Sick Days

Colin Phipps Issue: Section:

Last year my family spent $19,000 on premiums and received only $2,000 of care covered by our insurance

Now that President Obama’s health care overhaul has been passed by Congress, the talk of the nation has shifted from the politics of health care reform to questions about how and when the law will affect individuals. There is talk of the benefits to people with pre-existing conditions, no life time or annual limits on coverage, greater regulation and higher benefit standards. All good and necessary first steps, but first steps they are. As long as the health care reform assumes “for profit “ private insurance companies to be the center piece of our health care system, we shouldn’t expect too much change. Premiums and other costs may go down, but as long as there is a middle man (intent on profit) standing between the public and health care providers, our health care system will be too expensive and less than adequate. Obama, and others intent on reform, know this and pushed for this kind of reform early, but, when faced with the current political reality, had to choose more manageable first steps. Obama’s camp and just about anyone who is serious about health care reform knows that these changes must not be seen as the end game, but as figurative body blows designed to soften up those that oppose a public insurance option to compete with private insurance plans.
Health care is inherently expensive. There are well trained providers who deserve a respectable income, there are medicines, labs and high technology. The cost of actually delivering health care is staggering, when you add in the insurance industry’s profit and administrative overhead, it becomes overwhelming.
As consumers of health care, we should all be asking, “How can we improve the quality of the health care we receive while, at the same time, how can we reduce the cost of health care.”
If we want to improve the quality of care, we must insist on the primacy of the doctor patient relationship. To accomplish this, doctors must be able to spend an appropriate amount of time with patients, developing relationships, nurturing healthy habits, and delving into individual cases with individual attention. The way things are now, economically, doctors cannot afford to deliver the care they know is needed because they are beholden, not to the patient , but to the insurance companies.
  When we consider the cost of health care, we must consider the actual cost of providing services, the expected income of the providers, the administrative overhead and the expected profit of the insurance companies. There are ways to reduce the cost of providing services indeed, but staff must be paid, labs must be run, prescriptions filled. Health care providers don’t make as much as people think. The average chiropractor, after ten years in practice, makes about $100,000 a year. The average medical doctor makes about $160,000 a year. When one considers the eight plus years of school, the incredible debt students incur receiving their degree (I came out of school $120,000 in the hole), and the very real responsibility providers shoulder, $100,000 doesn’t seem out of line. When we look at insurance companies, and the money collected from premiums, it is important to understand that, often, over 50% of that money goes, not to paying for health care provided, but to covering administrative overhead and profit. Read that sentence again (often, over 50% of that money goes, not to paying for health care provided, but to covering administrative overhead and profit).  Imagine taking out just the insurance companies’ profit by offering a public option insurance plan. The Congressional Budget Office did and they figured that it would save $100 billion over ten years.
If we don’t take away insurance profit, either consumers have to pay higher prices to accommodate the two tiers of cost, or providers have to cut corners in the delivery of care to keep the consumer’s cost down.
As a chiropractor, who accepts insurance, I have to deal with the insurance companies every day, billing for services and receiving reimbursements.  It is without a doubt, one of the most ridiculous endeavors I have ever been party to.
To receive payment for services rendered to a patient with health insurance takes an incredible amount of work. I have to pay my front desk to manage the paperwork; I have to pay payroll taxes on their salary; I pay 15% of collected fees to a billing agency. My own paperwork, in the form of notes and reports, is at least triple what I fill out for my cash patients.  When compared to my cash patients, insurance patients only bring in 60 cents to my cash patients’  dollar.
When times were flush and my practice was predominantly a cash practice, with the few insurance patients I had, I just took the financial hit as a courtesy, the same way I accepted less from people with special economical needs. But as the economy turned, I found more and more of my patients were unable to afford their insurance premiums and extra, out of pocket, expenses. Now about half my practice is insurance.

From the beginning, my practice has been predicated on low volume, a high level of service, and affordability. I only see three patients an hour and keep my prices reasonable. With cash patients, I gross enough to cover my expenses (40% of gross) and to pay me a decent salary, but with insurance patients I only gross 60% of what I bring in from my cash patients. My only real choice, if I expect to gross enough, is to increase my volume of patients and reduce my level of service or to increase my prices. The price increase won’t really work because insurance companies insist providers accept a reduction in fees as a requirement to be a member of their network. High end plans with expensive premiums reimburse providers decently, but plans that offer affordable premiums, typically reimburse providers so poorly that it is a joke.
Imagine if my entire practice consisted of insurance patients. I would have to consider this: including the co-pay (patient’s financial responsibility), some reimbursements are as little as $40. That $40 cost me $16 for all the extra work involved so that leaves me with $24 per patient. If I want to continue providing the level of service I offer now (seeing three patients an hour, with my operating overhead at 40% of my gross)  my annual net take home before taxes would be around $50,000.  Not so good for four years of college, four years of chiropractic school and $120,000 in debt, especially not so good living in San Francisco, supporting a family of five.
My only real option with an insurance practice would be to increase my volume of patients dramatically. If I cut my appointments from 20 minutes to 10 minutes, I could see six patients an hour and pull in around $100,000 a year, and if I saw twelve patients an hour at five minute intervals, and was completely booked for every spot all year long, I could pull in around $200,000.
Herein lies the problem. Enough providers have gone into the insurance game, and embraced the high volume practice, that the five minute appointment and the $40 reimbursement have become the norm. Anyone who wants to offer a level of service that is more comprehensive, is faced with the insurance companies telling them that their twenty minutes of time and comprehensive care is worth only as much as five minutes of someone else’s wham bam thank you Ma’am. The problem for individual providers has gotten so bad that we are seeing a dramatic shift away from traditional doctor owned practices. In 2005, over two-thirds of medical practices were physician owned. By 2008 the share dropped below 50%. The trend continues to slide. Doctors, at an alarming rate, are becoming salaried employees of large health care organizations. This does not bode well for the doctor-patient relationship.
The only way for providers to reasonably offer a level of service above the five minute quickie, at a price that the consumer can afford, is to cut the middle man out.  I can do that personally by choosing to operate a cash only practice. That would save me a lot of head ache, but would hurt a lot of my patients who don’t have the resources to fund their insurance and pay for “out of pocket expenses”. We can’t really cut out insurance completely. The cost of catastrophic care is indeed catastrophic, but we can cut out the profit.
If I had it my way:  we could improve the quality of care and make things a lot more affordable by offering a public option insurance plan that offers catastrophic coverage at low premiums in conjunction with mandatory pre-tax accounts similar to HSA’s or Flex accounts for expenditures up until the catastrophic deductibles are met. The earnings of the pre-tax accounts could be used as supplements to premiums as a way to help fund the public option. Deductibles and premiums would be figured based income; employers would be expected to pay for their share of the premiums and the pre-tax accounts. This would drastically reduce the amount of money individuals spend on premiums and dramatically increase the amount they are expected to spend out of pocket. When our premiums are taken out of our pay check, or paid in monthly installments to the insurance companies and not the health care providers, it is so easy for people to forget just how much their visit to the doctor really costs. Last year my family spent $19,000 on premiums and received only $2,000 of care covered by our insurance, and paid an additional $1,000 for services not covered by our plan. That is $20,000 for $3,000 worth of care. That isn’t such a great deal, any way you cut it. When our youngest spent five days in the neonatal intensive care unit, we really needed and counted on the insurance. They paid for 80% of the $43,000 bill. In the end, though, when I figured in what I paid for in premiums, deductibles and co-pays, they only covered just about $15,000 of our $43,000 bill. It cost me $27,600 for the insurance to cover the extra $15,400. I wonder if I hadn’t paid my money to the insurance company in the forms of high premiums, but instead was expected to pay the hospital out of my pocket until the catastrophic public coverage kicked in, would I have been more inclined to cry foul at the $10.00 bandage, or the $250 one minute doctor visit that consisted of the doctor walking through the room, asking how things were and signing the chart.
If people don’t have to worry about the specter of a catastrophic health bill and are responsible for paying providers out of pocket for most of their health care, they will expect more and demand more for their money. This will be true in the hospital setting as well as the doctor’s office. As such, the quality and economy of our care will improve.
As the dust settles after this historic health care reform debate, and we look forward to 2014 and the implementation of many of the worthy and needed reforms, I hope that we don’t lose sight of the fundamental need for a public insurance option. Without one, true, fundamental reform will never come to pass.

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