Greg Boone

Month: August 2018

How insurance companies wear you down before providing benefits

This is a story that starts with a baby. We welcomed a baby to the family last Friday. Since he was late pre-term we were in the NICU for a few days before being finally discharged on Tuesday afternoon. Before we left, a lactation consultant at the hospital said we should check with our insurance company to see if we qualify for a free breast pump. Most insurance companies cover the purchase of a breast pump with a $0 copay which is great because we need one to help us feed our premature baby.

When I called the insurance company, they said there were providers online where we could order one and have it shipped to our house, and that it usually takes a few days depending on availability. They then sent me a list of in-network providers of “durable medical goods” (DMG) near me who I could reach out to.

This list had three vendors on it. Three. For all of Colorado. I called each of them: One didn’t supply breast pumps anymore. One was actually a Target CVS and was not an in-network DMG provider. The third said we would need to get a prescription from our doctor, fax it to them with proof of insurance, and it would be delivered to us within 7-10 business days.

I’d understand the hassle if a breast pumps were dangerous, like opiods, or hard to transport, like an iron lung, but you can buy literally any breast pump you want at any of the following stores, put it in your car next to the carseat, and go home and feed your baby: CVS, Wallgreens, Target, some grocery stores with large pharmacies, the hospital gift shop where our baby was born, any of the other hospitals in Denver, baby stores like The Mammahood, and probably a few other places I don’t even know about.  There are also zillions of them available on Amazon if you can wait a couple days. These are widely available commodities. It shouldn’t be such a hassle to get one to us.

I’d also understand the hassle of breast pumps were expensive, but they’re not. Our insurance will cover up to $165.04 and you can buy a pretty decent one for less than that! So why, then, does it take going through a medical supply company with a prescription to buy something that costs so little? Even if there’s a small amount of waste and fraud in the system, the costs of processing all of the paper work alone must balance out to more unless the insurance company is getting a hell of a deal on these pumps. Think about it, to get this breast pump so far has involved:

  • An hour of my time on the phone with the insurance company and the in-network providers who can fulfill this benefit.
  • Roughly an hour total of time spent by doctors, nurses, and medical assistants helping us issue the prescription and navigate the process.
  • Pump rental while we wait at an (admittedly affordable) rate of $4 per day. If the DMG provider takes the full 10 business days our total not-covered, out-of-pocket, not-FSA/HSA eligible costs will be $68-72.
  • Time spent processing the claim and prescription on the DMG provider and insurance company’s side.

According to the Bureau of Labor and Statistics, the median hourly wage for a general pediatrician is $90 per hour, $35 per hour for a Registered Nurse, and $52 for a Nurse Practitioner. Given these rates, and how many individuals in each of those professions we’ve talked to about this, it seems likely all of this totals more than $165 in total economic activity. All of this with no promise of any specific brand or type of product, leaving us consumers in the dark about what we might actually get. If we end up with a manual pump, for example, we’ll probably just go out and buy our own electric pump out of pocket.

A common argument against Medicare for all or single payer systems in the US is that private markets are more efficient and therefore provide lower costs. This a large, half-billion dollar insurance company has come up with is far from efficient and at some point consumers who can afford it will give up and buy their own out of pocket and those who can’t will either give up and pay more in rental costs or wait it out and eventually settle for whatever the PPO’s DMG provides.

There’s a much simpler solution if you cut out all the bullshit wrapped up in the business model of preferred provider network-dependent insurance companies. A single payer like Medicare could simply issue a coupon to us for $165.04 and obligate any retail store selling breast pumps to take it much like how grocery stores are obligated to accept SNAP benefits. Then, no matter where you live, or where or how you delivered your baby, you can redeem the benefit you’re entitled to with little economic friction.

Better yet, institutions like hospitals and birthing centers could simply give the mom a pump upon discharge and let CMS know. This option also reduces the risk for fraud because it has a built-in mechanism for verifying whether the person in question did in-fact need a breast pump.

Also, WTF is this $165.04 business. Just round it down to $165.

Reducing dependence on Amazon

A couple years ago, I fell in love with Amazon Subscribe & Save. I thought it would be handy to have more toilet paper, shampoo, cat litter, and other things we use on the regular shipped straight to us when we ran out. It worked better for some things — like cat food and litter, which we run through more predictably —  than others. We ended up with like a year’s supply of paper towels. It was included in Amazon Prime and we even got a small discount for scheduling more things together.

Dash buttons took us to a whole next level. How convenient, I thought, to be able to just order more of the exact thing I needed at the press of a button. So I got one for paper towels, trash bags, and laundry detergent and promptly cancelled all of our Subscribe and Save.

The thing with Amazon is, they have all kinds of convenient things like this. Amazon Prime itself is super convenient but do we really need it? No. As I’ve started to learn the social cost of these conveniences, I’ve begun thinking twice about whether the convenience is worth the cost.

We cancelled our Prime membership a couple months ago.

Amazon’s impact on Seattle

While Amazon has added thousands of jobs to the city of Seattle, it has also made it a dramatically expensive and inequitable city to live in. The company’s rapid growth has caused a housing shortage to become a housing drought, with the city unable to keep up with demand, despite building new apartments fast than any other city in the country. This wouldn’t be terrible in and of itself but the company doesn’t seem to be doing anything to neutralize the inequities it’s created in the city. Shrugging it off instead as the price of having a company of its size in the community.

Commerce ethics

Jeff Bezos is the world’s richest person. One might think that means working for his company must be lucrative, right? Maybe it is if you’re one of their software developers, but if you’re one of their delivery drivers, not so much. Amazon Flex pays well for an hourly job, but like many gig economy jobs, employees don’t get the guarantees and protections that full-time employment would carry, and even fewer still than a union-represented job.

Warehouse workers, too, don’t see much share of the fortune being made off of our Prime membership. In fact, several stories in the last couple years have illustrated the social cost of rapid delivery and the conditions endured by the invisible workforce behind Amazon’s product. While $120 per year may be the appropriate price consumers are willing to pay for this product, if that price can’t support the infrastructure keeping it running, it’s not worth supporting.

Too Big to Quit?

Amazon is everywhere. They’re increasingly diversifying their product line to the point where you can get an Amazon brand anything. I have to admit they’re doing a pretty good job of it.

I own several AmazonBasics products because they’re cheaper and about as good as other brands. Walmart, Target, and other big box stores all have their off brands, and AmazonBasics isn’t much different, except that they make basically everything. Amazon Prime Video, too, is turning out some excellent original programs that deserve to be made. I’m glad Amazon is giving them a chance. Finally, Amazon Web Services is inescapable and invisible from most choices you make on the web. One thing these three Amazon products have in common is that they’re really good at what they do. Together with acquisitions like Whole Foods make Amazon increasingly difficult to escape. (A seemingly-local coffee roaster here in Denver is actually owned by Whole Foods and, now, indirectly Amazon.) They’re yet another agglomerate company endemic to modern life.

Just as we can’t stop our bank from selling our mortgage to a giant commercial bank, we can choose to put our microeconomic choices into local businesses. Just as we can bank with a local credit union or community bank, we can choose not to give Amazon $120 every year just for access to their elite delivery service.

We can still get free delivery, it just takes longer without Prime — as long or longer even than the free delivery options from competitors like Target, if our recent experience is any indication. The forcing function of this is that we now seek out things we need quickly from local sources. This sometimes includes big box stores like Target, but also includes the shops in our neighborhood as well. Target may be a big box, but they pay a fair wage to our neighbors and full time employees there have the guarantees and protections that one should expect from a good job.

Some specialized items may only be purchasable from Amazon, but it’s increasingly worth the effort to be more conscious about the social costs of our spending.