The project for this afternoon, besides baking pizza from scratch for my grandmother while my parents are out at a cocktail party (???), is to take the stack of medical bills from my recent procedure and add up: 1) how much the entire process cost (insurance company negotiated price), 2) how much we paid out of pocket (not covered by insurance), and 3) how much we would have paid if I didn’t have healthcare insurance.
For those of you who, like me, are young, relatively healthy individuals whose parents took care of most insurance/billing things and have no idea what the differences are between those three sums, here’s how it works. When you go to the doctor (and you have healthcare insurance), they do their thing and send your insurance company a bill — or to use their terminology, a claim. The insurance company examines the claim, which includes charges for various services (i.e. physical exam, consultation, surgery, laboratory work – hematology, etc.). When you’re uninsured, these charges are the flat rates that you pay for these services. However, insurance companies use their leverage to negotiate lower prices for each service (noted on invoices as “Contractual Adjustment” or “Participating Provider Discount”). At this reduced rate, the insurance company covers a certain percentage, and you have to pay the rest.
This distinction between uninsured and insured cost is near and dear to me because as a non-student without a job, if it weren’t for Obamacare, I wouldn’t be covered under my mom’s company insurance. So here’s how much Obamacare saved my bank account*:
- Cost negotiated by insurance company: $23,691.43
- Amount paid out of pocket: $2,369.12
- Cost if uninsured: $98,632.80
That’s a difference of $74,941.37 between uninsured and insured cost, meaning my insurance company negotiated a 76% discount. Then, after that discount, my insurance company covered 90%, leaving me to pay only ten percent of the insured cost, or 2.4% of what I would have paid if I were uninsured.
I think there are two lessons to take from this. First, get health insurance. Even something as straightforward and relatively low-impact as the surgery I just had would have cleaned out my savings more than 10 times over, and even my parents would have trouble swallowing a bill for nearly $100K. Second, insurance companies have huge negotiating power over healthcare costs. I mean seriously, a Cantonese mother couldn’t manage to haggle a 76% discount.
I know there are a lot of things wrong with the way healthcare is structured in the United States. Service is inefficient, costs have skyrocketed out of control — something fundamentally is broken. But even as someone who has been through a procedure and seen everything from the patient side, as someone who has gone through all these bills and pondered each line item, and as someone who will be a healthcare provider in the future, I have no idea how to start fixing it. Do we point fingers at doctors who order too many tests? Do we blame insurance companies for working the system for profit? And even if we do find a place to start an overhaul of our current healthcare system, how do we know it won’t get bogged down in politics?
I don’t have any answers. I’ve started reading up on the healthcare reform debate, past and present, and maybe I’ll understand more in medical school, or when I start working. I’ll let you know if I find a solution, but in the meantime, get insurance and keep your fingers crossed hoping nothing bad will happen.
<edit> Here’s a graph:
* These numbers might be a little off; I think I’m missing one blood test invoice, receipts from prescriptions, and the charge for a follow-up with the surgeon.
Some tips for anyone who wants to try this:
- Make sure all appointments, blood draws, procedures, etc. are recorded in a calendar or datebook. Many bills look the same, and you can only tell the difference between different “Diagnostic services” based on the service date written on the bill.
- Get copies of the results from every procedure. This includes radiology reports, blood lab results, and even just patient histories from each physician. These are your records and you have a right to see them, so get them! These will also help you sort out what exactly you’re getting billed for. Insurance companies are pretty good about tracking, but this can help you spot duplicate bills, though more likely help you come to the sad realization that they aren’t duplicates.
- Hold on to all your bills (I have no reference point, but UnitedHealthcare at least sends a non-bill, Explanation of Benefits that lists the cost breakdown). Organize them by date and match them up to your calendar and results to make sure you’re not missing any for the time period you’re tracking.
- Use a spreadsheet. Really. It’s like magic. Mine has the columns: Date, Procedure, Provider, Uninsured cost, Insured cost, and Out-of-pocket.
- To find the information you want from a UnitedHealthcare Explanation of Benefits (EOB): look for the “Services Details” section. This lists each service/procedure claimed by the provider on this EOB. “Amount Billed” refers to how much the provider wanted to charge you, aka the uninsured cost. “Not covered” shows the amount that the insurance company does not accept (sometimes because they’re for duplicated charges; an explanation should be further down in the “Remark Code Descriptions” section). “Amount Approved” indicates the amount the insurance company agrees should be charged for the service, aka the insured cost. Lastly, “Your Balance” is how much you pay, aka out-of-pocket. If you want that amount by line item, subtract “Health Plan Pays” from “Amount Approved” to get the out-of-pocket cost.