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Eli and Ms. Rabett are moving on in years, and although they have excellent health insurance through Eli's employer, they had some health problems last year.  As part of the insurance company's efforts to reduce costs, it provides receipts for each claim, and gee, the Bunnies had a lot last year, over 50 of them and some were large.  When you get old, Mom Rabett used to say, your social life becomes visits to the doctors.

Neither Eli nor Ms. Rabett are feeling guilty about this, between what Eli paid and Eli's employer paid, they were only about a grand shy of covering the insurance company's costs of a bit less than $17,000.  Moreover, in previous years the Rabett family and Eli's employer has provided a ton more money in health insurance payments than in health insurance costs.  That, after all is what insurance is for.

However, in shifting through the bills to figure out if there were enough costs to take the medical exemption (no, and this is excellent) Eli was able to see the discount that the insurance company got from the docs and the hospitals.  The total discount was a bit north of $28,000.

Consider the following question:  Why are so many people unhappy about losing crappy high co-pay/deductable health insurance?  

If these policies access insurance company discounts, then just the fact of running the claims through an insurance company yields a 28,000/(28000+17,000) = 62% discount on what you would have paid walking through the docs door.  In that sense ANY health insurance is better than none.

Moreover, unless you can negotiate ~60% discounts with the hospitals and docs you use, health savings accounts are a disaster.

Good health insurance is best of course

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Comment Preferences

  •  You've noticed the real role of the insurers (5+ / 0-)

    Our "system" is of course totally fscked.  One of the worst aspects is how hospitals overcharge the uninsured. This was explained a couple of years ago in Fareed Zakaria's excellent Time article.  Basically, the hospitals create absurdly high list prices called the chargemaster.  It's about three to five times what an insurance company negotiates and about ten times what Medicare pays, since Medicare rates are tied to cost with only a fair profit.  I suppose their excuse for chargemasteris that it's really meant for oil sheiks who come to America for our superior care.  But they've having trouble not breaking into laughter when they say that.  Especially since much of Europe now has excellent hospitals too.

    So if you're uninsured, the hospital hits you with a bill at chargemaster.  The secret is that it's negotiable; they know it's unconscionable, and there are people who make a living negotiating down these bills.  But by being insured, even with a high deductible bronze-class plan, you get the lower insurance company price.

    There are some fake plans, like mini-meds, that don't even go this far, and the "out of network" coverage of some PPOs may not either. So it's best to stick to a reputable HMO, like anyone in the state exchange. Those mini-meds, of course, don't meet Obamacare standards.  People who allegedly "like" them probably never had to make a claim.

  •  This fact is all kinds of wrong... (0+ / 0-)

    but the reality is so right that it deserves more attention!

    To be first in the soil, which erupts in the coil, of trees veins and grasses all brought to a boil. -- The Maxx

    by notrouble on Fri Mar 21, 2014 at 07:50:57 PM PDT

  •  Not always (0+ / 0-)
    ANY health insurance is better than none
    If you're borderline poor you might be better off going to a non profit hospital that has to supply a certain amount of "Charity Care" in which case you might not pay a dime in spite of not having insurance.

    I found myself in that situation when I went back to college to finish up a degree. I was low income and my case put me in a position where I qualified for "Charity Care". My bill for over twenty thousand dollars was written off and that wouldn't have been the case if I'd had insurance.

    If I'd had insurance I would have ended up with a bill for around $4000 dollars. So it really depends on individual circumstances and that's one of the aspects to this totally fucked up situation.

    My invisible imaginary friend is the "true" creator

    by Mr Robert on Fri Mar 21, 2014 at 08:46:06 PM PDT

  •  So would a medical bankruptcy caused by (0+ / 0-)

    medical charged that were $28,000 lower make you feel significantly better?

    The fact that two patients with the same illness, the same treatment, but different insurers could accrue charges that differ by $28,000 seems to be one of the major problems with the system.   It seems to me that the services are either worth the additional $28,000, or they're not.  If not, then someone (and the economy as a whole) is being screwed (inefficient).

    "Because I am a river to my people."

    by lordcopper on Fri Mar 21, 2014 at 09:31:53 PM PDT

  •  No, health CARE is the goal. Forcing people (0+ / 0-)

    to subsidize a completely unproductive drag and hindrance to an essential service is wrong and immoral by any measure.

    Pretending that structuring theft in a system that perpetuates the theft is anything other than evil, is naive, at best.

    "Those who can make you believe absurdities can make you commit atrocities." - Voltaire

    by Greyhound on Sat Mar 22, 2014 at 12:55:25 AM PDT

  •  this is wrong: (0+ / 0-)
    Why are so many people unhappy about losing crappy high co-pay/deductable health insurance?
    People are NOT losing THESE policies (and I  have one). People are losing policies that do not cover any significant expenses.  Cheap misleading policies that cover some routine expenses but are capped at some ridiculously low level.  And don't be so sure these fig leaf policies get victims the kind of discounts you mention.

    I do not view my 5k deductible policy as "crap".  It's there for the really big stuff and I don't mind paying routine expenses out of pocket.

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