The ACA deductibles cap the providers' losses

[jberryhill]

The fact of the matter is that one of the things driving up the cost of health care for everyone are the unreimbursed expenses run up by people who have no health insurance.

What a $5K deductible means - on the other side of the equation - is that when a patient comes through the door, the hospital is looking at a maximum $5K loss.

Back when I was much younger, and my income was $12K a year, I had an event which incurred a $7500 hospital bill.

They chased me for a while over it, but the fact of the matter was that I was a grad student with no money, and I spent some time after that making $45 a day as a substitute teacher for a while after that. I don't know if things have changed, but there was no finance charge on that debt, and by the time I had real employment, the time had expired for it to be collectible anyway. After seven years, it dropped off my credit report.

Yeah, with high deductibles, some people are going to get bills they can't pay. You know what they are going to do? Not pay them. The upside - for everyone else - is that everything ABOVE that deductible WILL be paid.

The other consequence of that dynamic is that it will be a lot easier to negotiate away those bills. Let's say you run the hospital finance department. Someone racked up $50K for something, and they had a $5K deductible. You get $45K from the insurance company, and bill the guy $5K. You find out the guy has no money and can't pay the $5K. What are you going to do:

(A) Spend your staff time bugging a guy with no money for $5K

(B) Spend $1K on a law firm to get a default judgment the guy can't pay

(C) Sell it to a collection agency for $1K and they can try to collect until the statutory limit expires

(D) write it off as a 5K loss and take the tax benefit

If you answered (D), then congratulations, you just improved the bottom line.

At the end of the day, the hospital got $45K on a $50K bill, which is a lot better for the hospital - and everybody else - than getting 0 on a $50K bill.

[leftstreet]

1. I don't give a shit about a hospital's bottom line

You can't sell a health insurance reform law by telling people their ruined credit scores are actually a sacrifice for the greater profit good

[jberryhill]

2. Whoosh....

Do you know why medical bills are so high in the first place?

Run this dynamic forward for a few years.

I'll work out a payment plan with you. Okay? Now, do you want a $50k payment plan or a $5k one?

Tell you what, I'll cut your bill in half if you can pay that in six months. You want a $50K bill or a $5K one?

[leftstreet]

4. Provider losses are a myth

Hospitals are raking it in

80% of Americans have medical insurance coverage, through employment, medicare, medicaid etc. That leaves 20% who don't regularly access care...because they can't afford it. Those people aren't bankrupting the medical industry

[jberryhill]

8. Even that reinforces the point, though

Let's assume you are correct.

What happens at the big city hospital when someone comes in the door with a $5K deductible and a $50K condition?

What happens in the same situation when the person has no insurance?

I'll tell you what happens. In the first situation, the person gets appropriate treatment. In the second situation, they get a band-aid and directions to the exit.

[leftstreet]

9. The average person DOES have insurance though

The point you're making isn't wrong, it's just a matter of percentages

Right now the average person spending the night in a hospital in your city, and my city, and cities all over the country...is on medicare

Hospitals are doing just fine and raking in the money. Getting the remaining 20% of the population on medical insurance is great, fine, terrific - but won't have an overwhelming effect on hospital 'losses'

[jberryhill]

10. Stabilized and discharged is not the same as treatment

[leftstreet]

11. ??

Not sure what you mean, unless it's the flurry of media scare stories the last few years about 'Teh Poor' using ER services. Again, 80% of Americans have medical coverage. The average hospital patient is on medicare

Hospitals are raking it in

[Ms. Toad]

3. You should.

Because what the hospital can't collect gets added to everyone's bill.

[leftstreet]

5. Sorry, that's a myth

If only 20% of Americans had medical coverage, it would make sense. But the vast majority of people have major medical of some kind. Hospitals losses aren't that large

[Ms. Toad]

23. Hospitals are mandated to provide emergency care

whether the recipient can pay for it or not. They also have a portion of noncollectable debts from people who are insured who can't pay their portion of the bill. The hospitals don't just eat those debts; the cost of care for everyone is increased to cover the portion they cannot collect.

That's not a myth, that's business 101.

[leftstreet]

25. Correct. And most collections are people with insurance

Again, the largest percentage of people accessing medical services already coverage of some kind

You could actually argue that medically insured people are driving up the costs of medical care by their inability to meet their patient obligations

[Ms. Toad]

28. You would be wrong

that costs from the uninsured (and uncollectable) are do not play a significant role in increasing the cost of medical care.

Even when the insured are uncollectable for their portion of the remainder, it is generally only a portion. For those using the ER as an alternative to care the uncollectable portion is 100%, and a far greater portion of the uninsured are using the ER for more significant conditions than the insured, because the insured have access to regular care and are treated before the conditions get as serious as they are for the uninsured.

And it doesn't really matter whether the bulk of the uncollectable bills come from insured or not - the reality is that - whatever the portion - if those currently uninsured now have insurance that pays 70%-90% of bills which were entirely uncollectable when they had no insurance, that 70-90% is now collectible and is no longer shared by everyone else.

Again - simple business 101.

[leftstreet]

29. So we'll look forward to hospitals lowering prices

Not

You're sincere in making your point, but it's based on a media myth that impoverished people are causing medical costs to soar. That's just not true

[Ms. Toad]

30. Many things contribute to the cost of medical care

Impoverished (or even lower middle class) people without access to affordable care is one factor which contributes. When people who do not have regular access to care receive care only when it reaches the level of requiring emergent care, that increases the overall cost of care. When people receive care and cannot pay their bills, that increases the overall cost of care. Being insured (with insurance which pays for preventative care) lowers those two costs.

Those are not the only contributors to the cost of medical care - but those are two contributors. That is not a myth, the former is medical fact, and the latter is basic financial reality.

I did not ever say those were the only things driving the cost of medicine - what I said was that you should care that insurance will be paying for portions of medical care which are currently not collectable because those costs are shared by the rest of us. Nothing factual you have said contradicts that - you are merely saying "uh-uhhh" or other things cost more. The former is wrong. The latter isn't anything I have been addressing.

[jberryhill]

6. Bingo

Padding everyone's bill by the average deductible means they are going not going to go chasing around the deductible losses with any great vigor either.

American tourists are sometimes surprised not to be billed at all if they incur treatment in some countries, because billing them just isn't worth it.

Even as it stands now, I've seen plenty of situations where people with medical bills have had the provider simply take the insurance company payment and write off the rest.

[kestrel91316]

7. Fine with me. Helps me, too, by limiting my losses if I need medical care.

[Hoyt]

12. You can "write it off as a loss," but you get nothing for that.

You lose the 5K, and likely insurance will only allow 12K on the 50K charges. You don't get a deduction unless you declare the 5K is income. In which case it essentialy zeroes out.

But I agree, no hospital is going to turn away a transplant or other major procedure over 5K that might be hard to collect. That's a good thing.

[Mojorabbit]

13. They will come after your house if you own one though and in a heartbeat.

A one night stay in the hospital last month for high bp and my sister's bill was over ten thousand. Hospital will never see it.
My husband just had an emergency triple bypass and the hospital bill alone was almost 180,000 before they cut us a "deal" in August. That does not include the surgeon, radiologist, anesthesia, ambulance etc..
I can't wait to get him insurance that does not care if one has a pre existing. Have not been able to buy it at any price for over a decade. So yes and no. The hospital can make out very well if the patient has assets but not if they do not.

[dkf]

14. Let's say the hospital charges $1,000,000 and the guys deductible is $5000.

Then the insurance company pays $995,000 and jacks up our premiums. The hospitals can charge anything they want now because the collective will pick it up.

[Fumesucker]

15. Since the insurance co gets to keep 15%-20% of the total it's a win-win for them when prices rise

[dkf]

16. Exactly. This is going to be like college expenses soon.

Some very deep pockets, indeed mandatory for the entire population. It's ripe for abuse.

[Hoyt]

22. Except, when you and I go to the exchange we are likely to buy policy

that is less expensive, not more expensive. In other words, the insurers who manage the cost (by paying that hospital $60,000 on their inflated million dollar charge) will survive.

Hopefully regulators will make sure abuse is controlled.

[jberryhill]

38. But for the fact that the insurance market is more competitive

I thought the same thing for a while - i.e. the strategy for the insurance company is to pay inflated medical costs in order to make that 20% as numerically large as possible.

That works when people are locked in to their current policy by a pre-existing condition. It doesn't work, though, when people can change insurance companies on a competitive basis.

[Revanchist]

17. Insurance (and Medicare/Medicaid)

Will only pay x for each DRG (Diagnosis-Related Group) so they can try to charge what ever they want but will only get a certain amount for any given procedure.

[dkf]

18. It's negotiated via contract.

I was told that I could not find out what my doctors charges were because it depends which contract they signed and when. That tells me it has the potential to be different.

[Revanchist]

19. You can't negotiation with HHS

But the hospital/physician negotiates with each insurance provider so in that way it is different but still doesn't mean they can charge whatever they feel like, insurance companies would just laugh at them if the tried that. That is why you have in-network and out-of-network providers, but there will always be a max payment per procedure.

[dkf]

20. If insurance companies laughed in the face of hospitals it wouldn't be so expensive.

[Ms. Toad]

24. You haven't spent much time reading your insurance EOBs, have you.

The contractual write-off in mine (because of negotiated insurance prices) from the last year ranges from 10% to 90%.

[Travis_0004]

21. Why would they write it off, when they can sell it to a collection agency?

If I have an uncollectable 5k debt, I will sell it for around 250 to a collection agency, and then write off 4750, which is more profitable then writing it off.

[madville]

26. More than just the deductible

You have to factor in the max out of pocket limit as well. Like say someone under a bronze 60/40 family plan had a $24,000 hospital bill. After the $5,000 deductible they would still be responsible for 40% of the remaining $19,000 or $7,600. That would be a total of $12,600 the patient would get a bill for.

[grantcart]

27. I believe that you have mixed up deductibles and caps

The plan I was approved on had no deductibles and a $ 10,000 maximum.


The maximum is the maximum amount of copays I can spend in a year. Up to that point I pay 80% of the cost.

After $ 10,000 my copay is $ 0 and the insurance company pays 100% of the costs.

[jberryhill]

31. That's not the point

If you have a $5k deductible policy, that's the most a provider is going to risk not getting paid.

[Yo_Mama]

32. No, it's the Out of pocket maximum

because patients often can't make the copayments either.

And most of the family exchange plans have out of pocket maximums at $12,700 a year. Or thereabouts in the Silver category. For lower income families (income 200% or below of the FPL), cost sharing is minimal at 6% or 13%. For higher income families (above 200% of FPL), cost-sharing is higher than the current average at 27% or 30%. So providing treatment to higher-income families will incur a hospital greater average losses.

[grantcart]

33. If its a deductible then there is no risk for not getting paid

They will not pay a dime until they see that $ 5k has been charged and paid first by the patient.

In an insurance policy, the deductible is the amount of expenses that must be paid out of pocket before an insurer will pay any expenses.[1] In general usage, the term deductible may be used to describe one of several types of clauses (see below) that are used by insurance companies as a threshold for policy payments.

If it is paid out of pocket first then how is it a risk of 'not getting paid'.

A policy that has a $ 5K deductible is essentially a catastrophic plan that only is going to kick in coverage in a major medical event. Virtually no one is going to have $ 5K worth of care under normal care without some major medical event occurring.

I really think that you have the terms mixed up because your explanations aren't matching with the terms.

[jberryhill]

34. If the bill is $15K, how much does the hospital risk?

[grantcart]

36. Hospital or insurance company?

Are you talking about medical providers or insurance providers?

[jberryhill]

37. Medical providers....

The fact that medical providers will be getting *any* payment from treating people who would otherwise be uninsured is a significant driver of (a) being motivated to treat conditions rather than stabilize and discharge, and (b) not having to increase everyone else's bills.

[treestar]

35. Thank you for this post

There are too many here who think the very concept of insurance is absolutely worthless. Not realistic. Even single payer would have to be paid for.