3 Things 12-20

12/20/2021 Although MAS is a financial services company, not everything published herein will be about numbers or investing. But no matter the topic, we hope for three things: 1) That you find the time you spend engaged worthwhile. 2) That you’ll reach out to us for help in any of our areas of expertise if something we discuss creates an urging in you to do so. 3) That you’ll share this with somebody new each time you read it. Thing One Got Hospital Bills “Hospital Prices Are Arbitrary, Just Look At The Kingsbury’s $100,000 Bill”. That was the headline of a recent Wall Street Journal article that detailed the nightmare that Barbara and Bill Kingsbury endured after she was diagnosed with cervical cancer. The bills just piled up. And with interest and penalties, the final amount owed after Ms. Kingsbury succumbed to her illness was almost $100,000. We’ve all experienced some version of this (if you haven’t you will) so what’s important to know is that you need to act immediately when you get a big hospital bill. That doesn’t mean you need to pay the bill right away because in many cases that may be precisely the wrong thing to do for two reasons:

  1. Your insurance company may not have kicked in their share yet.

  2. You may qualify for discounts that haven’t been applied

In healthcare, as with most other marketplaces, everything is negotiable. Unfortunately for most of us, we aren’t aware of that and end up paying more than we otherwise might have. Thought of in this way, the bill you get from the hospital is a starting point for the negotiations rather than the end. In this regard, it is important that you have a sense for what you are being billed. If you are uninsured, it is likely you are being billed the “chargemaster” rate. This is the sticker price/list price and it is the highest price you can pay. Next is the cash price, which is typically offered to customers (insured and uninsured) who elect to pay their bills in cash. This price is less than the sticker price but is still often much higher than what you might pay with a little more persistence. Next, come the negotiated prices paid by the various insurers. These prices are usually lower than the sticker or cash amounts. And finally, there are the Medicare prices which are the government negotiated reimbursement rates dictated by the Center For Medicare And Medicaid Services (CMS). In negotiating your bill down, it’s important to know where you are starting from so be sure to ask what rate you are being charged (and don’t be afraid to ask for discounts or even a lesser rate like the lowest insurer negotiated rate or even the Medicare rate). And also don’t be afraid to ask for the ‘cash-settlement-now’ rate. This gives the provider an opportunity to close your case and it gives you an opportunity to pay a fraction of what you might have paid otherwise. You’d be surprised how many providers are willing to settle. But If all that fails to get you a decent payoff amount, offer to pay the bill off in installments that fit your budget. Do all this before the bill becomes a collections issue to avoid damaging your credit. As always, reach out if you need help.

Thing Two A Refresher On The Invisible Hand Below is an excerpt of an economics video from The Open University: “An economy is a tricky thing to control and governments are always trying to figure out how to do it. Back in 1776, economist Adam Smith shocked everyone by saying that what governments should actually do is just leave people alone to buy and sell freely among themselves. He suggested that if they just leave self-interested traders to compete with one another, markets would be guided to positive outcomes as if by an invisible hand. If someone charges less than you, customers will buy from them instead, so you’ll have to lower the price or offer something better. Whenever enough people demand something, they will be supplied by the market like spoiled children. Only in this case, everyone is happy. Later free marketeers, like Austrian economist, Friedrich Hayek, argued that this hands-off approach works better than any kind of central plan. But the problem is that economies can take a long time to reach their equilibrium and can even stall along the way and in the meantime, people can get a little frustrated (from things like recessions and high unemployment). This is why governments usually end up taking things into their own, more visible hands instead.” What typically happens when the visible hands get involved in the functioning of free markets is good for a few and bad for most. For some salient and timely examples, think of things like gas prices, or the price of a college degree, or the cost of healthcare. The visible hands typically claim to be acting to protect us from unscrupulous corporations and individuals who would take advantage of us at our most vulnerable times. But as the invisible hand theory reminds us, there are automatic mechanisms in place to protect us in free markets. The value proposition dictates who wins and who loses. And in addition to that, the individuals running those corporations are held to account for their win/loss records. They can’t simply concoct a story and campaign to keep their jobs. They have to provide value or else. So on the one hand (the visible one), some of us are guaranteed to win and most of us will lose. And on the other hand (the invisible one) we all have a chance to win. Raise your hand if you prefer the latter.

Thing Three Just A Thought “We live in an age of science and of abounding accumulation of material things. These did not create our Declaration of Independence. Our Declaration of Independence created them. The things of the spirit come first. Unless we cling to that, all our material prosperity, overwhelming though it may appear, will turn to a barren scepter in our grasp.” - Harry Jaffa