What the heck is the answer? I rant on about insurance companies, and their profits, but a friend of mine – who happens to be a leading economist – says that insurance companies don’t really make all that much money. She even showed me charts and graphs to prove that, although she could tell me there are invisible dollar signs floating in the clouds, and I’d believe that too. She’s wicked smart, and she knows what she’s talking about.
On the other hand, she and I run in different economic circles, so perhaps it’s a matter of perspective….
So, if the insurance companies aren’t making money, and the doctors aren’t making money – after years and years of education and training – where are all these dollars going? Really, I’d like to know.
Let’s break down a recent medical bill, and see what we can find:
One overnight stay in the hospital, or one room for the night: $827.00 Now, we know it can’t possibly cost that much for one individual to stay in a hospital room; hospitals are, after all, for-profit businesses. The general retail rule-of-thumb is to double one’s cost; that means it cost the hospital roughly $415 per night for a patient to stay there.
The average cost of a hotel, overnight, is $120. One-fourth the cost of that hospital room. Of course, there are differences: in a hospital, you have nursing care – but in a hotel you only have to share a room with someone of your own choosing, sometimes there is room service and fridge and microwave, and the beds are larger (and more comfortable). Considering the quality of nursing care, it might just be a toss-up – but still, four times the cost?
The remainder of this particular bill includes such things as oral medicines, IV fluids, specimen collectors, lab work, tubing, bandages, scans, smoking cessation program…wait a minute, what?
Yes, there is a charge on the bill, and I quote: “Smoking Cessation-3-10 Min”. The charge: $29.00. Wanna know what it was? A guy came in, gave his name, said “hi”, and handed my husband a brochure on quitting smoking. That was it. Nice example, huh?
Oh, and the drug list included every single one of my husband’s medications; the ones he originally brought, but was told to send home because the hospital would “provide” them. Right. Five cents for an aspirin, the kind you can buy for about two cents apiece at the drugstore. For the rest, we were billed as much for one tablet as we usually pay for a 30-day supply.
While doing some research, I came across the site of an Indian radiologist who was also commenting on US healthcare. He pointed out the difference in costs between the US and India, and wondered why, based on the cost of CT scan machines, the fees charged were so high?
A CT scanner in the US costs about $900,000. Based on the charges on our bill, about $1500 for each one, that machine would be paid for after about 600 CT scans. According to US News, one hospital performed around 450 CT scans in one year – and that was just pregnant women. Imagine how many are done, each year? Even if it’s just 450, that almost pays for the machine right there.
Now we get even more interesting. The total of this bill was approximately $16,950. We paid $335, upfront. The insurance company paid $2,905. We were then billed $190. But, um, that just equals $3,430, right? What happened to the other $13,520?
That, my friends, is called an “adjustment”. Because I have health insurance, I receive, in effect, an eighty percent discount. Eighty percent. I remember, back when I did not have health insurance, being offered a twenty percent discount for paying cash; that’s assuming I had the cash, or at least a checkbook, with me at the time.
So, from just one hospital bill, we’ve inferred that the hospital is overcharging for medicine, testing, and somehow, someway, bilking someone out of thousands of dollars. Could this be the answer? Or part of it?
Can you imagine what their accounting must look like? I’m no CPA, but it sounds like a nightmare to me.