That's at least in part due to the fucked up nature of the medical industries strange relationships with the medical insurance industry in the US. In many other countries that "couple of million dollar" hospital bill would probably not cost as much as a couple of hundred grand for exactly the same time/care/procedures/drugs/expertise.
The hospital has not actually incurred a couple of million in costs – did you see yesterday's NYTimes (I think) article about the ~$1 saline solution getting marked up to $500+, while the patient was also invoiced a couple of hundred dollars for using the emergency room and another several hundred for the staff who administered the IV drip? Saying that someone is "mooching off society" for risking defaulting on payments for things artificially marked up over 50,000% seems a little harsh.
(Having said that, I'm fully aware that those of us in "the rest of the world" piggyback freely on a lot of medical/health research that the "unusual" US health system funds…)
Once again, that's the entire point of the insurance company. They balance impact and likelihood.
Even if I had the insurance to cover me, you're still going to get slightly higher insurance premiums. You're actually more likely to receive a higher delta because I was covered than I wasn't, as the hospital will recoup its losses across all insurance providers, while the insurance company will recoup across only their own constituents.
The health insurance system is an oligopoly that allows insurance companies and health care providers to collude to set artificially high prices. Drug companies, hospitals, surgeons, medical schools--they all get their payday and the insurance company gets to make a "small" percentage margin on top of it. Which just so conveniently means that they're some of the most profitable companies in the world. Just look at the bottom dollar. If they weren't making out like bandits, they wouldn't be making out like bandits.
It's specifically because of ubiquitous health insurance that health services prices are so high. If more people covered themselves, the price of services wouldn't be high, insurance payouts wouldn't be so high, and thus insurance premiums wouldn't be so high. I'm actually doing you a favor by sticking to my principles.
EDIT: and regardless of all of that, nobody has the right to mandate what others do with their lives. I could have chosen to be a burger flipper for the rest of my life and your argument would of social impact would still hold, even be worse because society would be out my higher tax revenue.
If insurance weren't ubiquitous, service would be cheaper, sure. And people would die or be bankrupted by treatable medical conditions like crazy. This is why insurance is so common. People don't like that kind of thing.
Given the system that we're in, you're doing me no favors at all by refraining from obtaining health insurance as a healthy person. You've decided that the risk of bankruptcy is acceptable while externalizing a lot of that risk.
It would also be cheaper if it were truly ubiquitous and single-payer. The prices European hospitals (even the private ones) charge to the various national health systems are a fraction of the list price for the same procedure at the average American hospital. It's only the current insurance system in America that creates perverse incentives to inflate list prices to the ridiculous levels we're accustomed with.
Which is why you will now pay a tax penalty if you don't pay for health insurance coverage. What contributions you make to society is part of a contract, not a unilateral choice.
If, when the care required to save your life cost above, say, $10k in one year, you agreed to die -- then I would consider you to be taking the notion of individual responsibility seriously. As it stands, you are proudly forcing the rest of us to bear your risks.
Personally, my choice is dictated by an attempt to understand my body and live a fuller life and some of those attempts suggest to me that insurance is overrated in light of Bayesian reasoning. -- not to suggest i actually sat down and calculated, just a guess.
For example, consider what happens if, as is very likely, you change your mind. The doctor says, "It's cancer, but it's treatable." You say, "Oh, I didn't think this through, please save me."
Very few doctors could say, "Tough, here's some aspirin, GTFO." If they could, they wouldn't have chosen to become doctors.
Or consider the case where you're unconscious and dying. Do they save you, or not? They can't really know what it will ultimately cost, and the certainly can't know how much money you could raise.
Then there are things like contagious diseases; you would have to spend money enforcing some kind of quarantine in order to cater to the "opt-outs".
For all other cases, like most types of cancer -- you can opt out -- only you'll have to commit suicide (I don't advocate this either).
That said the insurance system in the US is too broken and needs to be scraped.
What makes healthcare dramatically different is that, as a layperson, you cannot accurately assess the likelihood variable. You may have some very rough ideas - for example, a professional snowboarder is more likely to get a sports-related injury - but stuff that tends to be extremely expensive is also stuff that can happen to anyone at any time.
This differs from, say, car insurance, where a lot of the factors such as the value of your car, the frequency of driving, your driving habits, etc. are known. As such, you can optimize it much more effectively.
This is unacceptable. There must be some sort of accountability in the system. Unless, there is a secret pact between the hospital and the insurance company to show a larger bill to make the patient think he is getting his money's worth in which case I have nothing to say.
If we can't control the price, can I write a will saying my estate will actively refuse care for anything that costs more than 5k out of pocket per day and 15k annually? In the event I do need care that costs beyond that point, please give me a quick and (hopefully) painless death instead.
BTW, if you are uninsured you should negotiate before receiving service, apparently you can get a big discount simply by agreeing to pay ahead of time. Of course that's not really feasible in true emergencies, but you can still negotiate a payment plan.
Because hospitals are mandated to perform life-saving treatment regardless of willingness to pay, they have to foist the cost of that treatment onto their other customers. However, insurance companies hate paying much above cost, and they have a huge stick in the form of "we will remove your hospital from our network of approved providers" to get the hospital not to charge too much. Hospitals can't recoup those extra costs from insured people too well, so it tends to fall mostly on uninsured people with money. But the way it works is everyone gets the same bill, and then when the insurance company steps in to pay it, they activate their secret pact with the hospital to pay a small amount above cost instead of the nominal $8k figure.
Yeah, it's insane.
This is absolutely nonnegotiable. Here I am, broken, talking about end-of-life to avoid my family from getting a big fat debt and we don't even know how much a hospital actually charges for a procedure?
Require all hospitals to publish their rates and shut down anyone who negotiates any kind of discount. We have to contain health care costs and these shenanigans have got to go.
I'd really like to know how the system works in single-payer systems. How does Canada government pay for health care?
I am sorry for the over the top comments but these secret pacts, if they are real, make me livid. OK, what can we practically do so we see the real cost of healthcare in our invoice regardless of insurance company we select? Is it even practical to expect to see costs up front?
It's all but impossible to see costs up front in the US. Hospitals insist on determining the charge at the point of billing.
Can I start a restaurant and make people pay at the point of billing? Like an upscale restaurant with no prices on the menu and then charge people differently based on what they clothes are wearing...
"Surprise! Your burger was $800 but we will work with you on a payment plan."
Someone behind you in the billing line says, "Oh, you should have signed up for Acme's Burger Protection Racket and paid $150 a month and that way you would only have to pay $1k deductible and then you'd only have to pay 20% co-insurance for most means at this Fatso's joint there after."
I don't know how I feel about this whole thing. I certainly don't have all the answers and things we do to make healthcare better could actually end up making it worse. :(
The hospital is required to take Medicare, and Medicare tends to be unwilling to pay the true cost, which has to be made up elsewhere. After that you're stuck with different people paying different amounts for the same operation.
This is actually the reverse: the reason why Medicare is so much more cost-effective is that they're more consistent about paying only the true cost and have the marketshare to negotiate that up front rather than haggling over every claim. The hospitals favor private insurance because the margins are higher and they don't face the penalties for over-charging the US government if they get caught inflating prices.
http://www.nytimes.com/2013/05/08/business/hospital-billing-...
If someone has no insurance but does have enough assets to cover the lofty bill, I'd expect the hospital to seek to seize assets for the full amount. It's a safe bet there's a fair number of people who've ended up losing their house to pay for a few hours of tests, after the hospital refused to negotiate. Lesson: If you have assets, have health insurance to lower the risk of losing it all when you get scratched by a cat.
Just go to another country, if you need quality no-hassle healthcare.
pg says in one his essays, that he found after cashing in on Viaweb that he couldn't just walk into a hospital and swipe his card. It just doesn't work like that in America. You need insurance, even if you have 50 mil in your bank.
To top it off, individual health care is very expensive and designed to screw you (and since you're not a big company with hundreds of people signed up, you can't threaten to switch or do any other such sort of thing if they deny you care.) I know someone who needed a very expensive procedure, and his boss basically told the insurance company that if they didn't assent to the procedure, his company would switch to some other provider. As a lone individual, you have less of this kind of leverage.
Now, most other countries (I said most) don't work like that. You can go to any hospital, not have to worry about denials and pay in proportion to the service they render to you. And their fees come nowhere close to what the most U.S. hospitals charge.
As for options, based on my personal experience:
- If you want to go really cheap, choose India. India has a great medical system, but the generally unsanitary state of the country gives me doubts about the hygiene even in hospitals.
- If you are not seriously cash-strapped, try the UAE. They have a lot of really good hospitals, latest technology, and everything just gleams and shines there. For an example of pricing: laparoscopic surgery at premier specialty hospital in the UAE costs about $10k. I assume it'd be in the $50k (or more) in the US. (Au contraire, in India it's probably $1-$2k range.)
This is the part which scares me in these discussions: I can do that if I have time to plan in advance. If some accident occurs, I have no choice but to deal with the US system – and even if with good insurance coverage I'd have to deal with the kind of routine over-billing and obstructionism you mentioned. It's like we're trying to encourage all but the most risk-averse to emigrate to a country with a more humane system.
But in any case, a high-deductible policy with an HSA is a great option for people who don't have ongoing medical costs (diabetes, young children, etc). Not only are the premiums lower, but unlike a FSA, you can roll the money over at the end of the year and build up a balance.
If you do have ongoing medical costs, then yeah, traditional insurance (and maybe an FSA) would be the best choice.
It doesn't make much sense to me that hitting the limits would be so rare. Why have the limits in the first place if that's the case? If they didn't make a difference, then they'd just be bad propaganda for the insurer.
This random web page I looked up indicates that about 20,000 people are impacted by lifetime limits:
http://www.pwc.com/us/en/healthcare/publications/lifetime-li...
This is not a huge number, but it's not completely irrelevant either. The pool it draws from will exclude the elderly, the study only looks at the people with employer-provided health insurance, and the 20,000 is from the 55% of those who have lifetime limits.
The Census Bureau says that about 170 million people have employer-provided health insurance: http://www.census.gov/prod/2011pubs/p60-239.pdf
So we get about 93.5 million with employer-provided insurance with lifetime caps, and that in turn gives about a 0.02% chance of hitting a cap.
Whether that qualifies as "exceedingly rare", I'm not sure.
In any case, "$100,000 hospital bill" is probably a decent substitute for most people, although the odds of being bankrupted by that are probably considerably lower among the HN readership, at least.
Smooching off society is a good thing. In fact, everyone should do it. It's called universal health care.
Of course, the hospital would still treat you, and the rest of us end up paying for your care through slightly higher insurance premiums.
In short, you're implicitly mooching off society, and apparently proud of it. You managed to get away without actually triggering it, so far, but you were pushing a lot of financial risk onto other people. (Ignore this if you are, in fact, a millionaire.)
You wonder why individual plans are so much more expensive than group plans. It's because of people like you! Group plans include every employee, healthy or not, while millions of healthy individuals forego buying individual coverage because they think they don't need it. This gives the individual market a much riskier pool of customers.
I agree with the basic idea that the US health insurance market is completely messed up, but you're really doing it wrong, here.