Monday, April 30, 2018

Insurance Magic and Medical Mess

We received a statement from our insurance company today that is astonishing. For a regular diagnostic test (don't remember what it was, but it is part of an annual physical), the company doing the diagnostics charged $1,149.22. Seems kind of expensive.

The crazy part is below:

Somehow, Blue Cross Blue Shield was able to "negotiate" a $1,067.80 discount! The insurance company only had to pay $81.42, and we did not need to pay anything.  I wish I had that kind of power; that is a 93% discount, meaning I could buy a $75K Alfa Romeo for just $5,313.

How is this type of "discount" even possible? It should be criminal to charge the full price, given the steep discount possible.

Note also that the services were provided on January 22nd, but the insurance company did not pay until April 10th, roughly 80 days later. The delay in payment raises costs for the provider. And it suggests this case had to go through a lot of people's hands before it was decided, and all that effort costs money too. The overhead is all cost that is not working on health. And the "negotiation" of the discount is also an additional cost.

When my mother fell and broke her hip in Sicily ten years ago, she had a hip replacement in a small hospital. We were lucky that the surgeon there was a professor at the University of Catania, so she received excellent care. But what was most notable was that the hospital did not have an accounting department. We did not have to pay anything! We could say that the hospital reduced costs by eliminating the accountants. Unfortunately, that is probably not a sustainable solution either, but it certainly seems like a lot of human effort is being wasted in bill tracking and negotiating "discounts." Without all these accountants, the prices could probably be lower for everyone.

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