Stop Overpaying For Healthcare


“We are building an army of volunteer attorneys prepared to represent people when the time comes. In fact, when communicating with providers and bill collectors, we’ve been asking them to sue the patient. Thus far, none have.” – David Silverstein

By David Silverstein

America is in denial about the depth and breadth of the problems with its health-care system. While there is much discussion of rescinding the Affordable Care Act (Obamacare), there is nothing being discussed as a substitute that begins to address the underlying problems. Denial is an awful thing. Denial can be catastrophic.

What are we in denial about? An aging population? Sort of. Skyrocketing Medicare costs? Our ability to become more cost-efficient? Sure. But at the end of the day, what we are most in denial about is the hidden extent to which we are all subsidizing Medicare. Our ability to provide health care has become so advanced that our aging population is living longer with chronic, expensive health issues. We are not addressing, in a reasonable way, the problem of covering the costs of an aging population, and hospitals are taking matters into their own hands. That is creating a bigger problem for the rest of the population.

A hidden Medicare subsidy you are paying

The true promise of the Affordable Care Act, which was much more well intentioned than most believe, was the insurance mandate and the resulting expectation of millions of young new insurance customers. But young people aren’t stupid. Even without the negative press, the cost of insurance under the ACA simply didn’t strike people as being worth the investment. The combination of high premiums and high deductibles meant that younger, previously uninsured recipients would rarely receive real benefit.

Insurance under the ACA actually started to behave more like catastrophic coverage. But even under that description, the cost was too high. Why? Because the premiums didn’t just cover the cost of catastrophic coverage for young, healthy people. The premiums also had to subsidize coverage for chronic illness in middle-aged and older people. In many cases these preexisting conditions were uninsured (and uninsurable) until ACA. And they represent the most expensive of all patient classes. High costs were a big part of the unraveling of Obamacare. Yet those costs were necessary to subsidize the part of the ACA (preexisting conditions) that even Donald Trump has said he wants to keep. Hence the denial.

While the very young — 20-somethings — quickly recognized the extent to which they would be subsidizing others under the ACA, the public hasn’t yet come to grips with the Medicare equivalent, which has been going on for years (some would say decades). Right now all of us under 65 are subsidizing Medicare just about every time we seek medical care. Some of us understand this relationship and are quietly complicit, while this dynamic has created a systemic dysfunction that is becoming increasingly more evident.

“Right now all of us under 65 are subsidizing Medicare just about every time we seek medical care.”

The most obvious evidence of dysfunction can be found in our hospital bills. We’ve got widespread symptoms of a colossal problem showing up in millions of mailboxes. And no one is effectively addressing either the symptoms or the problem.

Because we have not yet addressed the substantial and increasing pressure Medicare puts on the health-care system, health-care bills are always variable, often unfair, and sometimes illegal. But they are sent every day. The most egregious billing inequities relate to hospitals and hospital related services such as radiology, anesthesiology, laboratories, and emergency room physician staffing.

Unintelligible, inconsistent and improper billing is primarily happening where the medical practitioners do not have a personal relationship with the patient. The hospitals, under pressure from the ballooning Medicare system, is relieving the pressure where it can, through convoluted pricing, secret pricing strategies and inflated, unintelligible bills. And while not necessarily their original intent, in many cases the hospitals are taking advantage of the confusion to beef up profits (and that goes for the so-called “nonprofits” too).

Efforts at greater transparency are nothing but a mirage designed to fool regulators and legislators — and it’s working.

Some recent studies conclude that pricing transparency doesn’t help as much as expected. These studies — and the press reports about them — are misleading and examples of the line being fed to regulators and legislators. You can pull up the costs of a procedure, but when your doctor says you need a procedure, you are not going to shop to save $75. What they won’t show you is what your doctor charges for every procedure, so you can actually shop doctors in the first place. You shop at Target or J.C. Penney or Nordstrom based on your capacity to afford it and your preferences. And you do that because you know as a consumer the level of quality and pricing you prefer.

Procedure-by-procedure microtransparency is a game that has allowed the health-care industry to suggest that it’s being more transparent, but is not actually giving people truly useful information.

Stop overpaying for health care

Some states have attempted to address these problems with legislation that goes largely unenforced. At the national level, legislators are loath to address the issue of medical billing, because that problem is a symptom of a bigger problem — the one for which they don’t have a solution: the funding of Medicare. Hence, the state of denial. In the case of a system that is projected to ultimately consume a great share of our tax revenues, we can’t wait to hit rock bottom. That would condemn us to either a decades-long depression or civil disorder that would tear the country apart. Or both. If legislators do not address the big problem, hospitals and providers will continue to relieve the pressure on their finances by passing it along to us fairly, or unfairly.

That leaves it to us. Six years ago my daughter, Kailey Silverstein — now getting ready to study health-care law at law school — began questioning the absurd nature of health-care bills. Together, we began challenging the hospitals to learn the system. Collectively, we can force this issue into the open so that our nation’s greatest minds can address the root of the problem.

How? There is one form of denial that works: denying payment (that’s right — deny, not negotiate) to providers that will not post their prices and provide fair and transparent pricing. We believe we have the right to shop for health-care services on the basis of price and any other factors we deem appropriate (quality, service, location, availability of other expertise, etc.). We believe those prices should be fairly and consistently charged to all patients. We do not believe it is “anticompetitive” or too complicated for hospitals to post their prices (as they currently claim) any more than it is for Target, Walmart or Amazon. We also believe that since insurance companies are acting as our agents, we are entitled to know what pricing our insurers have negotiated with which providers.

Getting sent to collections

Of course, everyone’s fear, and what’s held them back in the past, is the threat of being sent into collections. We are talking about creating legitimate disputes, not complaints. We demand information that any reasonable person would agree we need.

Ultimately, nearly every bill goes to collections. The patient executes a simple power of attorney and BrokenHealthcare calls the collections agency on their behalf. We explain the dispute and remind them that they are required (by the Fair Credit and Reporting Act) to do their due diligence before making a report. We tell them that they must get the correspondence file from the hospital and that if they make a negative report without seeing to it that the questions are answered, the patient (with our assistance) will sue them. Thus far, none have dared. We also tell the patients that if the biller actually does accede to our demands, they might actually have to pay their bill.

Our goal is not to get people out of their bills. That is merely a means to an end. The worst-case scenario is that someone ultimately has to pay their bill. Our goal is to get this matter into the courts and into the press.

Thus far, no one has had a credit report made. If and when it happens, it will be reported as “disputed,” and then we will initiate legal action. It’s a risk everyone takes. But there is also emerging case law that says when it comes to medical bills, you can clear a negative report by simply paying it. That’s not true of other bills, which can stay on your credit for seven years.

The goal of this new form of denial is to put fiscal pressure on hospitals’ results. If and when enough patients deny payment, it will hopefully allow us to test current billing practices in court. If the fiscal consequences are severe enough that a provider attempts to fight back by suing someone, we’ll be ready.

We are building an army of volunteer attorneys prepared to represent people when the time comes. In fact, when communicating with providers and bill collectors, we’ve been asking them to sue the patient. Thus far, none have. Our demands are too logical. No one believes a judge or jury will ask someone to pay their bill without the provider offering adequate information. And no one has dared test it, lest they establish a precedent for all others to live by.

— By David Silverstein, founder of management consulting firm The Lean Methods Group and Silverstein is also a member of the CNBC-YPO Chief Executive Network.