On Thu, 30 Oct 1997, Tim May wrote:
At 8:50 AM -0700 10/30/97, Secret Squirrel wrote:
The really good way to protect your medical privacy is to self insure. Most people are happy with policies that tap out at $1 million. If you would be happy with such a policy, then all you need is $1 million to protect your privacy. It is likely that this $1 million will not ever be consumed by health care costs. (Probably much less likely than that a policy holder will hit that limit. People tend to spend their own money more responsibly than somebody else's.)
I used to think this was so, too. But there's a certain kind of market failure at work. (Actually, it's not a market failure at all....it's a manifestation of the market. Read on.)
It turns out that if I have to go to the local hospital, the daily rate for a hotel room will be something like $2000 a day. Exclusive of whatever treatments I'm receiving, of course.
Turns out that Blue Cross and Blue Shield have negotiated, through enormous buying power, daily rates of about $700 a day. (These numbers come from my memory of a "60 Minutes" report a few years ago. Details and current figures may vary.)
Listed prices are the "sucker rates," kind of like the posted prices for out-of-towners, with locals getting a discount. And these pricing differences apply to the whole range of procedures. For example, an insurance company might have negotiated--over many years of intense negotiations--a fee of $100,000 for a liver transplant, but a "cash-paying customer" (a victim, a mark, a sucker) would pay the list price, e.g., $300,000.
Actually, the real "sucker rates" are the amounts small businesses pay for insurance. The big businesses (who can buy in bulk) get a pretty reasonable deal for what they get. The smaller companies who cannot bargain the price down get screwed. (The rate my wife's employer was paying was close to double what my insurance costs and it covered ALOT less.) I seriously doubt that most people could afford to self-insure at the going rate. (Not unless they have some serious income they want to get rid of.) alan@ctrl-alt-del.com | Note to AOL users: for a quick shortcut to reply Alan Olsen | to my mail, just hit the ctrl, alt and del keys.