Health care: a simple solution for April Fool's Day

Kathy Magliato belongs to one of America's tiniest and most elite groups: she is a female heart surgeon.

It's been exactly 50 years since Nina Braunwald, Ann McKiel, and Nermin Tutunju became the first women certified by the American Board of Thoracic Surgery. Since that time, writes Magliato, only about 180 additional women have been certified. None of them, I discovered, are practicing at the nation's three top-ranked cardiac hospitals (see my review of Magliato's book at The Neff Review). Magliato, still in her 40s and the married mother of two small children, is a genuine pioneer.

So when she wrote, "I am uncertain that the health care system, in its current state, can survive much longer," I readily agreed. And when she added, "It is such a shame, really, that no one can figure out what is wrong when the problem is very simple," I thought, She's going to propose a revolutionary solution that will finally restore sanity to our health-care morass! After all, the woman is not only a surgeon, but also an MBA.

But when I read her proposal, I expected her to pop up and shout "April Fool!"

If the insurance companies would simply pay what they are billed rather than just choosing to pay whatever they feel like paying, the health care system will stabilize and there will be plenty for all.

Say what?

Hey, I'm no fan of the way America's for-profit insurance companies do business. But let's take a quick look at what hospitals bill vs. what insurance companies pay. This winter my husband had outpatient hernia surgery. According to Blue Cross Blue Shield's estimation of benefits forms, the total billed (from doctors, labs, and hospital) was $10,313. BCBS negotiated a discount of $6,646, or 64%, so the total paid came to only $3,667. Of that, the insurance company paid $2,526 and we paid $1,141.

Now in Magliato's perfect world, the insurance company (or we and the insurance company together) would pay the whole bill. In other words, we would pay nearly three times as much as we actually did pay. This money, of course, would come out of our pockets one way or another.

If Magliato's simple solution were applied, insurance companies would have to nearly triple their rates in order to pay whatever medical providers wish to charge. Instead of today's family average of $13,770 (for families lucky enough to have good coverage at work), the average annual cost would jump to nearly $40,000. If workers continued to pay approximately 30% of the insurance premium out of pocket, we'd all be paying about  $1000/month for coverage (in addition to the $2000-2500 our companies would be paying), and either our salaries would drop or the cost of goods would rise precipitously to allow for such generous benefits.

And, of course, if medical providers knew the insurance companies would pay whatever they were charged, medical cost inflation would outpace anything previously seen in world history.

Dr. Magliato's solution is breathtakingly foolish. But she's right about one thing: our health-care system, with or without the Affordable Care Act, is such a mishmash of ill-considered practices that its very survival is in jeopardy. Because, as author T.R. Reid points out, we don't have a system at all. What we have is a crazy quilt.