The Cost of Apples

Up until last May, my experience of medical costs was limited to the $100 per month premium I contributed towards my employer-sponsored insurance and the nominal co-pays associated with well-child checkups and generic prescriptions. There was never any hesitation in seeing a doctor or filling a prescription. That all changed when went I back to school.

I blindly signed up for the school-recommended family insurance and naïvely assumed myself, my wife, and my two young children would receive whatever health care we needed at a relatively small co-pay. The upfront premium of $10,000 was high, but I believed that this would cover whatever life threw at us. However, two experiences woke me up from my ignorance: my wife’s endoscopy and a visit to the pediatrician.

In July, my wife was sent by her doctor to get an endoscopy to determine the cause of her stomach pain. In the weeks following her procedure, we started receiving statements from our insurance company.

The statements declared that we were responsible for the full amount. We received the following explanation from our insurance company, “We don’t cover preexisting conditions.”

As we argued with the insurance company, the hospital bills started trickling in: $1200 from the outpatient center, $200 from our family physician, $400 for the anesthesiologist and $200 from the lab. We received six bills demanding $2600 for one procedure. As I examined the bills I was shocked by the redundancy—why is the cost for the anesthesiologist not included in the outpatient center bill? Why do I need to pay my family physician twice (the initial visit and the follow-up) for a procedure she ordered us to do? Besides feeling hung-out-to-dry by my insurance company, I felt taken advantage of by the medical system. It seemed as if everyone in that hospital wanted to include something for our visit.

After fighting tooth and nail to get our insurance to cover my wife’s endoscopy, they finally relented. Still, we were left with $700 to pay. For an unemployed student, $700 is not a small co-pay.

I studied the coverage booklet put out by my insurance, and I still do not understand what is covered and what is not. What I found was something similar to how we were billed for my wife’s endoscopy: the procedure itself is covered one way, labs are handled another way, and prescriptions are an entirely different matter. How am I supposed to know what labs or prescriptions are associated with an endoscopy?

Compared to my wife’s endoscopy, my daughter’s first visit to the pediatrician should have been straightforward. A fever that lasted three days followed by a rash was a simple diagnosis for her experienced pediatrician. What is not simple is the billing and insurance struggles we are facing. Our insurance company decided that my daughter’s fever was a preexisting condition, and as we fought with them to fulfill their responsibility, the pediatrician’s office contacted us that the $115 fee is actually $321. Again, the feeling of being taken advantage of is overwhelming. It could be that our doctor’s office is honest in their error, but I have never received services or products charged to me like this. In other words, when I go to the store, I know exactly how much a pound of apples will be long before I get to the cashier—and there are no “preexisting” conditions that add hidden costs at the register.

I’ve learned a lot about medical cost of care; that is, care costs a lot and it’s not straightforward what the cost is. I know that we have paid $11,021 for an endoscopy, a visit to the pediatrician and spotty coverage for the rest of the year. It’s not merely that medical care is expensive, it’s also that I have no estimate of what my costs will be. Getting new brakes on my car is expensive, but the mechanic is very careful to give me an itemized estimate before the repair is made. Recently, my wife, after a particularly exhausting week, started experiencing pain in her chest and a tingling sensation in her arm. Being a nurse, she knew exactly the tests that would be ordered if she went into the hospital.

Despite my attempts, she refused to go to urgent care knowing that the cost of the visit, even if our insurance company cooperated, would be enormous. There’s now a hesitation to use our medical resources that was never there before.

Samuel Yang is a patient from Maryland.

Costs of Care:
Costs of Care (Twitter: @CostsOfCare), where this post was originally published, is a Boston-based nonprofit organization that collects anecdotes from doctors and patients. We feel these stories are poignant because they put a face on some of the known shortcomings of our system, and also because they unveil how commonplace and pervasive these types of stories happen.

16 replies »

  1. Yes, Mark, (to your first point) which is why I highlighted the upper left quadrant. with the red rectangle. I want to know what they’re “doing right”.

    THe 2010 HEDIS plots for HTN, DM, and COPD look just like this, btw.

  2. Interesting graph. A lot of medical care is like this. There is too little concern for cost or quality in medicine. I would like to first eliminate all of the low quality care (bottom half of the graph) and then look at the high cost care to get some measure of cost-effectiveness.
    It should also be pointed out that virtually all medical care is driven by provider decisions so the place to start with this is the doctors who are ordering and performing the low quality and high cost care.

  3. “they (lab) signed a contract with the insurance company to be a preferred provider which significantly undercuts reimbursements.”

    Not sure I understand this. Do you mean the lab was forced to sign a contract that it will loose money on? Is the lab’s method of profit creation to gouge under/un insured?

  4. I sympathize with the Mr. Yang. I deal with under-insured people daily. My husband recently received a statement from a lab after a blood draw. Over $200. was written off by our insurance company. What was paid by the insurance company would not have paid for the supplies or the professional responsible for caring for the sample and recording the results. The uninsured or under-insured ultimately picks up the tab for our insurance coverage. I am thankful we have this coverage, however, I am concerned about the “hidden costs” to other consumers. In this case the lab company has to recoup these expenses, they (lab) signed a contract with the insurance company to be a preferred provider which significantly undercuts reimbursements. Does the uninsured population becomes responsible for meeting the labs operating and overhead expenses?

  5. “87% of all healthcare is paid by insurance.”

    No, 100% of healthcare/profits/bonus/admin is paid by premium payers. I suspect Mr. Yang’s initial pre-exist ruling was due to his short time between signing up for insurance and using it. Not sure how you prove a non-preexisting condition?

    “Besides feeling hung-out-to-dry by my insurance company, I felt taken advantage of by the medical system.”

    Welcome to healthcare in America.

  6. Yes, but what is that relative to their income? What is actual dollar amount (adjusted for inflation) spent, comparing the 50% of health care expenses in 1965 and 13% in 2011? I am truly curious.

  7. There are a number of issues here.

    First, it’s interesting that one can easily get a package price for Lasik surgery or cosmetic surgery that’s not covered by insurance. For surgeries that are covered by insurance, you might be able to learn the hospital and the surgeon’s list price but not what they will actually accept as full payment. It is possible to find out what Medicare pays if you know the DRG or CPT-4 code(s), so at least that can be used as a benchmark.

    Second, when people present at a hospital ER with vague complaints like stomach pain or chest pain, the precise problem cannot be determined without running tests. Depending on what the ultimate problem turns out to be, the variance in both the number of tests needed and the total cost can vary hugely from patient to patient. Once a diagnosis is determined and the treatment protocol is known, providers should be able to give an accurate all in price for treatment from that point forward but not for the initial diagnosis. Often, however, they don’t or won’t.

    Finally, regarding out of pocket costs, a huge piece of this relates to long term custodial care whether in a skilled nursing facility, assisted living center or in home. Medicare generally doesn’t cover this except under very limited circumstances after discharge from a hospital to a skilled nursing facility (SNF) and then only for 100 days – 100% coverage for the first 20 days and 80% for the next 80 days. After that, you’re on your own unless and until you spend down your assets and can qualify for Medicaid. Dental care is also paid for largely out of pocket by much of the population. Standard Medicare without a Medigap policy, by the way, has an actuarial rating estimated at 55%-60% which means that it covers about 55%-60% of healthcare costs expected to be incurred by a standard population of people in the 65 and over age bracket. Under health reform, the cheapest so-called Bronze plans are required to have an actuarial rating of 60%. The silver, gold and platinum plans scale up from there.

  8. In 1965 there was not much medical care to buy. There were no CT scanners or MRIs. No CABG surgery, angioplasties or stents. Chemo was in its infancy. Labor epidurals were rare. Did we have antibiotics other than sulfur drugs and PCN?


  9. Hi Nate,
    It’s impossible to find out how much medical care costs whether you have insurance or not. Over the past 10 months, we have been uninsured due to “preexisting conditions” and I have tried to shop for medical care. Of a total of about 8 episodes of care, I was given correct information on the cost in only one case (and that case was in Thailand where a complex surgery was exactly as quoted). Everyone else either said “I won’t/can’t give you that info” or gave me “estimates” which were usually far too low (this is known as “bait and switch” in the sleazy commercial world).
    I think you are living in a health insurance industry reality warp. According to one web site, high cost households pay 43% of their health expenses out of pocket, low cost households only pay 17%. Your insurance blinders are viewing only part of the picture. (http://www.healthreform.gov/reports/out_of_pocket/index.html)
    Have you seen “Sicko” ?

  10. “when I go to the store, I know exactly how much a pound of apples will be long before I get to the cashier”

    ” Getting new brakes on my car is expensive, but the mechanic is very careful to give me an itemized estimate before the repair is made.”

    The main difference between these two scenerios and insurance is in both of these your not asking someone else to pay the bill. Remove insurance from these basic healthcare needs and you wont have these issues. If you expect someone else to pick up the bill you need to expect extra scrutniy.

    “Most people don’t realize that their health insurance doesn’t really cover very much. ”

    Really Mark? You have to be joking making stupid comments like this. In 1965 Amercians paid 50% of their healthcare expenses out of pocket. Today that has dropped below 13%. 87% of all healthcare is paid by insurance.

  11. Bobby,
    I agree that we should stop fraud, abuse, overcharging and unnecessary health services.
    I don’t think we should stop necessary health care which is what this article is about.
    What is your definition of “misspent” ?

  12. “Every misspent dollar in the health care system is part of somebody’s paycheck.”

    – Brent James, MD, M.Stat

  13. Most people don’t realize that their health insurance doesn’t really cover very much. All of that policy fine print only serves to provide exclusions and exemptions. This was documented nicely by Michael Moore in “Sicko” and unfortunately is discovered every day by more people.

  14. Off topic: A continuing problem with this blog is that the hyperlinks in the RSS feed and other links do not work and return a 404 not found.
    This particular article suffers from this problem and i was only able to access it from the main page, not from published links.
    Please fix this.

  15. You describe very well the reality of dealing with our payment system. Granted, it is not always this bad, but it happens more than people realize. Reading health insurance policies is like reading credit card agreements. If only we had some place where we could go to look at plans in direct comparison with each other, with no hidden or complex differences. Something like an exchange.

    On the provider side, this complexity combined with a bad economy creates problems I do not like. It seems like every other day I am on call I get some patient who delayed treatment for fear of costs who ends up coming to the OR with a difficult problem that could have been resolved earlier with ease.