by Patrick Appel

This sickbed story received a number of responses. I've rounded up some of the best ones. A reader writes:

I'd be interested to know if your reader has ever actually had to rely on an HSA--I've noticed that those who rave about them are usually doing so from a theoretical perspective, not from personal experience as a consumer. As a freelancer, I've had an HSA for several years, and I hate it.

The policy has a $3500 deductible, so, short of a catastrophic claim, I pay for everything out-of-pocket. It's true that I only pay $113/mth in premiums for my insurance policy, but I never actually use my insurance policy (other than receiving the insurer's negotiated rates for medical services), and it really comes out to $405/mth if you include the deductible that I must pay before getting coverage ($3500/12=$292, although I'm only allowed to deposit $2,900 in the HSA annually).

Yes, the deductible is paid with "pre-tax" dollars (I still pay state and self-employment taxes on any deposits to my HSA), but that doesn't make it any less painful when I'm paying the bills. And it definitely deters me from seeking care on a timely basis. In the past year, I've had two different doctors suggest an MRI (which they seem to do as a matter of form these days--and usually at an affiliated MRI center that shares profits with the doctors). I still haven't gotten an MRI because, with business down significantly, I can't afford at least $1,000 for a test that may well prove inconclusive.

I've found no medical providers willing to negotiate with me for their services. In fact, many of them seem almost totally unfamiliar with HSAs and how they work. And what patient really wants to try to negotiate lower prices with a provider? Talk about uneven bargaining positions. That's just another conservative "let-the-marketplace-decide" pipedream that is totally removed from reality.

I'm also deterred from seeking timely care because I don't want to make myself uninsurable in the future. Last year, I applied for a group policy through my alumni association. After I completed the detailed application and provided additional information over the phone, I received a letter telling me Blue Cross California was "declining" my coverage. Days later, I received another letter listing three reasons:

   * Knee tendonitis and low arches treated with physical therapy (in 2002)
   * Shin splints treated with physical therapy within the past year (which
     cost me $3,000 out of pocket)
   * History of treatment for sciatica (once-in 2004)

My blood pressure, heart rate, and cholesterol are all low, and I weigh less now than I did 20 years ago in college. I take no prescription drugs, have never been seriously ill, and have never received ominous test results. But I couldn't get group coverage because I'd previously sought medical care while insured under COBRA or grad school policies. And a traditional individual policy would be prohibitively expensive. This is how we encourage people to become entrepreneurs?

Our system is clearly in need of reform.

Another reader:

I have been self employed with an HSA for my family for about 4 years.  My experience with finding out even approximately what a procedure would cost was a nightmare.  My son was having one of the most simple procedures done, ear tubes.  Yet no single person could even give a ball park figure for what the procedure would cost.  Individual calls needed to be made to the doctor performing the procedure, the hospital, the anesthesiologist, etc.  Also, the costs for everyone varied on where the procedure was done. 

When it was all said and done, the cost was $6,000 for a 10 minute routine procedure with no complications. This was up from $2,500 just two years earlier. The most touching part of the whole experience was realizing that the people doing the actual procedure, the doctor and the anesthesiologist, were less than 20% of the total cost. 

Of course the ear-tubes were not covered because my son had one ear infection prior to getting our HSA coverage, so it was considered a preexisting condition.  On a related note, my wife's entire back is not covered, not because she had some sort of prior procedure or injury, but because she has been to see a chiropractor.  Also, her lungs are not covered because she has asthma.  Brilliant. 

Another reader

Yes, I successfully negotiate a firm price for eye glasses, teeth cleaning, and even a tooth inlay, paid from my HSA. I suspect the average person's ability to do that drops pretty quickly when they are taken to the ER suffering a heart attack, or when they face cancer surgery. Their choice of secondary providers (hospital, supply vendors, labs) gets determined by their choice of primary provider (surgeon), which reasonably is focused on finding the best treatment to their life threatening problem. I want to meet the mythical patient who, before all the other things they must do prior to their cancer surgery, calls up the lab that will do the biopsy and asks how much that will cost, and what discounts have been negotiated with their particular insurance. And if the patient doesn't like the answer, then decides... what? That they will ask the hospital to use a different lab? Or their surgeon to use a different hospital? Or restart their search for the right surgeon for their medical condition?

Some medical expenses are very much like other consumer purchases. But the ones that cost the most are the most complex and urgent transactions consumers will make, in the face of the greatest information asymmetries.

One more:

This latest poster shows quite a bit of ignorance as well.  The poster repeatedly explains to us that he/she once "worked in medicine," and therefore understands billing codes and the procedures for negotiating prices.  That's great for the poster.

I have a J.D. and a Ph.D. in the humanities; I also have a tenured position as a university professor and good medical insurance (provided, I might point out, by the state government that employs me).  But despite all my years of education, I completely missed the memo explaining to me--as a relatively well-informed patient and consumer--how to negotiate my way through the maze of the medical insurance industry (who to call, what to ask, what to demand, what to offer, etc., etc., etc.).

As your other posters have illustrated so vividly, our current system for medical pricing and billing is utterly impenetrable to anyone on the outside of the medical fraternity, and that's surely the situation the vast majority of American citizens find themselves in.  And as your posters have also pointed out, even if I get that elusive memo, how can I be expected to begin the process of information gathering and negotiation at the very moment I suddenly find myself in unexpected and dire physical distress?

This is a capitalist market that will never work efficiently, because it's a market that thrives on keeping the flow of information a one-way street.

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