Friday, July 19, 2013

ER Visit: Cash vs Insurance (or "An Illustration of US Healthcare Cost Madness")

Following up from a prior blog post (Greyson's head wound ER visit). The following illustration shows the difficult, almost roulette-like choices you have to make during a stressful health crisis. Choices without data, without information, without prices.

If you find yourself at the Emergency Room and you are deciding whether or not to hand over your insurance card, or whether to spin the wheel and hope paying in cash costs less, consider the following metrics:
  • Issue: Toddler gets a cut in his forehead. To make it sound worse, let's call it a 2-inch head laceration.
  • Treatment: 2 minute application of super-glue to laceration + otter pop.
  • Total full price: Mary Bridge Children's Hospital in Tacoma, WA charged $1,988 for the "facility" charge plus $142 for the "ER visit" plus $315 for something called "Superficial wound fac professional fee" for a grand total of $2,445.
  • Payment Decision: You know, or you think, or you hope that you're correct that you read somewhere long ago that nobody pays full price. Door # 1: Do you use your high-deductible ($5K deductible) Blue Cross health insurance knowing that they won't pay anything, but also knowing (or hoping) that you would likely (hopefully) benefit from their implicit "hospital/insurance company negotiated hand-shake discount"? Door # 2: Do you spin the roulette wheel and just say to the doctor treating your child and the administrator with the guffawed look on her face that "I'm not giving you my insurance card. Just bill me after the service is performed and hope that I pay up."
So what do you do? First of all, you should not have gone to the ER in the first place. That was your first mistake. Never go to the ER ever ever ever. But since you are already here, you do the logical thing and hand over your insurance card. You go down the insurance path. So how did it all turn out? See below:
  • Total Patient Cost with Insurance: $2,445 full price - $871 "Blue Cross Members Discount" = $1,574. Ouch! Should have told your toddler to stop whining and walk it off.
  • Total Patient Cost without Insurance: $2,445 full price * 60% (aka, 40% Mary Bridge's standard "we take pity on uninsured freeloading bastards of society" cash discount) = $1,467. For a savings of $107 versus Option 1. Congratulations! Despite paying almost $1,500 for a simple cut wound, you can take a trifle of solace in your assiduity and risk-taking which saved you $107. Of course, you would not know that you saved $107 because you never opened up Door # 1 because transparent pricing was never available to you. So you still probably feel like you were taken advantage of.
I think the key takeaway here is that in the bizarro world of healthcare costs, you really have no idea what you are getting into. You can be as smart as a whip. You can pre-plan and call your insurance company to see what your benefits include. You can do everything humanly possible, but you cannot tear the veil of secrecy between the healthcare provider, insurance company and patient.

If we had price transparency in healthcare the way we have nutritional value labels on cereal, we could probably reduce our healthcare consumption in half.

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