Medical billing practices and high deductibles are why our medical costs are rising yearly; here’s why.

It’s amazing that even during the pandemic when the federal government was paying for covid related hospital bills and testing and few people were visiting their doctors or the hospitals, yet insurance carriers continued to charge us more in insurance premiums while increasing our copayments and deductibles.

As a front-line healthcare practitioner, the increase is not showing up in our insurance reimbursements, and in general, the reimbursements have gone down while the costs of running a practice continue to rise for many years now.   This is not true of hospital systems that have grown larger while private practitioners sell their practices to these systems and become employees of large corporate healthcare conglomerates.

California had a problem where one large hospital system named Sutter Health took over most of the hospitals in the entire state and insurers couldn’t keep up with the price increases.   60 minutes actually reported on it.

While everyone would love to blame someone, the problems are more sinister.   

Insurers have been predatory on small practices and hospitals for years, squeezing them until they eventually merged to have more ability to push back.   They created tiers that allowed higher-priced hospitals to appear cheaper while financially harming smaller ones who wished to stay independent as well as their affiliated doctors.  The smaller hospitals eventually joined the larger networks instead of trying to sue the insurers for the damage they inflicted which is why even St. Peters Hospital in New Brunswick is now part of the Barnabus – RW Johnson health system as of this past year.  Smaller but more effective players such as chiropractors were placed in higher more expensive tiers making them cost more even though they were far more cost-effective and effective.

These moves all resulted in health care inflation but the largest driver now is the idea that a high deductible plan is a good idea. For years, in the USA, when you visited a doctor, you would get a flurry of bills that had to be paid.   Many of them were covered by insurance.   Now, with high deductible plans being more common, we have the underinsured but didn’t-know-it crowd who struggle to pay their bills which come monthly.  Some have HSA plans and they dutifully pay those bills as they arrive monthly.  We are all struggling with the yearly increases in premiums which is a tax we must pay to have coverage. Meanwhile, it is the hospitals and their doctors who are getting hit with these high deductibles.  Once the deductible is met, the insurer pays the bill minus the copayment until the family maximum is reached at which time the plan will pay 100%.

Does anyone see a problem here? 

Insurers are hitting hospitals with high deductibles and this is slowing their cash flow. Part of the problem is the outrageous prices we pay for everything which has worsened as these systems fight to get paid these fees due to the poor negotiating power of insurers.  The model of getting a flurry of bills is failing, confusing to the consumer, and resulting in cash flow problems for not only those doctors but the hospitals.   Most people are doing their best to cope with this however after a few months hospitals and doctors are then sending the bills to collection agencies which are now sending us bills.

Do you as a healthcare consumer have any idea who you are paying after that happens or if the amount you are paying is even being credited to your account? Probably not so how can you fight something nobody understands or is willing to fix?

It’s a horrible way to run a business and if I ran my practice that way, I would be out of business. The irony is that when they need more money to run their businesses using this horrible model, they now have the clout to squeeze insurers who squeeze us.   This vicious cycle does not improve until we simplify the model and the providers clean up their billing free for all habits of the past.   High-deductible plans must also go away and the high fees that are unreasonable must come down as well.  The entire system needs a reboot.

It is well known that in other countries, you hardly ever see a bill for your care including Germany which does contract with private insurers. The system is out of control and it is free for all between hospitals, the large insurers, and the doctors who work under the hospitals. The business model is badly broken.

Even though Medicare will finally get to negotiate costs for drugs this year, and they are the only ones able to negotiate prices for hospitals, it is likely that one of the reasons that Medicare is able to keep costs lower is that they have a low deductible of $226 for this year and the cost of Medigap insurance is reasonable probably because the costs are kept in line by Medicare.

How do we fix this?

This cost problem is clearly not working and harming medical consumers who likely cannot wait to become of age to join Medicare.  Some are finding out that once they become Medicare-age, things improve.  Some decide to join Medicare Advantage plans which are the same problem as the one they just escaped to get a free gym membership while their networks and national coverage are compromised. There has been so much written about him in our blog and in the press, so why join an inferior plan with an inferior network?

A good first step would be to lower the age to join Medicare and then watch costs come down.   A second good step is to bring back the idea of DRG billing where there is a finite fee that is all-inclusive for medical care that is paid to the main provider and then they pay the others instead of the bill craziness we currently see.

Much of the diagnostic gobbledygook we believe to be needed in the USA is just not done or expected in other countries that have a much better record of care than we do according to the WHO.   Is all of this really needed?   Data has shown that yearly medical physical has little benefit for us.   Too many mammograms may have been increasing cancer rates.   Most knee and shoulder impingement surgeries don’t work which is the tip of the iceberg.

Maybe the first step needs to be simplifying insurance through Medicare expansion that we pay for just as we pay for medical insurance.   Allow insurers to sell Medigap insurance and begin there.  Costs must be reasonable, providers must be paid in a timely manner and care and diagnostics must be of high value and be needed.

Providers such as chiropractors and other therapists and non medical providers must be easily accessible as they are often more effective and cost effective too. Currently Medicare only offers limited benefits for chiropractic, which for musculoskeletal problems has been shown to lower costs, reduce drug dependency and offer a better quality of life to an aging public.   Functional medical providers must be included and paid fairly for the time they take to help people solve problems.  The system must stop being the problem.