Thursday, February 4, 2010

Health Care Reform - Medical Monopolies

Over the past year, The Obama administration’s push for health insurance reform has used insurance companies as the scapegoat. Insurance companies have been part of the problem for sure. They have stymied competition by “cutting deals with providers” to pay exorbitant charges for services. Collusion between insurance companies and hospitals was highlighted in a Boston Globe investigative article a short time ago. It works like this: The CEO of Blue Cross Blue Shield got together with the CEO of Partners Healthcare and agreed to pay the hospital a lot more money for services if the hospital would agree to provide Blue Cross Blue Shield with its “best discounts” off these inflated charges. This verbal agreement resulted in Blue Cross Blue Shield essentially eliminating, or at least putting at a great disadvantage, its competitors.

It is my belief that this type of arrangement has gone on all around the U.S., resulting in minimal competition and higher prices for medical care. As a result, see the example below of a recent medical claim from a hospital in Lubbock, Texas. Due to HIPPA regulations, I will not disclose the patient’s name or medical condition.

This inpatient stay was for a total of 52 days. The average length of stay nationwide for this condition is 29 days. Total billed charges were $1,016,000. The HealthSmart PPO discount of 40% brought the claim down to $610,000. Sounds like a great deal, right? Not so.

This claim was sent out to a company called NCN for further review. NCN can determine the hospital’s true cost of providing services through the hospital’s own numbers, in reports they provide to Medicare. NCN determined that this stay cost the hospital $134,600. The amount that Medicare would have reimbursed would have been $132,562. The U.S. average cost based on 14,688 studied cases would have been $64,864.

In summary, this Lubbock Texas hospital marked up the cost of care from seven to fifteen times what it should have been. Our Congress should focus on this type of abuse by having hospitals and other providers post their prices for all services in advance to afford consumers and insurers to shop for the best value. The price for services should not be different for consumers or insurers. One competitive price for all patients would greatly reduce the cost of healthcare for all without the government spending one tax dollar. Couple this with malpractice reform and combine with a health savings account and we have a model that works and breaks up the insurance company/medical provider monopoly. This is a solution we cannot afford to go without.

If you believe the above solution will help us all, please forward this e-mail to your Congressional Representative for your state and encourage them to offer true competition based medical reform without spending any more tax dollars. If enough concerned citizens do this, we can make healthcare more affordable for all.

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