The fix to this situation is rather easy.
Let's pretend Congress says:
1) It's illegal for hospitals and doctor's offices to bill for non-emergency services after the fact. What do I mean by this? For example, if you're going in for a routine checkup, you can pay via cash or credit card prior to receiving the services along with the co-pay. Insurance companies can adjust by not negotiating, but placing a set coverage amount on each service pre-decided by each doctor's office in their network ONCE. There's no reason why someone shouldn't be billed for the cost of surgery before it's performed, unless it's emergency surgery which happens during a spur of the moment emergency situation.
What advantage does #1 give everyone? Well for starters, patients will no longer receive a bill in mail for an amount they have no idea what it'll be until it comes. The bill is already paid and not treated as "credit" that doesn't pull a credit bureau report like it is now. Second, the hospital will receive their funds up front and not have to waste time and effort negotiating with the insurance companies after the fact. You don't see banks just throwing out loans to just anyone, so why should hospitals do it? Third, insurance companies won't have to constantly negotiate with hospitals to minimize payouts as it would be a one-time negotiation to the best of the insurance company's ability to get the payouts lower. People will pay a bit more up front, but insurance rates will go down... In other words, those who frequently visit a doctor will pay a lot more than those who never go which is the way it should be. A person in the 20's that never goes to the doctors shouldn't have to heavily subsidize a 75 year old's frequent doctor visits on their premium.
Those who need emergency spur of the moment surgery or emergency room visits who owe a balance to hospitals at the end of the year should have their tax refund or multiple tax refunds garnished to pay for owed hospital bills, up to the total amount due, whether they file joint or single tax returns, which will then be returned to the hospital in a tax break similar to what a write off is. I'd be happier with this policy than fining those who don't want to pay for insurance and never use it anyways. In one situation people don't want to pay huge amounts of money each month for a premium which is a choice. In the other situation, people owe money to the hospital already while people in the first situation don't owe money to any healthcare provider.
So in other words, I see the "pay after the fact" idea as a rather stupid concept developed by hospitals and insurance companies that should be changed to what I've just proposed. I also find how people who never their health insurance subsidizing those who frequently need to use health insurance a joke within itself.
Let's look at example #1)
Tony is going in for spinal surgery because his back constantly aches and effects his everyday enjoyment. Tony gets referred to a surgeon by his insurance company and makes an appointment to have surgery done. The insurance company pre-negotiated a $3,000 coverage payment with this particular surgeon, so when Tony goes in, he pays his co-pay plus the difference in cost with what the insurance company doesn't cover... So let's say the surgery is $5,000, in which the insurance company covered $3,000, so the remaining cost is $2,000. After collecting Tony's insurance information and the receptionist takes Tony's full payment plus co-pay by his AMEX card, the insurance company immediately kicks in their part of the payment over the computer. Tony then goes in for surgery and walks out without worrying about owing money on a bill and the doctor is paid without being out of the money for an undetermined amount of time. This is the way health insurance should work.
Let's look at example #2)
Erica shows up to the doctors because she has the flu. Erica's insurance company has a contract with her doctor to cover a doctor's visit up to a certain amount of money pre-determined between the doctor and them. Let's say Erica's insurance covers $100 of each "routine" checkup/visit, up to 12 visits a year. The doctor's office can then bill Erica $125 for the visit (their amount for all patients) and then require Erica to pay $25 plus her co-pay up front before she's seen. Erica's Visa is declined; thus, now she cannot see her doctor. Since this is not an emergency situation she is refused service. That is the way health insurance should work. The insurance company then doesn't have to kick in coverage for her during that visit since she's not paying for the services at the time they are performed.
Let's look at example #3)
Adam has a heart attack and needs an ambulance and a visit to the emergency room. The bill for the emergency room plus services is $8,000. The insurance company doesn't have an agreement with that particular ambulance so they cover $0. The hospital and Adam's insurance company have an agreement to pay $6,000 for emergency room visits plus a $250 deductible and $30 co-pay. In this situation the services would be billed afterwards due to the nature of the event. Adam's bill is $2,280 after services in which he receives a bill plus $300 for the ambulance totaling $2,580. Adam pays $80 a month for 5 months bringing the bill down to $1,880. Adam then receives a tax refund of $2,500 the following February. The government would then garnish $1,880 of that $2,500 tax return and now Adam's hospital bill is $0. That is the way insurance should work.
