The regressive domestic complexity tax
I’ve been keeping tabs on hard it is to do my bills. I did my bills last night, and man, I’m telling you, I used all of my organizational abilities, all of my customer service experience, and quite a bit of my alpha femaleness just to get it done. Not to mention I needed more than 2 hours of time which I squeezed out by starting the bills while waiting for take-out.
By the way, I am not one of those sticklers for doing everything myself – I have an accountant, and I don’t read those forms, I just sign them and pray. But even so, removing tax issues from the conversation, the kind of expertise required to do my monthly bills is ridiculous and getting worse.
Take medical bills. I have three kids, so there’s always a few appointments pending, but it’s absolutely amazing to me how often I’m getting charged for appointments unfairly. I recently got charged for a physical for my 10-year-old son, even though I know that physicals are free thanks to ObamaCare.
So I call up my insurance company and complain, spend 15 minutes on the phone waiting, then it turns out he isn’t allowed to have more than one physical in a 12-month period which is why it was charged to me. But wait, he had one last April and one this April, what gives? Turns out last April it was on the 14th and this April it was on the 8th. So less than one year.
But surely, I object, you can’t ask for people to always be exactly 12 months apart or more! It turns out that, yes, they have a 30-day grace period for this exact reason, but for some reason it’s not automatic – it requires a person to call and complain to the insurance company to get their son’s physical covered.
Do you see what I mean? This is not actually a coincidence – insurance companies make big money from having non-automatic grace periods, because many people don’t have the time, the patience, and the pushiness to make them do it right, and that’s free money for insurance companies.
There are the (abstract) “rules” and then there’s what actually happens, and it’s a constant battle between what you know you’re paying for which you shouldn’t be and how much your time is worth. For example, if it’s less than $50 I just pay it even if it’s not reasonable. I’m sure other people have different limits.
I see this as a systemic problem. So this isn’t a diatribe against just insurance companies, because I have to jump through about 15 hoops a month like this just to get my paperwork sorted out, and they are mostly not medical issues. This is really a diatribe against complexity, and the regressive tax that complexity projects onto our society.
Rich people have people to work out their paperwork for them. People like me, we don’t have people to do this, but we have the time, skills, and patience to do it ourselves (and the money to buy takeout while we do it). There are plenty of people with no time, or who aren’t organized to have all the information they need at their fingertips when they make these calls, or are too intimidated by customer service phone lines to work it out.
And, as in the example above, there’s usually a perverse incentive for complexity to exist – people give up and pay extra because it’s not worth doing the paperwork. That means it’s always getting worse.
Bottomline: you shouldn’t need to have a college degree and customer service experience to do your bills. I’d love to see an estimate of how much more in unnecessary fees and accounting errors are paid by the poor in this country.
mathbabe 
Not just the complexity but the fees that “the poor” pay. For example, are you unable to pay a parking ticket due right now due to other priorities (food, heat, rent), well it’ll double or more in 30 days. What’s the APR on that? Bounce a $15 check due to both 1) always having to cut it close and 2) the complexity you mention, then you are now $35 more in the hole. Add that to your prior post about the costs of payroll cards. When you have very little, the nickels and dimes can pull you under. And once that happens the fees get even higher.
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I had a similar experience with AT&T:
It’s a successful strategy for them, it’s probably legal, and it has not led AT&T to lose me as a customer because I have no reason to think my experience with any other telecom would be different.
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I had a similar experience with ATT years ago, and I’m still a customer anyway. I say the same to anyone who complains about one airline in particular – fly any of them and you’ll have a crappy experience (at least, if price is your #1 reason for picking).
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I had an issue with AT&T years ago. I refused to pay for their overcharge errors. Switched to another carrier. Told the debt collectors that I owe nothing and debt collectors kept reselling the “debt,” until they gave up.
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There are airlines on which I absolutely do not fly. Maybe living in NYC we have more choices on who to avoid.
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Even if it’s only a marginal difference, I do feel it’s a social obligation to put a little effort into finding the least obnoxious firm and dealing with them. I think it’s more valuable than voting 🙂
I refuse to use AT&T, for example.
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But often with such a small sample set (my own experience), it’s hard to know for sure which is the least obnoxious. I have had both AT&T and Verizon for 5 years (divorce and kids and family plans) and they have each been equally surprisingly helpful at times and incredibly bad (customer service and fees) at times. Maybe there are others but with rolling contracts, it hard to move anywhere. And I have no real way of knowing whether the next provider is any better overall.
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Here’s another aspect – tarifs. In the old days (when I was a lad) we in the UK got gas from the Gas Board, electricity from the Electricity Board, phone service from the Post Office (really) and so on. It sometimes sucked but it was simple – and mostly fair.
Now I have a CHOICE of suppliers so I need to choose so I need a website to help me – and it’s still troublesome and BORING. Tarifs change all the time – intended to confuse us I’m sure – so every decision has to be reviewed regularly.
All this choice adds to total costs so its added to all our bills – but mainly to those who doin’t keep on top of the nuisance.
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Is it any wonder that Quicken Health is now a discontinued product as of yesterday’s announcement from Intuit with their sale of their financial division, it doesn’t work with situations like you discussed and yes you are right on the money, who has the time to go around and around with all of this. Our lawmakers hire this stuff done too so they are not at the bottom of the insurance food chain either so they don’t see all of this sadly. Back in 2009 when Quicken Health came out I ended up in a debate stating consumers are not going to use it, and the marketing manager thought I was attacking him which I professionally explained I was not. A couple years later they ran their own and basically said in different words what I did 2 years prior, so it was the beginning of the time to suck the big egg.
http://ducknetweb.blogspot.com/2013/07/quicken-to-sell-intuit-financial.html
I keep saying it’s the query masters with insurance companies that decide the parameters and unless like yourself you call up, you don’t know. Government does this too with Social Security as I just experienced losing my mother. They pay 30 days behind and the person has to live for the entire month to collect, so my mother passed away at the end of April, and the payment made by automatic deposit on the first of May had to be returned as she was not alive for the entire month of April, no pro rate at all.
I could go on and on with insurance claims on what I have seen over the years and as we know it all comes down to money. Queries like this that run like this is what started me going on the “Attack of the Killer Algorithms”…it’s amazing if you hand around a doctor’s office as I did for years writing software you see some very strange and unfair parameters for claim payments and eligibility as well. They are big machines.
You are right, consumers are not falling all over themselves to use such web services and software and thus we keep having one more platform added on top of each other to help consumers navigate the complexities, well that is the marketing side if you will, (dashboards) and the real translation is another company as a middle software to write some code on top of other code and make money. If they would just simplify at the root and make it less complex, the middle companies with tons of dashboards they provide would not need to exist:)
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You’re only scratching the surface! Years ago, when I had Hodgkin’s Disease, the Blue Cross representative gave me some good advice—Don’t pay any bill until you start getting warnings. Why? The insurers and care providers can take months dickering over charges; the sooner you pay, the sooner they stop arguing. I’ve had this confirmed since by some very experienced insurance executives.
Insane? Yes! But that’s how insurace companies make profits, by goughing customers and chiseling doctors. The doctors combat this practice by loading up on procedures, to push their end of the bargaining.
So we need single payer, since the current system is built on making the insurance companies—who don’t provide any care—rich.
And there are similar games being played in all industries. The problems is that the market—and executive compensation—is driven largely by corporate profits; since our economy has been largely stagnant since 2007 (or when Obama’s so-called “stimulus” ended), the only real strategy to raise profits is to squeeze workers and existing customers everh harder.
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I’m currently on month three of wrangling with hospital billing to point out that my insurance plan explicitly covered 100% of a recent surgery…which of course is not what my insurance paid them. The hospital is well aware of this and is working the insurance company for the extra money. Of course when I call BCBS they say it’s a hospital billing problem. My father-in-law is a surgeon and he says he’s not surprised by this, as insurance companies routinely underpay his invoices and makes his staff hassle them to get the rest of what’s owed them as well. At least they have staffs, but it’s certainly a nontrivial factor in health care costs for everyone.
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Great post, Cathy. This is also related to your earlier post about small vs. larger businesses. Until they reach a certain size, truly small businesses face an enormous complexity tax that can become overwhelming, especially because the opacity and complexity can often be attached to significant legal liability. By contrast, big corporations have entire units devoted to navigating legal, tax and other hurdles (in addition to being able to shape those environments through lobbying).
To give one example from my own experience – and one that I’ve heard echoed by several friends since – when I incorporated my tiny business and hired my first employee, I set up what I thought was everything in terms of insurance, including Workers Comp. What I didn’t know, and what no one told me, was that New York State requires employers to provide some sort of disability insurance for all employees. I discovered this six months later when I received a bill for $8,000 or $9,000 as a penalty from the state, billed at around $300 per uncovered day. My accountant assured me that this was something he saw happen all the time (pointing to yet another challenge of small business – little attention from vendors) and that it could be argued down to a a few hundred dollars, which I did, but only over the course of several months.
That kind of tedious complexity tax is endemic to running very small businesses, and is a major unseen advantage for the big companies.
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I’ve always wanted to have somewhere a website where people report the real cost of their bills, ideally in both money and time spent dealing with them. And that would allow people to comparison-shop properly.
Without such data, the most honest providers (whose charges are all in plain view) will lose in marketing to everyone else who moves as much of the costs as possible into hidden surcharges of the kind mentioned here, marketing instead a much lower price.
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I should also note the hospital being well aware of this has not stopped their billing system from sending bills to me
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Yes, I have friends who have been in regulatory positions and they say that far from not wanting regulations, as is often assumed and stated, BIG business loves regulations because they can deal with them (the larger departments) and their competitors cannot AND because they often have the muscle to get regulations which help them secure their positions relative to their competitors. Big business wants anything but free market competition and the best big business to own is one that the government deems “too big to fail.”
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The kinds of nuisance fees you describe are a problem for people making a reasonable income, but for the working poor and lower middle class folks, they are death by a thousand cuts. In old China, that was a form of public execution. They tied you to a pole and started making little cuts into your body. Most people didn’t make it to 1,000 before they died. Just so, those making modest incomes are tied to that fee pole and they are dying.
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There is “some” humor and satire with healthcare though and this video captures it from Kevin Slavin on why he’s done with the internet as being a useful level of educating people on healthcare and he mocks a couple studies and how we react to news on the web, and it has some f-bombs but is so funny and he makes his point.
If you have a cat, don’t get too upset as it has not made you mentally ill, just don’t sit around and draw pictures of them:) Toxoplasmosis, unwired as you have never seen it explained before. If you work with data, you have to appreciate this on how complex we are:)
http://ducknetweb.blogspot.com/2013/07/toxoplasmosis-and-internetthe-spreading.html
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It’s another form of rentier extraction dynamic. A little extra here, a little extra there — across many thousands of people, pretty soon you’re talking about real money.
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I don’t mean to hijack this post but healthcare blogging is what I do and when I see others that understand what is happening I get enthused as there’s so much. We do have one big insurer that is becoming too big to fail and it’s scary, pretty much using the same techniques as the financials have and of course their stock is traded on the market. What I am seeing here is the “use of subsidiaries” to where most of the operational activities are taking place and there’s a ton of “tiered subsidiaries”, so point made is if you think selling policies is the main focus of insurers, you might want to think again.
So when you said “under the radar” this is is by all means with so many subsidiaries and the creation of a not for profit subsidiary to open the doors to purchase more specialty practices and surgery centers. They are also, via a subsidiary they purchased building the new federal data hub. If you look at the latest annual report there’s no mention of any of this with subsidiaries, again it’s all under the radar and much of it is in my backyard in California so I hear it from doctors and others. The activity taken by their not for profit subsidiary and the way it is being conducted is truly scary and nobody says a word.
http://ducknetweb.blogspot.com/2013/07/health-insurance-business-under-radar.html
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I don’t have an accountant and I do my own bills. (I also do my mom’s bills.) Most of the bills are no-brainers. With cable/telecomm companies it’s a once a year dance on keeping their fees reasonable. Insurance companies is another matter, and they are all different, and there is a big difference between self-insured plans and other plans. Since I’ve had the unenviable job of being my spouse’s primary caregiver and dealing with insurance companies on a regular basis, I have learned to always keep copious notes of every phone conversation, noting dates, times, hold times, and most importantly names of insurance employees. The response to “I don’t see it in the record,” is I spoke with X on Tuesday, July Y at 10:14am and she said verbatim …” At which time the heretofore blind employee now sees the light. BCBS of New Jersey was terrible. United Healthcare were the biggest cheats, and the only way to beat them was either the formal appeals process or to go through the agents which sold the policy to my employer. Aetna employees were extremely helpful and would teach me the correct phrases to use on subsequent phone calls. I was sorry when Aetna was no longer a choice. Maybe on my next job? Empire BCBS (through my spouse’s self-insured employer) was extremely helpful until about 3 years ago, when something definitely changed. They’re still OK but tougher. And getting physical therapy approved for my wife is always a pain.
Do I like the way insurance works? Hell, no.
Do I want a grand socialist medical system? Hell, no. I honestly believe my wife is alive today because we have access to the best doctors and the best hospitals, which would not be so under a socialist system. I’ve had experience in dealing with socialized medicine in Israel and in Canada, and both are inferior to what’s available now in NYC.
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It’s not a “systemic problem”, it’s systemic theft. These businesses are dishonest and thieving, and the people who work for them are responsible for it.
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I definitely feel your pain, Cathy. Insurance companies are the worst! My daughter is on her middle school volleyball team and she was required to get a physical every year. I had the same exact issue: physical is not free until you yell at the insurance company. Spent over two hours on the phone with these guys, shouldn’t have come down to that. Plenty of companies like ATT are run like that, such a pain!
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I have to agree with Bobito. These companies think they are being smart by “conveniently” saying they didn’t know about a certain incident or it’s technically not under warranty or insurance until you have to spend more than an hour on the phone with these guys to straighten things out. Honestly, who has that kind of time? It’s worth it if you get something free out of it, I say. I once got free cable for two months cause I got wrongfully charged for a package deal, but had to wait on the phone for almost a half an hour, spent another hour on the phone with those people. Thank god I don’t work customer service anymore!
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