There are several huge inherent problems with high deductible junk insurance.
High deductible insurance shifts what is called first dollar coverage from the insurer to the consumer. This is why it is often called "consumer directed" health insurance. The atrocious theory is that if the consumer is required to pay the first dollar of healthcare costs due to the large deductible, we will think long and hard before accessing medical care, hence this will tend to lower or bend the cost curve.
It seems consumers are not the only ones experiencing problems with high deductible health care.
People get sick or injured, and they have to use their high deductible coverage, and in the process of doing so, discover the insurance leaves them with huge bills. This is why so many call it, "insurance in name only".
Providers and hospitals are having very significant problems of their own, dealing with this very defective product.
Here's a very interesting exchange from the recent Tenet Healthcare Corp. conference call with Wall Street analysts.
The system is cannibalizing itself. As insurers raise premiums, consumers are herded to high deductible insurance, which then results in unpaid bills to healthcare providers. An endless cycle of debt, collections, more debt, then bankruptcy.
And most worrisome to Wall Street, reduced profits. Most Americans saddled with medical debt will tell you, "you can't get blood from a stone".
Andrew Schenker - Morgan Stanley:
Conifer Health Solution
If I might just slip one more in here, change the directions a little bit. You mentioned you expect a benefit from the removal of annual and lifetime caps. I was wondering if you could kind of walk us through the trends in bad debt related co-pays and deductibles today and maybe how you think that might change for exchange products given kind of the known actual values of the different middle tiers
Trevor Fetter - President and CEO Tenet Healthcare Corp: Yes, Steve, go ahead – or Dan, sorry.
Daniel J. Cancelmi - CFO Tenet Healthcare:
I'll handle this one, Andrew. There has been an uptick, obviously, in the level of accounts that Conifer is processing related to high-deductible plans. We've seen that building over the past several years, and it's continued into 2013 as well. Now I might add that Steve and his team are doing a very good managing our bad debt levels and in keeping them relatively stable. And in fact, in certain cases, there's been some slight improvement in our collection rate. So we're pleased with that. But obviously, the number of accounts that we're seeing that relate to these high-deductible plans has been building, and it has been putting pressure on our bad debt levels.
does what is called revenue cycle management for Tenet and many other healthcare systems.
These are the folks that send you letters when you fail to pay your medical bills. Then, when the initial round of letters go in the garbage, this is the company that refers your account to collection.
When you burrow deep into the Wall Street, for-profit end of healthcare, as I do periodically, you see how every single encounter Americans endure with our system, is before anything else, a medical/healthcare sales pitch to generate revenue. There are plenty of good people, doctors, nurses etc. working in the healthcare trenches, who struggle to provide excellent care in an environment all too often inhospitable to those following the most righteous calling of their profession.
Stephen Mooney - President, Conifer Health Solutions:
We've seen this is being continuing trend for, like, actually a few years now as a continuing uptick of the larger co-pays on our balance – (we got our) balance after insurance side of that, and so that continues, although we're obviously deploying more strategies to counter that. But also to realize, the ACA also includes some subsidies for cost sharing as well. So that's a big thing which we think is going to have an impact as it goes forward.
Trevor Fetter - President and CEO:
When we talk about, we're excited about next year, we keep referencing this on calls, but it's some of these more arcane details about the way that insurance plans are structured, the subsidies, the cost-sharing, these various attempts to get out of this pervasive issue of shifting more and more of the burden onto individuals which ultimately just shifts it onto hospitals. So it's one of the things that we're – a big area that we are well-prepared for, and particularly enthusiastic about for 2014.
If you care to read the entire transcript, you'll see that every single encounter any of us have with the healthcare system has a huge $$$ sign attached to it.
Bad debt often leading to medical bankruptcyis not limited to for-profit systems, like Tenet and CTCA, this is a growing problems for hospitals nationwide as healthcare costs continue to be shifted from the insurers to consumer/patients.
Those of us who buy HDCD, a very defective private product, do so because it is the only so-called affordable solution available. If in fact, this insurance product is holding down costs, or bending the cost curve, it is also impacting the bottom line of other medical industrial complex players.
The problem with all this, as I have stated for years, is that requiring consumers to shoulder the large monthly premium, then a large deductible often as high as $10,000 or more, has the intended consequence of making us delay healthcare--so a small and easy-to-treat problem often becomes a nasty and expensive medical crisis.
The bad debt resulting from high deductibles, co-pays, co-insurance and all the other costs consumers bear in accessing healthcare, is having a deleterious effect on the bottom line up and down our for-profit health care system.
This obviously cannot continue in this fashion, and the U.S. system, the most expensive in the world, will implode (sooner rather than later, I fear) of its own greed and patently unsustainable costs.