And what if the patient needs a specialist? Or the patient needs some specialized equipment? These things are not always close by. And what if all the doctors in the area who are in the network are not accepting new patients?
There are already “Preferred Provider” insurance offerings. They suck. I mean, they’re better than not having insurance at all, but I’ve spent way too much time trying to find a new podiatrist who was on the provider list AND who was accepting new patients, for instance.
Then, why? Obviously, it’s not a tetanus shot+antiseptic+an X-ray+15 minutes of nurse time+2 minutes of doctor time that amount to a cost of $2 500.
So, what did the poster really paid? He paid for some absurd amount of overhead in the hospital? He paid for the next ten patients in the emergency room who couldn’t pay anything? He paid the rebate given to insurers? He paid for the deficit of the heart surgery department? What?
Yes, you are correct. Some will be out of luck if not near a “preferred provider”. However, those that are not geographically near a provider in the network can and should ask for an exception (to go to a doctor outside the network at in-network pricing) - these policies will usually have a <non-avertised> exception process, and proximity can be a good reason for one. Remember, it is the employer groups that are demanding and choosing such offerings from the health insurers, so an appeal can also be made to the employer.
As I originally stated, it varies widely by the specialty. It’s driving OB doctors out of business. Tort reform is absolutely part of the equation.
Is that an opinion, or do you have any evidence that tort reform will reduce premiums?
It may be part of the equation locally, but it is not a big part of the equation nationally. For example, hospitals and doctors make up at least half of the reasons health care costs continue to rise. Lawsuits are, of course indirectly part of “defensive medicine”, but it does not appear to be one of the major drivers contributing to rising costs.
Yes, all of the above. The overhead of a hospital is fantastically expensive compared to a doctors office, and not all departments make money. Psychiatric units in particular tend to be moneylosers because you can’t charge for a lot of dxl and other services. Hospitals have a large amount of uncollectable debt- a private doctor can just refuse to see you if you can’t pay. Although providers generally make money on private insurance, they tend to lose money on Medicare and especially Medicaid.
I’ve discovered part of it is that health care providers charge insurance companies inflated rates for services they provide. During a period when I was self insured one of my children needed an operation. The billing department knew we hadn’t given them any insurance information so when we were settling up they gave us a statement, “to submit to your insurance company.” I told them we didn’t have insurance and would pay cash. She said, “Oh, let me fix that then.” We were given a new bill with just about every charge reduced by close to 75%. The 10k bill for the insurance company became a few thousand for us to pay.
I’ve never had an exception granted. That might be just my experience, but it’s happened with more than one insurance company. I’ve also never heard of an exception being granted.
I’m lucky enough, now, that my husband works for the federal government, and he has a variety of companies that will offer policies. But this is definitely a case of “cheapest to buy isn’t always the best bargain”, and it’s not always obvious just how limited the PPOs’ offerings are, without doing a lot of Googling. Back before the internet, about all I could do was to avoid any group that advertised PPO.
It’s not my opinion that lawsuits are driving OB doctors out of the specialty. If an insurance company will only pay X and a doctor needs 1.2X to stay in business then either they raise the price or discontinue the service.
But your solution, tort reform, won’t lower premiums, so you must have another motive for advocating it.
because I don’t think rice paddies are the optimal delivery system. Tort reform does lower the cost to doctors of certain specialties. It states right in the cite about tort reform in Texas that they lost doctors prior to tort reform and gained them back after tort reform.
Jon Opelt, executive director of Texas Alliance for Patient Access, said tort reform in Texas has benefited patients by adding nearly 5,000 more physicians than can be accounted for by population growth. Opelt also said that patients have greater access to specialists in high-risk fields of medicine, and more emergency room doctors are willing to be on call because their fears of lawsuits have been reduced.
Before the 2003 reforms, “55 Texas counties saw a net loss of physicians and … some 99 counties lost a high-risk specialist,” Opelt said. “An estimated 5,000 high-risk specialists restricted their practice due to liability concerns.”
Where does it says premiums went down after tor reform?
I question the mathematics. If something goes up by X% per year, what you need is the number n such that (1+X)^n=2. Then n*log(1+x)=log 2, then n=log 2/log(1+x). For 7%, n=10.24 yrs. If it was 12%, then log 2/log 1.12 = 6.12, not 6.00 as your rule of 72 would lead.
The “Rule of 70” has been a longstanding approximation of interest rate calculations in the range that’s normal for western world financial calculations. Of course it breaks down when you get to ludicrous rates, like 50% compounded monthly, or 0.5%p.a. but in the range of about 2% to 15% it’s not a bad approximation.
Huh? I hope you don’t mean that insurance companies pay $40 or $50 - $60 for every $100 they take in. That sounds like a better racket than even collecting taxes.
If the prices didn’t go down then the savings is the rate of inflation using a health care index. Haven’t kept track of it in awhile but from 1981 to 2006 my insurance costs rose an average of 5.5 percent a year. That was for an HMO policy. That would be in Ohio.
If I were to hazard a guess I would say the article I questioned (the numbers quoted) was off by 2 digits. instead of being a savings of .05% it was a 5% savings.
That’s exactly what I mean. An insurance company’s loss ratio is the amount paid on claims divided by the amount collected in premiums. This number does not take into account administrative costs, lawyers’ fees, and other overhead, nor does it account for earnings on investments (insurance companies invest premiums and pay claims out of earnings, when all is going well), but it’s a useful indicator of an insurer’s health and profitability. Malpractice claims can take years to pay – as long as ten years – so malpractice insurance companies are usually sitting on larger reserves than other insurers, and earn enough income to pay off claims without depleting premiums. This is true even for a 70% loss ratio, but over the past five years, The Doctors Company’s net profit margin has been over 30%. At least half of their expenses are lawyers’ fees, not claims, and their acquisition of another large insurer was a big expense in 2008. The net profit is also after dividends and taxes, so their business expenses were even lower than these numbers show.
Health care costs in the United States have increased about twice the rate of other nations since 1980.
Economic orthodoxy is that health care is badly unsuited to market delivery. This was parth of Kenneth Arrows work on uncertainties for which he got the 1972 Nobel Price in economics.
Among the strikes against health care in a market environment is that its rife with externalities -if an insured person is admitted to hospital, neither the hospital nor the insured person bears the cost of treatment. Thus, the fundamental brake against overprovision is removed.
Also, it has no price elasticity. Price elasticity represents the customers ability to not purchase a serivice, if the price is too high. If your kid has cancer, you will pay anything. Hence, a fundamental market mechanism for correcting unreasonable pricing is not present.
In addition, barriers to entry are present. Barriers to entry means that it is very difficult for any small businesses to enter the market and compete with the large established businesses. It is just too expensive to get a toehold in the market. This means that the basic market mechanism where a provider that does not perfom efficiently gets eliminated is severly weakened. And it is far more profitable to form cartels and increase prices than compete for customers.