Enwealthen

Walking the path to financial freedom and security

3 Steps to End the Health Insurance Nightmare

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Injured Piggy Bank with Crutches. Courtesy of Ken Teegardin.

Confused by healthcare decisions?

Understand your health insurance?

Have you reached the point where you’re almost afraid to go to the doctor because you don’t know how much you’re going to have to pay?

I have.  And I think it’s about time we made some changes in medical insurance.

Hanging On By a Very Thin Thread

At first glance, healthcare isn’t about building wealth.  But once you realize how quickly your finances can be ruined by an expensive medical procedure, suddenly it becomes a very real threat.  Or looking at it purely from a cost perspective rather than catastrophic impact, improving our medical insurance system will improve service and reduce costs, lowering your recurring expenses.

In the rain.  On my motorcycle.  With the bad driver.  One minute, I’m minding my own business.  Next minute, I’m laid out on the pavement wondering what happened.

End result: wiped out my savings, plus $10,000 in additional debt due to the medical costs.  Ever since then, I always have health insurance, just like I always have uninsured motorist insurance.  I take insurance very seriously.  If you’re serious about your finances, you should too.

Reading SB’s article on why we need health insurance, I realized what I had to say about this deserved more than a comment.  I’m no expert in healthcare policy, medical insurance, or the Affordable Care Act, but there are some obvious flaws in the system that can be easily, and inexpensively, fixed.

While I appreciate President Obama’s intent to reform the broken healthcare system, in my opinion, he is wrong to force individuals to have health insurance.

In America, people have the freedom to be idiots, it’s in the Constitution.

But for many, it’s not a choice.  When you’re choosing between starvation and insurance, eating always wins.

Health Insurance: Cloaked in Failure

Currently, I’m covered on my wife’s insurance.  It’s a large $35 copay, $500 deductible PPO plan, costing us over $500 a month for my coverage.  Decent, albeit pricey.

The other day I went in to see a specialist.  Spent 20 minutes with the doctor – no tests, just a quick look and some Q&A.  Final bill for that 20 minutes?  Four hundred thirty eight dollars.  Insult to injury, I had to pay the entire $438 myself since it was my first use of the new insurance, and my deductible still applied.

Further back, Mrs. Enwealthen ended up in the emergency room.  We weren’t yet married, she was a contract employee, and she had no health insurance.  End result: almost $9,000 dollars in medical bills.  With amazing luck and some negotiation, she got it reduced by over 70% using cash payment along with reductions due to her low income status due to recent unemployment.  She learned her medical coverage lesson the hard way, too.

Regardless of where you stand on the ACA.  I think you can agree with me, that the US healthcare system is broken, and something needs to change.  CNN, The Daily Beast, Harvard, and even Wired magazine, have weighed in with their opinions on how to fix healthcare costs in the US.

Here’s mine.

Show Me the Money

One factor in both our experiences was lack of information.  Have you ever tried to obtain an estimate for medical services?  Try it some time.

Call up your local hospital or urgent care facility and ask them how much it costs to get a simple arm fracture diagnosed and treated.  They won’t tell you.  It’s almost impossible.

Why is it so difficult?  Because different patients receiving the exact same treatment from the exact same doctor at the exact same facility, are charged wildly different amounts.

The same service.  The same facility.  The same doctor.  But not the same price?

Why?  Because of the health insurance companies.

The larger the medical insurance company, or the better they negotiate, the better rates they get for their clients.  So any healthcare provider has a different rate for each service they perform for each insurance provider they support.  Blue Cross allows $100 for that service.  United only pays $80.  But perhaps Medicare remits $150.

You wonder why dealing with hospital billing services is so difficult?  Imagine it from their end.  Hundreds of health insurance companies multiplied by the dozens of insurance plans they each offer again times the tens of thousands of possible services offered by a healthcare facility.  It’s a flood of prices.

Where’s our modern day Alexander to cut this Gordian knot?

On the patient side, due to lack of price transparency, there’s no way to comparison shop.  If I know my broken arm is going to cost me $4,000 to fix at Hospital A, but only $500 to fix at Urgent Care B, then I can make the decision to go to Urgent Care B.  Perhaps if it’s a riskier procedure, I choose Hospital A despite the higher price, because of their higher survival rate or world-recognized top orthopedic specialist.

Regardless of who I choose, price transparency gives me choices and eliminates unwelcome surprise.

My solution?

Step 1: Legislate a single, fixed cost per service per hospital

Price should be regardless of customer financial status, regardless of insurance provider, and regardless of doctor performing the service.  It doesn’t have to be fixed per state, or across multiple facilities, just fixed for all instances of that service for that facility.

This gives you price fairness for the entire organization.  Setting a broken arm?  That’ll be $300, please.  Insurance?  Doesn’t matter.  Doctor?  Doesn’t matter.

Step 2: Legislate a cost estimate be provided to every patient at checkin.

You take your car to the mechanic, he gives you a cost estimate.  You take your body to the doctor, shouldn’t you get the same?

This gives you price transparency.  You know how much you’re going to be billed, and you can make an educated choice about the services you receive and the facility you choose to perform them.

No more sticker shock when you receive the bill weeks after the service.  Plus now you have the opportunity for comparison shopping based on price, success rate, or whatever factors matter to you, and you can make an informed choice about your healthcare.

Help Me Help You

Step 3: Contact your representatives

Tell them you want single pricing for medical services, no more different prices for different customers.

Tell them you want to be given a cost estimate before receiving medical service.  No more sticker shock.  No more surprise bills.

Not sure who to contact?  Look up your state and federal representatives at VoteSmart and email them now.

Was this useful?  Join the Enwealthen mailing list to receive more financial tips automatically in your inbox.

Have a health insurance horror story?  Opinion on other ways to improve our healthcare system?  An idea for a catchy name for our new healthcare information bill?  Comment below and share your opinion.

Photo of injured piggy bank with crutches courtesy of Ken Teegardin.

10 Comments

  1. The cost of healthcare is just insane. A couple years ago my daughter was rolling around and hurt her arm (nursemaid’s elbow, basically a partial dislocation). We brought her to the pediatric ER. Long story short…when we put her coat on it actually popped the elbow back into place and she was fine. They took her vitals and she was feeling fine. The doctor came in and said “so I hear you’re feeling better.” She asked my daughter to raise her arm over her head which she did. For that I received a bill of $487. The kicker is we got a call from their billing department looking for payment BEFORE we even received the bill in the mail. Let’s just say I gave them a piece of my mind.
    Mike Collins recently posted Wealthy Turtle Has a New Look!My Profile

    • Isn’t it though?

      It’s a sad state of affairs when you have to look at a medical condition in yourself or someone you love and find yourself thinking, “Is this going to be worth the cost and hassle of dealing with the healthcare industry / insurance?”

  2. Hmm, good point about not being able to get an estimate and good solution suggestion.

    I take wealth insurance seriously too. I’ve watched too many horror stories!
    Sam recently posted How To Build Passive Income For Financial IndependenceMy Profile

    • Thanks for the comment, Sam.

      Be sure to tell your friends! The more we spread the idea of fair pricing, the better the chances of making a positive change in the system.

      It’s a dangerous world we live in, and getting more dangerous by the day, it seems. Having to worry about surviving the doctor after surviving the accident is a horrible place to be.

  3. I believe it is not only the big amount of money that one has to pay for expensive health insurance that makes people stop and think many times over whether to sign up or not. It is the many complicated twists and turns involved in understanding how it works and in what way can insurance be maximized. I contemplate a lot about health insurance while hoping that I don’t meet any accidents while making up my mind.
    Jen @ Frugal Rules recently posted Shout Out Saturday #37My Profile

    • Very true, Jen.

      Whenever open enrollment time comes around and we have to evaluate our medical insurance choices it’s a difficult decision. So hard to compare plans on their published features. But then you don’t know which doctors are included our what prices have been negotiated so it’s impossible to do accurate cost comparisons.

  4. Cost transparency would go along way towards fixing our health care system. The different prices for different insurance companies isn’t good for our economy. When tax payers pay the higher amounts because we aren’t given the option to price compare, we take away from our savings and the money that is put back into our economy. I really liked your ideas about the single price and how it is so important we get our leaders to see that. Hopefully someone will hear voices like yours soon, before it is too late.

    • Sure enough. So many reasons why improving our current system would improve the economy.

      Glad you like my points. Please do share them with your friends!

  5. Hi Jack. :) I’m pretty astounded at how much medical bills can add up to! I think what you’ve outlined here about a standard fixed price per treatment per hospital could work quite well plus getting an estimate would be really useful. When I was reading this article, I must admit that I’m so grateful for the National Health Service (NHS) here in England.

    Basically anyone who works pays for the service out of their taxes – not a lot really but it depends on what you earn as to how much you get taxed. A lot of people slate it because of waiting times and not getting to choose your consultant etc. But no matter what the injury or emergency, we’re covered. We can go to our nearest hospital or doctor’s surgery and get looked after with no additional costs. We also have private healthcare here too which lots of people pay for to avoid waiting times for appointments and test results. I can see why people don’t want to wait but we have a good healthcare system and I’m proud of it!
    Hayley @ A Disease Called Debt recently posted Why you need to be happy in your jobMy Profile

    • As an American, I’ve been conditioned from birth that free enterprise and capitalism is the best way. But without a doubt, the current state of the health care system in the US is a dismal failure.

      If our government wants to be involved in the system, they need to nationalize it completely. This current hybrid approach is inefficient on so many levels it would be laughable if the consequences weren’t so serious.

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