The Parlous State of American Health Insurance

Yesterday, I received the bill for my heart intervention, hospital stay, and the imaging (echocardiograms and the like) that was done before the heart work.

The raw "retail" amount was $100,000. But all my providers are in the preferred network. They agree to accept about $35,000 from my insurer. My current insurance plan has a roughly $2,000 deductible each year, and then pays 75% for anything above that. I pay the remaining 25% up to an additional amount of $6,000 per year. The most I should be out of pocket in any given year is $2,000 (deductible) plus $6,000 (co-insurance payment) or $8,000 total. (That excludes the physician's fees. I was in the catheter lab for 90 minutes for the angiogram and stenting. I was in a standard, private hospital room for less than two days, and needed no special gear or care.)

I'd already used up my deductible, and these bills exhausted my out of pocket, so my share was $5500. (If I had had to pay 25%, it would have been over $8,000.) Healthcare during the rest of the year, for expenses covered in my plan, are thus 100% paid for. (What's nice is cardiac rehab is covered, so I will pay $0 for all of those appointments.)

The bill from the hospital said, call today to see if you qualify for a "prompt payment" discount. I did so, out of curiosity. I was planning to pay by credit card, as we pay our card off each month, and get airline miles plus the float.

The very nice person in billing said, "Let me see, yes, you do qualify, and it is ... 20% off ... that's $1,100." My mouth dropped open. I said, "Really? And I can pay by credit card." "Oh, yes." I immediately paid. I had heard that if you had terrible or no health care, you could call and negotiate and paying immediately could help. But I already had the benefit of halfway decent insurance.

So that was $100,000 retail. Negotiated to $35,000. My share was $5,500. Reduced on calling and paying immediately to $4,400. (The hospital received $30,000 from the insurer, too, of course.)

If I didn't have health insurance (for which we pay $800 a month as a family, and it's a very nice individual, not group, policy), I would have faced a $100,000 bill. Well, rather, they would have sent me home to arrange a future appointment as it wasn't life threatening, and I would have had a long talk with their finance department before I was admitted for the procedure.

I'm also now incentivized to go to healthcare providers for any little thing, no matter how expensive it is to treat, so long as it's medically necessary, as I will pay nothing for it. This is the moral hazard of care in which you pay a lot and then nothing.

Explain to me how this makes sense at any level? The raw cost, the billed cost, the premiums, the rest of it. The system is designed to have as many parties interceding to make profit as possible. It is not designed to produce the best care in the world; our care is fine. It does not exceed or meet comparable developed countries with national healthcare, and we pay vastly more and have steeply increasing costs. 

She got big house, drop top, jet ski Versace, Prada, and Veni

I had a lot of response from One Million Dollars! yesterday, much of it about my investment approach — folks, always consult with a trained, certified financial adviser who only has your best interests at heart and isn't paid by commissions, and such beasts exist — but some about how they'd spend the money.

My dream is a second floor on our house. We've added a bedroom and bathroom in the basement, and cleaned it up enough that I put my office into a freed-upon side. I'd rather not add much more space, but it would be nice to have a "rumpus room" and another spare room. Thus is the extent of my ambition. No cars, no second houses, no ski chalets. Just a little freedom to pursue the work I love, and the same for my family, and the ability to be charitable at higher levels of giving (and the time to participate more in philanthropic organizations).

What would you do if you suddenly came into millions of dollars? Or if you had a dot-com or other windfall, how did you spend it?

Update: Oleg Makaed wrote a wonderfully thoughtful response with a great anecdote about his father offering him choices over at Medium.

One Million Dollars!

My friend/colleague/employer/foil Marco Arment was employee #1 at Tumblr, and it thus is no surprise that people have been curious as to the number and total value of the bags of cash that will thrown out of helicopters onto his palatial Hastings-on-Hudson estate soon. His boss, David Karp, reportedly received from Yahoo's $1.1 billion offer about $220 million or $250 million, depending on the source.

Marco wrote a blog post about his time working for David from 2006 to 2010, which began as a collaborator on consulting work and morphed into Tumblr. It's a lovely bit of writing about how two people (even in an unequal power relationship) can produce sums greater than their parts through productive agreement and disagreement.

But on the Accidental Tech Podcast ATP, Marco and his two co-hosts, John Siracusa and Casey Liss, go into the issue of money much further and in a rather interesting way.

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