Healthcare and your insurance premiums, your deductible, and that Billing Statement you received that almost gave you a heart attack when you opened the mail.

Let’s look at what is behind this money pit and how we got to this point and what the government, your doctor, hospitals and insurance companies are doing to continually worsen the situation, and maybe talk about some solutions that will put your healthcare decisions back between you and your doctor and not the insurance company’s un-named person somewhere, and certainly not the government. 

Having spent 22 years in the medical and pharmaceutical industries and more recently having a major healthcare issue with an initial bill well over $2 million, well talk about shock!

Several things you have to know about healthcare⏤there’s lots of people in the system that make lots of money, and yes your money pays them. Did you know that the average American family of four with healthcare insurance pays premiums of approximately $9800 a year, has a $3000 to $5000 deductible, $25-$45 co-pays at the doctor’s office, and still is left with 10 to 25% of the hospital bill when they show up at the emergency room, are you surprised?

The companies that write the checks to the insurance companies for 185 million Americans are usually paying more, but you’re still on the hook for that deductible, co-pay and balances from the hospitals. 

Did you know that your healthcare is factored into your salary, some companies give you the option of declining the company’s HealthCare? Maybe your spouse has you covered, or you just think you will not need it, good luck!

Purchasing it on your own, so the question comes up⏤which is cheaper? Just think about how much money you are spending and how much healthcare you are getting, who pays for your healthcare, do you think you’re getting value for your money. Do you know of any other choices or options you may have?

What do you think about health savings accounts; do you know how those work? Do you know what happens with that $8000 you pay in premiums you send the insurance company every year? If you don’t use it, if you don’t go to the doctor but one or two times just for an office visit. You work in the corporate world for a number of years, does your company pay for your insurance completely or do you have some amount deducted from your check every week. Has this amount gone up?

How much do you think the average person or family of four people actually spend in a calendar year for their basic health care costs? Those doctor visits maybe a visit to the emergency room for broken wrist, or one of the kids needed stitches from falling off her bike. Do you know what your doctor submits as a bill to the insurance companies for each visit? Have you figured out what all those different numbers are on your billing statement, all the different columns mean?

Here’s what’s on a typical bill:  One of my recent bills:  

First column: Established patient office or other outpatient visit, typically 15 minutes (billing code 99213). Simple enough was my first visit.

Second column: Amount the provider billed the plan: $195.00, the insurance company. 

So far seems straight forward, let’s move on.

Third column: Total Cost (amount plan approved): $89.70, didn’t your doctor say it was $195.00, so where does this number come from?

Fourth column: Plans share:  $79.12, ok plan approved 89.70, but paid only $79.12 why?

Fifth column: Your share: $8.97 Ok, what you still owe.

Let us not forget you paid a $35.00 deductible when you signed in, it’s a specialist! No matter how you try⏤these numbers don’t add up, from the $195.00 doctor’s bill or explain where the rest of them come from. Only the $8.97 goes against your deductible, a long way to go until that $3000 is covered. Most insurance companies, if you haven’t paid your deductible by that time is going to bill you for that full amount, if your deductible is $3000 you’re stuck for the whole thing.

Sounds to me like doctors and insurance companies are making a lot of money.

The people that are making most of the money are the insurance companies and they don’t cure or take care of your health or anybody’s health. They are accountants and gateways to the money and protect it at every opportunity. What they don’t payout goes right to the insurance company’s bottom line, profit!

Have you ever heard of insurance company formularies that are used to determine type of care and how much they will pay for it? Insurance companies are a financial institution that will never lose money. They are also the largest single lobbying organization in the United States, some people say they own the United States Congress, I don’t doubt it.

United Healthcare is one of the largest healthcare insurance organization in the country, the only one AARP recommends. Many corporations use them because of the services they offer, it is also one of the most profitable organizations in the United States. 

In 2018 United Healthcare operational costs combined overhead, and operations was approximately 19% of every dollar paid in by you or your company. On top of that they made almost 9% profit after taxes, not bad for somebody that didn’t provide any medical care to you directly⏤just juggled around the money. That amounts to $0.28 out of every dollar you paid for healthcare went to United Healthcare for their operations, not the doctor.

Your doctor had to process your insurance claims, probably has one or two people in his/her office, that are speaking with insurance companies 50% of their time, getting authorizations completing or sending documents, then sending you bills for the balances, then processing them and following up, that’s about 40% of their office operating costs, those people again don’t do anything to make you healthy. 

Do you know that you can get a discount at most private hospital facilities and some community hospitals run by a county or state for paying cash, usually 40%. Many doctors will do the same, typically small individual private practices, my doctor gives me a 40% discount for cash, I pay the bottom-line amount, I have no copayment or deductible. You will not get it if you don’t ask!

So why isn’t the entire country on a cash basis for primary level healthcare? If you can reduce the cost of healthcare by as much as 68% by paying cash  you will be saving a ton of money, under the current system those office visits to your doctor 24 times a year (family of 4 each 6 visits each) is costing you about $500 a visit, for what your doctor would charge about $75.00.

At the end of the year maybe you didn’t use all your deductible, but even if you did go to the doctor 24 times you probably paid about $2500 in deductibles, added to that $8000 premium. add co-pays to visits probably cost you close to $12,000 out-of-pocket which you will never get a penny back, once you pay a premium, it’s gone.

What do you think would happen if we change primary care to all cash basis? And gave you a tax-free healthcare savings account from your employer or one that you could contribute to on your own if you’re self-employed. And made these accounts permanent so they didn’t expire at the end of the year and lose the money back to the government, even pay interest on the money that goes into your account. Then let the individual or family decide how much money they want to put in this account.

How do you take care of major medical expenses? That’s what insurance is for, pooling resources for catastrophes and not every day expenses are why people should have insurance. Most major corporations that provide healthcare insurance are spending between $14,000-$18,000 a year for each employee’s insurance coverage. Can they save money by funding your account and pay for Major Medical policies, most definitely!

Now let’s say your out-of-pocket expenses for a pretty healthy family of four where the adults are between 28 and 50, the children are school-age and has those 24 visits per year, that’s six per person which seems to be a lot of trips to the doctor each year. So, with discounts and all say the doctor charges $100 per visit, $2400.00 for the year. 

If you put $3000 into health savings account, you be covered for all your primary care and save somewhere between $9000 – $12,000 a year. If your company was able to do this, they would have the same savings, I think your Human Resources VP and CFO would be very interested in that type of savings.

Okay you still have to put money into a major medical catastrophic insurance program. For those 86% of the people in the country where the company pays their insurance now who is saving $10,000 per employee, they can afford to kick in $3000 per employee into a major medical care program; the companies become self-insured because they are paying cash to the hospitals and the physicians at that 40% discounted rate.

Insurance companies will not be too happy about this, neither will the trial lawyers that sue your doctors, hospitals, and you⏤as trial lawyers today earn 40% of their fees from medical litigation.

So how do we get this started? First establish the legislation for the health savings accounts, you enroll the doctors in cooperatives that offer these discounted rates, they become participants in the plans. Companies funds your health savings account at the first of the year just like they paid premiums on the insurance, and remember they are saving anywhere from 75 to 80%. 

Then the companies set up a major medical program, Johnson & Johnson has 170,000 employees; they fund their healthcare and save about 50% of the cost, it’s a great model for companies to use. And by the way they cover much more than the average employer because it’s cheaper and they make better decisions with you and your doctor. 

This can be phased in over a two or three year time span, very easily. Except for a few obstacles:

A big obstacle will be the United States Congress, because the money they get from lobbyists of insurance companies, huge dollars are going to dry up very quickly. But we can reduce healthcare costs in the United States by over 60% and more in the following years. 

Encourage healthier living, more involvement of everyone in their healthcare decisions, doctors offering additional discounts if you maintain a healthy profile. 

Other big places to cut costs are the hospitals, their bureaucracies are gigantic, one local community hospital, is listed as a regional Hospital group, they have only one hospital, yet the administrator of this “group” gets paid $855,000 a year for running a group that doesn’t exist.

He doesn’t run the hospital, there’s another administrator that actually runs the hospital that gets paid $685,000 a year, this is not the Mayo Clinic or Johns Hopkins or New York’s Mount Sinai⏤it’s a medium size community hospital, complex cases, trauma, brain surgery are sent to the regional Medical Center a short distance away or Medi evacuated by helicopter as necessary.

I had the opportunity to stay there several times two years ago, my room cost was billed at $1579 a night, semiprivate, it did include food, the certified nursing assistants, but not my medications or doctors or nurses that attended to me. 

Maybe Marriott or Hilton, should take over the “Hospitality” operation of hospitals. I had a suite last fall for at a Hilton for $450 a night and it was a lot nicer than the hospital. 

What about the expensive equipment these hospitals have like CT scanners, MRI machines, ultrasounds and many others, some costing $300,000, $500,000 maybe even $1 million, only because everything associated with medicine is inflated because the insurance algorithms that provide the money. Once you remove the insurance algorithm, you eliminate the black hole of spending, Tylenol doesn’t cost $11 a tablet. 

Bottom line is we don’t need a single payer system. We need an ‘Everyone Payer System‘, get rid of the insurance BLACK HOLE, cut costs, improve patient doctor control of your health care once and for all.