More Dogs on Main Street
June 9, 2007
The big topic of discussion this week has been whether the snow on Thursday was the final storm of last winter or the first storm of next winter. I’ve always held to the 4th of July theory any storm before the 4th of July belongs to the prior winter, and anything after begins the next one. There wasn’t a lot of snow at my house, just enough to cover the roofs and decks. The snow on the ground melted off pretty quickly. I’ve certainly seen worse in June. One year, we made a snowman on the summer solstice with green grass for hair, and more than one 4th of July parade has been snowed on. Though it puts a real crimp in the outdoor recreation, we need the water.
I’ve got the irrigation running on the farm. Normally this time of year, I can cut two streams out of the ditch, and they will run to the bottom of the pasture over the course of the day. So far, even with the rain, I can’t get it to flow across the field. The ground just sucks it up. The river level is down to mid-summer flows already. Trails that normally are just opening up are already dusty.
Did you watch the big presidential debates last week? I tried, but couldn’t last through them. If this selection of mixed nuts is the best we have to choose from, we’re screwed. Where’s a Chester A. Arthur when we really need one? Although the presidential candidates are loathe to talk about it in any meaningful way, we have a health care problem in this country. The system we have is just perverse.
For example, I was in for a regular check up recently. Given my diet, the expectation was that my veins were flowing hot fudge sundae instead of blood, and completely lined with mozzarella cheese. So the doctor drew a little blood for the routine cholesterol testing. That gets farmed out to a private lab, in this case, a part of the evil empire called Laboratory Corporation of America.
The bill for three simple and routine tests was $254. I have health insurance, sort of. It’s one of those high deductible plans that covers anything that goes wrong, as long as it happens on an odd numbered Wednesday in a month without an "r" in the name. Bad as the coverage is, the insurance company has twisted LabCorp’s arm, and got a discount. LabCorp can only charge people in the insurance plan $35.34 for these tests. The other $218 just gets written off.
I’m not talking about a co-pay here. That is the net, total payment to the lab for the tests. If you have insurance, the total payment to the lab is $35 whether you pay it yourself or the insurance company pays it. If you don’t have insurance, the lab charges $254. LabCorp is apparently able to perform the tests and make an adequate profit at the $35 rate, but feels like they are justified in screwing the uninsured by gouging them an extra $218.
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The explanation is that they are "sure" they will get paid when there is insurance. In my case, the $35 had to come out of my pocket because I haven’t met the deductible on my plan yet (and won’t short of a month in intensive care). So the risk of me coming up with the cash is about the same with or without insurance. On the other hand, the uninsured may be more likely to pay the bill if they were charged $35 instead of $254 for the exact same service. But the uninsured guy gets to pay more than 7 times more just because they can get away with it. Somebody is going to hell for this.
The doctor bill isn’t quite as bad, but the same kind of pricing goes on there. The "rack" rate for the physical exam was $311. The discount for having insurance was about 50%. Again, this isn’t a situation where the insurance company paid the difference. The insurance company paid nothing. The net amount in the doctor’s pocket was 50% less than the rack rate because the insurance company puts a little muscle on the doctor and gets a discount. The process works by the insurance company threatening to exclude the doctor from their "plan" if he doesn’t play along, essentially putting him out of business. In most settings, this is called racketeering. The end result is that my annual physical cost about $180, which seems like a bargain. The exact same exam would have cost a guy without insurance $565.
Then we wonder why people without insurance don’t get an annual physical exam, and instead of finding and treating their high blood pressure early, discover it only after a stroke lands them in the emergency room. Then the medical/industrial complex whines about the high costs of treating the uninsured, billed at the rack rate, no doubt.
If Jiffy Lube tried the same kind of pricing, they would be out of business in a month. Imagine pulling your car into the service bay, and the guy informs you that the $29 oil change will cost you $210 because you don’t belong to AAA. If your car insurance company raised your rates 10% year, for no good reason, you would start shopping the coverage around to find a cheaper alternative. Medical insurance isn’t easily shopped around. If you once had a slight fever, no other company will take you. So they can arbitrarily jack up the premiums, pretty certain that you have no options but to pay it.
Most people’s health insurance is purchased by their employers, so they don’t have to shop it themselves. That does a great job of hiding both the costs and the abuses in the system. If we all had to buy health insurance the way we buy car or homeowners insurance, there would be rioting in the streets demanding that the system get fixed.
But don’t hold your breath waiting for that to happen. If you don’t have insurance, that will cost you 7 times more than it should.