Getting sick is very expensive. You are forced to spend on unwanted services, are not making money, and are miserable and unhappy. One illness can bankrupt you or take food off the table. Medical debt is the leading cause of bankruptcy in the US. All medical debt is reported to credit agencies and is aggressively collected by hospitals, physicians, etc. Today, we will focus on the personal finance aspects of an illness.
Health insurance
Most people who have health insurance expect their policy to pay for illness expenses. This is an oversimplification, there is a whole lot of fine print and details.
Insurance is a contract between your insurance company and yourself (person insured). The insurance company will pay for the services listed in the contract. The patient (you) must pay their portion of the bill (deductible or co-pay).
Some services may not be in the contract and will not be covered (e.g., plastic surgery, certain obesity medications, etc.). Other services may be covered in some instances with a high deductible. Most services, if present in the contract, will be covered if provided by a physician or their assistant who participates with that particular insurance plan (participating physician).
Most insurance plans are high deductible, meaning patients usually have to pay an initial $3,000 to $10,000 “out-of-pocket.” There are also maximum out-of-pocket expenses, or limits on the total amount a person will pay over a 12-month time period.
Health insurance companies can deny medications or procedures, which they deem experimental (the benefit not yet proven) or when alternatives are available at a lower cost. Insurers usually opt to pay for the cheaper alternative.
There is also a cost to not being able to work or being unable to work full-time. Many illnesses have multiple symptoms and may make you miserable and depressed.
Some medications or procedures are only approved under certain conditions and circumstances. Physicians need to obtain approval from the insurance company ahead of time (prior authorization).
Case studies
I have explained the above details so when I discuss the cost of care, you can understand the money logistics. I am now going to present two fictional cases to help illustrate how much medical care can cost.
Case 1: 45 year-old male, developed vague chest pressure at rest
- Overweight, diabetic and has high blood pressure
- Smokes one pack of cigarettes per day
- Father had a heart attack in his mid-50s
His symptoms do not get better for an hour. He gets nervous and goes to the emergency room (ER). He is registered quickly, the nurse takes his vital signs (blood pressure, pulse, temperature, oxygen level), confirms if he is taking any medications and allergies. The nurse also quickly assesses his past medical history.
The patient is moved to the main, or treatment, section of the ER for evaluation and treatment. EKG, X-ray, and blood tests are ordered. IV is started in case IV medications need to be given. ER doctor examines patient, asks further questions, and orders any additional tests (if needed).
A few hours pass… Nurses occasionally stop by to make sure the patient is stable, comfortable and his condition is improving. Results come from blood tests, X-rays, and EKG. The emergency room physician comes in, informs the patient that he did not have a heart attack, pneumonia, blood clot in the lung, etc. ER physician thinks symptoms were most likely related to acid reflux (GERD). The doctor prescribes one or two medications and advises the patient to quit smoking and lose some weight.
The physician also advises the patient to follow-up with their doctor in 5 to 7 days. The patient is then discharged from the ER. The patient is given the results of their tests and some basic information about their illness.
Case 2: 30-year-old healthy male feels lightheaded and thinks he may pass out
- Ate food that did not agree with his stomach
- Had nausea, loose bowel movements and abdominal cramping
- Was not able to keep water or any fluids down due to nausea
The patient became weak and somewhat sweaty and called 911. An ambulance arrived and took him to the nearest emergency room. He is registered, triaged, nurses and ER doctor evaluated him. He is dehydrated. IV fluids are given, and he starts to feel better in 1 to 2 hours. He is then discharged home.
Cost of care?
In both cases the patients did the right thing. They did not have the medical knowledge and the means to evaluate and treat themselves. They went to the emergency room for help.
The bills come a few weeks later. There will be multiple bills from multiple providers and the hospital. I am going to summarize this in a simple and easy to understand manner.
- Emergency room charges (triage, nursing, registration)
- ER physician charges
- Lab test charges
- X-ray charges
- EKG charges
- Medication charges
- IV fluid and IV medication charges
- Charges for physician reading X-rays (radiologist)
Case #2 will have additional charges due to ambulance services. Initial evaluation by paramedics. Charges for vital signs monitoring heart rate, blood pressure, oxygen, etc. IV set up and IV fluid charges. Also, the cost of transportation to the ER.
The emergency room bills for the cases above might be around $7,000 to $10,000. The patient might expect to pay $1,000 to $2,000 out-of-pocket, with their insurance covering the remainder.
These bills are for sick, but uncomplicated cases. Often, patients are unaware of which health insurance plans their physicians or even the hospital accept as being an in-network or out-of-network provider. Who has the time during an acute illness? This would need to be done before the treatment is rendered. This will generate additional billing due to higher rates for non-participating physicians and hospital(s) (ghost billing).
Depending on your health insurance plan there could be an adjustment. The total bill might be reduced 40% to 60% (i.e., $400 for every $1000 bill). This is due to health insurance contracted prices. It still remains a lot of money for you to pay though. If you do not have health insurance, you are often liable for the whole bill without adjustments.
Notably, billing services may make mistakes, your final bill could also be more than it should be. Medical billing is complex to say the least. It has legal, medical, and financial jargon. It is difficult to understand the details. Challenging the medical bills is complex and expensive.
NYC driver income vs. healthcare expenses
Let me explain the above from an income and expense point of view as well. Pre-tax average income for NYC TLC-licensed drivers is typically $50,000 to $70,000 annually, after paying all business expenses. This roughly translates into $25 to $30 per hour. Of course, some drivers make more than that and vice versa.
For every $1,000 out-of-pocket healthcare bill, a typical NYC TLC driver has to work approximately 40 hours (almost one week of work!). Average annual ACA marketplace health insurance premiums, based on our research, for 2024 were $8,951 (single individual), or $746 monthly, and $25,572 (family), or $2,131 monthly. The cost of health insurance is unaffordable for many, including NYC TLC drivers.
However, it is not all doom and gloom. Assistance and subsidies are still available for those who need it via NY State Medicaid and The Black Car Fund. Many drivers have Medicaid, typically known as Fidelis health insurance. Their bills would be negligible as these programs are funded by NY State. The ability to participate in these programs may also change due to budget politics and money.
Summary
The most important message here is to stay healthy by actively taking care of yourself. Participate in a healthy lifestyle, manage your weight, manage existing illnesses if you have any. Smoking, alcohol cessation and eliminating ultra processed foods will help significantly towards your health (Also see last month’s article, The Cost of Staying Healthy).
See your doctor on a regular basis and follow their advice. Ask questions if you need to better understand your health status and recommendations. You are your best advocate. Take charge of your health, nobody else will.
Next month we will discuss obesity.
