Healthcare Education and Q&A Thread

This is the only part I don't understand. Can you please elaborate on the political ramifications for the commercial insurers, if they don't subsidize the Medicaid losses?

Can do, with a real life current event.

Here in Philadelphia we are in the process of closing a hospital because it simply cannot break even under the immense weight of massive Medicaid patient concentration. Rather than completely closing it, we felt it important to keep the facility open on a scaled down basis, so that patients in the area had access to care. They'd have to go elsewhere for inpatient admissions, but at least they could still come to this scaled down facility for ER visits, chemotherapy treatment, colonoscopies, X-Rays, and other outpatient services.

In order to make this work we need to establish new reimbursement rates with commercial insurers. Our position is we need the same rates, or at least close to the same rates, as we were getting from them when the hospital was a full-service facility. Our argument was that the inpatient component is being closed because the commercial rates we were getting weren't enough to offset massive losses on Medicaid patients. We pointed out that by closing the inpatient services and scaling down the facility, we were cutting the overhead on the delivery of the remaining outpatient services. But, if commercial reimbursement were to drop in concert with that cost cutting, we would wind up in the same place, with our heads underwater.

Most insurers recognized the situation. They realized that if this facility completely closes, the people in the community would have very little access to care. Given that many are poor and don't have cars, getting to the next hospital 3 miles away isn't feasible. And public transportation in the area isn't practical. With no facility in their neighborhood, there would have been a public outcry.

Most insurers agreed to maintain the same rates. Except for one large insurer who shall remain nameless. They have dug in their heels insisting that their rates come down in concert with the cost cutting. We have responded by speaking with the community's state representatives, who in conjunction with us are putting pressure on the insurer. The argument:

- Without these rates, this facility is at risk of going out of business, leaving the community without adequate access to care.

- Your competitors, the other commercial insurers, agreed to establish rates.

- Therefore, you are the only company standing in the way of this community having the access to care it desperately needs.

The community was furious with us for closing the inpatient portion of the hospital. They haven't caught wind of these payer negotiations yet, but local government is aware. If it comes to a head, this insurance company will be painted as the enemy by both us (the provider) and the local government. The public response will be deafening.

What is the cost of the current system and is it sustainable?

That question is extremely vague. The "cost of the current system" cannot be put into meaningful dollar terms. If I said $2.0 trillion per year, does that mean anything to anybody?

Is it sustainable? Depends. In some communities absolutely, in others not at all. For some employers absolutely, other employers not at all. For some doctors and providers absolutely, others not at all.

I can tell you this, Medicare cannot afford to continue paying the current reimbursement rates over the course of the next 20 years. Benefits will have to be cut or taxes raised. Something will have to change.

^^ Generally, under HIPAA, an insurer can exclude pre-existing conditions from coverage if you have received treatment for the condition in the past six months. The length of teh exclusion can last from 12-18 mos. Frequently Asked Questions about Portability of Health Coverage and HIPAA (http://www.dol.gov/ebsa/faqs/faq_consumer_hipaa.html)

Some states impose stricter restrictions than HIPAA and prohibit all exclusions for pre-exisiting conditions.

Also, to clarify, HIPAA only applies when you have already been insured and are transferring ot a new group insurer - not when purchasing individual insurance plans.

Tips for getting insurance when you have a pre-existing condition - CNN.com (http://www.cnn.com/2009/HEALTH/05/14/preexisting.condition.insurance/index.html)

I am curious as to the average payment for the vast majority of commercially insured individuals. Realizing this breaks down by coverage, age, etc., I am just looking for a true average.

This is difficult to answer because it will vary so greatly from hospital to hospital. I can tell you our large urban academic medical center got an average of $20,074 per inpatient admission in the most recent fiscal year. Meanwhile, our community hospital got $8,876 per inpatient admission.

The reimbursement is so much better at the academic medical center because it sees sicker patients requiring more expensive treatment, which results in higher reimbursement. Also, the commercial rates are higher at the academic medical center, because of negotiating power discussed in the first post above.

Which is a good representation of the US average? Really hard to say. I do know the Medicare "base rate" is about $6000 nationwide. So I'd put the nationwide commercial average at $6000 - $10,000 per inpatient admission.

Much, much higher if said patient is sicker than the average inpatient admission.

Further, what is the tax burden impact of medicaid and medicare to taxpayers?

To me, that is the "cost of insurance" (ave. paid by all commercially insured + pro rata tax burden to taxpayers). For those who use self pay, the cost would be the average annual cost of healthcare (i.e. 1 million uncovered people spent X on healthcare in 2008) + pro rata tax burden.

Great question and I'd agree with the approach to ascertain the number. Unfortunately I don't have the information available to me to do it.

We hear all the time that people cannot switch their insurance because of existing condition. I thought if you had current insurance that if you wanted to switch to another company they could not underwrite, charge higher rates, or reject a person because of that condition. Is that true?

Yes they can, but there are limits to their ability to restrict. See JR's answer, it's right on.

Also, to clarify, HIPAA only applies when you have already been insured and are transferring ot a new group insurer - not when purchasing individual insurance plans.

Tips for getting insurance when you have a pre-existing condition - CNN.com (http://www.cnn.com/2009/HEALTH/05/14/preexisting.condition.insurance/index.html)

I guess I should have worded my question better because I was talking a family and not group plans.

In 2008, the average cost of insurance premiums for employer based policies was $3,400.00.

"Growth in health insurance premiums is far outstripping inflation and wages. Many employers have been forced to pass on premium increases to workers. Workers on average pay 27 percent of the premium. If workers continue to pay that percentage, by the end of 2009, employees, on average, will pay nearly $4,000 annually for their share of health insurance premiums.

The average employee contribution for family health insurance premiums increased 120 percent between 1999 and 2008 to $3400 annually. And average out-of-pocket expenses for deductibles, coinsurance and copayments have increased 115 percent over the same period. Salaries have only increased 34 percent during this period."

http://www.nchc.org/documents/Costs-Workers-2009.pdf

From the various sources I have gone through, it appears that the price of healthcare - and by that I mean doctor's visits, operations, and pharmaceuticals, not the cost of insurance - has risen drastically in the last 10 years.

In your opinion Schneed - what are the two or three factors driving this rapid increase. (I am assuming malpractice insurance is one but are there others?)

We know that the goverment does provide health ins to people today. Do we know what the goverment pays on average for health coverage v/s private ins?