How to negotiate directly with physicians and hospitals.

As the post-vasectomy head of a healthy household, do I really want to be swimming in the Obamacare risk pool with millions of morbidly obese, perpetually pregnant, HIV infected drug abusers? ­­

-hedgeless_horseman

 

This is the written version of the talk that I gave last June at the First ZeroHedge Symposium and Live Fight Club in Marfa, Texas.  The symposium theme was disintermediation, and this talk was titled: How to negotiate directly with physicians and hospitals.

I have more than 15 years of experience negotiating physician practice and hospital payment agreements.  I have worked on site at more than 100 hospitals, surgical centers, and medical practices, in more than 20 states.  Regarding healthcare pricing, billing, and collections practices, I have been a conference speaker, author, and an invited witness at congressional committees.  I am not a doctor, attorney, or accountant, nor am I giving you any medical, legal, or tax advice.  I am not selling anything.  I am merely sharing my experiences and personal opinions.  I am not receiving any compensation or financial benefit for doing this.

If you have Medicare, Medicaid, VA, TriCare, Obamacare, or another subsidized private insurance because you or a family member are employed by the federal, state, or local government, including police and fire, say, "Socialized medicine!"  Now, for your comrades that live outside the USA, everywhere from the socialist utopias of Venezuela and Canada...to the formerly Great Britain...to the People's Republic of China...to the United Arab Emirates, repeat after me, "Socialized medicine for the poor...and poor medicine for everyone!"

It's true.  I get to see it firsthand every day.  The wealthiest people from every nation, most with socialized medicine, mostly come to the USA for healthcare, and these people all pay cash.  Why?  Because the USA has the very best healthcare in the world.  I have seen the data, traveled widely, and discussed this with enough physicians and patients to believe this to be true. 

Don't think so?  Just think about the fact that the University of Texas MD Anderson Cancer Center in Houston recently dedicated a new 12 story 626,000 s.f. Sheikh Zayed Bin Sultan Al Nahyan Building for Personalized Cancer Care on April 9th. The celebration included His Highness Sheikh Hamed Bin Zayed Al Nahyan, chairman of the Crown Prince Court of Abu Dhabi in the United Arab Emirates (UAE).  The royal family can afford to go anywhere for healthcare, but they choose to go to the USA.  

 My point is this.  With healthcare, like everything else, you get what you pay for.  If you are on socialized medicine of some form, and not paying for it, then you should not expect to get the best medicine money can buy. 

I want to ask everyone that lives here in the USA, and either you or your private employer...as a part of your wages...actually paid twelve monthly health insurance premiums last year, unsubsidized by the taxpayer, scream, "Ouch, that really hurt!"  I know it hurt.  I'm sorry.  And not just the monthly premiums of somewhere around $1,000 for an average family, but add a $5,000 in-network annual deductible, $10,000 out-of-network deductible, and 30% coinsurance, if you actually need to use the insurance, and that really, really, really, hurt. 

 

Pop quiz!  What fraction of Americans have just $1,000 saved for emergency expenses like the deductible on their health insurance?  We ZeroHedge readers know the answer is only 37%. 

 

Approximately 63% of Americans have no emergency savings for things such as a $1,000 emergency room visit or a $500 car repair, according to a survey released Wednesday of 1,000 adults by personal finance website Bankrate.com, up slightly from 62% last year. Faced with an emergency, they say they would raise the money by reducing spending elsewhere (23%), borrowing from family and/or friends (15%) or using credit cards to bridge the gap (15%).

 

http://www.zerohedge.com/news/2016-01-07/sad-state-affairs-two-thirds-a…

 

And, as ZeroHedge readers, I hope every single one of you is in that 37%.  If not, then for God's sake, get your impoverished ass into one of Dave Ramsey's Financial Peace University classes.   Life is too good to spend it as a debt slave.

Primarily, this talk is to educate those of you that are, now, or may be, in the future, responsible for paying for your own healthcare.  It is not directed at the nearly half of America that is now on Medicare, Medicaid, VA, Tricare, government employee insurance, etc., those whose healthcare expenses are the responsibility of the taxpayer, and who are essentially wards of The State.  However, the conversation we are going to have should still be interesting for them, too, and God only knows how long that government gravy train will last, so all of you should really pay attention.

Like all the speakers at this first ZeroHedge Symposium, I am talking about how to, in many instances, remove the middleman, in this case the health insurance company, and how to negotiate directly with healthcare providers, specifically physicians, hospitals, diagnostic facilities, and pharmacies.  This is a discussion about how to negotiate to pay less for healthcare, and not a discussion about how to not pay for healthcare. 

As I learned in Heinlein's great book, The Moon Is A Harsh Mistress, TANSTAAFL.  It stands for: There Ain't No Such Thing As A Free Laproscopy.  Which means if you aren't paying for your healthcare, then I am.  Unlike the good ol' days in America, when we had a choice to fund our local hospital via charity, and could feel good about doing so, in 2017 America, the Supreme Court has determined that we have no freedom of choice to donate to a charity.  We are now required to pay for other's healthcare, upon threat of imprisonment by the IRS.  It's sure hard to feel good about that.

My presentation, today, will mostly be limited to technique and tools, that is, how to negotiate.  Why we should negotiate directly for healthcare is mostly outside of the scope of my presentation, but I imagine we will probably get more into that during the discussion to follow.

You are going to need five things, which I am going to give to you, today, free of charge!

1)  Some absolutely critical industry vocabulary

2)  A clear understanding of how healthcare is priced in the USA

3)  Insight into to actual pricing

4)  A proven negotiation strategy, including:

        a.       The point of contact

        b.       Foreknowledge of what prices medical providers will usually agree to

        c.        A sample offer and agreement

5)  The confidence to successfully negotiate

Unfortunately, I couldn't come up with a better way to impart to you an understanding of the industry lingo, other than these simple handouts.  However, this information is so important for you to be able to understand any negotiation strategy that I simply must slog through each term with you now.  Please, I ask that you hold your questions and comments until I get through the vocabulary.  Many of the terms are cross-referenced, and will become more clear after we hear them all. 

Premium:  The monthly amount enrollees pay the insurance company to be covered.

Deductible:  The amount paid by the member before insurance will begin to reimburse services.  It is reset annually, and based on the level of benefits or amount of premium paid.  For example, with a $1,000 deductible the patient must pay medical providers for the first $1,000 of allowable expenses incurred by the patient each year, after which costs may be split according to a coinsurance arrangement, and/or may be limited to the patient’s out of pocket expenses.

Coinsurance:  A cost-sharing requirement of some insurance plans where the patient assumes a percentage of the costs for covered services after the amount of the deductible has been met.  Coinsurance is described as a ratio, for example 30/70, meaning the patient is responsible for paying 30% and the insurance will pay 70% of the allowable.

Copayment (co-pay):  The amount to be paid to a physician by or on behalf of the patient in connection with the services rendered by the physician.  It is due at the time of service, is a fixed dollar amount determined by the insurance company based on the level of benefit, and is usually found printed on the patient’s insurance card.

Out of Pocket Expense:  The total of covered health care expenses that are paid for by the member or patient, not including any premium.  This is typically the total of the deductible and any coinsurance paid during a year.  It may be a maximum amount where after 100% of allowable expenses are paid by the insurance company.

Explanation of Benefits (EOB or ERA: Electronic Remittance Advice):  The insurance company’s explanation of the benefits they have, or have not, paid to a medical provider, along with any remaining amounts for which the patient is responsible, if any.

CPT code:  Current Procedural Terminology codes maintained by the American Medical Association. These five digit codes describe most medical, surgical, and diagnostic services and are used for administrative, financial, and analytical purposes such as on fee schedules and bills. These CPT codes are also known as Level 1 HCPCS codes, with Level 2 HCPCS codes being for non-provider medical services like ambulances and prosthetic devices. The CPT code is equivalent to a part number, SKU Stock Keeping Unit, or UPC Universal Product Code.

Inpatient Prospective Payment System (IPPS): A system of payment for the operating costs of acute care hospital inpatient stays under Medicare Part A (Hospital Insurance).  Under IPPS, each case is categorized into a diagnosis-related group (DRG).  Each DRG has a payment weight assigned to it, based on the average resources used to treat Medicare patients in that DRG.

Diagnosis-Related Group (DRG): a system to classify hospital visits into similar groups.  Its intent is to identify the products that a hospital provides, such as an appendectomy.  DRGs are assigned by group based on diagnosis (ICD code).  DRGs may be further grouped into Major Diagnostic Categories (MDCs).  DRGs are used to determine how much Medicare and some insurance plans pay hospitals and other services like home health.

ICD code:  The International Statistical Classification of Diseases and Related Health Problems provides codes to classify diseases and a wide variety of signs, symptoms, abnormal findings, complaints, social circumstances and external causes of injury or disease.  Supposedly, every health condition can be assigned to a unique category and given a code.

Billed charges (usual and customary fees): The undiscounted fees a healthcare provider lists on the bill (list price, or retail).  These fees are usually set well above the highest allowable of all the provider's contracts, sometime as much as 800% or even 1,000%.  The purpose of this overpricing is to force the insurance companies to the negotiating table. 

Allowable:  The discounted fee for service a healthcare provider has contractually agreed to accept from an insurance company.  It is listed by CPT code on the EOB or in a fee schedule available from your insurance company, Medicare, or Medicaid.  UNDERSTANDING THIS TERM IS THE KEY TO UNDERSTANDING HEALTH INSURANCE AND TO NEGOTIATING DIRECTLY WITH MEDICAL PROVIDERS.

Global Period: The number of days after a medical procedure when the fee for office visits is included, contractually, in the allowable for the procedure.  It is typically 30, 60, or 90 days. 

Elective: For our purposes, care for any medical condition that is not an emergency.

Emergency:  A medical condition manifesting itself by acute symptoms of sufficient severity, which may include severe pain, such that the absence of immediate medical attention could reasonably be expected to result in serious jeopardy to patient health, and/or serious impairment to bodily functions, and/or serious dysfunction of any bodily organ or part.

EMTALA: The Emergency Medical Treatment and Labor Act (EMTALA) is a federal law that requires anyone coming to an emergency department of a hospital with an emergency condition to be stabilized and treated, regardless of their insurance status or ability to pay.

Insurance Verification:  the process where a healthcare provider contacts the financially responsible party (usually an insurance company, Medicare, or an employer) and verifies that coverage is in effect and the information current.  This generally includes the amount of the deductible met by the patient, copayment amounts, and coinsurance terms.

Precertification: The process of obtaining approval from insurance, in advance, for a proposed treatment or diagnostic test, and is NEVER required for emergency care.

Medicaid: The United States health program for eligible individuals and families with low incomes. It is a means-tested program that is jointly funded by the states and federal government, and is managed by the states.  Generally is the lowest allowable fee for medical care.

Medicare: a social insurance program funded by taxes and administered by vendors hired by the United States government.  Medicare provides health insurance coverage to people who are aged 65 and over, or who meet other special criteria such as a disability.  Generally it reimburses close to the average allowable fee for medical care.  It is the easiest fee schedule to access at: www.CMS.gov

Tricare:  Health insurance for military personnel and their dependents.

Workers Compensation:  Insurance that provides medical care for employees who are injured in the course of employment.  It is usually has the highest allowable fees for medical care.

 

OK.  We made it!  That is it for the confusing industry lingo.  Sorry to do that to you, but if it wasn't so difficult, then people might actually understand how our healthcare system works, and the powers that be certainly do not want that! 

Before we start looking at how healthcare is priced in the USA, are there any questions, comments, or burning desires regarding the vocabulary?

To begin to understand how healthcare is priced, we are going to look at 1) the doctor's bill given to a patient, 2) the claim forms the doctor and hospital send to the insurance carrier, and 3) ERAs that the insurance carrier then send back to the patient and the providers.

As we have already learned, all healthcare services have been assigned a code by the AMA, a five digit CPT code.  So, if you trip and fall off your patio, you might get a doctor’s bill like the following table located in your handouts:

 

 

On the hospital’s bill you might see something like this:

 

It is important to understand that the amounts shown on both of these bills are un-discounted Billed Charges (Usual and Customary Fees).  They are the highest price the provider might ever hope to receive for the service, also known as full retail, or MSRP.  Don’t panic when you get these bills, because as everyone knows, “Never pay retail.”

You may receive other bills from several doctors such as anesthesiologists and radiologists, as well as laboratory services, therapists, and the ambulance company.  The bills all look similar, and the strategy and tactics I am presenting, today, should work for each of them as well.

If you have insurance, the providers will send your carrier a claim with essentially the same data as is on the bill they will provide to you if you are not insured, or if you simply request a copy. 

An important fact is that Federal Law, as a requirement for the medical provider’s participation in Medicare, requires that a medical provider charge every patient the same amount for a given CPT item.  What it does not require, however, is that a medical provider accept the same payment amount from every patient for a given CPT item.  This allows insurance companies, government payers, and you to negotiate a discounted fee, known as a contracted allowable, and not be in violation of the law. 

The purpose of this overpricing by the medical providers is to force the insurance companies to the negotiating table.  The insurance company is bringing a large volume of patients to the medical providers, the members in their network, so they are able to negotiate a lower discounted allowable fee from the medical providers.  However, if the insurance carrier is not able to negotiate a contractual allowable fee schedule, then they will end up paying the higher billed charges of the out-of-network provider for the members that still end up being treated by that medical provider in emergencies when precertification is not required. 

This creates a tiered-pricing structure for medical services that looks very much like this table in your handouts:

At this point, if you are paying close attention, then it should start to dawn on you where I am leading you with this talk, which, after all, is titled: How to negotiate directly with physicians and hospitals. 

Spoiler Alert:  You are learning how to negotiate for Medicare rates, at worst, and Medicaid rates, at best.  In our example, a bilateral elbow fracture patient in Texas received surgeon and hospital bills totaling $179,219.  Medicare allows $30,542 and Medicaid $22,600, which means the government negotiated an 83% or 87.4% discount, respectively.  You can too!

Before we move on to providing you with access to these fee schedules, and then a negotiation strategy, do you have any questions about how healthcare is priced in the USA? 

Now, on to where you can find these prices.  Well, if you have insurance, then after you receive medical care and the healthcare providers send their claims to the insurance carrier, you should receive from the payer an Explanation of Benefits (EOB), or you probably can go online and view an Electronic Remittance Advice (ERA).  For every CPT code that the providers billed , you will see both a billed charge and allowable. 

Quick show of hands: how many of you have received a medical bill, or an EOB, and threw it away because you could not understand it?  That is intentional!  They want you to be confused.  However, after today, I doubt that you will ever do that again. 

What if we do not have insurance, or we want to know the allowable, because we think this is important information to know so that we can negotiate before receiving healthcare?  Think having a baby or elective surgery.  Do not worry!  The federal government provides us with the Medicare rates online, and I believe that each state provides its Medicaid fee schedules online. 

Medicare Physician Fee Schedule Look-up Tool:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PFSlookup…

Medicare Acute inpatient hospital stays:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpa…

Texas Medicaid Fee Schedule: 
http://public.tmhp.com/FeeSchedules/Default.aspx

You would soon discover, however, that it is much easier to determine the allowable for a physician service than a hospital service, for which you will likely need to look up the DRGs for the ICD codes and then try to cross-reference them with the IPPS Fee Schedule, at a minimum, or you may even need to look up and calculate conversion factors.  It is not easy, again, intentionally so! 

Regardless, we would first need the CPT codes for the services you are seeking from the physician, and probably the ICD codes, too, in order to price hospital services.  You could try to guess at the diagnosis and the services you think the doctor is going to provide to you, and then try to use a search engine to determine the ICD codes and CPT codes, or buy a coding book. 

"I know I need a hip replacement.  My trainer at the gym told me so.  I'll just Google, hip replacement ICD and CPT code."

Good luck with that!  The odds of you guessing the correct diagnosis and appropriate procedures (without going to medical school) are incredibly slim, especially with the new ICD-10 diagnosis codes.  Also, chances are good that your athletic trainer doesn't know what the hell she is talking about when it come to medicine, and in reality, you probably just need a new athletic trainer, and not a new hip. 

Is your head spinning, yet?  Good!  Now, stop it, because you will see that we don't need to do any of that!  It's all just a red herring designed to keep us confused and the health insurers in business and profitable.  Sounds a lot like our banking system, no?

Fortunately, as you will now learn, there is a much more simple and better way to be 100% certain of your diagnosis, diagnosis code, procedure, procedure code, and even the medications the physician will offer you, at least for elective conditions. 

Here it is.  If it isn't an emergency, then make a doctor's appointment! 

You may be thinking, "Isn't that putting the cart before the horse?  Don't we want to know the costs in order to negotiate the fees before the services are provided?"

The surprising answer is, no!  

Why?  Well, because we only need to negotiate the fee schedule, specifically, Medicare or Medicaid, and not the exact fee.  This is very important.  Think back to the tiered-pricing structure.  

Eventually, we may want to know the actual (or sometimes estimated) allowable amounts in order to budget for elective procedures, but this occurs after, or at the time of the physician's office visit, when they can provide us with the ICD codes, CPT codes, and usually the allowable amount, too!  Later, we may choose to audit the allowable amount they give us, to make sure it is correct, and we were not over charged, but this is seldom done, as most people still trust their doctor, and the discounts you will be receiving are so HUGE you may feel a little guilty.  Also, I will tell you, the auditing process is very tedious, not to mention the appeal process. 

Therefore, we are now going to start talking about a negotiating strategy before we even attempt to access any pricing data.  Again, we first need to know the diagnoses and proposed treatments.  So, the solution is to start with a simple negotiation with the physician's office, probably just for the cost for the initial office visit, at the very least, and maybe some expected diagnostic tests.  This is best done over the telephone, is easier and more successful than you might think, and is analogous to finding a mechanic to, "just take a look," at your car and tell you what is wrong with it, and then getting an estimate to repair it.  Just like we expect to pay a little bit for the mechanic to diagnose our car, we should expect to pay a little bit for the doctor to diagnose us.  The funny thing is that my mechanic and Medicare both charge or allow about $100 for a diagnosis.  This is not so funny if you are the surgeon that spent 13 more years in school than the auto mechanic with a high school diploma.   

Here we go, step by step:

1) I usually prefer to skip the added expense of going to a GP or family practice intermediary just to get a referral to a specialist that can actually help, especially when I can determine what medical specialty is likely to be most helpful for by medical condition by visiting the website of the American Board of Medical Specialties.  (Is your ignition system acting up, your suspension riding a little rough, need new tires, brakes squeaking, transmission grinding?)

                http://www.abms.org/member-boards/specialty-subspecialty-certificates/

2) Use the links on abms.org to visit the appropriate specialty board's website, and then use their "find a physician" with the sub-specialty likely to be most helpful for the condition

3) Start calling the sub-specialty physician offices listed, tell them you are a prospective new patient, and ask to speak to the Business Office Manager.  Ask him or her the following questions:

   a) "Do you accept Medicare and/or Medicaid insurance?"  If yes, then...

   b) "Super!  Do you accept cash payment at the time of service?"  If yes, then...

   c)  "Great!  Then, of course, you will accept as payment in full, the Medicaid allowable, but paid in cash by me to you, directly, at the time of service?  Correct?"  If yes, then (e).  If no then (d).

   d) "I guess I understand.  Well, then surely you will at least accept as payment the Medi­care allowable, paid in cash by me to you, directly, at the time of service?  If yes, then (e).  If no then conclude the call, because you cannot fix stupid.

   e) "Thank you!  Can you please tell me what the estimated amount is for an office visit, using this fee schedule, so I can know how much money to bring, and please make a note on my account that we have negotiated a Single Case Agreement for me to pay these rates to you, in cash, at the time of service?

   f) Tell him or her your specific reason for the visit (I am leaking red fluid on the floor of my garage) and that you want to be fully prepared for the visit.  Ask what diagnostic tests, if any, are usually required for this type of problem, lab, X-ray, CT, MRI, ultrasound, etc., and which ones would probably need to be done outside the physician's clinic? 

   g) Make sure to get the BOM's name and contact information, and the appointment time and date.

 

After your office visit, if it turns out that you need a procedure such as day surgery at an Ambulatory Surgery Center (ASC), an inpatient admission at a hospital, a diagnostic test like an MRI or CT, or a series of treatments such as physical therapy, then you simply repeat the above negotiation, starting with the facility your physician recommends, and in the case of a hospital or ASC, always where he or she has privileges.  ASC's allowable rates are always much lower than a hospital, so act accordingly.  When telling the BOM that you are a prospective new patient, make sure to give the name of your physician.  Instead of just making a note of any negotiated agreement in your account, the BOM and you should execute a written Single Case Agreement.  It is usually a one-page agreement that looks something like this sample found in your handouts:

 

It should be obvious to you why, when possible, these negotiations should occur before treatment, which is more often than you might imagine.  In general, elective conditions are negotiated in advance in this manner.  Next, we are going to look at emergency conditions, which are more than likely negotiated after examination and treatment.   

Before we do, are there any questions?

Ok, so I experience some kind of true medical emergency, where my life or limb is in jeopardy, like a heart attack.  mrs_horseman puts me in an ambulance that rushes me to the Emergency Room at the hospital, and they run all kinds of tests, and give me some very expensive medications.  Fortunately for me, a long enough timeline has not yet passed, my survival rate has not dropped to zero, and I don't even get to go to the cath lab or have emergency heart surgery.  However, we do get several large medical bills from the hospital, ER doctor, ambulance, laboratory, and cardiologist.  I either have no insurance, am self-insured, or I have a catastrophic insurance plan with a very high deductible that I am not likely to meet with this event, or this year.  What do I do? 

When I receive each bill, I immediately call each provider and get the name and address of the BOM.  I then draft a Single Case Agreement Offer and Acceptance, and I offer to pay the estimated Medicaid allowable clearly labeled as such (by using the tiered-pricing structure I covered earlier) and expiring 10 days after it is received.  I may also include some horseshit narrative about how I just received a small windfall, and was advised by my attorney to settle my hospital bill before I piss it away on fast women and slow horses, or worse, squander it.  I send this to the BOM, Certified Mail-Return Receipt Requested , with my attorney copied on the bottom of the offer.  The BOM may argue the accuracy of my Medicaid estimate, and make a counter offer with a more accurate Medicaid allowable, but the odds are very, very, high that he or she either agrees to the Medicaid allowable, or counters with something like a Medicare allowable.  Either way, at this point I have successfully negotiated somewhere around an 83% - 87% discount on average, less for doctors, more for hospitals. 

It is important to lock this agreement in, quickly, before my account is sold to a third-party collection agency, which is nowhere near as likely to accept such a deep discount, and far better than a healthcare provider at actually getting blood from a turnip.  Medical providers are now turning their accounts over to collections as soon as 90 days from the date of service, which can mean that you are still being treated for this condition when this happens!  Do not let this happen to you!  Open the bills!  Mail the offer!  Maybe they say no, but that is not likely.  On the other hand, the collections agencies are working very hard to get you on a payment plan for Billed Charges, with interest, for the rest of your life! 

Does this sound unlikely?  Too good to be true?  Then consider this:  Medical providers are highly incentivized to give the patients they treated huge discounts.  Why?  Because they know that collecting money from patients foments malpractice litigation.  They would rather have you pay them pennies, than have you sue them for millions.

There it is.  I said it.  Think about that for a moment. 

Now, considering the minimal risk of negotiating, and the large potential reward, do you now have the confidence to successfully negotiate directly with physicians and hospitals? 

Before I spend just a few more minutes talking about pharmacies, and then finally some self-insurance goals, are there any questions or comments?

I recently had breakfast with a pharmacist friend of mine that has worked as a manager for Walgreens for more than a decade.  mrs_horseman is probably smiling when she hears that I have a pharmacist friend, because she knows how I feel about most of the people in that industry.  Nonetheless, I told him about this presentation I am making, and asked if he had any advice for negotiating directly with the pharmacies for medications.  It turns out, he does, and I would have never guessed the tactic he described. 

Are you ready? 

Coupons and free discount cards.

He explained that if one simply goes online and searches for Walgreens coupons, it is usually possible to save between 5% and 60%.  He specifically recommends Good Neighbor Pharmacy Prescription Savings Club. 

                http://www.mygnp.com/prescription-savings-club

He says that when you purchase medications, then you have 5 days to return to the same location Walgreens and bring a coupon for reimbursement of any savings. 

He says that if you are paying cash, then you must be sure to request a generic, if available.

For long term meds, he explains that the drug manufacturer's web sites will often offer a free co-pay assistance card.  If you have insurance, then you can present the free card from the manufacturer to the Walgreens pharmacy, and it will cover your co-pays. 

In closing, I want to talk just a bit about insurance and one of the situations where we would want to be able to negotiate directly with physicians, hospitals, and pharmacies. 

As we have discussed, today, one of the primary benefits of having health insurance is to take advantage of the discounts negotiated by the insurance company or government.  However, we just learned that providers are usually willing to accept similar discounted rates from cash pay patients. 

The other big benefit of health insurance is to share with other people the risk of having to pay large bills that are the result of serious and unexpected injuries or illnesses.  This is the traditional role of insurance.  However, the costs and benefits of sharing risk are directly related to the health and healthcare consumption habits of all the members of the risk pool.  As the post-vasectomy head of a healthy household, do I really want to be swimming in the Obamacare risk pool with millions of morbidly obese, perpetually pregnant, HIV infected drug abusers?  No.  It is too expensive!  

What to do?

Well, what do many smart employers in Texas do to save money with Worker's Compensation Insurance? 

They self-insure!  They have money put away in case of an emergency.  If they have an employee that is injured, then they negotiate directly with the healthcare providers, and pay deep discounts well below the statutory Worker's Compensation allowable, which we learned earlier is usually the highest allowable.  They pay themselves a premium each month, which is effectively a forced savings plan.  Sometimes, these companies may also purchase a relatively inexpensive health insurance plan called catastrophic, just in case a really big and expensive event occurs, like the whole oil refinery blows up and puts a few hundred employees in the hospital.  However, if nothing happens, and the employees don't have any accidents, the company gets to keep most of the money, instead of giving it all to the insurance companies!    

Hmmm.  I wonder.  Could I do that for my health insurance?  Yes, and in fact mrs_horseman and I do exactly this.  We have a high-deductible catastrophic health insurance plan and a $600 savings line item in our budget that we pay ourselves every month.  We bet on ourselves to be healthy, unlike an HSA, where you bet on yourself to be unhealthy.  This is true, and why we simply refuse to take the pre-tax bait of an HSA.  

Remember, friends, the only surefire way to dramatically reduce healthcare costs is to remove the middlemen and allow market forces to return to healthcare. 

 

Thank you for your time, and thank you for coming to the First ZeroHedge Symposium and Live Fight Club in Marfa, Texas. 

 

You know the rule.  If it's your first time at Fight Club, then you gotta fight.  What are your questions and comments?

 

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The Q and A session was amazing,  I am sorry if you missed it.  Those that did attend will recall that I predicted the Republicans would not repeal Obamacare.  I hope to see you at the Second ZeroHedge Symposium and Live Fight Club in MArfa, Texas, June 1-3, 2018.  The lodging is filling up, so book it soon.  It is going to be fun!

https://www.zerohedge.com/news/2017-10-17/theme-second-zerohedge-sympos…

https://www.zerohedge.com/news/2018-02-28/practice-honesty-when-it-matt…

 

Peace, prosperity, love, liberty, and health!

 

h_h