Why does Medicaid coverage often stink? And related questions and answers.

Bernard,

Here’s a NY Times pick from comments on their article about students rioting at Middlebury College when Charles Murray was there to speak (boldfacing mine):

Michjas Phoenix 15 hours ago
I am a very liberal Democrat. Often I find myself correcting obvious errors among the black and white crowd. Today my mission has been to argue that Medicaid coverage often stinks and that those who champion the ACA need to be critical about those added to the Medicaid rolls. I have always been a critic of Medicaid and I have always been seen as very liberal. But now, expressing the same ideas, I have been taken for a defender of Trump. It is incumbent upon all to distinguish their enemies from their constructive critics. Too many have lost the ability to recognize constructive criticism. The temper of the time is important. But we are all individually responsible for how we think, and those who can’t tell their friends from their enemies have themselves to blame. Ignorance is ignorance, and it doesn’t matter if your intentions are good.

Here are my questions and my answers in response to Michjas’s comment:

Q: Why does Medicaid coverage often stink?
A: Because it pays only fractions on the dollar, thus many doctors refuse to accept Medicaid patients.

Q: Why exactly do doctors refuse to accept such patients?
A: Because they are not willing to incur losses of profits, or even actual financial losses, by taking on such patients.

Q: Why might doctors incur losses?
A: Because of the very high costs of relatively ordinary treatments and procedures in American medicine. For example, the electrocardiogram I got in a Spanish clinic in early 2014 after having struggled on Napoleon’s route over the Pyrenees cost me out-of-pocket something like $190 as a foreigner not covered in any way by Spanish healthcare – the same simple procedure in the US costs 5 to 10 times as much.

Q: Why are American healthcare costs so high compared to most of the rest of the world?
A: In part because so much of healthcare in America is privatized and for-profit in large companies that, with Citizens United, are legally entitled to influence, or even control, politics and law-making by pouring cash on politicians, who then create or modify laws to enable enormous and still-growing profits in medicine and pharmaceuticals. This is a disastrous feedback loop for everyone except the highly wealthy. Contributing to the loop is unlimited liability for medical enterprises, from which lawyers profit greatly. Early evening television has been flooded by ads for drugs, debt consolidation/relief, and legal help related to healthcare (cars and beer have always been there, and cigarettes used to be).

Q: Why do Americans put up with this destructive cycle?
A: Because not enough of us have put our minds and resources together to stop it. Maybe we’re scared and galvanized enough now to get on with it. One place to attack it is in Trump’s planned expansion of privatized prisons. Privatization of fundamental community matters is the true underlying problem. Yes, government can be wasteful. But that’s better than the hellholes of our healthcare system, our prisons and our overall infrastructure, all of which have been looted by large corporate interests.

Another line of questioning – and one should carry out several or many lines to triangulate the whole truth – would inquire into why Medicaid pays only fractions on the dollar. I think the answer comes out the same, though: high costs of ordinary healthcare, which have been exacerbated in recent years by private physician practices getting folded into large private hospital chains that are inexorable on profitability across the board. Most doctors now report to accountants, not to senior medical people (but I’d have to fact check that assertion – it’s certainly true in Concord MA – I’m aware of only one private practice left in town).

Wayne


Wayne,

Well, we can take Michjas’s self-description as a liberal who hates Medicaid at face value. Of course, Medicaid can be improved, but contrary to what he (I assume) says, Medicaid is much better than the alternative of no health insurance for those poor people. And that is the only alternative presently on the table for consideration. We know this because of all the Republican legislators and governors who refused Obamacare’s expansion of Medicaid and because of the provisions of the Republican alternative to Obamacare now under consideration. So, just what does Mr. Phoenix propose? The comment doesn’t say.

As for your questions, I’ll just say, for the moment, that the reasons why medical costs, and, therefore, health insurance costs, are so high in the US are complicated. I look at blogs and essays by experts, such as Princeton economics professor Uwe Reinhardt and Dr. Aaron Carroll, and I see that they find the system and the forces that influence it complex. These are many factors, which researchers see, but research tends to find mixed results when people try to figure out one or even just a few causes for the high costs.

But the costs are high compared to other advanced nations, and the results worse. See the two charts below. I sent a link to these earlier.

You have surely noticed on your bills from your medical providers that there is an amount listed as “the price” for some service. Then there is the amount listed as a negotiated price, negotiated between the provider’s accountants and your insurance. Of that negotiated price, there will then be an amount paid by the insurance, and an amount that you owe. Medicare, Medicaid, and any insurer have negotiated with any provider. Part of the settlement is an agreement by the provider not to come after you for the difference between their “price” and the lower negotiated price. (And to allow them to come after you is one of the key “reforms” that Trump’s new Secretary Price (a politician-physician) intends to implement.) They agree to accept the insurance payment and your “patient responsibility” amount as full payment.

I don’t have the detailed bill at hand, but I see that from my most recent visit to my cardiologist I’m paying the U of South Florida’s medical practice $56 for a “Routine EKG using at least 12 leads w/interp and rpt.” I think that this is my 20% of the Medicare negotiated price for this procedure, which is likely similar to your Spanish EKG [see below]. If this is 20%, then the negotiated price was $280, not 5 or 10 times the Spanish price.

Bernard


Bernard,

I paid out of pocket $190 for an EKG in Spain in 2014, in a village walk-in government clinic which was not an emergency room. When we came back to the US I looked up walk-in EKG costs around the country and found much higher costs for an EKG, 5 to 10 times as expensive for walk-ins. Here’s a current example of a market-oriented heaalthcare site that says, for an EKG, anywhere from $190 in rural Henderson NC to $2,700 in Las Vegas. Is this site to be believed? Hard to know.  Maybe your EKG cost number didn’t include the whole story, which as I understand is pretty often the case. The hospital chain adds their charge, the company that manages hospital billing adds a charge, and so on and so on.

Wayne


Wayne,

I’ve received my Medicare statement for activity for December, January, and February. So I see the details of the billing for that EKG I got:

Routine EKG using at least 12 leads including interpretation and report.

Service approved: Yes
Amount Provider Charged: $56.00
Medicare Approved Amount: $17.00
Amount Medicare Paid: $13.33
Maximum You May Be Billed: $3.40 (And I was billed this by the USF practice.)

Established patient office or other outpatient visit, typically 15 minutes.

Service approved: Yes
Amount Provider Charged: $138.00
Medicare Approved Amount: $72.74
Amount Medicare Paid: $57.03
Amount You May Be Billed: $14.55 (And I was billed this.)

The total Charged for this office visit and EKG is $194.00! I put the exclamation point because that is might close to your report for what you were billed for your Spanish examination, which I suppose was in an urgent care clinic or even an emergency room. The Medicare Approved Amount is $89.74, the Amount Medicare Paid was $70.36, and the Amount I Paid was $17.95.

Hmmmm.

I read, as you do, that charges for medical procedures vary widely in the United States. Also the frequency of various procedures.

Then we have this funny business with a Provider Price, a negotiated lower price, an insurer payment and a patient payment.

I believe that Medicare, and every large health insurer, and Medicaid do this negotiating on our behalf.
Republicans believe that one cause of our high health care costs is that people are demanding and using too much care. According to this line of thinking, we demand more health care than necessary (or available) because we don’t pay out of pocket. We don’t feel the cost because it comes out of our pay checks before we see them, and the medical bills don’t come to us but to our insurer.

Thus, a key part of Republicans’ solutions to the high cost of medical care is for us to purchase high deductible health insurance and for any medical care to have co-pays too. Supposedly, we won’t demand unnecessary care, and we will compare prices among providers, choosing lower cost ones, and we will negotiate with our physicians to lower their prices.

Below are a couple of useful graphs, which I got from Mark Thoma, a blogging economics professor. The first includes comparative data going back 45 years, the second is comparative data for 2014. As he and his sources are economists, you will see that they now how to properly compare costs over time and internationally. See the link for attributions and more information. Click the charts to see larger versions of each.

Bernard


Bernard,

The much higher prices I showed you from the market-oriented website represent, I believe, the parallel situation here: if you walk in for an EKG and have no known insurer in this country, I believe these are the numbers you’d see, i.e. mostly $500-$800 but some outliers below and above those numbers, one of them as low as $190.

Wayne


Wayne,

I agree with you that hospital emergency room treatments are the most expensive way to get any particular treatment in the US.

As you describe your treatment, it wasn’t a hospital emergency room, but a medical group practice, government run, and you were cared for as you might have been here at an urgent care clinic. In this country, urgent care clinics are in between emergency care and regular doctors’ offices for costs.

But I’ll add that once when I was in Paris on business, I was traveling with a former friend who was, as the time suffering from Stage IV breast cancer. I don’t remember the details but she had some problem, ran out or forgot to bring it, or the bottle leaked, with one of her various expensive medications. While I was working with my French colleagues, she walked into a French pharmacy, where a sympathetic and knowledgeable pharmacist listened carefully. Then she handed my friend the medications. Free. No French doctor’s prescription required. No problem. Any other issues, come see me, she said.

We are seeing the difference between civilized nations and our present descent into a Hobbesian state of nature and barbarism.

In this regard, I call your attention to Nicholas Kristof’s column: A conversation between Jesus and Paul of Ryan.

Bernard

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