Insurance

For years I’ve viewed the insurance industry as a form of legalized mafia.  Patients feel that they must carry insurance for fear of what will happen in a catastrophe if they don’t have coverage.  Doctors have felt that they must accept insurance for fear that they won’t be able to stay in business otherwise.  Insurers threaten both patients and doctors, intimidating helpless patients into thinking that they’ll die or go bankrupt if they don’t have insurance; doctors face a very real threat of loss of business if they don’t play the insurer’s game.  Exactly how is this different from the protection money extorted by those in organized crime?

I wasn’t around when dinosaurs roamed the earth, but I remember when doctors started posting a little sign saying that the receptionist could help patients file an insurance claim.  Help, because doctors were paid by patients, not insurers.  I was in high school, and didn’t understand what was so hard about shoving a piece of paper into an envelope and affixing a stamp.  Nonetheless, some people found the paperwork confusing and thought it was really nice to have the doctor’s office hand them a nice neat bundle of papers that could be sent to their insurer, knowing that they were providing all the information needed.

That changed over time.  Instead of the receptionist’s help being a wonderful bonus, doctors agreed to bill insurance directly and hired extra staff to do it.

I’m not convinced it’s been a change for the better.  Sure, more things are covered, but at what price?

Why do people pay $1000 per month ($12K per year) to have a “free” annual physical?  Throw in one or two illnesses severe enough to need a doctor, and paying cash to the doctor would cost less than $500 a year for most healthy people.  That extra $11,500 could do quite well in a savings account, accruing interest until the money is needed.

Last year I added up all my medical expenses for the previous couple years.  A zillion doctor’s appointments, physical therapy, medication, x-rays, ultrasounds, blood work, EKG, and a brief stint wearing a king-of-hearts monitor averaged out to significantly less than $1000 per month – and that’s after I was diagnosed with RA.  That’s right.  Even with all those things going on, the insurance company still made a profit off my family.  Now that I’m on Enbrel, I’m costing them money, but for two decades, they made a tidy sum off of my premia.

Doctors are starting to re-evaluate things.  From some blogs I’ve read, it sounds as if the threat of losing patients is no longer as great a deterrent as it once was.  The insurance industry is pushing too hard, and some physicians are deciding that they can’t go on.  They’re either going to retire early or find a different way to practice.  If they stop jumping through the hoops held out by insurance companies, they can spend more time treating patients with significantly less time doing paperwork, document for treatment instead of external audits, pay fewer support staff, and still make a decent living.

Without insurance hassles, cash-only practices sound like a great business model – from the doctor’s perspective.  As a patient, though, I’m not seeing any advantage to my pocketbook.  Right now, I pay $20 every day I visit a doctor’s office (when we change to the new insurance plan, it will be $30).  My insurance picks up the remainder of the cost.  It would not be to my advantage to increase that payment to $100 (FP) or $215 (rheumy), even if there’s a chance I’ll get part of it back.  I have a strong financial incentive to see doctors who accept my insurance.  The mafia might be losing its grip on doctors, but that’s not true for patients.

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3 thoughts on “Insurance

  1. We purchase auto insurance knowing it will probably cost more than our out-of-pocket expenses (realizing there are differentials…but it is still insurance). Some specialty auto shops can operate without insurance claims, but few can. With two children with cancer, and a husband with heart problemw, a father with Alzheimers..I have yet to meet a doctor so phantasmagoric I would pay cash (unless I was uninsured). And I have met some brilliant doctors, but than-again the insurance company is losing money on our family.

    One company of 20 employees wrote how upsetting it was to have their premiums raised…until the insurance company showed them they had paid $20,000 more than they took in premiums. So, the conclusion is that the insurers are making big money most of time, but so are the doctors and CIO’S of big hospitals. Each side calling the other side the problem…..no easy answers when lives are dependent on each side.

  2. Great post with excellent financial reality check on the bottom line. Each family or individual has to do a similar financial check every year to know what’s their best health care financing strategy. The primary care physicians will be aligning with Direct Primary Care, such as QLiance or Health Access Rhode Island, more and more as they analyze the hassles that prevent them from practicing medicine in response to patient needs instead of someone else’s budget needs.

    The doctor would like to relate to the patient in a simpler business model than our current convoluted mess that leaves as much or more money for the insurance agent selling the policy than for the primary care physician. Direct Primary Care is one way to eliminate the middle people. WarmSocks could have had a direct primary care relationship for the pre-Enbrel years and saved a lot of money.

  3. I couldn’t agree more. Excellent post. Before last year, I only went to the doctor when I had something (maybe 2x a year) and for my annual exam.

    I must say, though, last year I “spent” $378,000 of which I paid $50 out-of-pocket. I have no idea what my mom and her employer (combined) pay for the insurance, but it wasn’t worth it for me until last year.

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