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Patients' Medical Costs

1/5/2021

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Insurance premiums for Medicare and Medigap policies are described in 9 pages on SeekingAlpha.

Community Health Centers get federal grants and often have lower costs than average.

The Wall Street Journal has a good free guide to looking for health care costs, no matter if you pay with Medicare, other insurance, or cash. Finding costs before you get treatment is hard. Dr. David Belk explains about the confusing cost of office visits, including higher pay from HMOs than from fee-for-service. The Atlantic describes 2019 laws and practices of debt collection for unpaid hospital bills.

Each patient's cost depends on his or her insurance.
  • Insurance companies negotiate costs, and patients pay this up to their deductible or copay.
  • A 2020 HCCI survey lists (a) average cost paid by private insurance, (b) average cost that would have been paid by Medicare, (c) numbers of patients and providers. These are in 2 spreadsheets: (1) summary for each state and metro area, (2) detail for each type of office visit or injection for each state and major metro area. Summary citing previous studies and methods.
  • A 2019 RAND survey lists 1,600 hospitals and the average prices negotiated by insurers for inpatient and outpatient care, as multiples of Medicare prices (averaging 2-10 times as high for outpatient care, 2-4 times as high for inpatients): xlsx list of 1,600 hospitals, pdf summary, AHA comment.
  • For people without insurance, the Medicare level for each service, and the private insurers' averages, are starting points for negotiation.
  • In order to know total costs, patients can ask the doctor's office whether an anesthesiologist, assistant surgeon or hospital fee will be needed.
  • Anesthesiologist fees are in the Specialists tab above.

Doctors' fees under Medicare are in the Specialists tab above. They show what Medicare pays, and the list price for each procedure from each provider. Medicare costs include the total paid by Medicare, supplemental insurance and patients.

Hospital fees for the most common 100 diagnoses are in hospital spreadsheets from Medicare, and are mapped nicely at ClearHealthCosts. 

For example the data files show that surgeon costs for knee replacement are typically around $1,500, assistant surgeon $300, anesthesiologist $200, and hospital costs (for "major joint replacement or reattachment of lower extremity") averaged $14,000 if there were no major comorbidities and complications (MCC), or $23,000 if there were.

For a few procedures (primarily imaging, tests, counseling, dental extractions or implants, cosmetic procedures), ZendyHealth gives (free) a range of local prices within a radius you choose. They offer you a doctor based on how much you want to pay ($49 referral fee). You cannot use insurance with the doctor, but Zendy helps you submit a claim to your insurance company, so your cost counts against the deductible. For these and other procedures they offer a free consultation. You have to pay their legal bills if there's a problem ("indemnify"), and accept arbitration. You have no choice of provider, and see the name assigned to you only after you have paid the referral fee. For example different MRI centers have different strength magnets, and you are likely to get the cheapest, weakest magnets, which give less precise images. If you have time to search the Specialists tab above, you can find the lowest price providers and negotiate directly.

Costs for treatments in North Carolina are available from Blue Cross/Blue Shield of North Carolina, based on their patients and their contracts with providers: bcbsnc.com/content/providersearch/treatments. These have actual costs for a treatment episode, including hospital and doctors. Very easy to access. The free system compares all providers within any radius of a zip code, up to the whole state. You can sort by cost, name or distance. However there are only 1,200 procedures, no info on how often each doctor does the procedure, voluminous output with typically 3 providers per screen, not downloadable, only North Carolina, no procedure codes, so it is hard to be sure what each item covers,  no lab costs or drug costs. Their data come from one year, but they don't say which year.

Doctors' Incomes

Doctors' incomes derive from the payments above and the volume each doctor does. Average incomes (after expenses)  by specialty range from $200,000 per year for Public Health and Pediatrics to $500,000 for Plastic Surgery and Orthopedics, with wide variation. Concierge (2% of doctors) and cash-only (5%) doctors earn slightly more than average, comparable to other self-employed doctors. 13% are direct primary care doctors, generally subscription-based but lower fees than concierge. Three quarters do not charge for no-shows, whatever their policies may say. 70% see patients for 45 hours per week or less, but they spend 10 hours or more on paperwork and administration.  A fifth to a quarter of most specialties would not choose medicine again if they had the chance. Wealth averages $1-2 million, depending on specialty and age. A quarter of doctors have over $1 million by the time they are 35, and two thirds do by the time they are 50.

​Most doctors at hospitals work for large groups (TeamHealth, Schumacher) which contract to provide hospitalists, radiologists, emergency doctors, etc. Some companies provide doctors to hundreds of hospitals (Envision + Amsurg). Hospital doctors earn $200,000 - $400,000 per year. About half feel fairly compensated. Only a quarter "regularly" discuss the cost of treatment with patients. Over three quarters would choose medicine again and the same specialty.
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Medicare Costs, Premiums, and Alternatives

12/27/2020

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 Related Topics:
Hospitals' Financial Data
Medicare Payment Formula for Hospitals
Patients' premiums depend on income and what coverage they want.

Government Approaches which Could Save Money Include: ​

  • Learn from other countries, which vary widely in the effectiveness and government share of their health spending.
  • Cover hospital stays abroad, at lower cost than in the US, by 80%.
  • Help patients find the least expensive options for tests, as NPR and Vitals describe.
  • Concentrate each elective surgical procedure among as few surgeons as possible, so they steadily become more expert.
  • Provide patient-education fliers, especially in emergency rooms, telling patient families about efforts to reduce readmissions and asking what they need, so families know the risks and work for better transitions. It is strange that the most powerful people, patients and their families, get the least information about readmission risks. Provide fliers on a wide range of exercise and diet options, not just the ideal ones. 
  • Assign process researchers to see how hospitals help and harm patients (monitoring, awakening, transfers, therapy, intravenous drugs), how much could be done at home with intense support, how patients could be treated better or less expensively in hospitals or at home.
  • Give Medicare power to suspend hospital personnel who make egregious errors, rather than suspending the whole hospital or depending on state license suspensions for individuals. SEC can suspend financiers and accountants. Medicare needs similar power.
  • Follow Inspector General recommendations to reduce costs, with examples as high as $6 billion. Spend more on fraud prevention, which returns $1 billion for each $125 million spent.
  • Describe procedures, not just date and code numbers, on patients' Explanations of Benefits, and explain how to report discrepancies, so patients can report for example doctors who see the patient for 10 minutes and bill 40 minutes.
  • Offer an option with higher premiums or copays in order to be free of penalties and cost-saving limits, or to have higher limits, like car or house insurance. Participants would pay the full extra cost of the extra coverage. People are used to the idea of paying more for more coverage.
  • Reduce coverage for readmissions (rather than imposing a delayed large penalty). For example people know there are limits on hospital and nursing home days, and therapy hours, so patients limit use, have other insurance, or pay directly, and Medicare still saves money. Medicare could limit coverage to 2 days of readmission per year.
  • Raise the copay for readmissions. Charging $1,000 copay for every readmission would raise $250 million per year, comparable to the $227 million direct income from penalties (760,000 readmissions in 3 years, or 250,000 per year). Presumably this would improve self-care and discourage readmissions at least as much as the penalties imposed on largely powerless hospitals, thus saving the same $1.5 billion in readmissions. It makes the patient think hard about staying out of hospitals, and if s/he decides to return, the hospital itself is not at risk of penalties, so it can give full care rather than push cheaper, riskier comfort care. It puts decisions about the level of care to seek in the right hands, the patient's. Research shows that higher copays for hospitals may or may not reduce use, depending on the detailed situation. (Higher copays for office visits do reduce preventive office visits, and therefore increase hospital use.)
  • An extra 0.9% tax on wages and self-employment income started in 2013, for income over $250,000 per year (couples) or $200,000 (individuals). The rate could be raised and/or the starting point lowered.
  • 3.8% tax on investment income (including capital gains) started in 2013, for the lesser of net investment income or the excess of modified Adjusted Gross Income over $250,000 per year (couples) or $200,000 (individuals). The rate could be raised and/or the starting point lowered.
  • Charge Part A premiums for higher income families. They currently pay nothing, having accrued coverage if they worked enough quarters. The fact that the trust fund is expected to run out of money indicates that not enough was collected during working years.
  • Make it easier to drop Part B. People with good health plans rarely benefit from Part B. The government payments simply reduce what the private plan has to pay. Medicare makes it needlessly hard to drop Part B.
  • Raise Part B premium for higher income families. The current Part B premium is the higher of $105 per month or about 2% of income. There are various proposals:
Graph of Subsidy for Couples
The government pays a lot for people at all income levels. Medicare Part B (doctors) and Part D (drugs), are not paid by the payroll tax, and are paid by premiums and government aid. (Part A, hospitals, is paid by the payroll tax.) Currently the Part B premium is $105 per month per person, and the cost is 4 times as much, $420 per month, so taxpayers pay a 75% subsidy. Premiums go up with income and subsidy is reduced, in several bands of income, but even the highest income participants get 20% subsidy.

The current premium is about 2% of income (red line above). It is
  • 1.5% to 2.5% of income between $101,000-$537,000 for couples
  • 1.5% to 2.5% of income between $50,000-$270,000 for individuals.
People below that pay more; people at the top pay less (in percentage). The advantage of bands is that premiums generally do not change for small changes of income, simplifying administration a little.

The Bipartisan Policy Center recommends starting bands at lower incomes (p.59 of full report), which result in higher premiums (and lower subsidies - green dashes above):
  • 2.3% to 4.1% of income between $62,000-$349,000 for couples
  • 1.7% to 3.1% of income between $41,000-$233,000 for individuals
People below that pay more; people at the top pay less. The plan would raise $6 billion per year.

Kaiser summarizes a variety of 2014 Budget proposals involving 15% increases in the premiums paid by high income participants, starting the first band lower, and slowly lowering all bands by not adjusting for inflation for several years (red dots above). Premiums would be:
  • 1.6% to 2.7% of income between $93,000-$576,000 for couples
  • 1.6% to 2.7% of income between $47,000-$288,000 for individuals
People below that pay more; people at the top pay less.

A Tucson blogger recommends charging 5% of income, up to the full cost (purple line above). Dots show bands of income, where people pay
  • 4.25% to 5.75% of income between $44,000-$237,000 for couples
  • 4.25% to 5.75% of income between $22,000-$118,000 for individuals
People below that pay more; people at the top pay less. She does not estimate the savings. A spreadsheet here estimates the savings from this proposal at $19 billion per year, using IRS counts of people by income, and consistent assumptions.

This option charges low income people the current $105, since Medicaid already pays the premium for most of them. Dropping the premium to 5% for low income people would cost Medicare more, but save an equivalent amount in Medicaid assistance, so the $19 billion overall savings would remain. It is far more than the $1.5 billion saved by the readmission penalty. Incomes can be adjusted for cost of living (purchasing power parity) by using US government locality pay. AARP presents arguments for and against basing premiums on income.

In the spreadsheet you can try different percentages and bands. A 3% charge could have bands of income where people pay
  • 2.5% to 3.5% of income between $72,000-$402,000 for couples
  • 2.5% to 3.5% of income between $36,000-$201,000 for individuals
People below that pay more; people at the top pay less. The plan would raise $6 billion per year.

The graphs show subsidies people would receive from various proposals. The current Medicare subsidy is large, even at incomes well over $100,000. The government does not subsidize food or housing for people at those incomes. The highest income limit on Food Stamps is $15,000 for one person, $20,000 for two; in subsidized housing it is $55,000 for one, $63,000 for two (Honolulu). Housing tax benefits do go to higher incomes, but people still have to pay the basic cost themselves. Why does the government make such large direct payments for health insurance for people with incomes over $100,000?
Graph of Subsidy for Singles
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