A Big, Unfortunate and Expensive Illustration for Health Reform
By Hanh Kim Quach
Health Access California
The Wall Street Journal had this tragic story last week about a Merced man -- who was insured -- but still socked with a $1.2 million hospital bill (not counting thousands in doctor's office bills also).
What happened to Jim Dawson, of Merced, that landed with debt that could bankrupt him is a textbook example of what health consumer advocates have been fighting to reform for years.
Dawson had a good job with Valero Energy Corp., a big oil refinery. He had Valero-sponsored comprehensive health insurance policy, and a regular primary care physician who knew his medical history, *should* not have been vulnerable to medical-financial angst. That's at least what many think. But Dawson's story shows how anyone can be vulnerable.
First thing that went wrong: His primary care physician, and subsequent specialists were not able to diagnose a staph infection until six months after his first doctor's visit -- and by that time, the infection had ended up in his blood stream.
Next: He ran up against a lifetime cap on his health coverage -- a max of $1.5 million (which, incidentally is considered generous. Most policies have a cap of $1 million, but where set in the 1970s when the purchasing power was equal to $6 million today, according to WSJ)
Lastly: Dawson and his wife, in combing through their hospital bills, realized the hospital had inflated various items at tens and hundreds of times their actual cost on the street. For instance, stockings for $791, when they could have purchased them for $12; oxygen for up to $6,675 PER NIGHT, when it could have been rented for $250. All those numbers added up to "Disneyland numbers,'' admitted the hospitals chief medical officer.
The Dawson case highlights a number of issues:
DISCLOSURE OF QUALITY AND COST:
Dawson visited many providers who were unable to accurately diagnose him at first. Still, Dawson (or his insurance) paid all these providers full price for their conjecture. If providers were asked to account -- or disclose -- for why Dawson's staph infection went undiagnosed for so long, then
1. Dawson's infection would not have spread as far or been as costly and
2. Other consumers could decide whether or not to see that provider.
LIFETIME CAPS:
The fact that lifetime caps have not been reset since the 1970s, combined with costly medical technologies that are used in health care will mean that more and more Americans will reach their lifetime caps.
HOSPITAL OVERCHARGING
Even the chief medical examine at Dawson's hospital admitted his bill amounted to "Disneyland numbers.'' Given that Dawson's hospitalization occurred earlier this year, he should qualify for a discounted rate under AB774 (Chan), which was enacted in January. It requires hospitals to offer the Medicare-negotiated rate for patients who are uninsured, or spend more than 10 percent of their annual income on health costs.
Unfortunately, until this is sorted out, the Dawsons are making $30 payments to various hospitals. At that pace, with at least $1.2 million in the red, I estimate it will take them 3,333 years to pay off (not including interest).
December 3, 2007 at 01:36 PM | Permalink | Blog Reactions
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Comments
This unfortunate story is exactly why ABX11 does not address the health care crisis. Nothing in the bill limits copays, deductibles, nor lifetime caps. Anyone with private insurance coverage can easily go bankrupt and still claim they have coverage. There is no minimum benefit package in the bill meaning one could buy an "affordable" plan that has a $5,000 deductible and $500,000 lifetime cap and easily go bankrupt with one bout of a serious illness. We need the profit-making private insurance business out of the health care business.
Posted by: Susan Bergman | January 24, 2008 04:23 PM
In addition to Ms. Bergman's comments this bill is a state subsidy to corporations because the cost of 6.5% of payroll as a premium for state health fund coverage is half of the average cost that employers are presently paying for their health benefit plans. Sen. Mark Wyland asked Kim Belshe if their were any restrictions in the bill against corporations cancelling their independent plans to put their employees on the state plan and she could not name any. This is an enormous, unconsidered cost by the state's legislative analyst.
Posted by: Gerald Hunt | January 28, 2008 01:35 PM
I support much of Assembly Bill X1 1, but it doesn't go far enough.
In order to satisfy the demands of the medical lobby, the bill has been larded with out-of-control costs that the state will force upon every Californian if mandatory insurance is part of the package.
You can do better, and that's just what we need to do.
Single payer is still the best way to go because it will take the greed and outrageous profits out of healthcare costs, thereby making QUALITY COVERAGE AVAILABLE TO ALL. This is the simple bottom line--you must take the profit and greed out of the equation and treat health coverage like fire and police protection, a simple human right everyone should be entitled to.
Sincerely,
Kaleo Kaluhiwa
p.s.- guess what's the #1 reason for personal bankruptcy these days? Yup, medical costs incurred by an unexpected illness or injury.
Posted by: kaleo kaluhiwa | January 28, 2008 05:45 PM
Huh... Your blog is nice in general, but this very post... It is brilliant!!! It can be never better.
Posted by: mineman200 | April 10, 2008 09:54 PM