I worked in the medical industry for six years as a sales rep for a medical company. This ”insider knowledge” has given me a unique understanding of the issues surrounding the cost structure of health care and why having government dictate our healthcare can be both bad and beneficial.

There is no denying that health care is one of the most important and convoluted issues of our time. It’s important because it is 1/6 of our nation’s economy; convoluted, because anything that is 1/6 of a multi-trillion-dollar economy is going to have a lot of moving parts. Just thinking about it feels like walking into a house on Hoarders. It reeks, it’s cluttered and way too overwhelming.

But if you’re one of the millions of uninsured American’s suffering under the weight of all this crap, you know it’s mandatory that we pick up our shovels and organize our piles on the lawn Peter Walsh style before this toxic, biohazardous waste gets one more piece of useless trash added to the top and by “trash” I mean legislation. The situation is gettin’ real stank up in here and those Glade Plug-ins aren’t doing a thing to mask the stench of rotting cat carcass.

Over the years we’ve simply added one piece of ineffective legislation on top of another and it’s time we attempt to understand what’s under all this shit because Mr. & Mrs. Voting American, our names are on this deed. Stay tuned, crude illustrations to follow.

What got me all fired up to write this post was not Obamacare and the pending Supreme Court ruling, but Xeni Jardin’s Twitter stream. Xeni Jardin, founder and editor at Boing Boing (@xeni) is currently receiving treatment for breast cancer. I don’t know her whole story but I’m assuming it includes a struggle with insurance and paying for her treatment. Her Twitter page went crazy with tragic stories of people who have also struggled. Here are some of the tweets:

I have been to the hospital exactly three times. Baby #1, Baby #2 and a stress-induced case of viral meningitis. The meningitis was due to a nasty legal battle I was having with my employer. That employer happened to be a Medical Company (MC). I worked in the medical industry for six years selling pharmaceuticals, diagnostics, surgical devices and equipment to doctors and hospitals. I am versed in the various issues surrounding the overall problem, in particular, when it comes to the rising costs and affordability.

I used to believe that I sold innovative and medically necessary treatments to patients who needed them. If it weren’t for me, who would educate the doctors on these awesome, fancy-schmancy products?  At least that’s the feel-good flavor of koolaid the MC fed me. At every Fiscal Quarter’s end, the real motivations of my MC came bubbling to the surface like the frothy head on a glass of champagne.

I had a yearly territory quota of over $2 million dollars. The more you exceeded it, the more money and praise you received. The more you fell short, the more you were avoided like day-old trash behind a fish market in a desert town. As you can see, we were highly valued employees.

Most companies who manage a sales force use material rewards to ensure performance and allegiance. Every meeting is an orgy of competition and excess; bellies are filled with booze and steak and egos are stroked and manipulated. We have private Vegas-style parties, city-wide scavenger hunts and chauffeured trips through wine country. One year for a National Sales Meeting in Orlando, all 200+ employees stayed at the Ritz Carlton and the company rented out the Islands of Adventure Theme Park after hours. I rode the Incredible Hulk Rollercoaster like 7 times in a row, kind of drunk. It was awesome.

Meanwhile, the price of our products increased every year far beyond the increased “costs of doing business and inflation” which is the koolaid we were given. In four years the market-dominating device I sold went up 30% and the champagne kept flowing. The rumor was that the markup was six times the cost to manufacture. (Which, by the way, was moved to Costa Rica in order to save hundreds of thousands of dollars it was costing to manufacture it in California.)

So here’s some basic math on one surgical procedure:

1) The surgical device cost an estimated $250.

2) The Medical Company charges hospitals $1300.

3) Hospital’s then bill the Insurance Company (IC) up to $12,000, and the IC actually only pays a fraction of that. ($4000)

In the end, a procedure could end up costing 50 times the cost of the primary device used to perform it. Sure, there are incremental costs along the way, doctor’s fees, nurses, anesthesia, supplies, etc. But it could never add up to $12,000. Trust me, I know.

This whole hospital mark-up scenario is why we began pushing doctors to perform procedures in their office. They would make more money and the procedure would cost less overall.

Let’s look at why the hospital charges so much for a simple procedure anyway? And who pays the portion the insurance company doesn’t pay? And why do IC’s only pay a fraction of the cost? The answers to all those questions is part of the yellowed, decade-old newspapers stacked up to the ceiling.

The American Medical Association (AMA) assigns codes to procedures and those codes are ultimately assigned a dollar value. Let’s say you need your appendix out. We’ll give an appendectomy the code of APPY=OUCHIE. To understand how procedures are assigned a dollar value, we have to usher in the Government (and all their crap) through the front door.

Medicare is the Government’s name for health care for people over the age of 62.5. MediCAID is the Government health care program for everyone else.  MediCARE sets the standard for the cost of most of the procedure codes the AMA comes up with. In our example, Medicare determines that it will pay a hospital $3,000 for anyone insured by them who has an everyday, ordinary APPY=OUCHIE.

Government says it will pay $3000 for a Medicare patient who needs an APPY=OUCHIE (Appendectomy).

Then ICs say, “Well, if it’s good enough for the government, then it’s good enough for me.” And they base their reimbursements off of what the government pays. But IC’s will pay “a leeettle bit” higher because you know, they’re supposed to be private and fancy. Therefore, IC’s may pay $4,000 for an everyday, ordinary APPY=OUCHIE.

Not to complicate things further, but it is the Government we are talking about, but it also depends on which state you lived in since Medicare is a state-run agency and different states, pay different prices. I think I just saw a rat scurry across the floor.

It also depends on WHERE you have your APPY=OUCHIE performed. Stand alone hospitals are the most expensive and charge the most money. Surgery Centers (if applicable to your procedure) are the second most expensive and the doctor’s office (also, if applicable) are the least expensive location to have your APPY=OUCHIE. (Although I’m not sure anyone would offer to take your appendix out in their office and yet, I would not underestimate some doctor’s desire to make a buck).

Here’s where the crude illustrations come in:

Meet Ms. Abby Appendix. She needs an APPY=OUCHIE real bad. Abby has private insurance, but it’s not great. Of course, she doesn’t know this because there’s no place to compare your IC to other ICs available. Also, it’s the only IC her company contracts with so she really has no choice in the matter.

This leads us to one of the biggest, reeking piles of steaming, hot trash in the whole house. All of these entities, the MCs, hospitals, ICs and doctors, (perhaps excluding the government) have ONE thing in common. Instead of being motivated by providing Abby with affordable, quality, life-saving treatments, at the end of a Fiscal Quarter’s end, they are all truly motivated by profit.

This is a LARGE reason why the house smells like feces and there’s black mold growing up the walls.

Let’s get something straight, this is not a story about greed and capitalism because I love me some free markets. MCs need to make profits in order to provide cutting edge medical treatments. I agree with that. But do we need to rent out Islands of Adventure Theme Park?

Most hospitals are also in the business of turning a profit which seems like a conflict of interest on account that their overall product is um, life? But, we live in America so hospitals are allowed to make a profit, too. So how do they do that? They do that by attracting patients and they do THAT by providing quality service, having the fanciest medical procedures available and the best doctors money can buy.

ICs are another player in the game looking to make a buck. Again, huge red flags going up. Their mission should be to help people get the best, most effective medicines and procedures and yet, what’s most important is their Quarterly report to Wall Street. But again, we live in the land of opportunity so why shouldn’t they be able to operate in a free market too?

After all, competition drives costs down right? Wait, what’s that? You can’t buy just any ol’ insurance you want because of the state you live in and/or the company you work for? Where’s the competition in that? 

I’ll tell ya…petrified pieces of dog poo.

That leaves the Government to play checks and balances over all these entities. And as we all know the Government is so efficient and does everything in a timely, economical manner, right?  I don’t blame them really because there are so many moving parts, the lobbyist, state regulations and all that red-surgical tape, it’s like opening a refrigerator with milk that expired in the 90′s. Obviously, the Government’s motivations should lie in the best interest of the people, but how can it when it’s up against three powerful entities with money to burn on Remy Martin, Cuban Cigars and campaign donations?

So, Abby got that medically necessary procedure at the hospital.

But then, Abby got a bill.

So Medicare deemed that an ordinary APPY=OUCHIE should cost $3000 and Abby’s IC paid $4000, but the hospital charged $12,000 for a fancy-schmancy robotic APPY=OUCHIE because the fancy doctor wanted to try out his new fancy toy. That decision, left Abby with an $8000 balance.

Why did this happen?

This happened because Medicare sometimes doesn’t pay for fancy-schmancy surgeries and therefore, many ICs don’t either. Plus, many doctors don’t have a clue what shit costs and why so they just do what they want and let the hospital, IC and patient figure it out when the bill comes due. 

Abby didn’t have very good insurance (not that she had a choice) but if she did, the remaining balance would either be “written off” in some crazy-ass hospital accounting process OR paid by her good Insurance Company company. Because she didn’t, the balance was charged back to her.

There’s your flee-infested couch.

So where do we, the people, the home owners come into the picture?

Five percent of Americans account over 50% of all health care costs. The vast majority of these people are the elderly and the uninsured. This 5%, and all their enormous expenses that go unpaid and are “written off,” are the reason why hospitals charge its patients 50 TIMES what a procedure should cost.

Admittedly, this is only one room of the Health Care Hoarder’s House and there are another three bedrooms full of Medicare fraud, rising insurance premiums and already too high taxes… all of which need sorting and cleaning.

Due to that nasty battle with my company, I no longer work there. Now you could say this is the tirade of a disgruntled employee. You could say that, but it wouldn’t negate the math I just laid out for you and it wouldn’t make this any less true. The truth is, I’m not disgruntled. I have nothing against my previous employer or any other medical company.

It’s not the MC’s fault, but they are part of this conversation as are the hospitals that charge $12,000, the ICs that will do anything not to pay a dime (and then increase your premiums), the doctors who are uninformed and Mr. & Mrs. Voting American who don’t give a rats ass what things cost because they rely on the Government and their IC to pay the bills… until they won’t… or can’t.

It is a broken, messy system where the motivations are all wobbling and misaligned like a giant stack of kitty litter in the hallway. The Government, the hospitals, MCs, ICs and even some doctors are the money-drunk hoarders and the ones paying the ultimate price are all the little people trying to find a place to rest their sick, weary bones as one careless hand after another adds another piece of useless trash to the heap. Again, and by “trash” I mean ineffecitve legislation.

So what’s the solution and where is Peter Walsh when you need him?

I’m not sure there is one comprehensive solution– at least not one that I’ve heard. But I can tell you some ideas that I could get behind.

1.) Transparency on procedure options and costs. We (and doctors) need to know what’s happening, how much it costs, and why. Maybe that entails having a 3^rd party patient advocate? If you can afford it, you can get one of those right now. But the people who need the most education, can’t afford it. That means it’s up to US to pay attention to what things cost and why and to know all our options and educate each other. There’s an amazing website www.healthcareblueblook.com. It will give the fair pricing for many surgical procedures. Information is empowering.

2.) Access to free preventative healthcare. This means that everyone can have easy access to free pap smears, dental exams, colonoscopies, mammograms etc. If there could be a way to incentivize people to do these things, all the better.

3.) Shifting the motivations of Insurance Companies and providing transparency into their operations. Companies with so much sway over a person’s life should have more accountability.

4.) Allowing people to purchase Insurance from a larger pool of options, not just those in their state or from their employer. This would help to drive costs down making it more affordable.

5.) Reform of the Medicare program and a crackdown on the rampant fraud that lies within.

Clearly, I don’t have all the answers. Right now, there are things that scare me about the current planned legislation, dubbed “Obamacare.” The mandated purchase of insurance will only allow you to choose between a few companies in your state (because again, government health care, [Medicare] is a state-run entity). This limited pool of options creates a virtual monopoly and because ICs are motivated by money, well, that’s not a recipe for success.

However, I do like the slashing of expenditure to an already bloated, and fraud-filled Medicare system which is also a part of Obama’s plan, but I don’t like the increase taxes that will happen to pay for all of this. Essentially, Obamacare’s additional government bureaucracy that will oversee all these new changes will be like building another wing onto the house to pile up even more crap into.

The United States has the highest quality health care and innovation in the world. That is due, in large part, to our money-motivated system. I don’t want to lose the motivation to innovate and provide quality, but at the same time, I don’t think people need to mortgage their homes, declare bankruptcy and forfeit their life’s savings to have it.

The MCs, ICs, hospitals, doctors and state-run bureaucracies all have to be willing to give more, so that we, the people, can have more. Motivations are powerful. Money is powerful. I know, I was entranced by that eyeball staring at me from on top of the pyramid, too. But there are things in this world more important than money… as I have come to find out. For me, they are Baby #1 and Baby #2, and I don’t want them to find themselves trapped inside a house filled with my useless trash.

So what do you think? I’d love to hear your thoughts and any additions to my list. Leave a comment and I’ll pick someone at random to give absolutely nothing.