Total health care spending in America was
approximately $3.5-trillion in 2017 and about 32% of that amount — or
$1.1-trillion — was spent on hospital services.
Hospital costs averaged $3,949 per day and
each hospital stay cost an average of $15,734.
Those are alarming figures, especially for
families with limited budgets or no insurance. It is not surprising that 60% of
all bankruptcies are related to medical expenses.
But there are options when it comes to paying
for hospital costs. It requires an educated medical consumer and the
willingness to explore a variety of funding sources.
“Rising health care costs for hospital stays
and surgeries have created a new financial and emotional epidemic for
Americans,’’ said Gail Trauco, an Atlanta-based oncology nurse who also serves
as a pharmaceutical trials expert and a licensed grief mediator.
One thing is certain: Health care is a big
business.
Hospital Costs
There is no standard system that determines
what a hospital charges for a particular service or procedure. Many factors
figure into hospital pricing, including an individual’s health circumstances,
the cost of lab tests, X-rays, surgical procedures, operating room and
post-surgical costs, medications, and doctors’ and specialists’ fees.
For example, if one patient’s recovery from an
operation takes place in an Intensive Care Unit (ICU) and another patient’s
recovery takes place in a recovery room, costs can vary by thousands of
dollars, even if the two patients’ surgeries were similar. The cost of
gallbladder surgery is different for someone with diabetes than it is for someone who
doesn’t have diabetes.
In addition, overall hospital costs vary
considerably depending upon where a hospital is situated and who winds up
paying the bill — the patient, an insurance company or a government program
such as Medicare or Medicaid.
The bottom line: No two hospitals are likely
to be the same. So regardless of a hospital’s published fee schedules for a
service or procedure, the best information that a prospective patient can
receive is a good-faith estimate. Until the bill is actually processed, there
is no reliable way to assess a patient’s final hospital costs.
Surgery Costs
How much does surgery cost? Isn’t that always
the first question?
The average cost of surgery can vary
drastically depending upon the procedure.
2018 Average Costs for
Common Surgeries
·
heart valve
replacement: $170,000
·
heart bypass: $123,000
·
spinal fusion:
$110,000
·
hip replacement:
$40,364
·
knee replacement:
$35,000
·
angioplasty: $28,2000
·
hip resurfacing:
$28,000
·
gastric bypass:
$25,000
·
cornea: $17,500
·
gastric sleeve:
$16,000
With those figures, patients might think they
know the ACTUAL cost of surgery.
Sometimes, they must think again.
There are numerous potential “add-on’’ costs
to surgery that aren’t absorbed until after the fact, when financial reality
becomes even more brutal.
Here are a few areas that are often included or associated with
surgical costs:
·
Operating room
per-hour costs
·
Anesthesia
·
Surgeon’s fee
·
Hospitalization costs
(before surgery)
·
Pre-surgery treatment
(such as dialysis and insulin pumps)
·
Anti-rejection
medications
·
Visits with the
surgeon
·
Insurance deductibles,
co-pays and premiums
·
Non-medical expenses
(such as child care, travel and lodging)
·
Lost wages.
Paying for Hospital
Stays and Surgeries
In 2016, Medicare spent about $672.1-billion
on benefit expenses for 58-million individuals who were age 65 or older or
disabled, according to the U.S. Department of Health and Human Services.
Inpatient hospital services accounted for 29% of that amount ($195.4-billion).
Approximately 36-million patients per year are admitted to U.S. hospitals,
according to the American Hospital Association, and Medicare pays 90% of the
costs for almost 42% of them. Overall, Medicare payments account for nearly 20%
of all hospital care costs.
In 2016, Medicaid paid about $339.3-billion
for acute-care services, such as hospital care, physician services and
prescription drugs. Its share of hospital admissions is about 20%, for whom it
pays about 89% of all hospital costs. Overall, Medicaid pays for approximately
17% of all hospital care costs.
There are other ways to pay for surgery.
Private health insurance pays for approximately 34% of all hospital care.
Out-of-pocket costs comprise 11% of the total, while 18% are covered by other
sources, including all other public health insurance programs, such as the
Children’s Health Insurance Program (CHIP), and programs of the Department of
Veterans Affairs (VA) and the Department of Defense (DoD); and other
third-party payers, including workers’ compensation, and other state and local
programs.
Patients may have to pay co-pays, deductibles
or the total cost of hospital care and surgery. Anyone having trouble paying
their medical debt should talk to a financial professional to discuss
debt-relief options, including debt
consolidation and debt
settlement.
In the best-case scenario, the patient will
have primary insurance to pay most of the expenses, along with a secondary form
of insurance that pays the remaining expenses.
But even if you have excellent insurance
coverage that pays 80% of the total bill, the remaining 20% can exceed $100,000
for major surgery. But with secondary or supplemental insurance, the remaining
20% can be paid by the insurance company and not the patient.
Sometimes, particularly in the case of
self-employed people, private insurance can be obtained outside of the
workplace. It could cover a bulk of the surgery cost, but most insurance plans
have a “cap’’ or maximum that the company will pay. For some major surgeries,
that cap is met or exceeded by standard care during the procedure.
Surgery Without
Insurance
Here are some potentially scary terms:
Self-pay.
Out of pocket.
Even if you don’t have insurance — or if you
are undergoing a procedure not covered (such as weight-loss or plastic
surgeries) — you do have options.
It’s always a good idea to examine all
self-pay options because it’s likely that insurance will pay only a portion of
the bill. Be sure to include all the expected expenses, including the surgeon’s
bill, anesthesia expenses, hospital care before and after surgery, labs, medications,
X-rays, testing and doctor visits.
Be proactive. Plan for contingencies (such as
complications), which could raise the cost, and establish what your payments
will be after the surgery (prior to having the procedure).
Never ignore calls from the hospital’s
collection department. In fact, go out of your way to establish good
relationships with those individuals. They can help you set up a payment plan.
Sometimes, they can reduce the amount you owe and allow you to pay the rate
that insurance companies have negotiated for the same procedure. So it’s
senseless to alienate these people.
Here are more recommendations if you don’t
have insurance.
Prevention — Meghan Nechrebecki, founder and chief executive officer of
Health Care Transformation, said this is an often overlooked factor.
“Prevention comes first,’’ Nechrebecki said. “Utilize the ambulatory care
clinics. Go see your doctors and do what they recommend to keep yourself
healthy. Eat well and exercise often. You will prevent many surgeries and hospitalizations.’’
Reduce Surgery Costs — Become a master negotiator. But first,
pare down the cost of everything. Research where the procedure will cost the
least amount of money — from anesthesia to the surgeon to the hospital to the
pharmacy — much like how everything needs to be in-network for insurance. How
do you do this? Call everyone who is providing the care and explain your
situation. Ask for the best rate offered to insurance companies. By being
pleasant (but persistent), you can whittle thousands of dollars off your bill.
People in billing will often help, whether it’s pointing you toward programs
for people with financial difficulties or providing inside information (such as
the savings from using a surgery center instead of a hospital).
Ask the Right Questions — If you want important answers, you must
ask the right questions. And some of those questions must be asked to yourself.
Example questions you should ask:
·
How long will you have
to repay the loan?
·
How much are the
payments?
·
Will you be able to
manage the payments? Or will you struggle to pay your bills on time?
·
Will the payments put
too much stress on your credit cards because you can’t pay more than the
minimum?
·
What’s the strategy if
the cost of surgery becomes higher than the original estimation?
·
Can you afford the
prescription medication that is needed after surgery?
·
Will paying for the
surgery compromise your ability to save for future needs?
International Surgery — Seeking healthcare outside of the United
States — a practice sometimes known as “medical tourism,’’ has become a recent
trend. In some cases, the procedures cost 75% less. Sometimes, foreign surgeons
promote and advertise themselves. But let the buyer beware. The surgeon’s
credentials — and the facility where you would recover — should be verified.
Temporary Disability — This short-term benefit might not pay
for the surgery itself, but it provides financial help during your time of
recovery. There are limits on the monthly benefits and the length of time when
you can receive them.
Government Programs — Insure Kids Now is offered to low-income
working parents who don’t have health insurance (or whose insurance doesn’t
cover their kids). The Children’s Health Insurance Program (CHIP) provides free
or low-cost health insurance for kids. Some veterans are eligible for free
healthcare without copays through the U.S. Department of Veterans Affairs (VA).
Seniors (65 and over) can get surgical coverage through Medicare.
Some states offer medical coverage for those with lower incomes. If you’re
facing major surgery, you might qualify, even if you hadn’t qualified before.
Telemedicine — According to Mary Gorder, chief executive
officer to Drs. On Calls, the new concept of “telemedicine’’ can add up to
substantial savings. “If a doctor is able to consult with a patient via video
conferencing without being in the same place as them, it can help alleviate the
need for a patient to stay in a hospital,’’ Gorder said. “If a patient is
already in the hospital, telemedicine can cut down on the cost of the stay by
not requiring the doctor to be at the hospital.’’ Doctor consultations done on
a per-call basis can be ideal for people who don’t have insurance because they
are much less expensive than an in-person visit.
How to Pay for Surgery
Costs
There are numerous creative ways to cover the
costs of surgery.
Borrowing from Retirement Savings — It’s not what we’re taught, but know
that your 401k or 403b retirement plans could allow you to take a loan against
the funds you already have saved — without a penalty. Most plans will allow you
to withdraw 50% of your vested balance (up to $50,000) for healthcare expenses.
Payment Plans — They are commonly offered when surgery
is routinely paid for by the patient instead of an insurance company.
Sometimes, it’s a formal agreement for monthly payments. It could be a loan
that involves the hospital or surgeon in the financial arrangements. Especially
in the case of an unplanned or emergency surgery, hospitals are usually happy
to establish a payment plan with willing patients. Monthly payments are more
attractive than NO payments. And they should keep the debt from appearing on
your credit report as a negative account.
Medical Crowdfunding — This has become a routine process in
recent years — such as a GoFundMe that is powered by donors — and it’s
particularly effective for medical needs. You can start a campaign or one can
be started for you.
Using The Nest Egg — Spending your life savings on surgery is
definitely not ideal. But if the surgery improves your quality of life, it
could be money well spent.
Home Equity Loans — Home equity loans are borrowed against
the value of your home that is greater than the balance of your mortgage. If
your home is worth $200,000, but you owe only $150,000 to the bank, you could
borrow against the $50,000 in equity. It’s usually easier to obtain this type
of loan — instead of an unsecured loan — because your house is your collateral.
But be careful. If you can’t make the loan payments, it could lead to
foreclosure and eviction from your home.
Unsecured Loans — These are loans that aren’t secured with
property you own. It’s based on your credit and income — a credit card might
fall into this category — and doesn’t use collateral. Surgeons might have their
own loan programs, but the bottom line is the interest rate. If you can obtain
a more favorable rate, go for it.
Shop Around — Hospitals and doctors charge different
rates. If you’re not tied down to a network, it pays to comparison shop, just
like you would do at a store.
Ask for Reduced Rates (Or Pay in Advance) — Many people might be hesitant to try
this, but why not? There are discounts available, but you must ask for them.
You can also pay what you can. Even a $5 monthly payment toward a hospital bill
is an effort accepted in good faith.
Charity — Pediatric cancer patients can seek treatment
at St. Jude’s Children’s Hospital, where all treatment is free to the patient.
Meanwhile, Shriner’s Children’s Hospitals offer free services for pediatric
orthopedic patients. Nonprofits and other organizations also provide financial help for cancer patients.
Speak Up — Trauco said it’s helpful to become your own
patient advocate. “If you are truly in need, write about it and talk about
it,’’ Trauco said. “Contact your local newspapers and TV stations to get the
word out. Good Samaritans are still among us and a medical expert may offer
assistance to a patient at no cost. Tell your story because someone else is
also living a parallel trauma.’’
Bill “No Pay” Fay has lived a meager financial existence his
entire life. He started writing/bragging about it seven years ago, helping
birth Debt.org into existence as the site’s original “Frugal Man.” Prior to
that, he spent more than 30 years covering college and professional sports,
which are the fantasy worlds of finance. His work has been published by the
Associated Press, New York Times, Washington Post, Chicago Tribune, Sports
Illustrated and Sporting News, among others. His interest in sports has waned
some, but his interest in never reaching for his wallet is as passionate as
ever. Bill can be reached at bfay@debt.org.
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