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That's the thing: medical insurance in the US is a weird hybrid between actual insurance and a complicated web of collective purchasing agreements. They let lar
by tikhonj 11y ago
That's the thing: medical insurance in the US is a weird hybrid between actual insurance and a complicated web of collective purchasing agreements. They let large organizations, companies and even individuals to get together by proxy to get bulk discounts on health costs.
You can see why this second function might be useful, although it also does weird things to the market. But it feels like it should be fundamentally distinct from insurance against risk. Having both functions in one line-item just makes everything more complex and confusing.
It also makes sense because medical insurance is a special channel for companies to give additional compensation to their workers. I've heard this originated from salary caps during WWII—turns out that if you try to ham-fistedly control the markets, you'll get weird ripple effects. If you're just channeling money to your employees, paying for their routine expenses makes sense especially since people can appreciate immediate benefits like that a lot more than the abstract benefit of having a low-probability risk hedged for you.
If you were actually going to design a system for managing health care from the ground up in the US, this is absolutely not what you would come up with. It's hideous legacy code. And it's just as hard to update as legacy systems, with the additional barrier of politics thrown in.
It doesn't really make sense, but you can sort of trace the reasons it evolved the way it did. And it's not changing significantly any time soon.
- maxerickson 11y agoIt's not apparent to me that my insurance company is engaged in attempting to get bulk discounts. I have some recent bills that are 4x or 5x the supposed national rate for the services, having that hospital in their network appears to be a choice to try to collect premiums from people that live near it rather than the result of any sort of negotiation on my behalf. I have the idea that we should ban networks. Not that we should ban insurance companies from trying to negotiate, but that we should prevent providers from charging arbitrarily different rates to different people. Especially hospitals that benefit from exclusive licenses, they should suffer under price regulation in exchange for those licenses (never mind that those licenses are intended to allow them to charge more for those services and "cost shift").
- jrockway 11y agoI don't think they actually write a check for the amount the hospital owes. I think my EOB for surgery looked something like: Item: drugs Amount requested: $7000 Amount paid: $3 Amount owed by patient: $0
- maxerickson 11y agoDo you mean the amount the hospital bills? I'm talking about a bill I have to pay to meet my deductible, so the 5x number is the number that appears in the EOB (the covered amount for the service) and unless I am mistaken, it is the amount they would pay if I had met my deductible. My paranoid speculation is that they push back harder against the coding of bills that they are responsible for than they do for bills that are under the deductible. This doesn't really make sense (the insurance company should want to control costs all the time), but it feels good.
- jrockway 11y agoI was well over my deductible by the point of surgery, so I don't know. I paid the hospital a total of 22 cents of my own money for an overnight stay. That was probably an oversight, but whatever, they can have 22 cents. Anyway, like everything in life, the prices are negotiable. My insurance wouldn't cover the surgeon's time for the surgery despite pre-approving it, I negotiated quite a discount on that. (It was Aetna too. Good to know the claim was denied after a good night's sleep.)
- jrockway 11y agoAnd yes, I did typo/braino that. The hospital owes no money :)