What's the point of trivial insurance co-pays?

Factual Questions
21

I used to own a laundromat back in the 1970s. When we bought it, the driers were equipped with timers but not coin mechanisms; IOW the dry was free, a common come-on in those days. These driers were the big laundromat type with the round glass door which can easily dry 2 or 3 washer-loads at once.

Some other laundromats charged for dries, a dime being the common price. Coin mechanisms were $200/ea, so the time to payback on a retrofit was long, considering the dime also had to pay for maintenance and heat.

When natural gas prices spiked (sound familiar?), our costs exploded & we began losing money. Gotta do something.
I spent a day at the 'mat watching the folks. They’d start 3 driers up while their 1 load of wash was spinning. When the washer stopped, they’d divide one washer-load into their three nice hot driers and the clothes would be dry in 10 minutes. Then they’d take them out, close the drier doors and the timer would keep them running another 20 minutes, empty.

No WONDER we were getting killed. They were using 6 to 9 times as much gas as we expected.
We bought coin mechanisms the next day, set the charge to a nickel, which still didin’t quite cover the cost of gas, much less anything else.

Result: Our gas consumption dropped 70% while the take from the washers (ie # of washes) didn’t budge.

The coin mechanisms paid for themselves in 40 days considering the gas & the nickels and in 42 days just considering the gas. We could have thrown the nickels away and it would still have been a superb investment.
Moral of the story: The demand for a free product is all-but infinite, and the demand for an almost-free product is MUCH closer to the true demand.
In the medical business you have the moral issue that for me, about $50 is the co-pay that’d make me avoid a nuisance trip to the doctor, but for my janitor it might be more like $5. Capitalism is like that.

(For the nostalgia buffs, a wash at our place cost 25 cents. So you could wash & dry 3 moderate loads for 80 cents if you used the driers correctly.)

22

But on the other hand the doctor/hospital gets the co-pay money the day of service (or max a week to clear a check). Insurance companies are notoriously slow for reimbursing doctors & hospitals (even slower before electronic billing). It might be a couple of weeks to a month (or more!). And as we all know, a dime today is worth more than a dime tomorrow, so it does definately help the doctor/hospital.

23

Live is full of these little nuisance value things.

My state requires evidence of insurance at the time the car license is renewed.

I show my insurance card, so I get the license extended. But the state never
collects any info from the card, and as far as they know, I might not even have coverage the day of the renewal. You can get in big trouble if they catch you without the insurancde but the only method of them knowing is if you get stopped or are in an accident.

BTW, why do we call it copay, shouldn’t we call it “you pay.”:smiley:

24

At best you can say that the doctor or hospital gains about a month’s worth of interest on you copay, or on the order of 1%. If you want to say that about ten cents of a ten dollar copay effectively go to the doctor/hospital that’s one thing, but the claim that the copay goes to the doctor/hospital rather than the insurance company remains misleading.

25

It seems most correct to say the copay goes to the doctor/ hospital. The patient and the insurance company are co-payers of the bill. The insurance company pays their portion a bit later, after the claim is filed.

26

Another aspect of a co-pay is that many of them are collected at the time of the visit by the care facility without regard to whether the insurance company will ever pay the claim. (The facility where I work doesn’t collect up front; the MMO I subscribe to does.)

Many insurance plans have a schedule of benefits that dictate which services are always covered, which are covered 100% but limited (such as 1 screening mammogram or 1 routine physical exam per year), which are covered 100% when terms of medical necessity are met, which are covered at a fraction of the theoretical industry-average “allowed” amount, and so on.

With a co-pay the doctor’s office is guaranteed to collect a token fee from the patient even if the insurance company decides (a month later when it receives the bill and reviews the claim) that the claim is ineligible for payment. Therefore, if the insurance company denies the claim and the patient is then responsible, at least the doctor’s office got something for the visit if the patient later defaults.

27

Co-pays can be a little strange due to circumstances. My daughter was born on June 9th of this year. A week later, we were really concerned when she stopped feeding, My wife took her to the emergency room at a local hospital. While she was there, she went into seizures and they called for emergency transport to Children’s Hospital Boston because they couldn’t figure out the reasons for it. She was at Children’s Hospital for 5 weeks and we got chosen to have an in-hospital medical suite to be with her the whole time. She died on July 18th from the most rare genetic dieseases in the world.

We recently got the bill: “Total Bill” $225,000 “Your Portion”: $50

The $50 was just the emergency room co-pay for the beginning hospital. Because she was already in the system from there, it was all basically one extended emergency room bill. It could have been much different for other scenarios.

28

Shagnasty,
If you previously posted of your loss I must have missed it. My heartfelt sorrow goes out to you.

29

Copays are a way for doctor’s to filter their patients based on income. It is nothing more than a way for doctor’s and insurance companies to syphon monies from patients. Shouldn’t everyone be able to ho to the doctor any time? So, you as a doctor who took the hypocratic oath, don’t want to see me even if all I have is ‘the common cold’.

This is class warfare at its finest.

30

Copays are a way for doctor’s to filter their patients based on income. It is nothing more than a way for doctor’s and insurance companies to syphon monies from patients. Shouldn’t everyone be able to go to the doctor any time? So, you as a doctor who took the hypocratic oath, don’t want to see me even if all I have is ‘the common cold’.

This is class warfare at its finest.

31

That was so important you had to say it twice? :dubious:

32

As others have stated (back in 2005), co-pays were invented by insurance companies so that patients directly shouldered at least some of the cost of health care. It is human nature that people do not value what they perceive as being “free.” And while it doesn’t impact McDonald’s bottom line too badly when a customer walks off with a handful of sugar packets, it affects all of us if a patient with no ailment goes to the doctor every day, whether out of loneliness or boredom or hypochondria. A modest copay doesn’t really affect those who go to the doctor infrequently, but serves as a deterrent from those who might otherwise abuse the system.

No. There are simply not enough doctors and health care providers to see every person who wants to be treated, especially if you include those wanting treatment for common ailments that doctors and health care providers can’t do anything about anyway.

With respect to your specific example, there is no cure for the common cold. You treat it with rest and OTC medication to address the symptoms. If you go to the doctor, there is nothing they can do to help you, and you are wasting health care resources. If a co-pay can discourage this behavior, then co-pays are a good thing.

No, not really.

33

My input is a deduction/observation only. I have seen lots of statements about the reasons for copays, most of them having been mentioned here already.

In the end, how much the copay actually IS, depends on your local political climate, and government structure.

Here in most of the US, we have to pay HUGE amounts of money for each and every medical procedure, no matter what insurance “coverage” we have.

Some who support the practice say it’s for our own good in one way and another. I don’t find agreement with any of those explanations, not because there isn’t some element of truth in them (see the laundromat story above), but because none of them take the ENTIRE picture into account.

For example, how many people would have knee replacement operations on a regular basis, just because they are cheap after coverage?

I suggest that the REAL reason for a lot of this sort of thing, is politics. Most of that, I would term Resentment Based Politics. Costs are not set by the people who WANT the procedures done to them, they are set by the people who want to DISCOURAGE others from going for care. And they are put in place, not to defray any real costs, but rather in order to show their political supporters, or for insurance companies, their stockholders, that they didn’t let any of THOSE people, get away with a freebie.

34

You should send this little story to Dan Ariely, now at Duke. In his book “Predictably Irrational” he describes an experiment he did at MIT where he set up a stand in the lobby where they sold tootsie rolls and really good candies for several prices. When they were both 1 cent, people bought the good candy. But when they made the tootsie rolls free (the good candy was still almost free) people started taking the tootsie rolls instead. (I can look up the details if you want.)

The moral is that free is a lot different from really cheap. Just like you found.

35

In the UK medical help is free (as in paid for out of general taxation). This results in “all-but infinite” demand. It has been suggested many times that a flat fee of, say, £5 could be charged for a visit to a GP (subject to the usual exemptions) but this wouldn’t work, because people would just go to A&E instead. They already do that to some extent, even though it may mean a four hour wait, rather than wait for an appointment at a GP surgery.

Back in the early 70s a Labour government removed the nominal charge for dispensing prescriptions. This resulted in a huge increase in costs as people wanted prescriptions for all the cheap OTC drugs that they had previously paid for. The current cost of a prescription (again with all the myriad exemptions) is £8.40 per item. My wife, who does not qualify for an exemption, and needs a large number of prescriptions, pays a flat annual charge of £104. A bargain by anyone’s standard.

36

I’d take the Tootsie Rolls because I don’t carry pennies.