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Why is Insurance So Expensive? Here is One of the Reasons

September 2, 2018


Want to know one reason insurance costs are too high?  They pay big systems, these days the majority of the medical "providers," much higher than they pay small practices, and often too much for what they do.

Here's a food analogy:  You want a hamburger, so you go to your favorite burger joint where they make everything from scratch and pay $5 for your favorite burger, and you are happy to pay it.   It's what your wanted and the price is reasonable.   Now say you don't have time to drive to your favorite spot, so you stop a fast-food factory, where the burgers are pre-made somewhere else and are exactly the same for everyone,  but cost $10.  Are you happy about that?  Would you even order one? I doubt it.

So what about your doctor visits?  ( I know, doctors and hamburgers are not a great comparison, depending on the doctor, but the basic subject is close enough). The way things are these days, you don't really know what medical things cost if you have an insurance plan that acts as a "middle man" and money pool (basically a bank) and pays completely for things like physicals and, if you are lucky not to have big deductibles (or unlucky enough to meet them), regular office visits for being sick or chronic problems.

Well, I would like to inform you that insurance plans are paying the local big medicine megasystem monopolies (yes, I know that is self-contradictory, it is really a "duopoly"  around here) nearly TWICE what they pay us for the same thing.  For example, one type of service is a well-child visit (physical) for a teenager, which is something that most insurance plans pay for completely once a year.  One insurance pays the Big Medicine practice  $203 and the same insurance pays us $116.  I know that for a fact, since that is what they paid for our son's physical recently (we also don't have a lot of choice in doctors),  and I know what they pay us for the same thing, obviously.

Since it is a preventive service, you probably never get a bill for that (although you should get a statement, or "EOB").  So it is "painless" for you, you are not involved.   But multiply the difference by the thousands and thousands of well-child visits!  We are all paying for it.

Well, "why didn't you negotiate a better payment?" you may ask.  Well, we have tried.  For small practices, there is no such thing as negotiation; it is "take it or leave it" when talking to the big insurers.  We have even been told that "we do not need any additional primary care in your area so we are not offering a contract."  Yes, you read that right.  They don't want you to have a choice.

Well "$116 is still pretty good for one visit," you may say.  "Well," we say,  a well-child visit here is 2 appointments long here (30 minutes, and always will be) so that calculates to $232/hour, and if that is all we did that won't come close to  pay for staff, rent and overhead.   Oh, and we have to pay services to get paid (submitting the claim, billing, etc) and may wait 3-6 months before receiving anything.

There are many reasons insurance premiums are outrageously high for working people (one is just because they can).  Now you know another reason.  Is that OK with you?  If not, let them know. 


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