a couple of weeks back, i went to the doctor. he ordered some lab work. i don’t worry too much about it, because i have insurance. of course, as a self-employed, woman of childbearing age (regardless of the fact that i can’t bear children – more on that some other time), i am among one of those highly-insurable-but-at-great-cost groups.

the other day, i received from my insurance company my “explanation of benefits,” which (if you don’t know) essentially outlines what the “service provider” (in this case, labcorp) billed the insurance company, and what the insurance company in turn “approved” and paid them. the balance of which is either “not allowed” (meaning, essentially, labcorp was gettin’ greedy) or “patient responsibility” (meaning the amount i have to pay, since i haven’t met my deductible).

now, i know you can’t read it all tiny like this, but go ahead and click it so you can see it full-size – then you too can gaze in awe and wonder as i have at the following:

in a nut shell, of the $706 labcorp billed blue cross, blue cross seemed to feel $627 was unnecessary. i’m not too good with percentages, but i think that’s roughly 89%. eighty-nine percent of my lab bill was deemed “not allowed.” specifically (under note item 1) it says, “the amount billed for this service is greater than the amount allowed,” translation: in our contract with labcorp, we told them we’d pay them ‘x’ for ‘y’ service, and they billed for ‘z,’ so fuck ’em.

now at first glance, i was like, wow – that’s gotta make it tough for the lab to make any money. but as i read it through again, i started to really think about it. let’s break it down, shall we? i was at labcorp for roughly 20 minutes. in that time period, the two phlebotomists attended to four patients, about five minutes a piece. for my tests, she took two medium vials of blood (roughly 30 ccs, total). so, time: 5 minutes, supplies: 1 needle, 2 vials, 1 cotton ball, 10″ tape, 2 latex gloves, 2 labels. plus the actual lab work, completed elsewhere. assuming the girls were working at normal pace and i was an average patient, in an eight hour day you’re looking at 96 patients a day. in one lab (of thousands across the country).

and yes, i understand that every one’s lab tests are different, as are every insurance company’s agreements with the lab. but blue cross is one of the nation’s largest private insurers. labcorp is one of the nation’s largest labs. they both know the other’s expectations. so why the fuck would labcorp bill blue cross $21, knowing they’re only gonna get $1.85? or $183 bucks when they’re gonna get $24?? it makes absolutely no sense at all.

and i can answer my own question, about why the fuck labcorp bills what they bill. i’ve been a bookkeeper for enough companies over the  years to understand what it means to have “net operating losses.” and i have a pretty good handle on how taxes work. when labcorp gets to the end of the year, and has to determine what their taxable income is, it’s not the $79 that i owe them. it’s the -$627. because labcorp didn’t “make” $79. they “lost” $627. see what they did there? and that’s just my bill. my one, infinitesimal, five minutes of work among the millions of patients they see in thousands of hours each year. which brings me to my next point.

based on the fact that they are processing through millions of patient’s lab work (okay, hundreds of thousands, i’ll be conservative) – do you really think it costs them $46 for the test they (remember, knowingly) get paid only $9 to do? of course not! what business could possibly survive, accepting payments of only 20% of what they’re billing? could you? could i? oh, hell no. and for that matter, if they are willing (again, knowingly) to accept $9 for it, and they are one of the nation’s largest and most successful labs, they must be doing something right. they’ve got to be making money somehow. so i would conservatively guess that $9 test probably actually only costs them about $5.

in reading though the statement, i was reminded of a line from the 1996 film independence day, where the up-to-this-point-relatively-clueless president (played by bill pullman) is brought into a high-tech and sprawling lab and is dumbstruck by all he sees.

president whitmore: i don’t understand, where does all this come from? how do you get funding for something like this?
julius: you don’t actually think they spend $20,000.00 on a hammer, $30,000.00 on a toilet seat do you?

exactly.

so if we reverse engineered my math, let’s assume that test does cost them $5. and let’s assume a decent profit margin of, oh, say 25%. probably much higher than most of my profit margins, but i digress… if they wanted to make 25%, they could bill that $5 for $6.25. that’s good bank. a 25% profit margin is great! but here’s where it gets even uglier. if i wasn’t insured, then according to labcorp’s own website, that same test “retails” for $174.  and my person-on-the-street cost is $59. so once again, when they do this same test for an uninsured patient, they don’t “make” $59, they “lose” $115. on the surface, they generously give up 66% of their profit margin to you, the uninsured patient. only they aren’t really doing you any favors at all. because you don’t get to decide that 85% of that “isn’t allowed” and you’re only going to pay them $9, like blue cross gets to. no, you have to pay the full $59. which is already $10 higher than what they billed blue cross in the first place. so now, instead of the 55% margin (based on my estimate that the test actually costs $5) they get from blue cross, you my friend are going to give them a 1175% profit margin! even if you factor in a slightly higher overhead costs for labcorp to administrate the hundreds of thousands of bills they have to send out to individuals vs. those to only a few hundred different insurance companies, i would think it’s fair to estimate that same test costs them about $6 for an uninsured person. you’re still giving them almost 1000% profit on one test.

if i tried to sell a $100 graphic to a corporation for $155, i might get lucky and get that much. maybe. probably not though. probably closer to $110. and if i tried to sell that same $100 graphic to my fellow small business owner for $1000, do you think i’d get away with it? or do you think that he might decide he’ll just go somewhere else, or even do it himself for that matter.

but when it comes to things like blood tests and lab work, we individuals don’t really have much choice, do we? the vast majority of us wouldn’t have a clue how to even stick ourselves with needles, much less be able to do a damn thing with the blood once we got it. and therein lies the rub. we have to go to corporations like labcorp. they have the people. they have the equipment. they (hopefully) know what the fuck they’re doing with it all. and they know it.

my point is this: it shouldn’t have to be this way. if somehow corporations like labcorp could be convinced that having a profit margin somewhere between 10-25% was acceptable (like it is for thousands of other businesses, large and small), and that they could (and should) bill accordingly, everyone – everyone – would be better off. insurance companies could still demand lower prices because they pay them millions of dollars a year. uninsured individuals could more reasonably afford to get their tests done, even at a higher profit margin than what the insurance company pays. the insurance companies still make money. the lab still makes money. the person on the street still has some money left over. tons of paperwork is eliminated, saving tons of time – therefore tons of money – all around, thereby increasing the money kept by all three (insurance companies, lab corporations, individuals).

this is, in an overly simplified form, what the affordable care act was trying to get to. no one was trying to make it impossible for insurance companies or lab corporations (or hospitals, clinics, doctors, drug companies, etc., etc.) to make money. and no one was trying to get health care to be free for anyone. the point was to make it affordable.

way to fuck it up, america. keep up the good work.

this is what is wrong with the american health care system.