My 84 year-old mother has a bad back. She’s way beyond surgery, and her doctors are just trying to manage the pain. So every six weeks or so she goes back to the pain doc and he tries something else—a shot of cortisone this time, a nerve block the next, radio frequency ablation on the third visit (you’ll have to google it, I’ve got a word limit . . .). There is always something else to try.
She’s weary of the pain and becoming convinced that her case is hopeless. Yet my frugal mother also worries about the cost—“I can’t believe that Medicare keeps paying for all of this. I get these bills for thousands of dollars—but at the bottom, it says I owe $2.11.” As her son, I’m delighted that Medicare keeps paying and I hope that this process of trial-and-error eventually produces a solution.
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I’ve been in a funk since the 2009-10 state budget passed. The state’s elected leaders entered the budget negotiations confronting a potential $20 billion deficit, up from the $14 billion estimated when the Governor released his original budget proposal. That is, the state would have run a $20 billion deficit in 2009-10 if spending and revenue continued without changing anything structural (like tax rates or spending formulae). The faltering economy could no longer satisfy the state’s addiction to ever-greater spending.
Given such a dire forecast, we all wondered how the state would manage to find the money to avoid a major reduction in spending. Imagine our surprise when the Legislature and Governor pulled a rabbit out of the budgetary hat and increased budgeted spending by $12 billion, nearly 9% more than in 2008-09.
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I’m in the third month of my high deductible health plan (HDHP) experience. And we’ve had some big bills to pay—I’m thinking that we may actually reach that family deductible early in the year. No surprises, though. I’ll let you know how it turns out. (If you’d like to read my earlier series on this subject, find the link to our blog site at www.cgr.org.)
A good friend sent me a column penned by someone who feels differently. The title tells it all: “I regret enrolling in an HSA.” Author Kelley Butler is having a major case of buyer’s remorse.
Kelley Butler is the editor of Employee Benefit News and her article can be found at http://ebn.benefitnews.com/news/regret-enrolling-hsa-2670271-1.html.
Kelley liked everything about her old health plan—except the price: “I knew we couldn’t afford the premiums we’d have to pay to keep our beloved PPO.” So she signed up for the high deductible health plan with a health savings account (HSA) and “hoped for the best.”
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Originally published in Rochester Business Journal
1/9/2009, 1/16/2009, 1/23/2009
Early signals from our health insurer led us to expect another double-digit increase in our insurance premiums—perhaps a 15% hit. Frankly, I thought that we were just being softened up for something lower—If I were led to expect 15%, then a mere 11% bump should make me (relatively) happy. I was stunned when the final price of the most popular of our plans would go up 21% in 2009.
The big increase in price led us to explore cheaper plans, particularly a policy that includes a “Health Savings Account” (HSA). The discussion below refers to the specific plans we were offered by Excellus BlueCross BlueShield.
CAUTION: The remainder of this column discusses insurance premiums, deductibles, out-of-pocket maxima and other arcane health insurance jargon. Readers looking for lighter fare might prefer IRS Publication 17 or, perhaps, a William Faulkner novel.
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In partnership with the Finger Lakes Health Systems Agency, CGR sponsored a conference in Albany on November 27 to discuss the role planning should play in New York’s health care industry. This column is an edited version of my remarks to conference participants.
My father-in-law practiced radiology at Howard Community Hospital in Kokomo, Indiana for 40 years. And I was always hearing stories about the latest threat from St. Joe’s, the competition across town—a new CAT scanner, or this new technology called “magnetic resonance imaging.” When the radiology practices of Howard Community and St. Joe’s merged just before he retired, you’d have thought the Berlin Wall had come down.
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An article published in the current issue of Health Affairs reports on pricing for self-pay patients, one of the only parts of the health care business that is largely “unregulated.” The author, Gerald Anderson, reports that people who pay their own hospital bills get charged more for care than those whose bills are paid by insurance companies or have Medicare or Medicaid coverage.
That’s not a surprise, of course. We’re accustomed to bulk discounts and buying clubs—the “membership has its privileges” sort of thing. Yet the magnitude of the difference should capture your attention: on average, patients without public or private insurance pay three times the Medicare-allowable cost. Anderson doesn’t report the average for New York but in New Jersey self-pay patients are charged a whopping 4.56 times the Medicare-allowable cost. Pennsylvania is right behind with a charge-to-cost ratio of 4.33. California, Alabama and Nevada round out the rest of the top five. At the other end of the scale Wyoming and Maryland hospitals charge self-pay patients 1.85 times and 1.23 times the Medicare-allowable cost. Note: Let me suggest that “cost” is in the eye of the beholder (or, at least, the beholder’s accountant). I don’t claim here that the Medicare number is the right way to define cost—hospitals don’t think so—but I do want to call attention to the discrepancy.
The article isn’t describing a new problem, but it is getting worse. In 1984 the average ratio was 1.35.
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“Dad, I’m at the emergency room.”
Oh, great. Send your daughter off to college—across the country, for heaven’s sake—and one thing you notice right away: You have REALLY lost control. Unless you own a Lear or a nice $20m Gulfstream, there is no way to get to California quickly in a crisis.
OK, maybe not a crisis. Turned out she was fine—too much caffeine, too little sleep. They put in an IV, did some blood tests, then sent her back to campus.
I wish I could say that there was nothing wrong with ME when I got the bill! Are you sitting down? The hospital sent me a bill for $2,335. If that wasn’t bad enough, I soon got the bill for the “accessories,” like the extras you get with some gadget on a late night infomercial: “But that’s not ALL! Buy the hospital visit today for only $2,335 and get a doctor for ONLY $547! And don’t miss the lab work! Call the toll free number on your screen and get your personalized pathology report (YES, we test YOUR OWN BLOOD) along with your hospital visit WITH the doctor for a mere $354.25! That’s right—the whole emergency room visit for just $3,236.25!!
Many of you have had a similar experience. What’s my point?
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Need drugs? The legal kind, I mean? I think you’ll agree that there is no shortage of sources. I did a quick check of the phone book and found ten places to buy prescription drugs within a two mile radius of my house (3 Eckerds and 2 Wegmans plus Tops, Rite Aid, CVS, Kmart, Walmart and Medicine Shoppe). And there are more planned—Target & Walgreens will be in the radius by the end of the year.
Doesn’t this seem rather odd? Let’s put aside the places that do drugs as part of a one-stop-shopping model, such as the grocery and department store chains. It is the stand-alone pharmacies that puzzle me. How can Eckerds make money with three stores in my backyard? I can’t remember a time when these places were particularly busy. Waiting at the check-out is a rare event. Offhand, this doesn’t look like an efficient model. So either they are ready to go bankrupt (Ah, that must be why Walgreens is entering our market—they want to share in the losses!) or the margin between the price they pay and the price we pay is pretty rich.
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