Second of two parts
By Andrew Gerns
Recently I presided at the funeral of a woman named Polly, who I had come to know a bit in the months before her death. I was familiar with her medical care, and it struck me that in her last years almost all of her energy she spent on paying for it.
The more I thought about Polly’s situation, the more I realized that we are all at risk of the very same fate. Not just the poor and the working poor, but everyone who stays in a job “for the insurance” or who considers putting off a doctor’s visit or filling a prescription either because of the cost, the hassle of dealing with insurers, or an inability to handle growing “co-pays.”
Other healthcare systems around the world handle sick people the way we handle sick pets. No one is cared for unless they pay the money up front and even then they must bring their own food, bandages and relatives to care for them during recovery. We are in a system that guarantees a minimal level of access but which often saddles a person or family with a mountain of debt and which often does not cover the cost of providing the care in the first place.
The way we structure paying for healthcare poses serious moral questions for all of us. Namely, who pays for Polly? Because of the way the system of reimbursement is structured and because of the way the health care market works, we are all complicit in the health care mess.
Today we work under an operating principle that assumes that I will only pay for the cost of my care, and I want that cost as low as possible. Know it or not, we are all caught up in that game: insurer, employer and consumer. None of us want to pay more than what is supposed to cost to care for me and me alone.
And no one of us wants to pay for overhead.
The choices that are made because we only want to pay for own costs and no one else’s left Polly out in the cold.
When the Great HMO Experiment collapsed in the late 1990’s and early 2000’s, we were left with a system that contains many elements of everything that came before it. Which brings us back to how providers and insurances negotiate rates.
Each insurer group will go to each hospital or network and say “We will only pay $M”. The hospital says well, we want to charge you “$X” because it really costs us “$Z” to provide this service. But at the end of the day, the provider will negotiate a “special rate” of $M and hope they make up for the short-fall on volume. But to justify this, to make “$M” really look like a discount, the published rate for any given service must be somewhere between $X and $Z.
So here’s the formula: “$M” = rate paid, “$X” = rate charged and “$Z” = actual cost of care plus overhead. Hospitals and providers that survive and prosper are the ones who can build enough cash reserves to operate and grow based on getting as many people as possible who can, through their insurers, pay somewhere between “$M” and “$X” and enough patients who can actually afford to pay “$Z” when the insurance runs out or won’t cover what they need.
The truth of the matter is that most providers have to get by on “$M” and from that pay for staff, supply and overhead. They have to staff and deliver care accordingly. Most of what passes for cost-containment doesn’t contain costs at all, but shifts the actual costs someplace else.
And neither your (or your employer’s or your government’s) insurance premium nor your provider’s negotiated rate of “$M” fully takes into account the cost of the competing bureaucracies, the one designed to maximize collections (provider) and the one designed to minimize payments (insurer). Every time you compare an explanation of benefits and a provider bill, you are caught in between the competing bureaucracies.
In truth, a provider in a reasonably busy market will charge a wide variety of rates for a wide variety of contracts looking for that magic balance of volume and reimbursement just to stay in business. If you think that you are only paying what it costs you to get the care you got, think again.
But wait, there’s more. This is where we move from craziness to immorality.
If the provider has to post “$X” as their rate, even though most of the insurers that insured patients used has negotiated “$M”, does any one pay “$X?” You bet! Polly paid.
Those without the “buying” power of a group pay full freight because they cannot negotiate a “discount.” That means the uninsured. That meant Polly.
When your local hospital, be it tax-exempt or for-profit, publishes it’s “charity care” numbers, a large part of what you are seeing is the write-down between what it charges its poorest clients (because those with insurance including Medicare pay at a rate far below cost) and what it can ever possibly hope to collect.
In poor rural or urban areas, the cost of the write-downs can be greater than their collections, even if they are filled to the brim with patients. Without a healthy margin (or profit if the hospital is not tax-exempt), there is not enough cash to go from day to day and that means more debt. Which means that hospitals in poor areas spend much more money managing debt than paying for care.
Of course, the insurers have to make a profit to stay in business or, if they are the government, spend as little as possible for legislative and budgetary reasons. So they will do all they can to cap, limit, direct and ration care while at the same time paying as little as they can to the ones who provide the services.
The system is ripe with immoralities. Of the many immoralities of our “system” of paying for health-care, the biggest one of all is that we have broken the social contract that says that the majority of us who have help pay for the care of those who have not.
We have broken the contract that says that we are who are healthy, or even relatively healthy, and who have resources either in terms of insurance or wealth help pay for the care of those who are sick or poor, or who need extra care. We have devolved a system which will only tolerate what it seems to cost to pay for me alone and the system tries to make up for that fact with decreasing service, increasing overhead, and evermore limited access.
Having entered the system, Polly was all but bankrupted by it. One of the other documents that she never completed was the final order declaring her bankruptcy. She did not have the money to pay the court and lawyer fees to complete the process.
Polly’s health suffered because her nutrition was compromised. Her baseline health was in the basement. Her dental care was non-existent, which left her open to all kinds of new health problems. She lived in substandard housing because that was what she could afford. She avoided follow-up care and basic care for things like colds and sore feet for obvious reasons. When she could, she bought her shoes and clothes at the dollar store or the Salvation Army.
On the other hand, she used to tell me or her doctor at the filling station that she had the best exercise program on earth…fifteen blocks each way. Only one way uphill!
We have a system so weighted towards the payers who can obtain the lowest rates, that there are many with no insurance or inadequate insurance who are charged the highest, unnegotiated rates out there. We have a system in which many with insurance are bankrupted because the more specialized care they need, or the longer they are in the system, the less likely it is that they will find providers who will accept only the payment assigned to them.
This is one reason why healthcare causes the most personal bankruptcies, why we have the most expensive health related bureaucracy and why we have the most inefficient and haphazard basic care delivery system of the major industrial economies.
I am not so naive to think that Polly is alone in this. Just look around your parish. There are probably many in her shoes, but perhaps not as obvious. These are the ones who are one serious illness away from disaster.
If we as a society are going to seriously and adequately address the health-care crisis in this nation, we will have to come to terms with the moral question of how we all share in the cost of each other’s care. Are we responsible for each other, or not? Do we have obligations to each other, or not? We will bear, even on the most minimal level, each other’s burdens, or not?
The sad truth is that one way or the other, we all paid–and will pay– for Polly. We just didn’t help her.