Did you realize that healthcare costs have grown to command nearly 18% of the US gross domestic product? Yes! Like a cancer on our economy, healthcare costs are sucking us dry, folks. Aside from our never-ending wars, nothing is robbing our infrastructure and our future more than our healthcare mess.
American businesses and families spend about $3 trillion a year on health care, according to Richard Master, CEO of MCS Industries, Inc. (a leading supplier of wall and poster frames) and producer of Fix It: Healthcare at the Tipping Point. Per Master, these rising costs are crippling the capacity of American businesses to compete abroad. Business owners are starting to stand up and fight back. Check out the links (below) to Counterpunch and Fix It: Health Care at the Tipping Point to learn more about how health insurance is devouring our economy!
What’s shocking is that according to Mr. Masters’ research, more than 30% of that $3 trillion doesn’t even go to health care or medicine. Nearly $1 trillion goes to “administration.” You know, pushing paper. Some paper pushing is to be expected, of course. Doctors have to maintain medical records for their patients, they have to order procedures in writing, and so on. But a major portion of administrative expense is completely unnecessary and if it were gone, you wouldn’t even miss it – plus your life would be BETTER.
It’s called “Billing and Insurance-Related Activities” (BIR). You know, following up with your health insurance company to get your claims covered, checking to see if the doctor you want is in your insurance network, fighting to get treatment covered that your health insurance company insists is “not medically necessary.”
Well, if you think that’s bad, think about it from the doctor’s perspective! Hospitals and medical practices must maintain substantial billing offices to deal with health insurance. Dr. David Cutler, a Harvard health economist, noted on PBS’ News Hour that while Duke University Hospital had only 900 beds, it had 1,300 billing clerks!
Why so many? James G. Kahn, MD and MPH at UCSF has identified three realities of insurance billing that directly and unnecessarily burden our doctors and hospitals.
The first burden is complexity. Billing insurance companies entails multiple processes and great precision to detail or the claims just won’t get paid. These processes include analyzing patient insurance coverage and identifying what costs the patient is responsible for (their deductibles, co-pays and coinsurance), collecting those payments from patients, tracking prescription formularies and prior authorization; maintaining benefits databases; coding the services provided; checking and submitting claims; receiving and depositing payments; appealing claim denials and underpayments; negotiating end-of-year resolution of unsettled claims; and paying subcontracted providers.
The second burden is variation. The same insurance company can have scores, if not hundreds, of customized plans. Some are for large employers, others are for small employers, or individuals and families “on the ACA exchange” or individuals and families “off the exchange.” Our medical providers have to track a myriad of details about benefits, reimbursements, and plan specifics, and after all that respond to an impossible number of claim denials with additional documentation. And they have to do this with multiple insurance companies!
The third burden is friction. Rather than promote a smooth and easy process of billing and collections, health insurance companies reject 10 to 15% of all claims right off the bat, of which 5 to 10% remain unreimbursed even after additional documentation is submitted. Denying and delaying claims payments is actually the business model of health insurance companies, as described in this YouTube video created by a medical clinic after years of frustration with health insurance companies: Deny, Disclaim, Delay – How Health Insurance Companies Really Work
Without a doubt, dealing with insurance companies is no kindergarten party, folks!
So what are we to do? It’s so obvious that we need to get our healthcare system focused on our health! We need to get rid of the middlemen who add NOTHING to the equation. Health insurance companies merely transfer payments between people and their doctors. Medicare does this for less than 3% in administrative cost while private health insurance companies spend up to 20% (or more).
We can do this so much better! If we got rid of private, for-profit insurance companies who profit off of our illnesses and injuries, we could save billions of dollars. Because increasing our access to care and freeing up our doctors to spend more time with us results in a healthier California! Medicare for All/Single Payer healthcare is the answer. Join HEAL California and let’s take healthcare reform to the next level!
Learn more: How health insurance is devouring the US economy
Order the new video: Healthcare at the Tipping Point
Learn more: Why does health care cost so much?
Check out Dr. Kahn’s analysis detailing the burden of insurance billing