Purchasing Power: Good Luck Getting Out of THISRodney Johnson This year, I exchanged my high-deductible, health-savings account insurance plan for one with more benefits (and greater premiums), because of the Affordable Care Act. So I figured this was the year to address my issues once and for all. That being said, Im still intent on managing the costs associated with my care, even though Im not responsible for paying medical costs beyond a pre-set copay, no matter what the costs. Im trying to fight the moral hazard of having limited financial liability but still able to rack up excessive medical expenses. This seems like the path that all of us should take in order to reign in the crazy costs of health care. However, in my efforts to manage these expenses, Im failing miserably and I am sure I am not alone. The system is a complete mess not least because we play the dual roles of consumer and patient. Purchasing Power Shouldnt be Tricky The billing system is a riddle, at best. There seems to be no relationship between the actual cost of a procedure or treatment and what we end up paying. It seems impossible for a patient to know in advance what any of it will end up costing, even if he shopped around like a discerning consumer. Besides, even if this super-sleuth of a patient was able to determine the cost of care ahead of time, what could he do about it? How exactly are we supposed to shop around and try to bring some rationale to this system? So far, Ive been unable to solve this puzzle. In past years when I had such tests, Id tell the provider I was self-insured. Given that my deductible was five figures, I was definitely going to pay the entire cost. On this basis, I negotiated the price of MRIs from $1,500 down to $300. That seemed reasonable. But now that I have a super-duper insurance policy, I can no longer claim self-insurance. My power to negotiate (to the extent it ever existed) is gone. I simply hand over my card and pay the bill, which, for an MRI, is $150. One might expect the additional cost covered by my insurance would be near $150, bringing the total cost to the $300 that I paid before as a self-pay but Im not so sure. A recent charge for an MRI to my insurance company was $2,200. Ive not seen the discount yet, but I dont think it will be $1,900. That charge left me a bit shaken, but I was really taken aback by the next phase of the process Because I was not getting medical answers around town, my primary-care doctor suggested I go to one of several famous diagnostic centers. I called my insurance company and quickly found that choosing one in state would greatly reduce my costs, as well as the cost to the insurance company. Being a fairly organized person, I arrived at my appointment fully prepared. I met with my doctor and presented a binder containing a timeline of my symptoms, treatments, tests and previous doctors visits. After an hour and a half of review, she rendered her informed opinion apparently, Im just built this way. From a medical standpoint, there was nothing wrong with me. Her solution: I should instead investigate a pain-management regimen. I left her office disappointed because it didnt give me a path toward resolution of my issue. Her suggestion was simply to find a way to live with it. But my disappointment turned to fury when I got the $735 bill. The insurance companys negotiated rate was $400. No tests were performed, and this doctor didnt consult with others. The $400 cost was simply for spending 90 minutes with a person who, at the end of the process, had no idea what the problem was. My cost for this was just my co-pay of $20, the rest was paid by the insurance company. The fact that I personally paid so little might seem like a win for me, but its not. I still have no way to manage the overall expenses, and neither does anyone else, as far as I can tell. While my co-pay might only be $20, my premium can always be ratcheted higher when I renew not because of my individual procedures, but because the collective cost of care is growing. The process was starting to feel like a game and one that I was losing. Then things got even more confusing. I was referred to a chronic-pain specialist in my hometown. I was skeptical, but after meeting with him, I was pleased with his approach and his methods. I think Ive found a good physician that can help me get to the cause of my issues, which is great! What I struggle with is the crazy and costly path to treatment. At my first appointment, I was given 22 pages of forms to fill out. Thirteen of them were financial documents. I signed that Im responsible for all costs. I noticed that even if my insurance company declined to pay, I would still have to pay, even though I verified this doctor is in my network. If my injury were the result of an accident, the doctor would be first in line to be paid from any recovery in a lawsuit, if he had not yet been paid. It was hard to tell if I was going to a doctor or buying a house. Its also a sad commentary on the level of fraud and abuse in our medical system by patients. And its a strange evolution of the health-care industry that doctors have to become lawyers to protect themselves and guarantee payment of their fees. In the end, my doctor prescribed a minor procedure that was to be done at an outpatient facility. I called my insurance company and was informed the surgery center was out of network. I called the center the next day to cancel so that I could find an in-network provider (trying to keep the costs down for everyone) and was informed by a customer service representative that the surgery center would accept my low deductible. They would send the bill, as usual, to my insurance company, she said, and they would accept whatever they received from my provider as full payment and write off the rest. When I asked if I could get that in writing, she laughed and pointed out that it wouldnt change the cost to the insurance company they still pay only the portion that is derived from outpatient pricing. From my standpoint, it seemed very convoluted. So now Im left with physician and treatment bills I cant negotiate, but am not responsible for paying, either. Ive signed over any proceeds from a lawsuit regarding my injury to cover my care, even though no lawsuit exists. And Im relying on the word of a customer service representative that many of the forms Ive signed dont matter, since the billing will be handled differently. Its impossible to navigate this system with any clarity! Now that health coverage is mandatory, weve added millions of people to this insane system. Its hard to see how this is going to make things better. We have yet to simplify the process of providing care and paying for services rendered. Instead, weve only succeeded in making the purchase of insurance more straightforward. Having more people covered is a positive for the country (although the path to this coverage is debatable), but until we address the underlying issues surrounding the provision of care and how we pay for it, things will simply get worse as Americans get older. While all of this makes me shake my head, at least we can use the fact that boomers are aging, and requiring more health care, to our advantage in some ways. Adam ODell, the chief investment analyst for Boom Bust, has provided subscribers with some great gains in this space over the past two years. Now thats making lemonade out of lemons! Rodney Johnson works closely with Harry Dent to study how people spend their money as they go through predictable stages of life, how that spending drives our economy and how you can use this information to invest successfully in any market. Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on projects with Harry in the mid-1990s. Hes a regular guest on several radio programs such as Americas Wealth Management, Savvy Investor Radio, and has been featured on CNBC, Fox News and Fox Businesss Americas Nightly Scorecard, where he discusses economic trends ranging from the price of oil to the direction of the U.S. economy. He holds degrees from Georgetown University and Southern Methodist University. This article first appeared at Economy and Markets. 