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The Ted Almon BlogArticles on Healthcare ReformTuesday, February 27, 2007Health Insurers should collect Co-pays and Deductibles
There was more bad news for businesses on future health care costs in the news this week. Soon health care is expected to consume one in every five dollars spent in this country. There simply is no way our businesses can remain competitive with such a burden. (Link)
Meanwhile, stories of the financial woes besetting our hospitals are unabated. Where then is all the money going? The answer, as usual in the healthcare cost debate, is not simple. Try to picture ringing that odd triangular dinner bell from the old western movies. If the three sides of the triangle are the employers, the insurers, and the providers our cost savings efforts so far are like the ringer banging successively into each. We make a lot of noise, but we're really not accomplishing much else. If the costs are the noise and pain of the ringer, we shift it along to the next stakeholder, but it is back soon enough. We simply never seem to address things that will actually save money. Our latest exercise in the pursuit of such illusory savings involves various forms of high deductible coverage, broadly described as "consumer directed" plans which include HSAs, HRAs, and a variety of self insurance type options. Insurers maintain that subscribers need to have more "skin in the game" to be motivated to make cost effective choices about their health care. Typically these plans make the employee responsible for the first level of deductible, the employer another, and finally the insurance company's coverage. Subscribers though, typically carry the standard insurance card of the carrier. Since there is no functionality for providers to check on the status of the presenting patients' deductible, they have to bill the insurer to find out. Naturally, as such plans become more popular the number of these claims which are denied has skyrocketed. In addition to greatly increasing the billing complexity and associated costs for the provider organization, these receivables have proven extremely difficult to collect once the patient has been treated and left. Our hospitals, on the front line of health care, are crying "uncle" already. Last week The Hospital Association of RI introduced legislation to have the insurers pay their members the entire amount due and collect the co-pays and deductibles from their subscribers. This idea makes perfect sense, and is both fair and much more efficient to the system as a whole. It actually would more effectively preserve the personal responsibility the insurers tell us will ultimately reign in costs. Unlike the providers, the insurer has an ongoing billing relationship with all their subscribers, and all the leverage needed to collect, at least from those who want to continue their coverage. They also have to track the deductibles anyway to know when coverage begins, so adding the deductible amount to the subscribers' bill should be done at marginal cost. Because our country relies on a cumbersome network of private insurers for coverage of most citizens, our system carries notoriously high administrative overhead. Even before the onset of "consumer directed" plans, the government estimated administrative costs at 31% of our total outlays. This compares to 17% in Canada where they rely on a Government run single payer. Ironically, the difference in these cost profiles is roughly the amount of money we would need to cover all our uninsured! Imagine, no one has to forego needed healthcare or endure long waits, we wouldn't even have to give up smoking and eating Twinkies, although we should anyway. All we have to do is streamline the administration of our system. Blow up all the redundant and unnecessary paperwork. Having Insurers collect the co-pays and deductibles mandated by their own plans won't accomplish this goal but clearly it is a step in the right direction. Hopefully our Legislators will see the light this time around and go with the HARI plan. ArchivesNovember 2005 February 2006 October 2006 December 2006 February 2007 July 2007
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