Wednesday, July 27, 2011

"How much does that cost?" saves billions in healthcare spending

Have you ever bought a durable medical device? If so, did you get a good deal on it, or are you like most people – insurance paid, and you have no idea about its cost?

Sleep apnea may be one of those over-diagnosed conditions. My dad “snored.” I have “sleep apnea.” My guess is that he and I shared the same likelihood of a heart attack or stroke from snoring, and in fact, he did have a stroke – at 85. I am fairly sure it was not from snoring – er, sleep apnea.

Regardless, my doctor prescribed a CPAP. Unlike many that find the CPAP mask claustrophobic, I did not. From the beginning I slept better and felt more rested. My wife, by the way, also slept better as a result of the quiet whoosh of my CPAP instead of thunderous, room-shaking snoring.

Two years ago I had to replace my CPAP. Clutching tightly to my Health Savings Account (HSA) card, and carrying the knowledge of my $5,960 deductible health plan, I went prepared. Allina’s staffer showed me this slick, small unit. The H2O chamber and the blower were built into one device, easily separated for maintenance and carrying. 

“Looks good to me,” I said. “How much does it cost?”

You would have thought I asked “When was the last time you went to Mars?”

“I don’t know,” she said.

When I pressed her for the price she became defensive. I reminded her that in Minnesota the law requires Allina (all medical providers) to give me a price for medical services and products prior to my receiving or purchasing them. “The law requires you to give me a good faith estimate,” I said. I believe for a moment she thought I had her confused with an auto mechanic.

“Well, I don’t know,” she said, protesting, defensively, and revealing her ignorance. “You should call our business office.”

The business office manager knew the law and answered immediately. “$200 a month for a 10-month lease,” he said.

“But I don’t want to lease it,” I answered. “I want to buy it. How much does it cost?”

Hold on to your seat now. The answer is astonishing, especially considering that perhaps 1 out of 1,000 bother to ask the question. “$1,395,” he said. I bought it.

Just in the first 10 months I would have spent $2,000, and Allina would still own it. I never asked how much a new lease would be, or whether they had a “used CPAP lot” to which they sent suckers – er, I mean insured people – when the lease expires.

I saved at least $1,005 the first year. The second year, at least $2,400. But none of this would have happened if, 1) I had a standard PPO health plan with a low co-pay, 2) would not have asked “How much does this cost?” 3) owned a Consumer-Directed Health Plan with an HSA.

My purchase represents billions of wasted healthcare spending each month, and tens of billions wasted each year.  And the motivation for me started and ended with the financial transaction, with me acting as a purchasing consumer.

Today, Allina calls to tell me I need new hoses, masks, filters, pads, and so forth because “your insurance covers it.” Could be, but I’m paying it, and my mask is just fine.

Monday, July 4, 2011

MRIs at a single, flat, affordable price

Eric Haberichter, a Milwaukee, Wisconsin businessman, and his partners are market-changers. Their idea will revolutionize the way individuals receive and pay for MRIs.

Haberichter and his partners conceived of and created Smart Choice MRI. After you read this, I want you to contact Eric for details. If you prefer a human voice to an email, dial 414.431.0309 and tell him Dave Racer said to call.

At Smart Choice MRI a patient can purchase scanning services at a flat price. According to their website, "Smart Choice MRI charges a global, flat rate of $600 per exam regardless of who is paying the bill. Unlike the competition that may offer discounts to patients paying with cash, Smart Choice offers the same transparent price to every patient."

Imagine, no hassling over which view the radiologist will take as a way to determine the price. No matter which view, the price is $600. Have a suspected cancer on the lungs? $600. Think you might have broken your tibia? $600. Brain running on fumes (and you want to see if there's still energy there)? $600.

I asked Eric about his equipment. He mumbled something about Tesla. Nikola Tesla is, of course, one of history's giants in scientific innovation. But to MRI's, the industry applies his name with a rating. A Tesla 1.5 imager is powerful. At the time I talked with Eric about it, it was the industry standard -- it still is. Smart Choice MRI has it.

Well, ha, I declared. So what about doctors? I mean, you can't just have a nice machine if you lack qualified professional MDs to interpret the images.

"We currently interpret exams from locations across the country.  All of our radiologists are board-certified and have advanced subspecialty training." Eric had a ready answer. His radiologists practice at Cleveland Clinic, though their eRadiology function.

Now, to the point. What Eric has done is to engage his brain, to find a solution to a very real problem: The price of health care services. Eric did this without, and in fact, despite, any federal or state agency telling his doctors or him how to provide services. Eric saw a need, and he is filling it.

When I first met Eric, I told him he needed to franchise the idea. Maybe, someday, perhaps.

Believe it or not, Eric has to overcome institutional reluctance, even with the insurance companies that pay for most MRIs. It turns out, through his experience, insurance companies prefer to pay more - even a lot more - for MRIs, than $600. Their systems are not flexible enough to accept something so rooted in common sense as is Smart Choice MRI. When Eric explained this to me two years ago, he told me of one insurance company that wanted him to bill out at more than $2,000 for the service he would provide for $600.

What is the key development that clued Eric about the need for Smart Choice MRI? Consumer Directed Health Care (CDHC) with its high deductible health plans and Health Savings Accounts (HSA). Individuals began to shop for affordable health care, once they began spending money from their HSAs and their own pockets. Smart Choice MRI became the option of choice for many in and around Milwaukee. You can go there, too (Eric isn't fussy about even allowing Minnesotans into his clinic).

The only unresolved question I have about Smart Choice MRI is why there isn't one in Minneapolis and St. Paul, and your town.

Wednesday, June 29, 2011

“Mandatory Life Insurance,” Cries California Congress Person

Perfect Match for Health Insurance Exchanges

BROADMOOR, CA. June 29, 2011: “Tomorrow I plan to introduce the Affordable Life Insurance Empowerment Act in Congress,” said Arly Esperson, Congressperson from California’s 54th Congressional District. “Now that the Sixth Circuit Court of Appeals has ruled the health insurance mandate is constitutional, I think it’s time we take the next step.”

Today, a three-judge federal appeals court in the Sixth District upheld the cornerstone of the Affordable Care Act of 2010. “The progressives in Congress wanted to be sure the court upheld the mandate before we started moving ahead with the rest of our agenda,” Esperson explained. Esperson spoke about the controversial ACA provision known as the individual mandate that will require every American resident to enroll in a health insurance plan by 2014.

Progressives breathed  a sigh of relief over the decision, Esperson said. Esperson leads the Latte Party Caucus in Congress, a group of lawmakers who believe government needs to do more for “working people. And that’s why I am moving ahead with this new bill.”

The Affordable Life Insurance Empowerment Act (ALIE), Esperson explained, would require all United States’ residents to purchase a minimum of $10,000 in what Esperson called “lifetime coverage.” Ron Kelly, a spokesman for New Mexico Life Insurance clarified the term: “Esperson means whole life or cash value insurance, and it lasts a lifetime, or, well, until death.”

Esperson’s bill would go farther and require everyone older than 35 to own a minimum of $250,000 in term life insurance in addition to the $10,000 whole life policy.  “This will do several things for working people,” Esperson explained. “First, there will be money for burial cost. Second, it will help settle estates. And third, and just as important, the federal tax of 25 percent on the death benefit will help to reduce the national debt.”

ALIE overcomes two hurdles that might otherwise doom the bill: premium cost for low-income people, and accessibility coverage. 

First, Esperson explained that low-income people – the threshold is set at family income of less than $50,000 a year – will receive help paying their mandatory life insurance premiums. “America’s richest individuals often use life insurance to dodge paying estate taxes,” Esperson said. “We will levy a 35 percent tax on the life insurance proceeds of all plans that exceed $500,000.” In this manner, “we will make sure the rich pay their fair share.”

Second, Esperson plans to fold enrollment in mandatory life insurance plans in the Health Insurance Exchanges required by the ACA. “Hey, every state must have the Exchanges, and it would be nothing for Exchange enrollers to fill out life insurance applications.” 

Under ALIE, insurance companies will have to issue life insurance to anyone, regardless of their medical condition or age. “That’s why we mandate ownership,” Esperson explained, “to eliminate cherry picking of insured people, as the life insurance companies do now.”

The other ALIE key feature will help keep the premiums low for everyone, according to Esperson. “We will limit the premium rates on a three to one ratio, so that the younger people will not get stuck paying too high of premiums.” People under 33, according to ALIE, would pay one-third as much as people older than 65.

“This is the perfect adjunct to the Affordable Care Act,” Esperson said. “For the first time in our nation’s history, everyone will have health and life insurance.”

President Obama has remained silent on ALIE.