The Rationing of High Cost Healthcare

I would like to start this blog article with an extreme hypothetical situation...

Imagine a pharmaceutical company comes out with a pill... a WONDERFUL pill "Xyz" that is GUARANTEED to extend life by 1 month with no side-effects that works on kids as well as adults. For every 1 of the these pills that are taken, 1 month is added to your life expectancy guaranteed. Doesn't matter if you have cancer, in a coma, suffering from a horrible infection, stroke, or you are completely healthy. One month added to your life expectancy for every 1 pill you take.

Catch is, this pill is very expensive. For ONE person, it is $5,000 per pill or $150,0000 per month or $1.8 million per year.

In this hypothetical situation, should patients pay out-of-pocket for this treatment? Than only the rich will be able to afford such expensive treatment.

Should insurance pay for this treatment? Well, given the high cost, the insurance companies will raise premiums in order to afford to pay for this treatment... otherwise go into bankruptcy. With increase in premiums, more and more people as well as companies will not be able to afford health insurance.

In response, in order to make health insurance more affordable, insurance companies have increased deductibles as well as included riders that exclude the Xyz pill coverage.

• Increase in premiums
• Inability to pay for health insurance premiums
• Increase in deductibles
• Exclusion riders

All as a response to an increased cost of providing healthcare (via this wonderful "Xyz" pill).

Should the government pay for this treatment? The population in the United States is 312 million currently. The cost to government will be $562 million per year to provide treatment for every individual for one year. Given everybody theoretically could live forever while taking Xyz pill... nobody will die which means the population will increase. With population increase, the United States will eventually go into bankruptcy it it continues to provide treatment for everybody.

As such to prevent government bankruptcy, Congress passes a variety of laws that include cutting medicare/medicaid benefits, raising the United States debt ceiling, cutting back on education/military spending, increasing taxes, etc.

This story sound familiar?

That's because it is... though not because of the existence of the Xyz pill. But "expensive" healthcare exists due to new pills, new tests, new surgeries that keep coming out which are more expensive than prior healthcare interventions.

The insurance and government's responses are the same in real life as to the fictional response to the hypothetical Xyz pill.

So what's the answer???

I don't have one that will make everybody happy... Read more about the healthcare dilemma.

Health Insurance Billing Explained

So there are many patients who do not quite understand how billing through their insurance companies work. Words like deductible, copay, coinsurance, and premium all seem to blur together resulting in confusion in terms of what they may anticipate paying for a given medical service. This blog is to help demystify and clear up the confusion so that hopefully, there will be no surprises when you get a bill from either your physician or the hospital.

SO, perhaps the best way to explain the differences is through an example. Keep in mind that every single health insurance plan have different charges (even within the SAME plan with the same name), so look at the contract you signed to see exactly what your obligations are.

EXAMPLE: Mr. John Smith has Anthem PPO which has the following criteria:
Premium: $10,000 per year
This means he must pay $10,000 per year just to have Anthem PPO health insurance.
Deductible: $500
This means he must pay $500 in a given year BEFORE his health insurance coverage even kicks in.
Copay: $30 PCP/$50 Specialist/$75 ER
This means that if he sees a primary care doctor, he will have to pay $30 every time. $50 and $75 for a specialist or ER visit respectively.
Coinsurance: 20%
He will be responsible to pay 20% of allowable charges of his healthcare bill set by his insurance company, Anthem PPO.

In case you lost or misplaced your contract, call the number on your insurance card to get all this information. For those individuals where their health insurance is covered by their employer (ie, you are not paying premiums), you STILL are paying premiums reflected in lower wages OR hidden costs that may not be readily apparent. However, the expense of health insurance in a company is spread out through all its workers and the company gets a "group rate" that is cheaper than if an individual gets health insurance on his/her own.

HINT: Before you make an appointment with a doctor, make sure that the physician participates with your health insurance plan. Otherwise, you may find yourself paying the entire bill out of your own pocket! Click here to read more about this situation.

A final point to consider is that the copays, deductibles, co-insurances, etc discussed above apply if a physician is IN-NETWORK. OUT-OF-NETWORK coverage means a given doctor participates with your insurance, but you will be paying much more than if you remained with a physician who is an IN-NETWORK participating provider. How do you find out whether a given physician is in-network or out-of-network? Call your health insurance plan and ask. Click here for more info regarding in-network vs out-of-network.

To see what health insurance plans Fauquier ENT participates with, click here.