Not relevant. Flexible Spending Accounts are themselves a form of insurance, in that any money not spent by the end of the year reverts to the employer. The effect of this is to remove the impetus for the type of insurance plan that I was calling for. Suppose for example you had a plan with a $5,000 deductible and you put $5,000 into your FSA to cover the deductible (possibly sponsored by your employer). You would be back in the exact same position of having no incentive to consider cost in your medical treatment decisions.
IANAdoctor, but I have worked for them (in medical billing and claims filing) for the past decade. I’ve also gotten into more than a few battles with my personal physician(s) and with insurance companies over treatments. I’m not terribly fond of doctors, but insurance companies are demon-spawn.
Needs2Know is right. A great deal of the increase in physician charges is directly related to increases in malpractice premiums, which are paid to…insurance companies. Often the same insurance companies that provide health insurance. Those companies increase prices to patients (health insurance premiums) and prices to physicians (malpractice premiums) while, at the same time, lowering payments to physicians for services. In addition, many insurance companies make a habit of doing everything they can (licit or not) to reduce, refuse and/or slow payments. And they’re making money hand over fist.
SuaSponte is also right, to an extent. [Disclaimer: this is based on services, fees and payments in my area. Percentages may not hold true in other areas.]
The federal gov’t sets what will be paid per procedure for Medicare patients (part of that set amount is paid by the patient as copay and/or coinsurance). This set amount (called the ‘allowable’) has overhead costs factored into it, according to the area in which the physician practices (to account for differences in expenses such as office rent, etc., in different regions of the country). Physicians must write off all charges over that amount - and that amount is typically around 1/3 of the original charge.
Most other insurance companies peg their payments to the Medicare allowable, although they generally pay much more than Medicare (around 1/2-2/3 of the charge IIRC). Depending on your insurance and your physician, this causes one of two situations: (1)If your insurance and your physician have a contract, the physician writes off the balance of the charge. This is probably the most common type of insurance today, as it is the type chosen by most employers. If you have a physician list from your insurance company, you have this kind of insurance. (2) If your insurance & physician do NOT have a contract, then you must pay the difference. (Please remember, when your insurance says your doctor’s charge “exceeds usual and customary charges”, that means that the insurance company has decided they will only pay a certain percentage (typically 90%) of the average charge for some region that they’ve decided to group together.)
NOTE: If the physician commonly writes off the balance of the charge (as he would for an insurance company by contract) HE IS SUBJECT TO CHARGES OF FRAUD. If the physician commonly charges patients without insurance less than patients with insurance, HE IS SUBJECT TO CHARGES OF FRAUD. Of course, since Medicare and the insurance companies set their rates as a percentage of averaged fees in a given area for a particular procedure, if the doctors lower their charges to everyone, then within a few years all of the insurance companies lower their allowed payment amount for all doctors in that region. Nifty, huh?
HMOs are a cat of another color. HMOs generally contract with general practice physicians on a Per Patient Per Month basis. IOW, for each patient listed with a particular ‘primary care provider’, the HMO pays that physician a set amount each month to cover all services for all patients (the set amount is usually in the range of $1 PPPM). In addition, HMOs generally contract with specialist physicians on a reduced-fee basis (procedure payment amounts set by contract). From the monies paid in insurance premiums, the HMO pays a PPPM fee to the PCP and also pays a set amount into a pool from which are paid specialist payments. Quite often, any monies left in the ‘specialist pool’ at the end of the contract year are divided between the PCPs based on calculations of how much that PCP spent from the pool. If you’re having problems getting referrals from an HMO, it may not just be the HMO resisting - it may also be your PCP, who could stand to lose a substantial sum if he makes too many referrals. (Although Falcon’s right too - often this can be caused by lack of knowledge and/or concern on the part of the doctor.)
The entertaining part about HMOs is that many times they also require the hospitals and/or PCP groups contracted with them to do all of the claims work on that hospital’s/PCPgp’s patients. This moves almost all of the administrative costs from the insurance company to the medical providers. Again, a nifty trick, if you can manage it.
All of this price fixing is done by contract and the insurance companies hold most of the power, because they are BIG and can shut out doctors if needed. There was a hoorah in Texas a year or so ago, because almost all of the physicians in one city (Dallas, I think) finally banded together to fight one company that was drastically underpaying everyone with whom they dealt and consequently causing the city’s medical structure to collapse. This sort of cooperation between physicians is extremely rare, however.
You must also remember that many of the hospitals are owned by insurance companies - and require physicians to contract with those companies in order to practice at their hospitals.
Weirddave is also right (hey, everyone’s right today! 
). Physicians (at least ours) often write off charges for patients that can’t pay - but they have to go through all sorts of processes to do this, or they can face fraud charges for over-charging the insurance companies.
Oh wait, Enderw24 was wrong about one thing…the last thing that needs to be done is lowering wages for nurses. They are generally horrendously underpaid and overworked, and that situation is getting worse due to hospitals trying to cut costs. There is a tremendous shortage of nurses and has been for years - and this is getting worse as more nurses leave the profession and fewer enter the profession because of the poor working conditions and remuneration.
doreen - it is true that physicians can generally choose to accept any insurance plans that they wish. Quite often they don’t accept a particular plan or company due to low payments - the insurance does not pay enough to cover costs on procedures. This is particularly true of HMOs. HOWEVER, a great deal of the problem comes into play due to the size of the insurance companies’ patient pool. For instance, in my town, almost every major employer has Blue Cross Blue Shield insurance for their employees. If a physician opts out of BCBS contracts, he automatically loses the majority of the population as possible patients (with the exception of a few who will pay extra to see their favorite doc). This power imbalance often gives the insurance companies damn near total power over the pricing structure - if the doc doesn’t sign, he doesn’t have enough patients to stay in business; if he does sign, he must accept whatever the insurance company wants to pay. Even our fairly large physician’s group (around 400 docs, both primary and specialist) has had little to no luck negotiating with insurance companies. They have the money and the patients - you deal with them or you die.
DSYoungEsq - I’d tend to agree with you, but the fact is that individuals and small businesses get screwed by insurance companies. Large businesses who can provide large patient pools get the benefits of lower premiums. I’ve worked for places that paid for good policies for their employees, had very few claims (other than standard physician visits), and nonetheless had prices jacked up yearly until the business could no longer afford to pay the premiums. I know what a friend pays for his coverage as an individual ($5000 deductible, it’s basically catastrophic coverage) - it’s many times what I pay for full coverage with minimal out of pocket. Until that sort of problem is fixed, there’s no way for people to buy their own insurance en masse; they can’t afford it. That’s in addition to the problem that Falcon mentioned. Pre-existing conditions, riders, exclusions - favorite ways for insurance companies to refuse to pay for any treatment they can.
FWIW, HMOs and managed care plans seem to have failed miserably in my area. (A couple-three years ago, according to all the best experts, we’d be almost totally managed care by now.) Our group cancelled all MC contracts because we lost money (not just didn’t make a profit - lost money) on every damn one. That’s not counting what we spent trying to administer the claims. I had a managed care plan for a couple of years - the company discontinued it because it cost more to try to keep people from spending money than it did to just pay for their care.
IzzyR - there are a LOT of people who would be in trouble under your proposed plan. The purpose of insurance companies is to make money by taking in more than they pay out. The fact that they do so quite efficiently can be seen in the blossoming of new insurance companies over the past decade. Not to mention the insurance companies that foundered shortly before that due to junk bond investments that they made because they had too much money and didn’t know what else to do with it.
Also, many large employers do fund their own medical plans rather than buying insurance. You generally can’t tell the difference, as they often pay a commercial insurance company to administrate it for them (it’s cheaper than doing it themselves).
ENugent - medical expenses are only deductible if you have enough deductions, and even then only a portion of them.
Yikes! Just realized what time it is! This is probably a mess and may not make much sense - please excuse typos and confusing wording. I’ll check back tomorrow to see how bad I did. :eek:
Gotta run!
Too the extent this is true, it is true only because the law was modified to make it so (geez, did I swallow Jean-Luc Picard somewhen???). Presumably, if the concept of employer-paid medical insurance is to die, it would require legislation of some sort, and this safeguard could be transferred to employee-paid plans.
Health insurance is NOT a right. We use our current private plans to avoid the need for government-sponsored health care, which, to the extent they exist, exist primarily to cover those for whom no employer-paid care is available (retired old, unemployed poor, etc.). I would not go so far as to say that health insurance should be limited to catastrophic losses, but it could easily be handled by providing personally-paid plans which have different categories of coverage, much as your auto insurance plan has. I know many people who save insurance costs by limiting the coverage of their own vehicle; split off coverage for routine or preventative care from health problems from catastrophic coverage.
And lest you think there is something wrong with this: when was the last time you bought an automobile repair insurance policy, and used it to pay for oil changes, tuneups, and new brakes? Yeah, thought not… 
And personally, I love this kind! This is how my company does insurance…they funs the plan, and BCBS of Minnesota administers it. I’m on a PPO, so no primary doctor, I can see whoever I want, no referrals…it’s freaking HEAVEN.
Aside to redtail: In my case, my primary wrote referrals out the butt for me…HMO was just an ass about it, because I was only supposed to have one eye exam a year.
redtail23
Some commentary:
This is known as “capitation” and is not the most common way of doing things. Some HMOs do (e.g. Aetna) most don’t. (Maybe it differs by region). BTW, the $1 PPPM must be a typo, or I’ve misunderstood you.
Could you provide some examples of this? I would think this is extremely rare.
This is simply misinformation (the part about them doing so efficiently, that is). Most health insurance companies have been making little or losing money in recent years. (As managed care became a growth field there wa a lot of competitive pricing, as companies jockeyed for position, but they have lately faced up to the need to actually make some profits which has caused a recent wave of steep price increases, which is likely to continue for at least the next several years). There has actually been a retrenchment in the field, with all sorts of mergers, and some bankrupcies.
There’s a difference between having a self-insured insurance plan and simply reimbursing employees for their medical expenses, which is what we had been discussing. (BTW, employers pay insurance companies to administer the plan because they do not have the expertise and infrastructure to administer such plans, not because its cheaper to do it themselves).
Anyway, your opening statement that
is not supported by anything that you subsequently wrote. The fact that insurance companies take in more than they pay out is another reason to have insurance play as small a role as possible - eliminating the middleman markup. The issue of self insured plans is unrelated entirely.
And a note to Falcon:
Whether a plan is self-insured or not is unrelated to whether it is a PPO or HMO.
IzzyR: There are numerous examples of hospital and clinic chains that are owned by companies that also own insurance carriers. In the Twin Cities market, for example, Allina owns several hospitals, quite a few clinics, and also has Medica insurance. HealthPartners has a similar arrangement. It is true in most cases that a physician that practices out of this type of arrangement will accept the insurance that his employer owns. This is more to do with the physician’s relationship with the clinic than the physician’s relationship with the insurance company, since most physicians upon joining a practice will apply for certification to join the same insurance plans the rest of the physicians accept. That’s just being practical, because it allows any physician to treat any patient, instead of routing patients to physicians based on who takes what insurance plan.
There’s a difference between having a self-insured insurance plan and simply reimbursing employees for their medical expenses, which is what we had been discussing. (BTW, employers pay insurance companies to administer the plan because they do not have the expertise and infrastructure to administer such plans, not because its cheaper to do it themselves).
And a note to Falcon:
Whether a plan is self-insured or not is unrelated to whether it is a PPO or HMO. **
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My own health insurance is a self-funded plan that is administered by Medica. This means that claims are sent in to Medica as any other claim would be. The physician’s office does not know the difference, and there is no reason for them to know that. All it means is at some point, Medica bills Unisys, and Unisys cuts a check. That’s it. Unisys is paying for Medica’s expertise in claims reimbursement.
More on this later, but I’ve got to run.
Robin
I never claimed to want nurses salaries cut. Far from it. I too think they’re underpaid. What I am saying, however, is that they too have to be paid. Doctors have to be paid. Hospitals have to be paid. Everyone and everything has to be paid. The problem is that insurance companies are the ones that pay and when they refuse, they’re the ones that get blamed regardless of whether or not its actually their fault. If the insurance company doesn’t pay for something it shouldn’t have to pay for, no one ever blames anyone else for the procedure not getting done. I’m not even suggesting that we cut into a doctors salary to get the procedure done because “they’re rich and they can afford it.” I’m merely saying that insurance companies aren’t the scapegoat for societies ills (literally).