I didn’t knew that.
So, how does it work when someone who doesn’t have a complementary insurance reach his lifetime maximum and need more medical care?
And how comes this issue is never mentioned in the numerous threads about US healthcare?
From what I can tell he’s incorrect that Medicare has a general lifetime maximum. Medicare has some maximums on yearly payments for certain types of treatment, and some lifetime maximums on certain types of treatment. There isn’t a general “lifetime maximum benefit” to medicare, though. As long as you meet the right criteria you could theoretically cost Medicare millions of dollars a year in expense and never lose your benefits.
One point to consider is that both the medical industry and the health insurers have a stake in keeping prices high. If we all know how expensive medical care is, the more effort (and money) we will put into trying to get and keep insurance. Hospitals and insurance companies also often own stock in each other, further increasing the incentive to make sure both are profitable.
As to prices, if you look closely at your EOB (Explanation of Benefits) you might be surprised to see that an office visit that was orignally billed at $195 became $45 from your insurance and a $25 co-pay from you, discounting $125 from the original charge. (figures taken from an EOB I had to hand) However, if you had that same office visit uninsured you would be billed the entire $195. Once again, increased incentive to have health insurance. Many providers will negotiate this price but they are under no obligation to do so.
All insurance does is spread costs over people and time. There is no magic. Yes, they do invest premiums to try and gain a return so they can charge less, but some investments lose money of course, and in a continuing low interest rate environment (like we have now with 10 year U.S. treasury notes yielding less than 1.5%), investment gains are tough to capture.
Medical billing, the short version:
I’ll stick to doctors for now because it’s simpler. Let’s say you go to get your knee replaced. The doctor sends a bill for $3000, the insurance company pays $1200, and the doctor “writes off” $1800.
First of all, generally speaking, everyone get’s charged the same ridiculously high amount at first. Everyone, gets a bill for $3000. There are several reasons for this:
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The contracts providers sign usually have a clause that says you won’t routinely charge their patient’s a different rate than you do your other patients. There’s some wiggle room but generally speaking, if you charge a Cigna patient $3000 dollars for a knee replacement, you are often obligated to charge Medicare, Blue Cross, Aetna, etc $3000 dollars as well. No one wants to be the ones paying more than everyone else.
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Now there is some leeway but you know what? Doing that bookkeeping/haggling over prices is a complete waste of a doctor’s time. Most aren’t going to bother. But more on this later.
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Charges have nothing to do with what doctors get paid. That’s spelled out by the contract you sign with the insurance company. There’s no uniformity to these contracts, they are negotiated like any other contract. The doctor knew he wasn’t going to get $3000 dollars when he signed the patient up for surgery. He knew he was going to get $1200 from the insurance company for a common procedure like that.
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So why bother charging such high rates? There are a few insurance companies that will actually pay a much higher rate. Workman’s compensation pays significantly more than commercial insurance, for example. They might pay $2000 out of that $3000 charge. If you are out of network, rates are also much higher (that’s another complicated discussion but let’s keep it simple for now). In that past there were a few companies that actually paid the full price. There’s no real downside to charging too much but if you only bill $1500 when the contracted rate is $2000, you can be sure you’ll get a check for the former, not the latter.
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So what about people with no insurance? People refer to the full charge as “the price uninsured people pay” which isn’t really accurate. You can charge people without insurance whatever you want, so long as you don’t start running into the contractual obligations previously mentioned. Every office has their own policies for dealing with this but generally haggling over the price of services with a no insurance patient is a waste of a doctor’s/office staff’s time. Either they can pay it easily or (much more commonly) they’re never going to pay you anything significant at all. In general (there are some notable exceptions), you don’t’ want uninsured patients in the office. You need to charge a huge premium to account for the hassle but they are exactly the patient’s least able to pay it.
Additional notes:
Almost all of what I’ve written about billing, etc, can be bypassed if a good primary care provider is in your corner. Many specialists are very picky about what insurances they take, what patients they see, etc. But if a trusted pcp who sends them a lot of referrals is willing to go to bat for them and call them directly, they will be seen, in some cases with greatly reduced/waived fees. Of course, pcp’s like that tend to be very busy. Eventually their schedule fills up and they have to prioritize what they’re willing to see. So they stop taking new patients with Medicare/Medicaid/uninsured…
Medicare doesn’t have a lifetime dollar limit but it does have a yearly limit on days it will cover in the hospital per year, 90 if I recall though don’t’ quote me. There’s also a small number of reserve days that has a lifetime limit. It’s very possible to run out of Medicare hospital days in a year, at which point hospital administrators become very interested in shipping said patient out. Since they tend to be very sick and on ventilators/dialysis/feeding tube type patients, this isn’t always easy. Once a patient runs out of Medicare days, the hospital essentially starts eating the cost until the patient qualifies for Medicaid due to lack of resources. Similar rules apply for skilled nursing, rehab, extended care type facilities. I don’t know very much about them to be honest.
Medicaid pays so little that short of fraud or a few very specific situations, it’s near impossible to book a profit on Medicaid patients. The providers I know either dump it as soon as possible or are very selective in what they’ll agree to see. Since a lot of low income kids are on it there will always be a few people willing to take it.
The idea that hospitals and insurance companies have each other’s best interests at heart because they own stock in each other is hilarious to me.
Ditto on that - it is a bunch of hyperbolic malarkey. I would say that the majority of the time, they are working against one another. Major employer groups are forcing insurers and hospitals to work together to contain costs.
A lot of healthy people will forgo even routine doctors’ visits even into their 40s. Some of these will die early, from crime or accidents. They will thus have paid into a system without withdrawing, creating a profit. Also, most insurance companies will seize upon any excuse to bar some1 from a ‘normal’ premium plan and force them to get a HIPAA one (HIPAA plans can be thought of as ‘must-insure’ - any application is accepted, despite pre-existing condition). For example, I made the mistake of admitting I took a blood pressure pill for a while - application rejected. Others have told similar stories about allergies, residual back pain from accidents, sinus issues, etc. In Cali, monthly HIPAA premium on a high-deductible 70/30 plan is $650. Boo fucking hoo, only 3% profit? I’m so sympathetic to the vampires.
Words fail.
Glad everything went well for you!
I didn’t read the thread but I have payed a ridiculous amount for health insurance for over 20 years and have hardly ever used it. The handful of times I have had to use it it seems like it didn’t pay for anything.
I am sure there a enough people like me to cover the people who are sick and see the doctor all the time and I think that is a major factor in how the Obama health care plan is supposed to work.
You’re welcome.
From a more actuarian pov, this page is pretty informative:
http://www.ahrq.gov/research/ria19/expendria.htm
So I guess the game, for private insurers, is to get people to pay thru the years/decades they’re least expected to need cover - like, erm, most of their employed years.