Medical Bills making us Sick well after we are Well
Medical Bills Making Us Sick After We Are Well
Medical Bills Making Us Sick After We Are Well
We have all had to go to the hospital, a doctor’s office, a non-emergency clinic, or
any other type of medical facility to be seen by a professional to make us better. It may have been a broken bone, a cut that needed stitches, or that “illness” that we couldn’t shake without a prescription for antibiotics. We have all seen different doctors, in different locations at different times, but yet it still shocks us to learn that we all didn’t pay the same price for the same services. Why have health care costs skyrocketed so much over the last 10-15 years and what can we do to try to stop this trend from getting any worse?
Healthcare costs in the United States historically before the Millennium seemed to keep in step with the cost of inflation on a year to year basis. By the middle of the 00’s the increase of health care costs started climbing at a staggering rate much higher than inflation, some would even say two, three or even four times the rate of inflation. According to a recent study run by Millman, Inc, a health consulting firm, “2012 marked the fifth year in a row that US health care costs increased by 7-8% while inflation during that same time frame rose at a rate of 1.7% “ (Kavilanz). So why the discrepancy between the two?
During my research I discovered what I feel may be the route of these massive increases, it’s a computer file known as the chargemaster. This file is what hospitals, doctor’s offices, clinics, and other medical facilities both non-profit and for-profit entities use to base healthcare costs off of when billing you, the government, or your insurance company for the services and care rendered to you during your visit. The only problem is there is no universal chargemaster file, it is calculated on a facility by facility, patient by patient basis. Therefore, if you went to OSF St. Francis in Peoria to the Emergency Room and I went to OSF St. Joseph’s Emergency Room here in Bloomington for the same reason; we would be charged a different amount on our medical bills. While both hospitals are owned and operated by the same organization, the location of these two medical facilities help determine the costs incurred and passed on to you, the patient, for using their services.
Since Peoria is a Level 1 Trauma Hospital, the overhead and facility costs associated with providing you services, such as being seen in the Emergency Room, or utilizing any of their state of the art diagnostic machinery, are much higher than say that of a smaller hospital. So, the chargemaster file says an aspirin in Peoria costs say $1.50 each because of the costs the hospital incurs to administer that aspirin to you such as the electricity, the administration costs, the depreciation of the facility itself, and so on. While yes, you and I could walk in to Wal-Mart and purchase a 500 count bottle of generic aspirin off the shelf for $3.64, or less than a .01 per pill (walmart.com). That means if the hospitals are charging a markup of 150% on something as seemingly simple as an aspirin, they most likely are charging a similar markup on other things like x-rays, preventative and diagnostic testing, and other wound treatments like bandages, antibiotics, and gauze.
To make matters worse, if you ever take a closer look at your medical bills, you will see that the hospital itemizes your billing for you based upon the chargemaster’s medical coding for various things or treatments you received while being treated. Some hospitals will charge you for things such as gowns, gloves, or even instruments that the doctor used during your examination that you don’t get to keep, and was charged to the patient before you and the patient’s after you. So they are making well over 150% markup on an item that has been paid for 10 times over.
So why is this practice allowed? “It’s good for business, both for the hospital and for the health insurance company, if you are lucky enough to have medical insurance. For the hospital it is good for business because they can turn large profits for their business by varying the “cost” to each patient based on what type, if any insurance, the patient has” (Lane). If you are paying via government programs such as Medicare or Medicaid they will only get paid a certain amount of money for each of the items listed on the hospital bill based upon what the government feels an aspirin or a bandage should cost them. If you have private insurance that you may have purchased through your work or other insurance vendors, the hospital charges you an entirely different amount based upon the volume of patients they see from your insurance company. The hospitals work out “bulk pricing” for each of the different insurance providers they accept. That is why that list you see posted next to the payment window that reads: We Proudly Accept … isn’t there just as an advertisement for those insurance companies, but is also there to inform you as to who gets the best prices from the facility you are standing in. If you are paying out of pocket because you don’t have medical insurance, then sadly the chargemaster sheet will be utilized as a starting pricing point to bill you off of, and even used as a starting point for the collection process if you can’t afford to pay. This is where it becomes good for business. As a patient who just received a bill in the mail from your recent procedure, it would be quite shocking as a patient with no insurance to see that you have run up a bill of almost $10,000. Your first reaction would be to become irate with the hospital or doctor’s office and demand to know why you have to pay so much. So the hospital “reviews” your bill and then comes back with a good sales pitch such as: “because you’re a very valued patient of our hospital, we’ve reevaluated your bill and instead of $10,000 you actually only owe us $7,000. We have discounted your bill for you.” You are relieved because you have now saved $3,000 off your bill, but what you aren’t paying attention to is that the total cost of your procedure should have only cost you $4500 to begin with. The hospital comes out looking like the good guy, and they are still making a huge profit. Sadly this same practice is utilized by the major insurance companies by showing you how much savings you got for being their valued customer. When again you and the insurance company are paying way more than what should have been charged for your procedure.
Medical costs have been a “hot button” issue with American citizens across the board from school teachers to retirees, from politicians to farmers, American’s know they are paying too much but how do you stop the runaway train after its rolling downhill? Washington D.C. took up that very question when they put together the Affordable Health Care Act in 2010, as an attempt to put the genie back in the lamp. While on paper it sounded like the solution many Americans had been looking for, but in actuality it has only added to the problem of artificially adding annual rate increases into a system that already had inflated itself annually if it was needed or not.
So how do we try to reverse this epidemic before it becomes a financial death sentence for a family if someone has surgery, a heart attack, or a car accident? You have to look no further than your local Kroger’s, Wal-Mart, or Walgreen’s to see the answer before your very eyes. It’s called buying power. If these stores can offer over 300 different generic pharmaceuticals to you as a consumer for less than $4 for each prescription and still turn a profit, then the other stores are robbing us blind charging the consumer “full price.” By utilizing the Affordable Care Act as the backbone and adding to it a “universal buyer” approach, where the federal government would utilize its sheer size and with it, its buying power, would create a way to control costs and provide a “uniform” pricing method for everyone being seen by a medical professional. To implement such a massive change to a broken system would appear to have to come from the top down, via another sweeping legislative decree such as the Affordable Care Act, but there is another alternative, if we think outside of the box.
How does a local store compete for your business with so many national chain stores around offering the same products at huge savings due to their massive buying power? They stay competitive by using an economic tool called price matching. When you see an advertised price for a product or service you know what you’re getting and at what price before the service is provided. If a competitor has a closer location but charges more for the same product over 84% would drive a little further to “save” money on the goods/service we were looking at buying (Lovins). Imagine going to the doctor’s office and you see a readily available chargemaster available before you even step foot in an examination room. Even if the hospital charges you $1.50 for your aspirin you could present them with the pricing figures from the Affordable Care Act, which would have charged you $1.00 and they would match the lower price to keep your business.
These are just a couple ideas on how to solve the problem of rising health care costs in America. After doing my research, interviewing a health care provider, and surveying over fifty people via Facebook I honestly feel that the root of the health care cost epidemic is the illusive and secretive chargemaster files held by health care establishments around the country. Until they are made public information we, as Americans, will continue to be at the mercy of the profit making machines that are supposed to make us well, regardless of what legislation is passed. Until, we the people, have the ability to price match our medical services utilizing a universal government chargemaster file, we will continue to feel ill when we get our bills in the mail.