Monday, October 27, 2008

Poor Choices Yield Poor Outcomes

New car prices average $28,000 though somehow people manage to buy a new car every few years. Used car prices are about half that on average.

New car's start around $11,000 and perfectly serviceable used cars can be purchased for around $5,000 and still provide years of trouble free transportation.

Some leaner cuts of meat sell for less than $4 per pound while prime cuts can easily approach $20. Same for fish. You can get decent filet's for under $6 while some of the more exotic types can approach $30.

If you make poor choices, you can run out of cash in short order.

The same is true for health care and health insurance. (Regular readers will know the distinction. Others might have to think about it).

But when it comes to health care, some folks are not paying their bills.

Aurora Health Care's bad debts were up 28% through September of this year.

Wheaton Franciscan Healthcare's bad debts were up 30% for the fiscal year ended June 30

Columbia St. Mary's bad debts were up 36% for the fiscal year ended June 30.

Guess who pays?

The rest of us.

more than one in seven families insured through an employer, and one in five who bought insurance on their own, reported problems paying medical bills.

Some friends of ours earn very good money (in xs of $100k) and even double down on health insurance (despite my suggestion that is a waste of money). Yet they are constantly dunned by collectors about old medical bills. The Mrs. once said that we would be behind in our bills too if we had the out of pocket they do each month for docs & Rx copays.

On top of their double premiums (for very good coverage I might add) they incur over $300 per month on average in copays.

This has been going on for years and have damaged their credit.

Even so, they have managed to refi their home with cash out twice in the last 3 years. Purchased a new HDTV and two new cars. Both children go to private school.

But yet they can't pay their medical bills.

An estimated 18% of workers who get health insurance through an employer had deductibles of at least $1,000 this year, according to a survey by the Kaiser Family Foundation,


Why is this news?

Paul Miota of Menomonee Falls found that out when he had to pay roughly $8,000 last year to cover his share of the cost of outpatient surgery.

That was on top of the $425 a month, or $5,100 a year, that he was paying as his share of the premium.

"I bought the best insurance I could," Miota said. "I got this bill and I asked, 'What did I do wrong?' "

Define "best insurance".

Most folks would say it is loaded with copays and probably a low deductible. But those plans typically have a lot of holes where your dollars can eek out. The carrier stiffs you on the front end by overcharging for routine things like doc visits and hammers you on the back end when you have a large claim.

Kind of like buying an auto policy with copays for oil changes and brakes but only pays half the bill when you total your car.

Gestner never planned to be without coverage.

She decided to retire in January 2007 at 62 after having both knees replaced the previous year. She loved her employer, Hufcor Inc. in Janesville, but the factory's cement floors were hard on her knees.

Gestner, who has an income of $25,000 a year, initially planned to buy the health insurance offered by Hufcor. But when the cost increased to $850 a month, or $10,200 year, she decided to buy insurance on her own - only to find out that no one would insure her because she had high blood pressure.

Certainly $10k in premiums against an income of $25k is too much. These stories make good press but it begs the question.

First, I don't buy the statement she was turned down for high blood pressure. I have never had anyone rejected when their ONLY ISSUE was hypertension. It doesn't wash.

Second, even if she WERE turned down for HTN, I would think she could qualify for some kind of taxpayer funded plan or charity. A quick check at Cover For All indicates she could qualify for:

The state subsidized risk pool.

A chronic disease program at little or no cost.

Dave Bolen, vice president of finance for Beloit Memorial Hospital, said Gestner may qualify for charity care or a sliding-scale discount given the size of her bill.

There are choices.

Sometimes folks make sound decisions, sometimes not.
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