An aside on insurance
I'm going to outline the way things work from a payments standpoint because it's not something anybody has any real experience with, since things are so compartmentalized. Not the hospital billers, not the insurance adjusters, not the executives, not the patients, not the doctors. It's an elephant and a bunch of blind men and I think you have to have not only a DIY ethic but a love of data AND be a small healthcare provider to really grasp the eye-watering stupidity.
We'll use out-of-hospital birth as an example because I happen to know it. I'm sure every other corner of healthcare is equally stupid. But first, we'll talk about how I spent my morning:
We've got a CSV output out of our biller. It lists every CPT code she's billed for us and every insurance company we've billed. Now - my wife? She delivers babies. She does some naturopathic stuff too, but mostly she delivers babies. My task? collate those codes - 247 and counting - by provider (13 and counting) to see how much everybody pays us because you know what? If you aren't paying enough, fuck off. We're dropping you.
Note that what we get paid is not what everyone gets paid. It's what Insurance Company X has decided to pay us. Except it's not even that. It's what Joe at X has decided to pay us based on what Joe thinks is appropriate. Sometimes it's Jane. Sometimes it's Larry. Sometimes they'll pay. Sometimes they won't. In all cases, what they pay us is loosely related to, but not identical to what they pay Provider Z.
So let's set the stage: for, say, 36415, "Collection of venous blood by venipuncture", I've got a table of twelve different insurance companies and nine different prices ranging from $2.40 to $50.00. Have you ever paid less than $2.40 for any service? You can't get your shoes shined for that. Wouldn't you rather take $50? Guess who pays $50? DSHS. Right?
And all that's different from 36416, which is a finger stick blood draw (as opposed to vein). Brand X pays $2.40 for vein, $2.70 for finger. Brand Y pays $8 for vein, $4 for finger. And it's all different for every provider, and it's all different from every insurance company, and it'll change tomorrow. Or the next day. Or for sure the next time you bill. How do you find out the prices? Bill them. But you better bill them for a real patient with a real service or else that's insurance fraud and a felony and you'll lose your license and go to jail.
So. Let's say you hire us to deliver your baby. You show up, we check to make sure you're healthy, you have your baby, we check to make sure you and your baby are healthy, you give us hopefully a good Yelp review and life rolls on. Except no. There's billing.
From a customer standpoint, you talk to our front-room mercenary (we'll call her Mercy Fronts) to give you a guess as to what we can crack out of your insurance company and how hard your insurance company is going to drag you. If we're in network, "how hard they'll drag us" isn't your problem. They're just gonna drag us. If we're out-of-network, "how hard they'll drag us" is your problem because you're going to pay the difference. Mercy Fronts is now going to walk you through how, exactly, to submit superbills and what documentation you'll need to minimize the dragging for both of us.
From a provider standpoint, we'll talk to our back-room mercenary (we'll call her Mercy Backs). Mercy Backs has a big, scary database of every insurance company she's ever worked with, every provider she's ever worked for, and every CPT code she's ever tried. Then she takes our documentation and pickaxes every last cent she can out of the insurance company through artful application of CPT wizardry.
Mercy Backs takes ten percent. We literally pay her as if she were a talent agent. Mercy Fronts gets paid by Mercy Backs; I'm not quite sure how they work that out but let's pause for a minute to reflect on the fact that the doctor-patient-insurance triangle is so inefficient (point to the bad leg) that it's now created two jobs.
Right. So now you're the insurance company. You bill Spacely Space Sprockets (SSS) $X per month for employee benefits. You bill SSS employees $Y per month (plus deductibles, plus denied claims) for providing them health insurance. And the provider? You screw her as hard as you can so that the money only goes one way. 90384 - rhogam. Keeps your baby from going blind if you give birth with any sort of bacterial infection. Mandated by the state. We lose our license if we don't provide it. Costs us $60 a shot. Brand X? $140. BrandY? $7. Because fuck you, that's why.
Let's inject Amazon & Berkshire & Chase into this
So there are only two things ABC can do.
- They can create an insurance company.
- They can collectively bargain with some other insurance company.
Let's say they create an insurance company. Great. They've added a column to my spreadsheet. Now I know what ABC pays. I can take it or leave it. Who has ABC insurance? Amazon, Berkshire and Chase? Okay, that's about a million people and change. Aetna writes 23 million policies. So they're going to save money compared to the other 12 columns on my chart by carving out the profits? Aetna makes about $700-$800 million per quarter. Call it $3.2 billion and 23 million policies. Aetna's profit per policy is a whopping $139.13. Multiply that by every employee at Amazon (542,000), Berkshire (368,000) and Chase (234,000) and you've saved 159 million whole dollars! Assuming you're willing to be flat on it. Assuming you can be as efficient (or better) than Aetna. CVS figured they couldn't build something like that so they just bought it. For $69 billion. What do you think: does CVS understand insurance better than Amazon, Berkshire or Chase? Keeping in mind that Berkshire has owned GEICO since 1999 - an underwriter in business since 1936 that will insure 26 different classes of things (including your dog!) but not your health.
Or, they can do to an insurance company (or companies) what Amazon does to everyone else - say "get with us or we'll drive you out of business. Lower your rates or we will bury you." They did that to Fedex. Fedex is still in business. They switched to OnTrac - OnTrac is now a carrier that put up with Amazon's rates just long enough to establish a network. Now they'll ship pretty much whatever; Amazon's principle victory in shipping was getting the USPS to deliver packages for them on Sundays.
And really - let's say they can talk someone down 40 percent. Great. That means they'll save basically $50 per year per policy. Any company that does that is going to do it by fucking over their providers and their clients and we all know it and I'm here to tell ya - an insurance company that tries to fuck us? We drop 'em. We don't need your fucking $2.40.
I don't see any way it can work.
Know what works? Medicare. States negotiate the rates, taxes pay the subsidies, shit's all public. Four of my columns are contracted under Medicare. Their rates are all the same. Yeah, a lot of them suck - but they suck a lot less than they did because our professional organization got together and said "yo - you can't mandate we give Rhogam and then pay us a tenth what it costs for us to buy it, get your shit together or we'll drop you."
The inefficiencies of healthcare? It's the stupid games insurance companies pay. Fundamentally you have a product with inelastic demand being parasitized by a third party. Amazon, Berkshire and Chase? They're not looking to fix shit. They're asking for a seat at the table.