The Unbridgeable Gap between Left and Right on Health Reform

The Unbridgeable Gap between Left and Right on Health Reform

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Though thoroughly smothered under 2900 pages of well meaning but poorly focused, expert-driven “good works”, the core of the Affordable Care Act was providing 30 million people subsidized health insurance coverage. As the country continues to decide how it feels about this monumental legislation, a major ideological divide persists over whether the aggressive coverage expansion in health reform was really needed or not.

Far from “selling itself,” as a overconfident White House aide suggested it would back on March 23, 2010,  health reform remains strikingly unpopular. Only 37% of the public thinks the country will be better off as a result of health reform, and only 28% think their families will be better off, according to the May Kaiser Family Foundation tracking poll.  There is a stark partisan divide over health reform.  While 72% of Democrats have a favorable opinion of health reform, a substantial minority believes the bill could have done more (covered more people, provided a public option or path to single payer).  Alternatively, 74% of Republicans have an unfavorable opinion of health reform; the same percentage favors repeal.  Independents tend to break toward the Republican view of the bill (49% unfavorable vs. 35% favorable).  Those opposed feel more intensely about health reform than those in favor.

The Ryan House Budget for 2012 zeroes out all new spending for health reform (while keeping ACA’s Medicare cuts, devoting them to deficit reduction!).  The conservative narrative is that the problem of the uninsured was liberal mythology, not meriting major new spending.  In the blogosphere, an analysis surfaced suggesting that the real uninsured problem is only about 4 million people. This apparently originated in a Heritage Foundation blog posting from late August, 2009.  Other conservative analysts charitably suggest there may be as many as ten to twelve million uninsured worthy of federal help.   To take care of this smaller number, you do not need a major coverage expansion, but merely to apply the familiar market oriented remedies: selling insurance across state lines, high deductible health plans, malpractice reform, high risk pools, etc.

How do you get from 51 million (the 2009 Census Bureau estimate derived from the Current Population Survey) to four million (the Heritage blog actually started at 46 million, the estimated Census number of uninsured for 2007)?   Well, begin by subtracting those who are not uninsured for a full year.  According to the Heritage blog, that gets you down to 36 million.  Then subtract another 6 million children who are uninsured but eligible for Medicaid, and whose parents have not signed them up.  That gets you down to thirty million.  Then you subtract twelve million “illegal aliens” who are uninsured (down to eighteen), and the substantial number of “free riders” who come from “wealthy” households above $50 thousand in income and, voila, you’re down to four million “poor, sick uninsured for a lengthy period.”  This facile exercise in people subtraction is riddled both with errors and questionable judgments.

It is true that the 51 million uninsured estimated for 2009, which derives from the Current Population Survey of the Census Bureau, over-counts the actual number of uninsured due to significant under-reporting of Medicaid enrollment. Subtract that out and you have about 46 million people who reported that at one point in time they were uninsured during 2009.

There is great fluidity in health insurance coverage, just as there is in employment status and also in income eligibility for public programs like Medicaid.  Separate analysis using data from the Agency for Healthcare Research and Quality using the Census’ MEPS survey data suggested that in 2008 almost 41 million were uninsured for an entire year.  In a two-year analysis using the same data series, a little more than thirty million people were uninsured for two complete years (2007-2008).

Why those who have short-term coverage issues should be less worthy of help than the “hard core” long term uninsured is unexplained by the Heritage blogger.   Diabetics, or people with high blood pressure, or with depression who interrupt their medication because they cannot afford it even for a matter of months end up costing the entire society money in acute care for avoidable illness.

There is reasonable certainty that about a quarter of the uninsured are eligible for public programs (e.g. Medicaid or SCHIP) and are not enrolled.  This number, 11-12 million, is scaring Governors and Medicaid program directors all over the country.  Policy wonks ungallantly call them “the woodwork people”- that is, folks who will come out of the woodwork, like termites, in 2014 when the individual mandate requires them to have insurance coverage.  Unlike those to be newly covered by the ACA Medicaid expansion, the cost of the woodwork people will be paid for at the existing match (which averages 43% from state general funds).   States struggling with their present 53 million Medicaid enrollees will have to find a big chunk of new money.

The aforementioned MEPS survey found almost 6 million uninsured children in 2008 but not 100% of these are eligible for Medicaid or SCHIP, because many of them live in households above SCHIP’s income threshold.  Many families are daunted by the public program enrollment process, either because of mistrust of the government or deliberate bureaucratic barriers.  States in fiscal trouble have a powerful economic motive to make it complex or difficult for people to enroll.

Hospitals are actually the biggest “promoters” of public coverage both for adults and children, for the excellent reason that it reduces their bad debts.  But you have to be sick enough or patient enough to use the hospital to get their attention. To suggest that public coverage is simply “there” and that parents are dilatory in not using it does not tell the whole story, given the program’s “welfare” lineage and bureaucratic inertia.   There is clearly a problem here, but a different one than the Heritage Foundation blog analysis suggests.

A greater and less defensible leap is assuming that the entire “illegal alien” population is uninsured and since they shouldn’t be here in the first place, we shouldn’t worry about them.  According to the Pew Hispanic Center, in 2008, there were about 11.9 million people in the US illegally. Almost 40% of the illegal adults actually have some form of insurance, whether provided by employers or, via false documentation, through public programs. In 2006, the National Institute for Healthcare Management estimated that there were only about 5.6 million uninsured undocumenteds in the US in 2006. The Congressional Budget Office arrived at an identical figure for the current uninsured undocumented in a March 2011 report.

The number of undocumented folk in the US has probably fallen significantly in the past three years due to the collapse of housing construction and the shrinkage of tourism in the Sun Belt- two major employers of undocumented workers. In some states like Texas and California, the undocumented may yet constitute as many as one-third of the uninsured.  But the Heritage estimate of “12 million illegal uninsured” likely at least doubles the real number, as well as ignoring the on-the-ground reality – the public health threat posed by a large number of uncovered and highly mobile undocumented workers and their families.  Congressman Ryan’s proposed 2012 budget not only zeroes out money for the coverage expansion, but also cuts the safety net expansion provided community health centers, which serve the undocumented population without complaint.

The “high income” uninsured, who the conservative blogosphere assumes to be free riders, constitute a surprisingly large percentage of the long term uninsured.   Of the more than thirty million uninsured who were continuously without coverage for the entirety of the first two years of the recession (2007-2008), somewhat more than 45% had household incomes over 200% of poverty ($42 thousand a year for a family of four) , and more than 40% earned over 400% of poverty ($84 thousand a year for a family of four).  These are not small numbers.  But the idea that there are massive amounts of unallocated free cash sloshing around in their household budgets that is available to pay health premiums is laughable.

By the time of the 2007-8 recession, American consumers had accumulated a staggering $14 trillion in consumer debt.  When they ran out of cash, many consumers defaulted,  creating a landslide of uncollectible accounts that caused our financial crisis. According to the Federal Reserve, only about a trillion of this unsustainable consumer debt burden has been liquidated, mostly by being written off or paid off.  Thirteen trillion dollars in consumer debt remains a huge drag on the economy and a massive claim on future consumer income.  (As late as 2004, the total consumer debt was only $8 trillion).

If consumers had free cash, they’d be spending it, and we would not have 9.1% unemployment.   The idea that there are huge undiscovered cash reserves that would enable cash strapped consumers to take on a $14 thousand a year health insurance expense is delusional.  Unless we were willing to write off the remaining $13 trillion in debt and insist that people spend any resultant free cash purchasing health insurance, the idea that tens of millions of “wealthy” Americans are “voluntarily” foregoing insurance coverage does not reflect the on-the-ground reality. There may be free riders here, but not fifteen million of them.

What’s the bottom line?  While the headline number of 51 million uninsured probably overstates the magnitude of the real problem, there are presently tens of millions of Americans who cannot afford to purchase health coverage without help.  It isn’t just a problem of the “sick and poor”, either.  It’s the middle class, anxious and hurting, that is delaying seeking care because they either cannot afford health premiums or cannot afford the cost sharing their employer provided policies require.

The 4 million Heritage blogger’s number, faithfully reblogged by countless health reform critics, is a convenient rhetorical pretext for rolling back the Affordable Care Act’s coverage expansion, but not a credible estimate of the actual needs. One can legitimately quarrel with the large fraction of the expansion paid for by Medicaid, a broken program whose present covered population states cannot afford.  One can quarrel as well with the unspoken premise that health coverage is a “human right.” It might have been a more efficient use of scarce societal dollars simply to expand the safety net directly.

But simply abandoning the thirty million people promised coverage by the ACA to the vagaries of the “marketplace” (and a very expensive care system) is not only bad politics (a Tea Party gift to a struggling President Obama), but also bad social and public health policy.

Jeff Goldsmith is president of Health Futures Inc, which specializes in corporate strategic planning and forecasting future health care trends. He is also the author of “The Long Baby Boom: An Optimistic Vision for a Graying Generation.”

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57 Comments on "The Unbridgeable Gap between Left and Right on Health Reform"


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Nate Ogden
Jun 25, 2011

“Liberals would in general expand public health to include self-contained,
long-gestating chronic diseases such as diabetes and high blood pressure, and catching cancers early when possible. (Arnold Kling calls this ‘premum medicine.’)”

They would also regulate how much sodium you intake, how many sodas your drink, what you fry your food in, and anything else they could even remotely related to or affecting health.

” may have the reasons why. In any event, weak price controls are not a fact of nature–just a fact in America.”

Price controls limit supply, as a freeer, enough E’s, market then those you mention we let the market decide price not central planning. This actually works better in some cases then central planning, i.e. generics. Its when we pretend to have a free market but regualte the heck out of it that we get some really inflated prices.

Guest
Jun 25, 2011

I am jumping into this string a little late, but let me add two comments for Jeff Goldsmith (who I have admired for years):

1. It may be time for a debate on the scope of public health.

Almost all factions would agree that public health should include contagious diseases, plus emergency care for broken bones, infections,
and life-threatening conditions such as stroke, heart blockages, impacted bowels, septic shock, etc.

But conservatives tend to stop here. (Avik Roy stated this well on one of his blogs last year.)

Liberals would in general expand public health to include self-contained,
long-gestating chronic diseases such as diabetes and high blood pressure, and catching cancers early when possible. (Arnold Kling calls this ‘premum medicine.’)

An honest conservative (such as Kling or Nate Ogden) would say that if chronic diseases are untreated and life expectancy goes down a couple of years, well, that is not a national tragedy. The conservative view is that government has no duty to prevent all deaths. A conservative would state that diabetes is not a public health problem. (and by the standards of America from 1789 to about 1970, it is not.)

This debate is muddled, of course, by Republican hypocrites –who expect seniors on Medicare to get premium medicine without question, but would deny it to anyone under 65 without a good job or money.

The debate on public health must also deal with the research on over-treatment and over-diagnosis for a number of common conditions. There are far more urgent public spending needs than preventing five thousand early deaths from a cancer, by testing absolutely everyone.

At any rate, it would not hurt to drive the debate on the proper scope of public health.

2. My second comment for Jeff refers to his point that price controls are always captured by powerful players.

This is true for the USA but it does not appear true at all for Germany, Japan, and France, just to mention three large countries.
Regulators in those places have pushed back big pharma many times.
Canada took a strike of doctors over its initial single-payor plan, and the doctors lost.

Someone like Paul Starr may have the reasons why. In any event, weak price controls are not a fact of nature–just a fact in America.

Bob Hertz – The Health Care Crusade

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Barry Carol
Jun 14, 2011

Margalit –

All or none contracting is exactly what the powerful hospitals insist on now. This includes large systems with multiple hospitals that refuse to let insurers contract with some of their hospitals but not others and even try to resist tiering which strikes me as particularly obscene. Why should a hospital be able to get away with telling an insurer that it can’t charge its own members a higher co-pay than the member would pay to go to a competitor’s hospital? This is another area that probably has to be dealt with via regulation, along with the pricing of care delivered under emergency conditions where the choice of hospital is not possible or practical.

If I remember correctly, according to the large for profit hospital chain, HCA, about 70% of its inpatient revenue is from medical care and only 30% is for surgical care. Quality differences on the medical side probably relate more to differences in infection rates and readmission rates which are often completely uncorrelated with market power. In the case of cancer treatment, I’m told that as much as 80% of it can be dealt with perfectly well in a community hospital setting. People don’t need to go to Memorial Sloan-Kettering or M.D. Anderson for every cancer and, if they do, they are most likely to receive a full court press whether they want it or not because that’s the culture at those institutions.

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Barry Carol
Jun 13, 2011

Steve –

I don’t know how much difference there is geographically in the price actually collected per procedure nor do I know whether there is any correlation between the number of insurers and medical prices. I do know that within a given market, a dominant insurer will pay less than competitors with a much smaller market share.

Regarding the growth rate of medical costs, I think it is driven by such trends as advances in technology, including new cancer drugs, the aging of the population, secular upward creep in coding intensity, and, of course, the increase in the price of services, tests, procedures and drugs.

My preferred way to build countervailing power against powerful hospitals and large physician groups is the use of tiered networks and limited or narrow networks. If we can demonstrate to the patient that, for most care, the high priced hospitals are no better than their less well paid competitors, it’s legitimate for payers to require the member to share more of the cost to access the high cost, comparable quality provider. For procedures for which the high priced hospitals have earned a Center of Excellence designation, payers could put them in the preferred tier for those. As both employers and people who buy their insurance in the individual market perceive health insurance as increasingly unaffordable, tiered network and narrow network products are finally starting to gain more traction in the marketplace and it’s about time. As I’ve said many times, easy to use price and quality transparency tools are necessary to make this all work as well as it can for both patients and referring doctors.

Separately, I’ve never heard that PA insurers pay full charges. Why would they do that? My own insurance is with Highmark Blue Cross but I live in NJ and most of my doctors are in NYC near my work. Payment rates are determined by the local Blue (Empire in NY and Horizon in NJ) and Highmark then pays that contract rate under its Blue Card system.

Guest
Jun 13, 2011

Barry,
Why would a Center of Excellence agree to be put in a special tier by the insurer and give up its bread and butter so to speak?
If I was running on of those, I would tell the insurer that it’s all or nothing, and if I was big enough and excellent enough, it would be all, I presume.

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Barry Carol
Jun 12, 2011

Margalit –

Yes, I know about the cooperatives. I think Premier Inc. is the largest, but I’m not sure if member hospitals use it to purchase expensive devices or not as that’s a decision driven mainly by surgeons at each hospital, I believe.

As for the ACO’s, I’m not familiar with the intricacies of the regulations though much of the provider feedback seems to be negative so far. In theory, assuming they have sufficient critical mass and interoperable electronic records systems, they should be able to achieve some cost savings in care coordination, especially through the elimination or reduction of duplicate testing and adverse drug interactions.

If ACO’s were willing to assume the financial risk inherent in capitated payments and if there were at least two in each urban and suburban market to compete for business, there is potential to improve upon the status quo. Payments would need to be risk adjusted and the risk adjustment state of the art isn’t where it needs to be yet, in my opinion. The existing system still overpays for the healthy and underpays for the sick.

The closest thing we have to a large scale ACO today is Kaiser but their insurance premiums are not much lower than their competitors’. I don’t know, however, to what extent that is due to a different membership mix – older and/or sicker than competitors’ insured populations. If we wind up with very large ACO’s in many markets, it could indeed lead to even greater concentration of market power than we have now so even capitated payments, if driven high enough by near monopoly market power, could result in healthcare costs even greater than they are now under fee for service payment.

At the end of the day, I’m not very optimistic about the ACO concept’s ability to drive medical cost growth lower. There could be some quality improvements, though. As I’ve said before, to really attack costs, we need to stop paying for services, tests, procedures and drugs that either don’t work or cost more than they’re worth. We need meaningful tort reform to reduce defensive medicine over time. We need a more sensible approach to end of life care and we need good, user friendly price and quality transparency tools. We also need more reasonable and realistic patient expectations than we have today. If all that fails, we will probably eventually wind up with explicit rationing, most likely age based.

Guest
Jun 12, 2011

So , since as I pretty much expected, there seems to be wide “bi-partisan” consensus that these large health systems should be split up to more manageable size, how do you view the ACO movement, which only makes big organizations bigger, and encourages those that are still small to consolidate, or perish? Will the savings/losses they realize for Medicare (if any) be swiftly shifted to the private market? Or will the very large ACOs just turn into narrow networks for private HMOs? Or both?

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Barry Carol
Jun 12, 2011

Steve –

When it comes to patented drugs, even Wal-Mart doesn’t have nearly as much negotiating power as you might think. Big Pharma’s attitude is that if the doctor prescribes a drug, you, the pharmacy, need to carry it. So, our price is our price. As for the device manufacturers, they deliberately keep their prices very opaque to the point of requiring hospitals to sign confidentiality agreements precluding disclosure of how much each paid to any other hospital outside their system. All such confidentiality agreements should be illegal. The more price transparency we can have, the better. Finally, just as small employers should be able to band together to purchase health insurance on more favorable terms, hospitals should be able to form purchasing cooperatives to buy devices and other supplies on more favorable terms than they could as stand alone entities.

In markets where there is only one hospital, if insurers can not come to terms with the hospital on how much it will pay for various services, tests and procedures, it should probably just tell it’s members that it couldn’t reach an agreement with the hospital and it will reimburse members at, say, 110% or 115% of Medicare for whatever care the member requires. Let’s see hospitals try to collect two or three times that amount from lower middle class, middle class and even upper middle class wage earners. I’m sure the hospitals will love the publicity when the media exposes their heavy handed collection tactics if hospitals use them.

Guest
Jun 12, 2011

Hospitals already use these purchasing cooperatives. They are called GPO – Group Purchasing Organizations and they deliver everything from hardware to laundry services, including medical supplies. Some of these GPOs are very large national organizations, and other are small regional ones.

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Barry Carol
Jun 12, 2011

“Are you guys suggesting that those corporations should be broken up?”

Margalit –

Yes, they should be broken up. There are surprisingly few economies of scale in running multiple hospitals. As you can see from the New York magazine article that Steve linked to, labor costs are 60% of the costs of operating a hospital. There may be modest economies when it comes to supplies which are about 15% of costs. Since most hospitals are non-profit, even access to capital is not as big an advantage as it might be. Overall financial health is more important there. The only reason hospitals aspire to achieve local or regional market dominance is pricing power, pure and simple. To pick on Partners in Boston for a moment, there is no reason why MGH and B&W need to or should be owned by the same corporate entity let alone their outlying satellite community hospitals that are also part of their system.

Separately, on the issue of where you should be able to go for what care irrespective of cost, we can measure outcomes, hopefully with risk adjustment, for things like heart, brain and orthopedic surgery, organ transplants and cancer treatment. When it comes to the frequent flier with CHF or the alcohol or drug abusing patient with mental illness, I doubt that the quality of care is hugely different between community hospitals and AMC’s. Where we can measure outcomes, let’s see the data as well as the prices charged and actual insurer reimbursement rates received. Both referring doctors and patients should have as much useful information as possible at their disposal.

“except that we will use the coercive power of big government to give insurance companies an edge in negotiations? “

Steve –

The NYC metropolitan area in particular has lots of doctors, including surgeons, who do not accept any commercial insurance. If you’re practicing in a locality where the majority of your patients have Medicare or Medicaid, you’re already accepting federal or state dictated prices. In markets where there is only one hospital for miles around and a commercial health insurer with a dominant local market share, the negotiation should be a fair fight.

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steve
Jun 12, 2011

Barry- You describe the current situation. Most states are dominated by one or two insurers.

http://www.businessweek.com/magazine/content/09_31/b4141022519011.htm

http://www.americanprogress.org/issues/2009/11/insurance_market.html

As far as I can tell, there is no linkage between costs and number of insurers. States like Arkansas are dominated by one insurer. New York has its coverage spread more among different insurers. Both have premiums rising. It appears that even when insurers approach having a monopsony, that providers still have more market power.

As an aside, commercial insurers must be different in NYC. In PA they pay full charges. We love to see the commercials.

Steve

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Nate Ogden
Jun 11, 2011

“and now you want me to go to Joe’s Med Shack for health care,”

Until recently University Hospital was 30% lower then Cleveland Clinic and every bit as good. There are a number of suburban hospitals that are a fraction of the cost of Cleveland Clinic with equally good outcomes.

Remember the Government and Dartmouth are about politics, not value.

“to save you a couple more pennies?”

Actually it doesn’t save me or most payors even a penny, our income is so much per employee per month regardless of how much you spend. It does save you money though, either directly or via your employers cost which supposedly part of your compensation. Its also far more then pennies, when hospital care accounts for 40% of cost and they are being paid 3 to 5 times cost we are talking big bucks.

Guest
Jun 11, 2011

But the government is telling me, and “everybody” knows that this is true, that Cleveland Clinic and Mayo and all those Dartmouth Atlas endorsed centers of excellence are providing “highest quality care at costs well below the national norm”, and now you want me to go to Joe’s Med Shack for health care, to save you a couple more pennies?
I assume I can start going to those big name Clinics two years before I drop dead, or do I drop dead two years after I start going there…. Very confusing…

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Nate Ogden
Jun 11, 2011

“Are you guys suggesting that those corporations should be broken up?”

I won’t speak for Barry but yes. Some health systems have way to much power. If there are two hospitals in town and they are owned by the same company they need split.

“What you are suggesting, Barry, is regulations, not what I understand as market forces.”

If I sell a policy that clearly excludes XYZ drug the market allows people to buy that policy or one that does cover it. What you can’t have is the courts or politicians demand we provide that drug to someone that didn’t pay for it then got sick. We should never deny anyone treatment they are able and willing to pay for. We also can’t be expected to provide unlimited treatment to everyone like PPACA requires.

Life’s outcomes are not equal or fair, we are only required to give everyone equal access and opportunity.

“Basically, consumer decisions are either irrelevant, or undesirable, and either way those must be restricted as much as possible.”

I don’t think we should ever restrict a consumers decision, we should be allowed to only provide what they pay for though. If someone insist on going to Cleveland Clinic and paying a facility fee for streep throat they should be allowed to do that. The insurance company shouldn’t be forced to pay for it. A Medical Home that can educate as well as treat would be invalueable in this sitution.

“And how do you create price competition for major items, that continue to be insured, and which are largely not discretionary and not directly influenced by consumer choice, again without “regulation”?”

Scheduled benefit plans are very good at this. If you need a hip replacement we pay $X thousand, you can take that to any hospital you want to have the procedure done. Then it would be on the facility to justify why they cost twice as much as the hospital across town and why the member should pay the difference out of pocket. We should never tell someone they can’t pay the difference that should be their decision.

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steve
Jun 11, 2011

“Some health systems have way to much power. If there are two hospitals in town and they are owned by the same company they need split.”

Free market economics, except that we will use the coercive power of big government to give insurance companies an edge in negotiations?

Steve

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Nate Ogden
Jun 12, 2011

Its about giving the residents/consumers a choice not possibly giving the insurance companies an advantage. There are multiple insurance companies, in your logic why doesn’t that give the hospitals an advantage?

Further doesn’t the term free market sorta require an actual market with competition to be free?

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MG
Jun 12, 2011

This is the myth of the free market in many industries/aspects. The end point of a mature and long-existing market place is a marketplace dominated by a single company/entity or a small handful of companies/entities that will use their position, clout, and leverage to ensure that position remains unchallenged. Now maybe their stranglehold is ended through some market force (substitution, etc) but in most cases it requires gov’t intervention to intervene to restore competition. This is anathema to most conservatives today.

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Nate Ogden
Jun 25, 2011

“but in most cases it requires gov’t intervention to intervene to restore competition. This is anathema to most conservatives today.”

MG I think you have this flipped, its government intervention that creates non functioning markets not the other way around. Can you name any examples to support your claim?

Lets look at a few markets that have never been over regualted by government;

Hamburgers or Fast food in general
Plumbing, AC, electrical or any of your skilled trades
Car Repair
etc etc

Now if you look at industries broken up by the government this supposed anathema to conservatives it was actually government that created it in the first place

Telephone
Departure gates for airlines
Trash Hauling
Cable TV

If you have any examples to support your argument I would like to reserach them but I can’t think of any time it has happened

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steve
Jun 12, 2011

In a free market, both sides will seek to optimize market power. In most states, insurers have already consolidated, ahead of providers (excepting California). Costs have still risen. I have no problem with setting some limits on these provider consolidations, I am just surprised that a free marketeer would be willing to do so. Of course, there will remain the hundreds of small hospitals/clinics that are the sole source of care for millions of people.

Also, consolidation of facilities is how hospitals gain enough market power to negotiate lower prices with drug companies, device makers and implant makers. If you split them up, what is the unintended consequence of these hospitals not being to obtain those lower prices?

Steve

Guest
Jun 11, 2011

I am forced to conclude that I don’t understand what market forces are.
What you are suggesting, Barry, is regulations, not what I understand as market forces.
What Nate is suggesting is interesting, but again, I don’t see how the lack of first dollar coverage for consumers has any transformational value on that arrangement.
Basically, consumer decisions are either irrelevant, or undesirable, and either way those must be restricted as much as possible.

On a different note, I don’t quite understand the ant-trust enforcement on the provider side. As far as I know, providers who are not clinically integrated are not allowed to negotiate together. The large systems that everybody seems to think are the best solution to all problems, are single business entities, so anti-trust is not applicable. They just “happen” to be so big that they practically monopolize the market and obliterate any competition. Are you guys suggesting that those corporations should be broken up?

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Barry Carol
Jun 11, 2011

Margalit and Jeff –

Regarding the treatment of the 20% of the population that accounts for 80% of healthcare costs in any given year, I think we need to do the following two things: (1) stop paying for services, tests, procedures and drugs that either don’t work or cost more than they’re worth and (2) work toward universal availability of palliative and hospice care for patients in end of life situations and encourage the execution of living wills and advance directives as well as the appointment of a healthcare proxy with the information stored on a registry so it’s available to doctors and hospitals when needed. For those who have not executed a living will and don’t have a healthcare proxy, we need to change the default protocol from “do everything” to apply common sense depending on circumstances without providers having to worry about being sued if they didn’t do everything technically feasible or possible.

For the 80% of relatively healthy patients that account for 20% of costs, we need to reset patient expectations so they don’t keep demanding unnecessary or marginally useful care including expensive imaging and the latest drug they saw advertised on TV. We also should enact sensible tort reform that would take medical dispute resolution out of the hands of juries and give it to special health courts while also legislating robust safe harbor protection from lawsuits for doctors, NP’s and others who follow evidence based guidelines where they exist.

In the case of both populations, more aggressive anti-trust enforcement on the provider side, especially hospitals, would also be helpful as would good user friendly price and quality transparency tools that would be available to both referring doctors and patients.

Guest
Jun 11, 2011

Jeff,
I assume that the prohibition of first dollar coverage is the mechanism by which market forces are to be applied to medical care. Since the vast majority of people at any given time (80%) are incurring only a small part of expenses (20%), it makes sense that most of us can indeed shoulder first dollar coverage until we cross the threshold and join the expensive 20%, and I can see how market forces can work for this large segment of people, but small segment of medical care.
From what I see and read of the private market, such out of pocket responsibility indeed reduces utilization across the board. Disregarding quality for a moment, do we know if decreased utilization in the already small 20% expenditures segment, will have a cost reducing effect on the 80% expenses down the line, or is the opposite true, or perhaps no effect is to be expected?
Since most Americans will need some sort of comprehensive coverage once they join the minority which consumes most services, either due to major illness or trauma, how do we propose to unleash market forces on this large segment which will have to continue being paid by third parties?

Basically, it seems to me that best case scenario will allow market forces to exist in the large volume, small price, segment of the market, which consists mainly of primary care and some specialty and diagnostics. How do you then increase payments for primary care, without keeping supply down artificially, or without regulating prices? And how do you create price competition for major items, that continue to be insured, and which are largely not discretionary and not directly influenced by consumer choice, again without “regulation”?

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Nate Ogden
Jun 11, 2011

” How do you then increase payments for primary care, without keeping supply down artificially, or without regulating prices?”

Lets say a payor is spending $100 PEPM currently for outpatient physician services. $30 PCP and $70 SPC. If a PCP came to me and said I want to sell my Medical Home services for a capitated rate of $50 PEPM and will lower your total OP Physician PEPM to $80 effectivly cutting my SPC spend to $30 and ssaving me $20 I would jump all over it.

If they were to get really sophisicated and assist us in managing imaging cost, Rx, and hospital choice I could easily pay them $70 or $80 and still cut premium substantially.

I can’t get to the patients side when they make healthcare decisions. Now my best hope is to educate them and provide them tools to make efficient decisions. If the PCP was serving this role they could be compensated very farely and still help substantially lower cost.