Blog: Cutting the health insurance Gordian Knot:
With one simple executive order, President Trump could reduce the healthcare costs of the uninsured by 90%. Here it is:
“The Center for Medicare and Medicaid Services shall include the following in all future contracts with healthcare providers: No hospital, doctor or other healthcare provider, who receives Medicare or Medicaid payments for medical goods or services, shall charge uninsured patients higher prices than those of the Medicare fee schedule.”
Yes, believe it or not, that one little rule in the government’s Medicare and Medicaid contracts would save the uninsured 90% of their healthcare costs,without costing taxpayers one dime.
How?
It’s simple, and you probably understand already, if you have good insurance and have ever examined your medical statements in detail.
It works like this:
Because (a) in bygone decades many insurance companies paid whatever was billed (no matter how outrageous), and (2) because most current provider-insurance contracts mandate that the provider not charge any other insurer less, most hospitals and physicians bill amounts that are typically literally ten timeswhat Medicare or even Blue Cross is contracted to pay (example below). By charging such exorbitant fees, providers accomplish two things:
1. They can’t be accused, by any insurer with whom they’ve contracted to charge their “best rates”, of charging someone else less.
2. They never leave money on the table, even if the entity being billed is a self-insured millionaire, or one of the (increasingly rare) insurance companies that just pay whatever is billed.
This long-ingrained habit of billing exorbitant and unpublished fees is of no consequence to insured patients, or those with Medicare or Medicaid. They or their insurers all have contracts to pay only their contracted fees, which are invariably far less that what is billed.
But pity the poor uninsured patient. He or she has no contract with the provider to pay reasonable fees, but is required to sign an agreement to pay what is charged in order to obtain services. And what are the uninsured charged? Here’s a recent example of a real bill from a provider named (with no small irony) “Mercy Hospital”:
Real Blue Cross Medical Services Statement:
Item
|
Amount Billed by “Mercy”
|
Amount Allowed by Blue Cross
|
Amount paid
by Blue Cross
|
routine venipuncture
|
$26.00
|
$0
|
$0
|
general health panel
|
$474.00
|
$22.99
|
$22.99
|
assay of ferritin
|
$162.00
|
$18.57
|
$18.57
|
vitamin B-12
|
$159.00
|
$20.54
|
$20.54
|
assay of triiodothyronine
|
$152.00
|
$19.31
|
$19.31
|
assay of free thyroxine
|
$138.00
|
$12.28
|
$12.28
|
assay of iron
|
$92.00
|
$8.82
|
$8.82
|
iron binding test
|
$92.00
|
$11.92
|
$11.91
|
immunoassay tumor ca 19-9
|
$176.00
|
$28.36
|
$28.36
|
RBC sed rate
|
$72.00
|
$4.82
|
$4.83
|
TOTAL:
|
$1543.00
|
$147.60
|
$147.60
|
The hospital billed this patient $1543.00 for a set of tests. Blue Cross, per their contracted fee schedule, paid $147.60 -- literally less than 10% of what was charged! But what if this patient had been uninsured? They would have been liable for the full amount, more than 10 times reasonable fees.
I’ve seen this many times in my practice. Uninsured patients are financially “wiped out,” or even forced to declare bankruptcy or sell their homes because of exorbitant medical bills ten times what insured patients pay. In most cases, they would have been able to pay their bills if they had only been charged what insured patients pay.
Most medical businesses show no mercy to the poor. But with one simple executive order, President Trump could reduce their healthcare costs by 90%. What is he waiting for?
