ARC's 1st Law: As a "progressive" online discussion grows longer, the probability of a nefarious reference to Karl Rove approaches one

Saturday, November 03, 2007

The Feds will be more accountable?

Markos "Screw 'em" Moulitsas Zunigas (aka Kos) has this story about Blue-Cross, Blue-Shield which further illustrates (to me) why our current system is messed up and answer isn't more government involvement, but less. On to the specifics:

Blue Shield, scum suckers
by kos
Thu Nov 01, 2007 at 12:17:27 PM PDT

My daughter was born on April 7th of this year. We went to Alta Bates hospital, in Berkeley, which was pre-approved by our insurance provider, Blue Shield.

At the hospital, as is often the case in baby deliveries, my wife asked for and received an epidural. There was one Anesthesiologist in the entire hospital.

That anesthesiologist charged $1,032 for his services
, which was passed on to Blue Shield.

One anesthesiologist in the entire hospital? And I wonder if Markos was aware of that price tag before the procedure. Given that the majority of us who are "customers" in the health care system are never told of costs, I'll assume that this was the situation here.

That there's only 1 guy and the price is high is probably due to all of the malpractice lawsuits that anesthesiologists are faced with, similar to the cash machine that is a lawsuit against an obstetrician.
After an initial refusal to pay, followed by several weeks of back and forth, they sent a letter dated May 14th that says:
This is in response to your inquiry concerning services provided by East Bay Anesthesiologist on April 07, 2007 in the amount of $1,032.00.

You contacted us to request that claim process at the preferred rate. After careful consideration of this matter, we will, in this instance only, administratively approve payment for the above mentioned services. The claim(s) in question will be processed and an Explanation of Benefits will be sent shortly for you.

Please be advised that our determination in no way alters the terms and conditions of the subscriber's plan. In making this decision, we do not waive any of our rights to enforce the provisions of the subscriber's plan on this or any other service plan or claim.

Well, that ended well, didn't it? Of course not. This is the modern medical system we're talking about.

Since that time, Blue Shield paid about $400 of that total, and refuses to pay the rest. Meanwhile, the anesthesiologist's office keeps threatening to send us to collections. We've literally called Blue Shield several times every single month since May, asking why they wouldn't pay the balance. Each time, they assured us they would.

Then today, a service rep said they would pay no more. They said that this sentence applied:
You contacted us to request that claim process at the preferred rate.
Their out is the line "preferred rate". And the preferred rate for that procedure was apparently around $400.

Of course, we never asked them to process this at the "preferred rate". We ask them to pay for the service. That's why we're paying over $800/month in insurance premiums. To be insured.

It gets worse, the office of the anesthesiologist has letters from Blue Shield claiming that the insurance company had sent us the money directly, so to bill us for the services. Of course, we never received such money. No such checks were ever cashed (which would be easy enough to verify if they were really interested in the truth, and not shirking their duties).

It'd be great if Kos could get a copy of those letters and post them on the blog... wonder if he's actually seen them or if this is just the anesthesiologist making it up?
So they lie to us, claiming for seven months that they'll cover the procedure. They lie to the anesthesiologist's office, claiming they've already paid us the amount owed, and to bill us directly.

And now, finally, they truth comes out -- they have a problem paying what's owed and will refuse to do so, even though they sent us a letter saying they would.

At the preferred rate, which they paid.

I obviously don't know the specifics of the Moulitsas's's's health care plan, but I bet this is an in-network vs. an out-of-network issue or that the particular hospital that they went to simply didn't agree to their health plan's rates.
As my wife tried to deal with Blue Shield, she asked the costumer service rep what her name was. She said, "Diane." My wife asked for her last name. The woman said, "I don't have to give you that!"

Then she hung up.

Nice.

How could a government-run service be any worse than these unaccountable, unethical, disgusting creeps?

I can't wait to see all the stuff they'll refuse to pay over my abdominal pain.

If you think BlueCross, BlueShield is unaccountable, wait until you get the federal bureaucrat telling you they won't pay the claim. I heard this on one Lefty blog, where the commenter (responding to my recommendation that we need a freer market for health care) said that the government is accountable because they can get voted out of office.

I don't know about you, but if I get crappy service at a business, I don't have to wait 2, 4, or 6 years to "send a message" to the owner. I simply don't go there anymore (and perhaps let them know the reason). Businesses have to keep their customers happy if they want to stay in business. The government doesn't have to keep anyone happy. And the fact that your choice in employer provided insurance plans is probably limited to 3 and you only get to switch plans at a specific time of the year isn't that much different.

Finally, I'd like to point out something... Markos pays $800 per month for his plan, or $9600 a year. I assume that it's some full coverage, copay-only plan for two reasons: 1) the rate would suggest that; 2) Markos seems to be the type of guy (based on his political leanings) that would rather spend a fortune to protect against every conceivable event rather than obtain coverage for unlikely events and pay for common services - he likes the warm security blanket.

What if Markos had instead bought a Health Care Savings Account (HSA) with a High Deductible Health Plan (HDHP)? His premiums would be significantly lower, since he would only be insuring for unlikely, high-cost events. Granted, he knew he was going to have a baby this year, which certainly is a high cost event (*cough cough*). But, let's assume that he purchased one of those plans with a and contributed the same amount he's currently paying into the savings account.

Using Kos' b-day (and assuming his wife is near the same age) and zip code (Berkeley), here are some quotes for Kossack Prime.

For $221/month, he gets
  • $5k Family deductible (or a $2700 deductible for individual)
  • no charge preventative care visits
  • no charge on meds (Generic or Brand name) once the deductible is hit (which drug costs apply toward)
  • No charge hospitalization after deductible
  • No lifetime maximum payments by the insurance company

So, let's assume that the Kossacks had been contributing to this plan when he started The DailyKos, back in 2002, covering he and his wife.

I don't know the health care costs that Markos & his wife typically encounter, so the numbers below are simply for illustrative purposes.

2002
Beginning HSA Balance: $0
Premiums: $221 x 12 = $2,652
Est Healthcare costs - $2,000 (being only 31 at the time, I assume that he's not spending a lot of time with the doctors. $2k is probably a high estimate.
Total cost: $4,652
HSA Remaining Balance: $9,600 - $4,652 = $4,948

2003
Beginning HSA Balance: $4,948
Premiums: $221 x 12 = $2,652
Est Healthcare costs - $2,250
Total cost: $4,902
HSA Remaining Balance: $4,948 + $9,600 - $4,902 = $9,646

2004
Beginning HSA Balance: $9,646
Premiums: $221 x 12 = $2,652
Est Healthcare costs - $2,500
Total cost: $5,152
HSA Remaining Balance: $9,600 - $5,152 + $9,646 = $14,094

2005
Beginning HSA Balance: $14,094
Premiums: $221 x 12 = $2,652
Est Healthcare costs - $2,750
Total cost: $5402
HSA Remaining Balance: $9,600 - $5402 + $14,094 = $18,292

2006
Beginning HSA Balance: $18,292
Premiums: $221 x 12 = $2,652
Est Healthcare costs - $3,000
Total cost: $5,652
HSA Remaining Balance: $9,600 - $5,652 + $18,292 = $22,240

2007 - Baby Time!
Beginning HSA Balance: $22,240
Premiums: $221 x 12 = $2,652
Est Healthcare costs - $3,000
Baby Delivery = $8,000 (est)
Total cost for Markos: $5,000 (after the $5k deductible, every thing's covered)
HSA Remaining Balance: $9,600 - $2,652 - $5,000 + $22,240 = $24,188

Keep in mind that all of these amounts were contributed and paid out tax free, so that's an additional benefit for the Zunigas. It also doesn't account for the interest (3%?) that he would earn in his account each year.

Had Markos began an HSA even earlier, his savings account would be even larger. But, it should be noted that even with the delivery of a baby, Markos has $25k in his HSA.

And, I should point out that this shows that Markos isn't that smart of a consumer. He pays $9,600 in premiums a year, plus has to pay out of pocket copays (using already taxed income). The plan that I just found for him would only cost him a maximum of $7,2652 a year ($2,652 + $5,000 deductible).

And there are of course 18 different plans available, with varying degrees of coverages, deductibles, and premium costs. I selected the one above simply because it was pretty straight-forward, had an acceptable deductible and corresponding premium.

And, of course there are 29 competing HSA/HDHP plans in my area and one that provides coverage similar to the one I selected for Markos in Berkeley is only $147 per month, so his HSA would grow even more if he were lucky enough to live in the Show-Me State.

But, instead of understanding this simple reality and choosing a free-market solution that, if expanded to more people, would reduce the cost of health care (since the people paying would be spending their own money and ask how much it costs before agreeing to pay), Markos simply uses his specific circumstance to push for a more centralized, more bureaucratic approach to health care.

Two quotes from Milton Friedman are appropriate here:
  1. Regarding the ">"service" we can expect of bureaucrats: Hell hath no fury like a bureaucrat scorned
  2. Regarding spending your own money instead of someone elses - Nobody spends somebody else's money as carefully as he spends his own. Nobody uses somebody else's resources as carefully as he uses his own. So if you want efficiency and effectiveness, if you want knowledge to be properly utilized, you have to do it through the means of private property.
Your Co-Conspirator,
ARC: St Wendeler

Comments (5)
Brian said...

That anesthesiologist charged $1,032 for his services, which was passed on to Blue Shield.

And the anesthesiologist was putting a tube in her FRICKIN SPINAL CORD! I expect that thats a pretty good rate for something with a bit of risk.

Jason said...

"How could a government-run service be any worse than these unaccountable, unethical, disgusting creeps?"

It would be worse if instead of paying with dollars, he had to pay with time. It sounds like the medical care was timely and adequate. His problem is with billing and rude customer service. If this is the criteria for converting private sectors into government-run industries, no part of the economy would be immune.

DirtCrashr said...

The question isn't, "How could it be any worse?" - that's pure rhetoric, but How on earth can you expect it to be any BETTER, given the set of union-protected bureaucrats and staffers? I have had my time with Blue Cross and in my experience you DO pay with time too and plenty of it, your uncompensated hours day after day on your phone trying to straighten out nearly ever aspect of each bill that went wrong, was delayed, was sent to the wrong place, or otherwise ran into the human meat-grinder/paper-shredder that is the bureaucratic machinery of Blue Cross... Welcome to the DMV.

ppo health insurance plan said...

Neatly written and explained.Thanks for sharing. It will of great help to us !! ppo health insurance plan

peter kenneth said...

These days it is next to impossible that you can find such an informative and useful post !! well done guys you are doing a very good job!!