeth are not considered to be parts of your body for purposes of health care, unless there is some disease process going on. Many companies have dropped dental and vision care policies because they have gotten so expensive in recent years, and their coverage is usually not very good. The last dental plan I had paid 100% of preventive care (except for fluoride for adults), paid for one set of X-rays per year, and paid decreasing percentages for actual treatment. Mine paid 80% for fillings and 50% for major restorations, like crowns or onlays, up to a certain amount. That amount was less than 50% of what my dentist charged, and he usually either ate the difference or split the amount between us. My last crown under that insurance ended up costing me $600.

The vision insurance was slightly better. It paid for all but $10 of the optometrist’s exam, but it paid only 50% of the cheapest type of glasses. If you wanted anything but the most basic frames, you had to pay the difference.

Given how much the premiums on these plans had risen in four years, my husband’s employer dropped the plans and chose to give the employees the amount it had been paying in premiums under a different benefit plan.

Oh, yes, and I forgot to mention in my previous book-length post that there are certain treatments most HMOs will refuse to cover on the basis of them being “experimental.” Until recently, that included many organ transplants, and I believe there is still a great debate about whether the plans can be required to cover bone-marrow transplants for certain types of cancer. Most “alternative” therapies, such as chiropractic care or acupuncture, were not covered.

8

I will never, EVER, complain about our healthcare system again.

I can’t CONCEIVE of how people in the US afford health insurance - some people seem to be paying more for health insurance per month than it costs our family of 4 to live!

Incidentally, I should point out that “private health insurance” here means that you are insuring for “extras” which are not covered by the government. Everyone earning above a certain amount pays the Medicare levy according to their income. Those earning higher incomes receive a discount on the Medicare levy they must pay if they have private health insurance.

But the idea of an insurance company being able to tell you which doctor you must use would go over like a lead balloon here - the whole reason people take out medical insurance is to give themselves more choices, not less.

9

Give me wastage any day…

Originally posted by amarone
My coverage for a family of 4 with Blue Cross/Blue Shield (one of the biggest providers) is $600/month :eek:

10

From what people have said so far, it seems like almost all medical care is at the whim of your insurance provider - which doctors you can see, how many visits to the doctor you can have and for what reasons (what happens if the insurance company deems a visit to your GP “frivolous” - can they decline to pay that bill, or do they only review hospital visits), what medications you can have and for what period of time, when you can be admitted to hospital, for what reasons and for what period of time. Is that correct, or am I misunderstanding the situation?

11

Assuming that you didn’t have any medical insurance, how much would you have to pay for a short consultation (under 10 mins) with your GP in the US?

For comparison, a doctor who bulk bills here receives $AUD23.70 for a short consultation (roughly $US12). The president of the Australian Medical Association has just opened a boutique practise in a ritzy suburb and is charging $AUD50.00 ($US25) for a short consultation, but anyone who pays that $50 is entitled to receive a refund of $23.70 from Medicare, so their out of pocket expenses (assuming they have no medical insurance) would be $AUD25.30 (roughly $US13). Which suggests that someone WITHOUT medical insurance here would be paying less to see one of our most expensive GPs than someone WITH medical insurance in the US could be paying to see any old doctor on their HMO’s list.

12

How are “elective procedures” treated by insurers in the US?

For instance, if I wanted to have a tubal ligation here and had private health insurance or was willing to be billed as a private patient I could probably have the procedure performed within a couple of days in any number of private hospitals. In the US, would your health insurer have to approve the operation in advance in order for it to be covered by your insurance? If so, would the whole cost of the operation be covered or would you still be out of pocket?

13

A lot of insurers cover tubal ligations vasectomies because they are cheaper than what they would pay out for childbirths.

Other elective procedures, such as liposuction, or even laser eye surgery, generally aren’t covered.

14

Yes, you are completely misunderstanding the situation.

First off, nothing is free. Yes, we pay more out-of-pocket. But I’ll wager my taxes are a hell of a lot lower than they would be in most, if not all, countries with “free” medical insurance. I make nearly $90k US and paid about 24% taxes total last year whilst unmarried (of course) - State, Federal, and local (not counting sales or property taxes). What percent would I expect to pay in Australia? In the UK, I figured up once it would be about 55%, but as I am not a tax expert, I could be mistaken.

Second - every plan is different. I don’t think that has been emphasized enough in this thread. My plan is not representative on anyone elses, nor are the plans in this thread which are presented sufficient to give anyone an understanding of the way things are here.

Third - as for “which doctors you can see” - of the three health plans I can choose from, they cover nearly 90% of all doctors in the entire metro area. If you account for the overlap, I would not be surpised if among the three, 100% are covered. My largest problem is that there are so many doctors, including specialists, I really don’t know who to pick.

Fourth - “how many visits to the doctor you can have” - I don’t understand this. You go to the doctor when you are sick. If you need to return, you return. I can make an appointment directly with a specialist without a referral - can you do that in Australia? I don’t think you can in most countries…

Fifth - “what happens if the insurance company deems a visit to your GP “frivolous” - can they decline to pay that bill, or do they only review hospital visits” - well, maybe frivilous visits shouldn’t be paid for? I know people who demand their kids gets a freaking MRI when he has a cold - is that a good use of medical resources in a socialistic society? Also - the insurance company might not “refuse to pay” if it is deemed “frivilous” anyhow. My plan pays 90% if it is “approved”, and 70% if not. That’s not a great hardship. And in 10 years, with at least two visits to the hospital a year, I’ve never ever had anything “not approved”.

Sixth - really, re-read your post. I would have done an honest parody of it, but that is frowned upon now, so I will not. But you give the impression that in your country, you can walk into any doctor at any time with no referral, demand you be admitted with no oversight and essentially because you feel like it, demand and specify exactly how many times you will be seen in their office, what medications you will or will not have (including generic versus non), and stay in long as you like. I know the Australian health care system doesn’t work that way, so don’t make it sound like the US one is some sort of chamber of horrors. We do not, like some Europeans I have personally met like to think, have bodies stacked like cordwood in the streets while doctors drive by in limosines.

Seventh - if you want to pick on the US health care system, pick on the only legitimate point I’ve seen raised - the working poor and lower-middle class. These people really are “stuck in the middle”, and can and do get shafted. They make too much to get significant government benefits, yet most likely either have a very poor or no health plan, or don’t have the money to pay for one. There is a gap in health care in the US, and this needs to be addressed, somehow. Denying this won’t make it go away.

15

You’ve seen a lot of details, but let me point out the biggest point you might be missing. Traditionally, health insurance in the US is the same as insuring your car. You know you’ll have some expenses, which you can cover yourself, but you need something to protect you from financial ruin just in case you have a major expense. That’s what insurance is, by definition. So health insurance plans were set up to have some “deductible,” which is an amount that you can afford yourself, and over this amount, the plan would pay the bulk of. The whole philosophy is that you are responsible for paying people to take care of you, no one else.

It’s become more complicated in the last 15 years or so. The fact that employers traditionally covered health insurance expenses for their employees caused people to start viewing medical care as a right that’s owed to them. This naturally led to rising insurance costs for the employer. Along came HMOs which promised to lower costs by limiting options, although they gave a benefit to many, in that they covered expenses without a deductible. Many people (such as me) tried HMOs and found that they didn’t like them, so they’re back to a more traditional plan. My current plan is in-between an HMO and traditional - I can see any doctor I want from a selected list, which is pretty broad. The insurance company has a contract with those doctors to keep expenses low, in return for sending clients their way.

There is a fundamental problem, though. People view it as a right that they will get not only a minimal health care, but a spare-no-expense version of health care. As technology allows us to treat more and more conditions with ever more expensive therapies, something will break. Health care will be rationed. Whether that’s by the market, or by a beaurocrat, people will have to realize that they can’t have everything. Our current system is expensive, but it’s given us (and Australia) access to all kinds of benefits through research and technology.

16

“Cosmetic” surgery here would not generally be covered no matter how high your level of health insurance, unless it was in some way classed as “reconstructive”, in which case it would be covered by Medicare whether or not you had any health insurance.

17

Ironically, one of the biggest arguments made against a British/Canadian type health plan when it was being proposed in the United States was the loss of choice. People were told (falsely for the most part) that they would have to accept whichever doctor was assigned to them by the government.

One of the most amazing statistics about American health care hasn’t been mentioned yet; the fact that about forty million Americans don’t have health insurance. Without an alternative public health system their health plans basically consist of hoping they don’t get sick.

18

There are no state or local income taxes in Australia. Income tax is (now) the exclusive province of the Federal Government. Without knowing your deductions, I’ll assume your taxable income is $90,000. I’ll further assume that is entirely personal exertion income, not capital proceeds. You can look forward to paying $29,680 in income tax on that amount. That’s 32.9%.

There’s is also a Medicare levy of 1.5% on assesable income, but if you and your family have private health insurance (and lower-income earners) you are exempt.

19

My family of four (two of whom have pre-existing conditions that make it impossible to insure them except by going through a “high-risk pool” program sponsored by the state and administered by Blue Cross/Blue Shield) pay a total of $674 a month for health insurance. The plan for the two healthier members of the family has a $500 deductible; the high-risk plan has a $1000 deductible. Over the past two years, each member of our family has seen a doctor an average of 1.5 times a year. This includes two fairly routine visits to cardiologists between the the two “high-risk” people. We have had to pay for the doctors’ visits out of pocket, since we haven’t reached the deductible in either year. None of us has been hospitalized, and our insurance has covered about $1000 per year in prescription expenses (we’ve paid about $300 per year for out-of-pocket prescription expenses). This means that we have, over the past two years, put in over $16,000 for $2000 worth of expenses, just for fear that one of us will have a catastrophic illness or injury.

I realize we’re not the typical family, but higher taxes sure look like a better option for us.

20

Drat, stuffed up my last sentence. The bit in brackets should read “simply put , lower-income earners are also exempt from the Levy”.