[SK in CV]

Slight correction needed.

The CPI is not falling. It is at it’s highest level ever, save for 4 months in the middle of 2008, and as of September, at it’s highest level for calendar year 2009. It has been essentially flat for the last 4 months. It’s moved pretty slow the last 10 years, but it’s still almost 30% above where it was 10 years ago.

[SK in CV]

Slight correction needed.

The CPI is not falling. It is at it’s highest level ever, save for 4 months in the middle of 2008, and as of September, at it’s highest level for calendar year 2009. It has been essentially flat for the last 4 months. It’s moved pretty slow the last 10 years, but it’s still almost 30% above where it was 10 years ago.

[SK in CV]

Slight correction needed.

The CPI is not falling. It is at it’s highest level ever, save for 4 months in the middle of 2008, and as of September, at it’s highest level for calendar year 2009. It has been essentially flat for the last 4 months. It’s moved pretty slow the last 10 years, but it’s still almost 30% above where it was 10 years ago.

[SK in CV]

Slight correction needed.

The CPI is not falling. It is at it’s highest level ever, save for 4 months in the middle of 2008, and as of September, at it’s highest level for calendar year 2009. It has been essentially flat for the last 4 months. It’s moved pretty slow the last 10 years, but it’s still almost 30% above where it was 10 years ago.

[SK in CV]

Ucodegan, it appears you’re arguing against having insurance, that it’s cheaper just to pay discounted rates for care instead. In some cases I’m sure that’s correct. The whole idea of insurance (any kind of insurance) is to cover otherwise unaffordable losses. Anyone that has had to actually pay for hospital stays, or costs related to significant injury or illness understands this. Most people wouldn’t buy homeowners insurance to cover a baseball going through a windows. They buy it to cover the house burning down. It’s an entirely different discussion than I was having. But I’ll try to address your points.

What I am paying per month has nothing to with whether or not insurance companies pay full charges, which is what I believe you originally said. At least that’s what I was responding to. If I misunderstood you, we’ve totally been talking around each other.

Those charges were just mine. They didn’t include my prescription drug charges, which would run about $280/month, i pay $50. My employer pays approximately $450 per month for my premiums. After comissions and costs, I suspect the insurance company loses a small bit money on me every year. Which is why, if I lost my employer sponsored insurance, I would probably be uninsurable due to pre-existing conditions (all very controllable, but require regular maintenance. It’s a bitch getting old.) if I had to buy my own policy. Though I don’t think any of this is really material.

Processing insurance company claims is just “some” of the costs of running an office. It’s not immaterial, but it typically is less than 10% of revenues in small offices, much less for large organization. Doctors who complain that it costs more than that are doing it wrong. (I “taught” them how to do it for many years.)

Your final statement about the loss ratio is not even an argument I’ve ever seen made in the reform debate. Nor does it make any sense. Too much premium dollar goes to insurance company bottom line. That is the problem. That is why we need competition. It really is that simple.

[SK in CV]

Ucodegan, it appears you’re arguing against having insurance, that it’s cheaper just to pay discounted rates for care instead. In some cases I’m sure that’s correct. The whole idea of insurance (any kind of insurance) is to cover otherwise unaffordable losses. Anyone that has had to actually pay for hospital stays, or costs related to significant injury or illness understands this. Most people wouldn’t buy homeowners insurance to cover a baseball going through a windows. They buy it to cover the house burning down. It’s an entirely different discussion than I was having. But I’ll try to address your points.

What I am paying per month has nothing to with whether or not insurance companies pay full charges, which is what I believe you originally said. At least that’s what I was responding to. If I misunderstood you, we’ve totally been talking around each other.

Those charges were just mine. They didn’t include my prescription drug charges, which would run about $280/month, i pay $50. My employer pays approximately $450 per month for my premiums. After comissions and costs, I suspect the insurance company loses a small bit money on me every year. Which is why, if I lost my employer sponsored insurance, I would probably be uninsurable due to pre-existing conditions (all very controllable, but require regular maintenance. It’s a bitch getting old.) if I had to buy my own policy. Though I don’t think any of this is really material.

Processing insurance company claims is just “some” of the costs of running an office. It’s not immaterial, but it typically is less than 10% of revenues in small offices, much less for large organization. Doctors who complain that it costs more than that are doing it wrong. (I “taught” them how to do it for many years.)

Your final statement about the loss ratio is not even an argument I’ve ever seen made in the reform debate. Nor does it make any sense. Too much premium dollar goes to insurance company bottom line. That is the problem. That is why we need competition. It really is that simple.

[SK in CV]

Ucodegan, it appears you’re arguing against having insurance, that it’s cheaper just to pay discounted rates for care instead. In some cases I’m sure that’s correct. The whole idea of insurance (any kind of insurance) is to cover otherwise unaffordable losses. Anyone that has had to actually pay for hospital stays, or costs related to significant injury or illness understands this. Most people wouldn’t buy homeowners insurance to cover a baseball going through a windows. They buy it to cover the house burning down. It’s an entirely different discussion than I was having. But I’ll try to address your points.

What I am paying per month has nothing to with whether or not insurance companies pay full charges, which is what I believe you originally said. At least that’s what I was responding to. If I misunderstood you, we’ve totally been talking around each other.

Those charges were just mine. They didn’t include my prescription drug charges, which would run about $280/month, i pay $50. My employer pays approximately $450 per month for my premiums. After comissions and costs, I suspect the insurance company loses a small bit money on me every year. Which is why, if I lost my employer sponsored insurance, I would probably be uninsurable due to pre-existing conditions (all very controllable, but require regular maintenance. It’s a bitch getting old.) if I had to buy my own policy. Though I don’t think any of this is really material.

Processing insurance company claims is just “some” of the costs of running an office. It’s not immaterial, but it typically is less than 10% of revenues in small offices, much less for large organization. Doctors who complain that it costs more than that are doing it wrong. (I “taught” them how to do it for many years.)

Your final statement about the loss ratio is not even an argument I’ve ever seen made in the reform debate. Nor does it make any sense. Too much premium dollar goes to insurance company bottom line. That is the problem. That is why we need competition. It really is that simple.

[SK in CV]

Ucodegan, it appears you’re arguing against having insurance, that it’s cheaper just to pay discounted rates for care instead. In some cases I’m sure that’s correct. The whole idea of insurance (any kind of insurance) is to cover otherwise unaffordable losses. Anyone that has had to actually pay for hospital stays, or costs related to significant injury or illness understands this. Most people wouldn’t buy homeowners insurance to cover a baseball going through a windows. They buy it to cover the house burning down. It’s an entirely different discussion than I was having. But I’ll try to address your points.

What I am paying per month has nothing to with whether or not insurance companies pay full charges, which is what I believe you originally said. At least that’s what I was responding to. If I misunderstood you, we’ve totally been talking around each other.

Those charges were just mine. They didn’t include my prescription drug charges, which would run about $280/month, i pay $50. My employer pays approximately $450 per month for my premiums. After comissions and costs, I suspect the insurance company loses a small bit money on me every year. Which is why, if I lost my employer sponsored insurance, I would probably be uninsurable due to pre-existing conditions (all very controllable, but require regular maintenance. It’s a bitch getting old.) if I had to buy my own policy. Though I don’t think any of this is really material.

Processing insurance company claims is just “some” of the costs of running an office. It’s not immaterial, but it typically is less than 10% of revenues in small offices, much less for large organization. Doctors who complain that it costs more than that are doing it wrong. (I “taught” them how to do it for many years.)

Your final statement about the loss ratio is not even an argument I’ve ever seen made in the reform debate. Nor does it make any sense. Too much premium dollar goes to insurance company bottom line. That is the problem. That is why we need competition. It really is that simple.

[SK in CV]

Ucodegan, it appears you’re arguing against having insurance, that it’s cheaper just to pay discounted rates for care instead. In some cases I’m sure that’s correct. The whole idea of insurance (any kind of insurance) is to cover otherwise unaffordable losses. Anyone that has had to actually pay for hospital stays, or costs related to significant injury or illness understands this. Most people wouldn’t buy homeowners insurance to cover a baseball going through a windows. They buy it to cover the house burning down. It’s an entirely different discussion than I was having. But I’ll try to address your points.

What I am paying per month has nothing to with whether or not insurance companies pay full charges, which is what I believe you originally said. At least that’s what I was responding to. If I misunderstood you, we’ve totally been talking around each other.

Those charges were just mine. They didn’t include my prescription drug charges, which would run about $280/month, i pay $50. My employer pays approximately $450 per month for my premiums. After comissions and costs, I suspect the insurance company loses a small bit money on me every year. Which is why, if I lost my employer sponsored insurance, I would probably be uninsurable due to pre-existing conditions (all very controllable, but require regular maintenance. It’s a bitch getting old.) if I had to buy my own policy. Though I don’t think any of this is really material.

Processing insurance company claims is just “some” of the costs of running an office. It’s not immaterial, but it typically is less than 10% of revenues in small offices, much less for large organization. Doctors who complain that it costs more than that are doing it wrong. (I “taught” them how to do it for many years.)

Your final statement about the loss ratio is not even an argument I’ve ever seen made in the reform debate. Nor does it make any sense. Too much premium dollar goes to insurance company bottom line. That is the problem. That is why we need competition. It really is that simple.

[SK in CV]

[quote=ucodegen]
The degree of discount on rates is largely a fallacy. An easy way to check would be to figure out how much is being paid in for a GP’s office using self-pay rates and then calculate out what the effective earnings would be (subtracting office overhead, support personnel wages and insurance, malpractice insurance). The numbers end up not working out for a large discount. I even ran this for my GP.
…

There is a field within an insurance company’s 10K/Q that you may want to look at. I don’t remember the exact name is, but it equates to the ratio of claims paid out vs premiums paid in. Usually this number is less than one. During the time between the premium being paid in and the claim being paid out, the insurance co has use of that money for investing.[/quote]

It’s not a fallacy, it’s real. I just checked my summary of charges for 2008. My total charges were $3,884. My insurance (Aetna) paid $1,972.91, and I paid $170. Providers (for this year, coincidentally, it was 100% Scripps Clinic) took a discount of $1,741.90 or 44.8%. For 2009, the numbers are similar (total of $2827, insurance paid $1606, i paid $90, net discount of $1131 or 40%). I have no idea how the providers overhead and expenses are related to this issue. Those are mostly incurred regardless of cash payers or third party payers. (There would be some savings obviously if they didnt have to process all the insurance/medicare stuff.)

The term you’re looking for is loss ratio. The % of premium dollars that are paid directly for health care. It is always less than 1. If it was anywhere near 1, we wouldn’t need reform. That’s a huge part of the problem. In the late 80’s to early 90’s, when I did health care financing consulting for small medical groups and non-profit hospitals, (when capitations for primary care physicians was becoming common place) loss rations were in the very high 80’s to mid 90’s. (I remember one year when, i think it was Blue Cross, bragged about getting their loss ration below 90%) They’re now in the high 70’s to low 80’s and getting worse for consumers, better for insurance companies. All that extra profit is going directly to the bottom line of insurance companies. The system is irreparably broken.

Medical insurance is claims incurred insurance. Since most policies call for monthly or bi-monthly premiums, use of the premiums prior to payment of claims is not material as it is in life, disability or even professional liability insurance, where payment of claims are deferred.

[SK in CV]

[quote=ucodegen]
The degree of discount on rates is largely a fallacy. An easy way to check would be to figure out how much is being paid in for a GP’s office using self-pay rates and then calculate out what the effective earnings would be (subtracting office overhead, support personnel wages and insurance, malpractice insurance). The numbers end up not working out for a large discount. I even ran this for my GP.
…

There is a field within an insurance company’s 10K/Q that you may want to look at. I don’t remember the exact name is, but it equates to the ratio of claims paid out vs premiums paid in. Usually this number is less than one. During the time between the premium being paid in and the claim being paid out, the insurance co has use of that money for investing.[/quote]

It’s not a fallacy, it’s real. I just checked my summary of charges for 2008. My total charges were $3,884. My insurance (Aetna) paid $1,972.91, and I paid $170. Providers (for this year, coincidentally, it was 100% Scripps Clinic) took a discount of $1,741.90 or 44.8%. For 2009, the numbers are similar (total of $2827, insurance paid $1606, i paid $90, net discount of $1131 or 40%). I have no idea how the providers overhead and expenses are related to this issue. Those are mostly incurred regardless of cash payers or third party payers. (There would be some savings obviously if they didnt have to process all the insurance/medicare stuff.)

The term you’re looking for is loss ratio. The % of premium dollars that are paid directly for health care. It is always less than 1. If it was anywhere near 1, we wouldn’t need reform. That’s a huge part of the problem. In the late 80’s to early 90’s, when I did health care financing consulting for small medical groups and non-profit hospitals, (when capitations for primary care physicians was becoming common place) loss rations were in the very high 80’s to mid 90’s. (I remember one year when, i think it was Blue Cross, bragged about getting their loss ration below 90%) They’re now in the high 70’s to low 80’s and getting worse for consumers, better for insurance companies. All that extra profit is going directly to the bottom line of insurance companies. The system is irreparably broken.

Medical insurance is claims incurred insurance. Since most policies call for monthly or bi-monthly premiums, use of the premiums prior to payment of claims is not material as it is in life, disability or even professional liability insurance, where payment of claims are deferred.

[SK in CV]

[quote=ucodegen]
The degree of discount on rates is largely a fallacy. An easy way to check would be to figure out how much is being paid in for a GP’s office using self-pay rates and then calculate out what the effective earnings would be (subtracting office overhead, support personnel wages and insurance, malpractice insurance). The numbers end up not working out for a large discount. I even ran this for my GP.
…

There is a field within an insurance company’s 10K/Q that you may want to look at. I don’t remember the exact name is, but it equates to the ratio of claims paid out vs premiums paid in. Usually this number is less than one. During the time between the premium being paid in and the claim being paid out, the insurance co has use of that money for investing.[/quote]

It’s not a fallacy, it’s real. I just checked my summary of charges for 2008. My total charges were $3,884. My insurance (Aetna) paid $1,972.91, and I paid $170. Providers (for this year, coincidentally, it was 100% Scripps Clinic) took a discount of $1,741.90 or 44.8%. For 2009, the numbers are similar (total of $2827, insurance paid $1606, i paid $90, net discount of $1131 or 40%). I have no idea how the providers overhead and expenses are related to this issue. Those are mostly incurred regardless of cash payers or third party payers. (There would be some savings obviously if they didnt have to process all the insurance/medicare stuff.)

The term you’re looking for is loss ratio. The % of premium dollars that are paid directly for health care. It is always less than 1. If it was anywhere near 1, we wouldn’t need reform. That’s a huge part of the problem. In the late 80’s to early 90’s, when I did health care financing consulting for small medical groups and non-profit hospitals, (when capitations for primary care physicians was becoming common place) loss rations were in the very high 80’s to mid 90’s. (I remember one year when, i think it was Blue Cross, bragged about getting their loss ration below 90%) They’re now in the high 70’s to low 80’s and getting worse for consumers, better for insurance companies. All that extra profit is going directly to the bottom line of insurance companies. The system is irreparably broken.

Medical insurance is claims incurred insurance. Since most policies call for monthly or bi-monthly premiums, use of the premiums prior to payment of claims is not material as it is in life, disability or even professional liability insurance, where payment of claims are deferred.

[SK in CV]

[quote=ucodegen]
The degree of discount on rates is largely a fallacy. An easy way to check would be to figure out how much is being paid in for a GP’s office using self-pay rates and then calculate out what the effective earnings would be (subtracting office overhead, support personnel wages and insurance, malpractice insurance). The numbers end up not working out for a large discount. I even ran this for my GP.
…

There is a field within an insurance company’s 10K/Q that you may want to look at. I don’t remember the exact name is, but it equates to the ratio of claims paid out vs premiums paid in. Usually this number is less than one. During the time between the premium being paid in and the claim being paid out, the insurance co has use of that money for investing.[/quote]

It’s not a fallacy, it’s real. I just checked my summary of charges for 2008. My total charges were $3,884. My insurance (Aetna) paid $1,972.91, and I paid $170. Providers (for this year, coincidentally, it was 100% Scripps Clinic) took a discount of $1,741.90 or 44.8%. For 2009, the numbers are similar (total of $2827, insurance paid $1606, i paid $90, net discount of $1131 or 40%). I have no idea how the providers overhead and expenses are related to this issue. Those are mostly incurred regardless of cash payers or third party payers. (There would be some savings obviously if they didnt have to process all the insurance/medicare stuff.)

The term you’re looking for is loss ratio. The % of premium dollars that are paid directly for health care. It is always less than 1. If it was anywhere near 1, we wouldn’t need reform. That’s a huge part of the problem. In the late 80’s to early 90’s, when I did health care financing consulting for small medical groups and non-profit hospitals, (when capitations for primary care physicians was becoming common place) loss rations were in the very high 80’s to mid 90’s. (I remember one year when, i think it was Blue Cross, bragged about getting their loss ration below 90%) They’re now in the high 70’s to low 80’s and getting worse for consumers, better for insurance companies. All that extra profit is going directly to the bottom line of insurance companies. The system is irreparably broken.

Medical insurance is claims incurred insurance. Since most policies call for monthly or bi-monthly premiums, use of the premiums prior to payment of claims is not material as it is in life, disability or even professional liability insurance, where payment of claims are deferred.

[SK in CV]

[quote=ucodegen]
The degree of discount on rates is largely a fallacy. An easy way to check would be to figure out how much is being paid in for a GP’s office using self-pay rates and then calculate out what the effective earnings would be (subtracting office overhead, support personnel wages and insurance, malpractice insurance). The numbers end up not working out for a large discount. I even ran this for my GP.
…

There is a field within an insurance company’s 10K/Q that you may want to look at. I don’t remember the exact name is, but it equates to the ratio of claims paid out vs premiums paid in. Usually this number is less than one. During the time between the premium being paid in and the claim being paid out, the insurance co has use of that money for investing.[/quote]

It’s not a fallacy, it’s real. I just checked my summary of charges for 2008. My total charges were $3,884. My insurance (Aetna) paid $1,972.91, and I paid $170. Providers (for this year, coincidentally, it was 100% Scripps Clinic) took a discount of $1,741.90 or 44.8%. For 2009, the numbers are similar (total of $2827, insurance paid $1606, i paid $90, net discount of $1131 or 40%). I have no idea how the providers overhead and expenses are related to this issue. Those are mostly incurred regardless of cash payers or third party payers. (There would be some savings obviously if they didnt have to process all the insurance/medicare stuff.)

The term you’re looking for is loss ratio. The % of premium dollars that are paid directly for health care. It is always less than 1. If it was anywhere near 1, we wouldn’t need reform. That’s a huge part of the problem. In the late 80’s to early 90’s, when I did health care financing consulting for small medical groups and non-profit hospitals, (when capitations for primary care physicians was becoming common place) loss rations were in the very high 80’s to mid 90’s. (I remember one year when, i think it was Blue Cross, bragged about getting their loss ration below 90%) They’re now in the high 70’s to low 80’s and getting worse for consumers, better for insurance companies. All that extra profit is going directly to the bottom line of insurance companies. The system is irreparably broken.

Medical insurance is claims incurred insurance. Since most policies call for monthly or bi-monthly premiums, use of the premiums prior to payment of claims is not material as it is in life, disability or even professional liability insurance, where payment of claims are deferred.

[SK in CV]

[quote=ucodegen]
No its not. I talked to them about it. Go through insurance, charge is full price, period. In addition, 30% is not equivalent to the time-value-of-money for the reimbursement period in question. Besides, why present one amount as the cost when using insurance cost while the real cost for using insurance is done under the table? Does not make sense.
[/quote]

Hopefully you misunderstand what I’m saying, otherwise you’re just wrong. Insurance companies do not pay full charges. For both HMO’s and Perferred Provider plans, rates for services are specifically negotiated. (That’s how physicians, hospitals and other allied health services get on to the insurance companies “approved” lists.) Most have negotiated rates anywhere from 30 to 90% of what cash customers are charged (before discounts) depending on the specific service. Most non HMO and non preferred provider plans also provide that they will reimburse “reasonable and customary” charges, which are almost invariably lower than full charges that doctors or hospitals will quote.

[Author]

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