The way health care is administered in the United States is unsustainable and in need of fundamental reengineering — right? During the 2008 presidential race, the country appeared to be in agreement on this point. But that all changed somewhere, somewhere after the election of a dark-skinned new president with a foreign-sounding name whom even proud Medicare card-carrying Americans were viscerally driven to deride as a socialist.

This was recently reported in The Hill: “The six largest investor-owned health insurance companies saw a 22 percent increase in combined net income in the third quarter, putting them on pace to break profit records for 2010.” The president was castigated by loud little crowds around the country for championing the overwhelmingly popular idea of a publicly funded, public health insurance alternative to challenge the partly publicly funded, private health insurance companies’ assertion that they simply cannot provide their services any cheaper. Rather than groundbreaking legislation, what we got was the president being caricatured on national television, in effigy, as The Joker — and health insurance executives laughed all the way to the bank.

According to a Kaiser Family Foundation paper, there are four recent occasions when private health spending per capita in the United States stopped its steady increasing and actually decreased: 1) The mid-1960s, with the passage of Medicare and Medicaid; 2) The early 1970s, with President Richard Nixon‘s wage and price controls; 3) The late 1970s, during the health insurance industry’s “voluntary effort” in response to President Jimmy Carter‘s threatened cost-controlling regulations; and 4) The mid-1990s, with the introduction of managed care and another presidential threat: Bill and Hillary Clinton‘s attempts at health reform. (The chart of private health expenditures is humorously dramatic in its seismic shifts, as if plotting the position of a mouse quickly darting toward and away from the cheese against the presence and absence of the family cat.)

The major arguments against a public health insurance alternative are: quality of care (rationing!), waste (the government can’t run anything!), and the American way of life (one huge step in the direction of an over-taxed, European-style welfare state!).

As economist Uwe E. Reinhardt points out, “rationing” is already a major problem in our current system, in the form of countless valid treatment requests that are routinely rejected by companies that simply do not wish to pay for them — not to mention all of the Americans who get little or no treatment because they have no insurance. The inevitable degree of rationing to be expected under a public health insurance program (shorter-than-desired hospital stays; reduced access to the latest, most expensive treatments; maybe waiting lists) is a reality of those unable to afford the more expensive insurers and the more luxuriant care they offer. This is precisely why it is ridiculous to assert that private insurers and their world-class coverage would disappear as a result of competition with a public program.

With regard to waste, according to KaiserEDU.org, at least 7 percent of health care expenditures in general are for administrative costs (e.g., marketing, billing), while this same percentage for Medicare is less than 2 percent. The evil bureaucracy, it seems, runs a more efficient ship.

What of the slippery slope toward a lethargic society rooted in expensive, unearned entitlements as opposed to accomplishment, kind of like what you now see in parts of Europe? This is a valid concern. But we already have universal public health care here in the United States. A summary of all the local and federal legislation defining this program reads something like: “Citizens without Medicare, Medicaid or private health insurance are afforded absolutely no benefits until they experience an acute medical crisis, in which case they shall be admitted to the nearest emergency room and lavished with the most expensive treatments for the most serious illnesses arising out of a lifetime of no cheap, preventative care.”

Access in the early adult years and regular interaction with health care professionals provided by a public insurance alternative would likely give people on the margins of society more awareness about their lives and their well-being — and more of a feeling of ownership and stewardship over their lives.

Americans have the right to a public defender when unable to afford flashy private defense attorneys, but we do not have the right to a public doctor. Thanks to the anti-”public option” hysteria of a very loud few that gravely wounded a great attempt at revolutionary health care reform, we are left with a huge increase, in the coming years, of public funds directed to the same profiteering, investor-owned companies. Maybe the anti-Obama forces have it exactly right by seeking to repeal “Obamacare” — so that it may be rewritten to finally include a public insurance alternative.

Scott Carroll is a writer in Baltimore. He is a frequent contributor to The Baltimore Sun, where this piece originally appeared.

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108 Responses for “Bring Back the Public Option”

  1. Dr. Mike says:

    I would actually like to see more discussion about what a “Public Option” would mean, but as soon as you call me a racist for daring to disagree with the president the discussion is over. Goodbye

  2. cwells says:

    As i recall, the public option was a means of allowing those of us who wanted to, to opt into a Medicare – like federal health plan.
    @Mike. And btw, why would anyone think you racist for disagreeing with the President? Did anyone think you too intelligent for disagreeing with the last one?

  3. Jonathan H says:

    Those who think a public option will solve significant problems almost never address the political and practical realities.

    The reasons health care is so expensive in the US are political and cultural. We could fix health care many different ways: with single payer, with mixed private and public payers, or with all private payers. Other nations have made many permutations work. You don’t need a public option. You do need to get serious about forcing health care expenditures within a budget pegged to GDP (or some similar hard constraint).

    We actually passed a significant cost control measure in the late 90s (the sustainable growth rate for Medicare) that for political reasons has been rendered a joke. We now talk about the “doc fix” as a necessity, and just shrug at the failure to live within a budget, though every nation with universal health care does it. A public option wouldn’t do anything about the political/cultural forces that align against cost control in the US.

    We will bend the cost curve in the US. It’s inevitable. Could a public option serve as a catalyst for the changes in American attitudes towards rationing and sharper constraints on medical spending? Sure, but only if the political will exists to give it the freedom to do so. And if that political will exists, it could be applied to public payers as well to empower (or constrain) them to cut costs. All-payer rate setting is one tool that seems to work elsewhere, for example. Given America’s history, especially since the 1980s, the path of least resistance to cost control is through private payers rather than a new public payer.

    The public option is a Rorsach blot. If you deeply distrust business you see it as a salvation. If you deeply distrust government you see it as a disaster. The truth is neither, but the practical reality is that a public option is very unlikely to be what arrests the cost curve in the US.

  4. Peter1 says:

    A public “option” will never work. Insurance will use it to cast off the sickest and the poorest, and it’ll become another taxpayer bailout for profitable companies and their investors. People now don’t want to tax support Medicaid, the only public option for the poorest of the poor. Having the health system live within a universal budget is the only way, but Americans on have not shown any willingness to participate in living within their own budget cuts, they’d much rather force budget cuts on others, especially the weakest.

    • BobbyG says:

      “Having the health system live within a universal budget is the only way”
      __

      Yep. See Elhauge, 1994, “Allocating Health Care Morally”

    • Nate Ogden says:

      “Insurance will use it to cast off the sickest and the poorest,”

      Interesting argument Peter, ignorant, but interesting.

      Medicaid is always secondary to private insurance.

      Private insurance is required by law to cover dependents to age 26, specifically passed to move sick people from Medicaid to private insurance. Some states require up to age 30.

      In all but a couple cases private insurance is primary to Medicare(ESRD 24 months and disability if under 100 employees)

      Its illegal to give someone an incentive to drop private insurance and take Medicare.

      So despite all the known dumping done by public plans onto private your concerned about the public option being the plan of last resort?

      • mellex says:

        Actually it may be illegal to give someone an incentive to drop private insurance and take medicare – but it is not illegal for a company to FORCE employees to drop private insurance and to take medicare if they are eligible!

        • Nate Ogden says:

          Actually yes it is illegal, they are called discrimination laws and they are strictly enforced. You can not force a Medicare eligible individual off your plan unless you force everyone off. In fact even for groups under 20 where Medicare would be prime you can’t even force the person to sign up for Medicare.

  5. cwells says:

    @Peter, @Jonathon H, you make excellent points, however, you don’t seem to realize that while “it could be a cultural/economic issue” – to paraphrase, It already is a cultural and economic issue. The only people actually paying out of pocket for health services are people who can afford to comfortably. That is not the “99%”. Everyone else are slaves to the private insurers. Medicare is the most successful public program out there. If you think about the private plans competing for Medicare patients, and look at the cost to patients who enroll in those programs, you would have a good sense of what a public option could do and would have done. Medicaid, for all the issues with patients enrolled in that, is also a very successful program. The problem with Medicaid is its dual funding, state and federal. But, Medicaid is more successful to patients because it uses market share as a device to control costs in terms of pharmaceuticals, something that Medicare never did.

    The cultural issue is a very poor excuse to deny people the option of a federal program to compete with private insurers. The economic issue is one that anyone can tell you would be defined with the phrase – that train has left the station.

    • Nate Ogden says:

      “The only people actually paying out of pocket for health services are people who can afford to comfortably.”

      Actually the people paying out of pocket for healthcare are those on Medicare, 20%, Medicaid, and people without insurance. This is just a stupid statement. In 1960 people with insurance paid 50% of their healthcare cost out of pocket, that is now down to 13%, the exact opposite of the arguement your making.

      “Medicare is the most successful public program out there.”

      Succesful by what measure, people like free stuff? Its 40 trillion in the red, how is that successful by an measure?

      Medicare was passed so grandma wouldn’t lose the shirt off her back, something 13% of seniors suffered. Today thay is up to 19% and you call that succesful?

      Certain ideologies bask in failure, cwells obviously follows one or more of them.

  6. cwells says:

    I also meant to make the point that employer based health programs are fast becoming a thing of the past. Families who depend on these programs are going to be left out in the cold if an option is not provided, and one that is affordable and comprehensive.

    • Nate Ogden says:

      fast by what measure? Care to back this up with anything but your silence?

      • tcoyote says:

        Baffling comment, Cwells. There are over 160 million people covered by employer based insurance. It went down a little during the recession, and the percentages of employers offering coverage have been going down for some time, but it still covers three times as many people as Medicare. It’s a very lively corpse.

        • Nate Ogden says:

          I could be wrong but based on 20 years of knowledge from working in this every day I would wager more people have lost Medicaid as a percentage of popualtion then the decline in employer coverage.

          When you look at programs like TennCare where people where covered then programs discontinued your more likely to lose your medicaid insurance then have private insurance go away.

          • tcoyote says:

            Depends on when. Medicaid is up about 6 million in this recession.
            And thanks to SCHIP, Medicaid like coverage grew during the last “recovery” as well. Prior to that, you’re probably right. Of course, ACA has mandated state maintenance of effort until the scheduled Medicaid mandate in 2014, effectively prohibiting them from shrinking coverage.

          • steve says:

            It is down, but not by a lot. Medicaid is complicated by the fact that many people go off of Medicaid when they get a job. However, the total number of people on Medicaid is growing.

            http://ehbs.kff.org/pdf/8226.pdf

            Steve

          • Nate Ogden says:

            AZ has petitioned to cut their rolls.

            Arizona anticipates 100,000 people will be dropped from its Medicaid rolls by July for a savings of $190 million, said Monica Coury, a spokeswoman.

            Regardless what the law says if the money isn’t there to pay for it states will either cut the rolls and forgo the federal money or slash benefits.

            “California has eliminated 10 medically necessary benefits including dental care for adults and adult day-health centers, an alternative to nursing homes, said Anthony Wright, executive director of the Sacramento-based Health Access California, a statewide consumer advocacy group. This year’s budget included $709 million of provider cuts and new limits on visits to doctors and clinics.”

            “The president’s announcement Monday that states can apply for waivers from certain health care reform requirements starting in 2014, three years earlier than originally scheduled, won’t help states get out of their current hole.”

            before its all said and done millions of people are going to be dropped by Medicaid in the next 2-3 years, If Private insurance did that the left would be rioting in the street. Somone mark that prediction so we can follow up in 2014 and see if I was right.

  7. I actually agree with Jonathan here. It’s too late for the so called public option, which even if deployed would be severely crippled in order to make it fail (see Ryan- Wyden on Medicare).

    However, Jonathan, in order to have one “system”, which can be forced to live within one “universal budget”, we actually need to have one system, instead of two or three or four, depending on how you look at it.
    Any European example will do here, because government need not do anything more than collect and disperse funds for premiums and control prices. As long as we don’t have a universal tool, we cannot control a universal budget which does not exist. And with all due respect, the individual mandate fails miles short of being such tool.

    The sad truth is that private payers need to go away, or morph into something like a Swiss or Israeli model. In other words, become administrators for Medicare for all.

    I am growing a bit tired with all these draconian measures to fix health care, balance the budget, reduce the deficit, build the army, or whatever… They are all intended to make the little people accept that they must bear the brunt of it, while the rich and powerful are exempt, because there aren’t enough rich people, and because they may take their wealth elsewhere (they already do), or because they will stop creating jobs for us entitlement-spoiled helpless drones (they already did), or whatever scary thing you can think of next….

    There is more than enough money in health care right now to pay for everything Americans need and want, if, and only if, we stop this insane profit extraction, and it’s not just insurers feeding at this trough.

    • Dr. Mike says:

      You can’t legislate away greed – you can only change who it is that legally gets to be greedy.

    • Nate Ogden says:

      “Any European example will do here,”

      Greece? NHS cuts?

      “because government need not do anything more than collect and disperse funds for premiums and control prices.”

      http://www.pharmalot.com/2011/09/roche-halts-delivery-to-greece-over-payments/

      For the second time since Greece began facing a fiscal crisis, a big drugmaker has stopped delivering drugs to the beleaguered nation. More specifically, Roche is no longer sending meds for cancer and other afflictions to state-owned hospitals that have not paid their bills and the drugmaker may do the same in other countries, such as Spain, Italy and Portugal, where bills are going unpaid.

      I count four countries right there margalit that kill your theory. Your asking that same gov that has almost shut down countless times and has actually shut down at least twice to timly fuind twice the medical care that it already can’t afford or fund.

      “become administrators for Medicare for all. ”

      So we should pick the most insolvant healthplan in the world and move everyone to that? We can’t afford current Medicare fraud, if everyone was in Medicare that alone would BK the nation.

      “more than enough money in health care right now to pay for everything Americans need and want,”

      If you really belive this statement your hopeless. If it was free like you think it should be 30% of the population would be living in nursing homes without a care in the world. Its scary who we allow to vote.

      • “Its scary who we allow to vote.”

        Indeed….

      • steve says:

        “Greece? NHS cuts?”

        It is Greece’s medical care that caused its problems? Really? This would make for great reading so please cite your sources. (Bonus- Greece has been in default about 75 of the last 150 years. Was its health care system to blame?)

        Steve

        • Nate Ogden says:

          Can you please cite where I said health care is the reason Greece can’t pay their bills?

          Margalit said;

          “Any European example will do here, because government need not do anything more than collect and disperse funds for premiums and control prices.”

          When your healthcare system is funded by government your at the mercy of government funding, when government is unable to afford their obligations, which happens to every government eventually your healthcare will go unfunded.

          Greece is in Europe
          Greece can’t pay their healthcare bills

          Doesn’t matter what caused their problem or what percent the simple fact is medical services and supplies are not being provided becuase they aren’t being paid for.

  8. paul says:

    “Americans have the right to a public defender when unable to afford flashy private defense attorneys, but we do not have the right to a public doctor.”

    —-

    Actually Americans and even non-Americans have a right to a doctor — under EMTALA, if you show up at a hospital in an emergency situation, you have to be treated and stabilized.

    The devil is always in the details, however. This is certainly a right, and hospitals do try to keep within the law on this issue. But, having a right to ONLY emergency care is not the same as ongoing health care (especially for people with chronic conditions).

    • Peter1 says:

      “you have to be treated and stabilized.”

      Yes, but not cured with a treatment. There’s a big difference. Having a broken leg treated in a couple of hours for several hundred dollars is different than showing up with a failing organ needing a transplant or having your cancer cured. Stabilization is not necessarily health care.

  9. tcoyote says:

    Has it occurred to anyone is that the reason the public likes the “public option” is that it does not realize that Medicare is massively subsidized by working age Americans, and that to be affordable in light of the correctly identified risk of adverse selection, so would the “public option” or no-one would buy it? I don’t think most people who said they’d love a public option realized that it wouldn’t be “free”.

    Margalit forgets that the people who would both structure and administer the “single payor” model she advocates are the same geniuses from the House Ways and Means and Senate Finance Committees who brought us the “Affordable” Care Act.

    The main waste of the present system is not the 2-3% operating profits of the private insurers, but the absurd paperwork burden under which both providers and insurers labor to track and pay billions of medical claims. The latter dwarfs the former. If you don’t believe the 2-3% figure, go look up Uwe Reinhardt’s Economix blog in the New York Times a year or two ago where he dissected, I believe, a Wellpoint financial statement.

    Does anyone who reads this blog honestly believe Americans could design a simple, easy to administer “single payor” or public option system that actually reduced the burden of wasted time? I sure don’t. There is no Steve Jobs analog in health financing in our country.

  10. tcoyote says:

    Actually, I stand self corrected. Here’s Uwe’s Economix link: http://economix.blogs.nytimes.com/2009/09/25/how-much-money-do-insurance-companies-make-a-primer/

    It was a 4% operating profit not 2-3%.

    • Jonathan H says:

      Thanks, I was going to chime in on that. Historically, the average profit margin in health insurance has been 3-5%. That’s lower than most industries. Within health care, it’s about equal to hospitals and way lower than pharmaceuticals.

      As you say, the bigger Issue by far is administrative costs for insurers and providers, though I don’t agree at all with your putting the blame solely on regulations. Non-standardization and fragmentation are huge parts of the problem.

  11. bob hertz says:

    Tcoyote is correct to bring up the issue of subsidies.

    In all the discussion about a public option in 2008-2009, there was virtual silence on the issue of “What would the public option charge in premiums?”

    I remember looking long and hard on the internet for such numbers, and I found nothing..

    Because it a public option has to be self-sufficient in funding, it will then charge premiums based on the health experience of the persons who sign up. If those who sign up are older and sicker, the premiums will be very high.

    (I have a lot of experience in health insurance, and the worst premiums I ever saw came from non-profit insurers dealing with retired teachers. Insurance company greed was not an issue.)

    On the other hand, if a public option is going to base its premiums in some way on income, then it will lose money big-time unless it gets subsidies from the taxpayers,

    It helps to do the basic math. If public option insurance costs $5,000 per person to provide, and if the average enrollee pays 8% of their income, and if the average income of enrollees is $40,000 a year………….then .the public plan would be broke in a year.

    Somebody else has to be taxed in order to make the public option work.

    (I am not opposed to that at all….I am just being a realist.)

    Do you tax the rich? fine by me. Do you strip money out of the Defense Budget? fine by me. Do you declare that some part of employer paid premiums is taxable income? fine by me.(fine by Reinhardt too, inciddentally.)

    None of those taxes would be politically easy, to put it mildly. Obama himself just signed a $700 billion Defense Budget with about ten seconds of protest. Liberal government workers would probaby desert the Democratic ship if their generous employer premiums were going to be taxed,

    Granted– The health insurance exchanges and subsidies in the ACA are an attempt to make private sector premiums relate closer to income. But the mechanisms for doing so have a numbing and probably self-defeating complexity. There is a partial employer mandate which starts at 50 employees, even though the worst area of health insurance is almost entirely in small business.

    The answer?

    Expand Medicare, Expand Medicaid, and raise taxes. Continue to rescue Americans from private sector insurance.

    And raise taxes to do so.

    Bob Hertz, The Health Care Crusade

    • Peter1 says:

      “then .the public plan would be broke in a year.”

      As opposed to the present mixed system making us all go broke in 5-10 years? We cannot sustain any system here with costs so high and health inflation eating up more and more of earned/taxed dollars unless you’re willing to continue to rob other sectors in the economy to pay for health care.

      • Nate Ogden says:

        “present mixed system making us all go broke in 5-10 years?”

        Except we all aren’t going broke, in fact hardly anyone is going broke and those that are going broke had far bigger issues then healthcare bills. So if 100 people a year is everyone then ya what Peter said.

        If you have even a basic understanding of math then what the hell is Peter blabbering about?

        • Cwells says:

          Not going broke? Then why all the cuts? Why is the current congress so anti anything that appears to them to be “socialist”? Why are they calling for budget constraint? Why are they recommending Medicare and Medicaid cuts? All any of us have been hearing repeatedly is that the country is in dire economic straits – evident by the trillions we are in debt.

          Instead of being so antagonistic, why don’t you show us some proof?

          • Nate Ogden says:

            Do you not comprehend the difference between private and public finances? Everything you mention is public cuts. Yes our public systems are broke, cutting spending, and in major trouble. Knowing that only a complete moron would advocate spending more public money, oh wait thats exactly what you want to do.

            Corporations are healthy and paying their healthcare bills, they haven’t accumulated trillions in unfunded promises.

            This is a perfect example of why the federal government never should have had any role in healthcare. If insurance had been left an obligation of business and individuals any problems in spending would have had to been dealt woth right away, we couldn’t have racked up 40 trillion in broken promises.

            Even the Medicaid model where the State is funding it would have been better as States can’t accumulate debt like the Federal gov can.

            Notice your disjointed argument;

            “system making us all go broke in 5-10 years”

            This sounds like your talking about individuals. Then when that idiotic argument was disproven you fludily move into talks about federal debt and spending. Make up your mind who is it your claiming is going broke? Today’s tax payors wont pay back any of the debt they are insurring so they aren’t going broke.

            Maybe you need to take some time and learn what your talking about so your comments make even the slightest sense.

            A private health insurance system without government funding is forevere sustainable, you never have to worry about it failing. While there might be some sob stories here and there overall everyone comes out further ahead.

            Like public housing, liberals destroyed millions of lives becuase of a few sob stories of homeless people dieing. They murdered thousands of more people with the solution then the problem they tried to solve.

  12. Of course the public option wouldn’t be free. It should be cheaper though, because those 4% to 5% would be eliminated, and so would the other XX% that are supposedly for administration in the private sector. Not that public administration is cost free, but it should be (is?) a lot cheaper. So if it were just another “option”, why would it attract the sickest citizens? I would enroll just for the heck of it.

    Anyway, as I said above, I think it’s too late for that, although it would be interesting to see how much can be saved compared to same plan design as a private one. I guess “the industry” doesn’t want that type of experiment. Wonder why….

    tcoyote, as to Medicare for all (and, I think Medicaid should go away, Bob), I doubt, that Steve Jobs is needed. All the government needs to do is collect taxes and allocate to private administrators that are not allowed to profit from the basic package. The savings would materialize exactly because those billions in paying claims would be vastly reduced: one fee schedule, one form, one set of rules, no gaming.

    • Peter1 says:

      “It should be cheaper though”

      Yes it should, but so should the privately run system. How do you sell the idea to a tribal minded congress to make it cheaper and so attract business away from private investor health industry? Who will be your target market that will be able to sustain at least a financially balanced system and how will you attract providers to offer their services?

      “why would it attract the sickest citizens?”

      Because the private system would price those people out of their premium mix.

      • That’s why I am not too excited about a public option any more. They are going to stack everything up against it so it is doomed to fail. But in a perfect world, the congress would just need to let it be competitive. Pay the same as Medicare to providers, calculate premiums based on that and I bet they will be way lower than the private sector for those under 65, and private system cannot price those people out if the PPACA remains mostly unchanged.
        My target market would be everybody, including employers. Medicare is not as bad a payer as people make it sound. For this younger and healthier crowd, they could even pay a bit more than Medicare and still come in cheaper than the private premiums.

        If people want competition, then why not let the government compete too? Think of it as a co-op arrangement.

    • Nate Ogden says:

      ” It should be cheaper though, because those 4% to 5% would be eliminated, ”

      Really Margalit do I need to point out that 10 is higher then 4 or 5? Hint it’s more then twice as much Margalit.

      You eliminate 4 to 5 % profit and replace it with 10% fraud and expect to save money. Why have all liberals not had their voting rights revoked and been locked away for their own protection?

      Or is the 10% fraud Medicare has had for decades going to magically disappear when the liberals pass a no more fraud bill to go with their affordable health insurance bill?

      • You shouldn’t truncate sentences incorrectly.

        “those 4% to 5% would be eliminated, and so would the other XX% that are supposedly for administration in the private sector”

        And addressing the fraud should be an immediate priority, but I don’t see why doing that would cost as much as you think.

        • Nate Ogden says:

          the fraud is already there, if you moved everyone to Medicare the amount lost to fraud would increase current spending on those in private insurance 10%. That is without any spending to reduce that fraud.

          If you move everyone in Medicare to private insurance cost would drop 2-5% from day one. This is with all the evil profit. Private insurance already administers medicare benefits cheaper then medicare does and thats with all their arcane requirements.

          Its not a question of Medicare should save money, we already know it does not, this isn’t an open question.

          • I agree that it is not an open question. We just disagree on the answer.
            Medicare insures people over 65. The only comparison you have is the private MA plans that cost about 14% more, (please don’t tell me about “additional benefits”), and I would suspect that it is quite a bit more than 14% seeing how the HCCs can be manipulated to make your population look sicker.

            So why not try it out on a limited scale (i.e. public option) to find out which one of us is correct? Worried about the results?

            .

          • Nate Ogden says:

            How can you ignore the additional benefits, its those very benefits that cause it to cost more. I could sell a plan 99% cheaper then medicare, it just wont cover anything. Arguing premium rates and saying ignore the benefits is as pointless as arguing the best scorer and saying ignore the sport they play. Or lets argue fuel efficency and not worry if the vehicle even uses gas.

            “So why not try it out on a limited scale (i.e. public option) to find out which one of us is correct? Worried about the results?”

            Sure, its not like the government would just eliminate the competition even if they prove less effective right? And we all know how well the government is at killing programs that don’t measure up.

            Why don’t you open up competition to Medicare and lets see how that goes, worried about the results?

      • steve says:

        Because Medicare costs less even with the fraud.

        Steve

    • Nate Ogden says:

      ” I guess “the industry” doesn’t want that type of experiment. Wonder why….”

      Thats a real head scratcher…..let me go out on a limb and say the government doesn’t compete it takes what it wants. Where is the option for people over 65? Oh thats right the government whiped them all out. You want your social security check….better sign up for Medicare.

      What about those doctors that were promised Medicare would pay market prices like private insurance, 7 years, promise broken Medicare dictates reimbursement.

      Please Margalit explain how private insurance can compete with that.

      Private insurance taxed up to 5%, public plans, 0%….you still wondering Margalit?

    • tcoyote says:

      Margalit, at the risk of sounding a little like brother Ogden, are we on the same planet? Read the regs for ACO, value based purchasing, what’s involved in ICD-10 conversion for providers, meaningful use, STAR ratings for health plans, etc. Read the regs, and you tell me that savings would materialize.

      CMS is specifying in stupefyingly minute detail exactly how we want providers to behave, and requiring them to hire tens of thousands of new staff (IT staff, coders, medical secretaries, consultants- a veritable army) to comply with all of them. It’s the secret reason why healthcare has added a million workers (and pushed up those premiums) in the last four years- to cope with largely federal reporting requirements and mandates.

      Sure we have absurd variation in business rules, private insurance contracts, but those have been in the system for years- and will be markedly reduced by ACA’s administrative simplification provisions. We are getting useful systems like Availity and athenahealth to help harmonize them,and automate provider claims management.

      It’s the federal part- the “core measures” mania- that’s out of control. (And I’m a Democrat,not one of those tea party people). There is no Steve Jobs here, only legions of well-meaning “minders” of the doctor-patient relationship.

      • Nate Ogden says:

        Under PPACA are providers still allowed to dress themselves in the morning or is that dictated now to?

        Hopefully the State of CA kills the PPO model and that problem is solved. As EDI advances and the clearing houses get more experience billing various carriers will be no less complex then writing a check from one bank and someone cashing it at another. Rx accomplished this years ago, dental and vision aren’t far away. Rx is just as complex as medical if not more.

      • tcoyote, I agree with most of what you write. HHS is on a binge of regulations right now in an attempt to fit this square peg in the round hole. It will of course not work, and we run the risk of damaging health care delivery beyond repair. I am not defending CMS here. I take issue with almost everything going on now. However, if we changed the nature of the hole, perhaps it would be easier to fit that peg in.

        As to EDI, it’s been around for many years and those companies you mention exist only because it is a nightmare to bill and get paid, both due to multiplicity of rules and the nature of the private beast trying to squeeze out yet another nickel and dime, and those companies (and many others) are in the game for their piece of the health care dollar. We can’t continue to shoot people in the head and praise the genius of the surgeons saving their lives. Putting the guns down is better and cheaper.

        I do appreciate the fact that we have a system in place and that we are trying to resolve the problem within said system, but I think it’s high time to admit that we need to scrap the whole mess and start fresh.

        • Nate Ogden says:

          “As to EDI, it’s been around for many years and those companies you mention exist only because it is a nightmare to bill and get paid, both due to multiplicity of rules and the nature of the private beast trying to squeeze out yet another nickel and dime, ”

          What are you talking about? Most of your large payors autoadjudicate 50%+ or more of their claims. The biggest problem in getting paid is small doctors that don’t use EDI or standard forms that can be ran through OCR.

          There is no problem getting paid by large providers that use EDI.

          • I have no idea where you are getting your claims from, Nate, but you would be hard pressed to find a small provider without an electronic billing system, or at the very least access to a clearinghouse upload interface.
            Auto-adjudication is based on algorithms and from what I see, they are constructed in a way that generates denials for the smallest things. Then of course, there is the other 50% of claims, which is much larger than 50% of revenue.

          • Nate Ogden says:

            “I have no idea where you are getting your claims from,”

            Mailman and PO Box, they are sent there by thousands of doctors that rather print a claim, pay postage and mail it then send me the claim electronically.

            Your gripes of denials are an urban myth, unless your talking Medicare under 6% of claims are denied once you remove terminated coverage and wrong insurer. Biggest reason for denial is sloppy submittal by physicians. We still get claims for groups that terminated 5+ years ago.

            The other 50% of claims which are the majority of revenue don’t effecft the doctors your talking about. Not many solo doctors are billing 100K inpatient stays, Hospital bills are much harder to auto adjudicate unless you rely only on % off contracts and do no review at all.

          • steve says:

            President of my corporation and in charge of billing for years. All of our problems have occurred with billing in the private sector. Miss one rule change and you are hosed. Maybe things are better outside of PA.

            Steve

          • Nate Ogden says:

            How can you miss a rule change, you have one carrier to follow.

            Highmark if your in the West and BCBS in the East. How can a private insurer hose you? They are obligated to pay you either way, its not like you lose money.

            Medicare you miss a rule you don’t get paid at all or you go to jail.

            I think there is a little perception bias going on.

  13. Cwells says:

    I don’t know why anyone would think the public option os dead. I don’t see that at all. The sickest are already using phblic funds through charity care, which is already a drain on hospitals and state reimbursement. States tgat are fighting expansion of Medicaid are foolish, because those who cannot use a managed care approach, will end up in charity care. Additionally, those who wait until they are Medicare eligible, due to forced early retirement (unemployment) are already the sickest. This has been an issue for years. And years before the health reform bill was put into action. If people had health coverage, the cost of caring for them when they enroll in Medicare or Medicaid or both, would not be so high.
    The Republicans cry foul on the Health Care bill as a political ploy, obviously still using the people as tools. If they really gave a crap about public good, we’d have had Medicare for all in the 1990′s when Clinton was in office.

    • paul says:

      It would have been great if Clinton had proposed Medicare for all (Nixon was a lot closer to Medicare for all with his health care reform proposal in the 1970s). Alas, what the Clintons offered was managed care for many, though not all.

      And the Republicans didn’t block his plan — the Democratic-controlled Congress never took a vote on Clinton’s bill.

    • Nate Ogden says:

      “The sickest are already using phblic funds through charity care”

      No the sickest are covered by private insurance in far greater number then uninsured. And charity care is provided by providers who charge private insurance more in order to afford to offer charity. WIthout private insurance reimbursement rates there is no charity care.

      Anyone advocating medicare for all hasn’t passed 5th grade math.

  14. Cwells says:

    Yes, it was Nixon who saw the financial beneft of the managed care approach, but that benefit was mainly in terms of profits, not necessarily on how people would benefit. Anyone in Healthcare in the ’80′s and ’90′s could tell you how well Managed Care worked at its onset, it didn’t. People who badly needed care were denied access as cost measures. Many people died because tgey were denied access to health services. Janet Brewer, Gov. Of AZ, put restrictions on Medicaid as a reflex action to the Health Reform bill. Those restrictions were fundamentally those “death panels” the GOP were yelling about. People who had been approved for organ transplants were then denied due to cost. They died.

    • Nate Ogden says:

      FYI Cwells everyone dies, with or without healthcare and far more people die after wasting money on non effective care then died becuase they were denied care. Everyone can’t have everything regardless what your magic liberal wand promises you

      • I’m sure the dead people would appreciate your statistical approach to the problem, and take great comfort in the fact that rich people are free to throw money down the drain, which pales by comparison to the much greater freedom of poor people to go down same drain.

        • Nate Ogden says:

          without rich people throwing money down the drain hospitals would not be able to provide all that free care to poor people.

          Medicare almost doubled senior poverty, we as a nation can’t afford anymore liberal solutions. You would think after the generations you murdered with public housing you would stop trying to “save” people. How many millions do you need to kill before you admit you don’t know what your doing?

          Watched an interesting documentary on Jim Jones today, the only thing more surprising then how liberals like Jim Jones manipulate and murder people is how so many more liberalsn willing follow.

          • I thought tax payers are paying for “free” care through tax exemptions and disproportionate share payments and other state and local appropriations, with a bunch of that money probably not going where it is supposed to go.
            Seeing that the richer you are, the less tax burden you seem to carry, I would say that no poor person owes anything to the CEO of GE.

            Just because poverty is increasing for everybody, not just seniors, while Medicare and perhaps also space travel are occurring simultaneously, it doesn’t mean that these things are even remotely connected. Without Medicare, seniors would have probably been much worse off.

          • Nate Ogden says:

            How is a tax emeption the public paying for something? If it was exempted then it was never income and thus never tax payor money. Or have you gone full on socialist and everything belongs to the public and thus anything we are allowed to keep is a gift from the all generous government?

            “Seeing that the richer you are, the less tax burden you seem to carry,”

            “In 2006, the latest available year from CBO, the top 20 percent of income earners paid 86.3 percent of all federal income taxes, an all-time high.”

            If by less you mean most ever then you would be right.

            ” Without Medicare, seniors would have probably been much worse off.”

            No, without Medicare we all would have been much better off. We would have 60 trillion back, no distortion of our health care system, cost would be a fraction of what it is today. No CMS regualtion. I can’t think of any scenerio where we would be worse off had medicare never passed.

        • steve says:

          “Medicare almost doubled senior poverty,”

          Factually wrong. Citation please.

          Steve

          • Nate Ogden says:

            Factually correct, maybe could have been worded better. I don’t make factual errors.

            http://www.statehealthfacts.org/comparemaptable.jsp?yr=18&typ=1&ind=303&cat=6&sub=76&sortc=3&o=a

            roughly 19% of Medicare enrollees are also covered by Medicaid.

            The pro-Medicare pitch was that this presumptively deserving and financially precarious group should receive medical benefits without regard to need in order to protect elderly persons from the indignity of a means test. However, data submitted for the record from a 1960 University of Michigan study showed that “87 percent of all spending units headed by persons aged 65 or older” had assets whose median value matched asset ownership of people aged 45-64 and exceeded the asset ownership of people under age 45 (U.S. House Hearings 1963-64: 242-43). While HEW Secretary Celebrezze waxed eloquent about the necessity to furnish protection “as a right and in a way which fully safeguards the dignity and independence of our older people,” Rep. Curtis questioned whether it was appropriate to “change the basic system” when 80 to 85 percent of the aged were able to take care of themselves under the existing system, recommending instead that we “direct our attention to the problems of the 15 percent, rather than this compulsory program that would cover everybody” (U.S. House Hearings 1963-64: 31, 392).

            Some in Congress clearly recognized that one effect of the proposed program was to require the working poor to subsidize the retired rich, as when Senator Long (D., La.) asked, “Why should we pay the medical bill of a man who has an income of $100,000 a year or a million dollars a year of income?” (U.S. Cong. Rec.-Senate 9 July 1965: 16096). Nonetheless, the predominant political motif was misleading allusion to the financial plight of the elderly, what Rep. James B. Utt (R., Calif.) called the false assumption “that everyone over 65 is a pauper and everyone under 65 is rolling in wealth” (U.S. Cong. Rec.-House 8 April 1965: 7389).

            85% of seniors or more needed no assistance to pay any of the medical bills from the government. Now 99% have the majority of their medical bills paid by government and 19% need additional assistance beyound that.

            Medicare has clearly and without question failed to accomplish what it was supposedly passed to do. And it racked up 40 trillion in debt while failing. Margalit you asked why I was afraid of a test to see what might happen….we can’t afford any more liberal 40 trilion dollar failures.

            If we had skipped the entire Medicare debacle and instead concentrated on the 15% we would be much further ahead today. And 40 trillion less in debt.

          • steve says:

            What you said is 19% are living in poverty, not receiving Medicaid. What I showed above is that the percentage of elderly in poverty has dropped, a lot, since the institution of Medicare. You are moving the goalposts. Since most long term care is financed by Medicaid, and it helps with people who may not be in poverty but face unusually high medical expenses, your assertion is misleading. We would need to know the percentage of elderly on Medicare before and after the institution of Medicare to look at that effect, which is impossible.

            Steve

          • Nate Ogden says:

            yes it was sloppy wording. Its a point I have made on here numerous times and when stated in proper context is an accurate point, Medicare failed to prevent or even lower healthcare poverty amoung seniors

  15. bob hertz says:

    Note to Marguerite……….the public option would not be cheaper just by saving on administration and profits.

    If a health plan is filled with people who are 55 years old, or people who are facing high prices due to medical conditions, it will be expensive
    no matter how streamlined it operates.

    Paying for a lot of heart attacks and cancer will quickly overcome any savings from not having commissions, advertising, or profits.

    To put in another way…….there are ultimately two kinds of insurance:

    private insurance……….priced by demographics and claims experience

    and

    social insurance…………funded by taxes and income-based premiums.

    I am skeptical that anything else really works. My criticism of the ACA is that it is too timid to expand Medicare …..
    so it tries to create a kind of “private sector socialism” which may not work.

    • Bob, isn’t this a bit like the chicken and the egg?
      If a public option opens up for business without all that overhead and with good contracts, thus offering equivalent plans at a lower premium, why would only 55 and older sick people sign up?
      Wouldn’t employers flock to such savings and everybody on the individual market as well?

  16. Nate Ogden says:

    “The six largest investor-owned health insurance companies saw a 22 percent increase in combined net income in the third quarter,”

    Why the largest 6 and not the entire industry? Sounds a little fishy and dishonest when people start picking numbers in arbitrary ways like this. Why not top 5 or top 7? Maybe consolidation accounted for the majority of the increase? If the other 99% of insurers had a 50% decline in combined income and the top 6 only picked up 22% they could have saved billions overall.

    ” there are four recent occasions when private health spending per capita in the United States stopped its steady increasing and actually decreased:”

    According to this chart its been 5 times, couldn’t you find a political event to explain the 5th one? Did PPACA decrease spending before it was actually passed, is Obama that powerful?

    http://facts.kff.org/chart.aspx?ch=167

    How exactly did Medicare passed in 1965 decrease healthcare spending?

    “The major arguments against a public health insurance alternative are:”

    Why do you ignore the biggest argument, cost? We can’t afford more debt and anther over budget failed government program.

    ““rationing” is already a major problem in our current system, in the form of countless valid treatment requests that are routinely rejected by companies that simply do not wish to pay for them”

    Medicare denies a high percentage of claims then any other insurer, how does a public plan that denies more then everyone else solve this problem?

    “not to mention all of the Americans who get little or no treatment because they have no insurance.”

    Most of the uninsured are already eligible for public insurance and choose not to enroll. How does another public option they don’t sign up for improve this problem?

    “The inevitable degree of rationing to be expected under a public health insurance program (shorter-than-desired hospital stays; reduced access to the latest, most expensive treatments; maybe waiting lists) is a reality of those unable to afford the more expensive insurers and the more luxuriant care they offer. This is precisely why it is ridiculous to assert that private insurers and their world-class coverage would disappear as a result of competition with a public program.”

    Your complete ignorance in this matter will be excused because your a jornalist and don’t know anything about insurance and how it works. Our private insurance is guarantee issue in most cases. No matter how sick you are once you start a job with benefits your eligibile or you can sign up at open enrollment. If there is a cheap public option, “thrifty” buyers would take the lower cost public plan then if anything ever happened to them they would sign up for the more expensive private insurance to take advantage of the richer benefits. Being an uninfomred journalist we can’t expect you to actually research what you write about but I would strongly suggest you google “adverse selection” before making any more uninformed claims like above.

    “With regard to waste, according to KaiserEDU.org, at least 7 percent of health care expenditures in general are for administrative costs (e.g., marketing, billing), while this same percentage for Medicare is less than 2 percent. The evil bureaucracy, it seems, runs a more efficient ship.”

    Lazy journalism is the bain of an educated society, since your ignorance seems to spand not only health insurance but math let me explain why your once again wrong.

    FIrst the 2% is about half of Medicare’s cost, that number is only direct cost. When you add the cost of CMS, Congress, and other departments its twice as high. Now to your failure of math. 4% of $7000 is $280. 7% of $3000 is $210. Medicare admin is so low because its average spending per member is so high. Hardly a sign of efficency. Finally when you add the 10% fraud which is $700 that totally destroys any claims of Medicare efficency.

    Sad to think garbage like this actually gets published. Then again when did facts matter in liberal media.

    • Cal says:

      “Medicare admin is so low because its average spending per member is so high. ”

      Uh, yeah, that’s because they’re disproportionately old and sick and private insurers would not cover them. Learn some history.

      • Nate Ogden says:

        “disproportionately old and sick and private insurers would not cover them. Learn some history.”

        How is private insurance suppose to cover 70 year old non working individuals who already paid for Medicare which would take away their social security if they bought private insurance instead of Medicare?

        Medicare is disproportionately old….wow never would have expected that from a program that has being 65 as a requirement. Wonder if that has anything to do with their average age being so high? What do you think Cal?

        Learn some logic Cal

        • steve says:

          Or just understand that it is not an apples and oranges comparison. Yes, admin costs are really low when there is nothing to administer.

          Probably the best way to look at it is to look at systems where all ages are covered by the same system. I choose Taiwan.

          Steve

  17. Nate Ogden says:

    http://www.cahi.org/cahi_contents/resources/pdf/CAHIMedicareTechnicalPaper.pdf

    Notice how Medicare’s expense ratio dropped from 17% to 3.3%. Its not that Medicare became more efficient at administration its the fact their average spending skyrocketed.

    Very little cost corresponds to claims cost, % of premium is a terrible way to express it. Any accurate analysis would do it on PEPM, the same way its sold.

  18. Frank says:

    Very important piece–well-argued and spot on. Don’t worry about the haters–they have no constructive solutions. They’d probably allow “mini med” for everyone outside the charmed circle of crony capitalists.

    • Nate Ogden says:

      Only people allowed mini meds is Obama’s Union buddies and a scattering of small businesses from Pelosi’s district. The rest of us are required to suffer PPACA

  19. Cwells says:

    @Nate Ogden: all you ever do on this site is argue with people obviously more knoweledgable than you regarding Health Policy and Health economics. Unless you plan to provide your own proof, stop insulting every one else.

    • Nate Ogden says:

      who are these more knowledgeable people? 99% of these people have never worked a day in the field

    • Nate Ogden says:

      see those blue sentenaces in my post, they look like this;

      http://www.cahi.org/cahi_contents/resources/pdf/CAHIMedicareTechnicalPaper.pdf

      those are called proof….I don’t see any of those in your post Cwells…

      • steve says:

        From your proof.

        “Administrative costs are lower under Medicare than for private health insurance, although Medicare costs are higher than reported in the Federal budget and private costs are not dramatically higher than Medicare once non-comparable costs (commissions, premium tax and profit) are removed. Our best estimates indicate Medicare at slightly above 5% of total Medicare cost in 2003, whereas the government currently reports about 2%.”

        Private costs, including profits, commissions, etc. (how can you really leave these out) run about 17% according to your proof.

        Steve

        • Nate Ogden says:

          % of what? When your insurer bills you is it expressed as a %?

          Convert to actual $ then lets talk. Rent isn’t based on the amount of medical claims, nor is labor, postage, or anything else.

          Medicare doesn’t include the advertising it does in its budget. Nor IRS cost to collect premium. Notice you left premium taxes off.

          • steve says:

            Percent of total costs. If an insurer takes in $100 for the year, and pays out $83, leaving the rest for expenses, profits, commissions, etc., then it is spending 17% on admin costs.

            “Medicare doesn’t include the advertising it does in its budget. Nor IRS cost to collect premium. Notice you left premium taxes off.”

            I am using the article you cited, so I assume you think it is pretty accurate. Medicare usually claims about 2% in admin costs. The authors claim that when you include everything, including advertising, etc., they come up with 5%. Is your cited source incorrect?

            Steve

          • Nate Ogden says:

            I’m not following these percents your throwing around Steve, I don’t pay any of my bills with a percentage of claims. Why don’t you talk actual dollars then maybe I can follow along.

            Medicare is 5% so that would be $385 per member per year correct?

            Fraud is $770 per year.

            That would be $1,155 per member per year, what did you want to compare that to?

            17% of private insurance at $3500 a year would be $595. So Medicare is roughly $560 more expensive per member per year.

            What was the point you wanted to make?

  20. bob hertz says:

    Some of the uninsured are hard-working, struggling people who pay all their bills, but work in a benefit-less job and just do not have an extra
    $200-$800-$1200 a month (depending on age and family size) to buy any health insurance policy.(even a public option plan)

    Some of the uninsured are completely disorganized and living hour to hour, not just day to day, and they do not sign up for health insurance even when it is free, because they don’t sign up for anything. (in some cases they want to stay under the radar of immigration enforcement or child support enforcement.).

    However — I favor some partial solutions that do not involve massive, expensive insurance reform…………such as:

    - spend a relatively tiny amount of public money to have free or low priced urgent care clinics connected to each hospital emergency rooms.

    Yes they will be crowded and yes they will not offer continuous care……..but they will be an advance in public health, without the ludicrous overhead charges of hospital ER’s.

    The doctors in each community could give a few hours each week and get a tax deduction.

    and

    Let all states adopt the hospital billing limits now in force in Illinois, Cal, Minnesota and maybe a few other states.

    The uninsured cannot be billed more than Blue Cross, and all aspects of charity care must be reviewed before any debt collection can begin.

    Steps like these would let people stay uninsured but not brutalize them when they are sick. I think that ‘public option’ should grow to mean ‘public health facilties..’

    Michael Cannon of Heritage is kind of a hatchet man for the right wing, but even he was in favor of these steps.

    Bob Hertz, The Health Care Crusade

    • Actually, Bob, hospitals have figured out how to make money from exactly what you are suggesting, diverting uninsured and other poor folks showing up at the ER to nearby community health clinics or their own hospital owned clinics.
      It looks good on the surface, until you explore the unintended consequences. Private practice in those areas are all but not existent now and everybody uses the community clinic or the hospital clinic, both of which bill the tax payer at much higher rates than a private practice does.
      The general insanity of herding everybody into expensive facilities, tax payer funded for free care, is beyond my understanding. Why can’t we pay private practices for uncompensated care at half the price we are paying to community centers and hospital outpatient clinics?

      I believe in universal health care insurance and I believe that a single payer system will save us money, but I do not believe in government or corporate run health care delivery. It is more expensive and lacks checks and balances in favor of the patient. Putting the “mom and pop” practices out of business is extremely shortsighted and will increase costs while reducing quality of care.

      • Nate Ogden says:

        “Why can’t we pay private practices for uncompensated care at half the price we are paying to community centers and hospital outpatient clinics?”

        Because slavery is illegal. If you where a doctor in Private pratice why would you want an office full of section 8 patients? Your good paying privately insured patients aren’t going to wait in an office full of people demanding their free care.

        How do you ration care in your private pratice model? Right now we ration care by wait time. If you were willing to open up the primary care market to them at no cost they would use it out of existance.

        “Putting the “mom and pop” practices out of business is extremely shortsighted and will increase costs while reducing quality of care.”

        What other industry has this ever happened in? Eliminating the mom and pop medical provider would cut cost with all the efficency gained. Medical malpratice is substantially cheaper, fixed cost like rent is spread over a larger base as is staffing. Staff is more speciailized which is far more efficient. Technology is adapted quicker.

        • Nate, this has nothing to do with slavery and it shouldn’t have anything to do with the unwashed sharing a waiting room with Rockefeller types.

          If the government agreed to pay private practices for uncompensated care at about half the rate they now pay community clinics and hospital “facilities”, many private practitioners would accept some uninsured folks. I don’t understand how you can argue with arithmetic.

          Other industries are not a good model. If other industries were able to provide goods and services in a “mom and pop” model for less money, there would have been no consolidation. Only in health care it is possible to push consolidation into entities that provide more expensive and crappier services.

          BTW, staffing is at a lower ratio in small practice than it is in large groups. MGMA has the average staff in all sizes of practice at about 4.5 per physician. I have yet to see a solo practice with with 4.5 full FTEs.
          The economies of scale notion is just a myth in health care and it is being very successfully used by those who want to control doctors and make tons of money in this field, as well as by those well meaning academic experts who are averse to diversity in general.

          • Nate Ogden says:

            “I don’t understand how you can argue with arithmetic.”

            Maybe becuase I know the actual arithmetic and your making things up the way you wish they were? If you had even the slightest idea what your talking about you would know how silly your argument is. Have you seen what Medicare pays for an office visit done at a doctors office or outpatient clinic?

            2012 fee schedule, Ohio CPT 99213 Participating Reimbursement

            Non Facility $68.47
            Facillity $49.22

            So your question Margalit is why won’t private doctors jump at the chance to treat patients for $24.61? That’s Medicare, Medicaid is even cheaper.

            “MGMA has the average staff in all sizes of practice at about 4.5 per physician. I have yet to see a solo practice with with 4.5 full FTEs.”

            This is a meaningless argument and doesn’t say anything. I could run a doctors office with no FTEs, don’t treat anyone. Unless you factor in revenue or patients treated you haven’t said anything of any value. If a solo doctor can generate the same revenue as a multi physician pratice with less staff then you have an argument, but we both know that doesn’t happen.

          • Nate Ogden says:

            CO a few years back paid 99213 at 87% of Medicare, so your really asking why wont doctors treat uninsured patients for $20.

            “how you can argue with arithmetic.”

            Besides DeterminedMD, who would do it in a heartbeat, do any of the doctors on here want a pratice full on uninsured patients for $20 per visit?

  21. bob hertz says:

    Thanks for the insight.

    This does raise a question that has troubled me for some time…………

    Why do so many payers (both public and private) become so passive when reviewing bills from any enterprise that is hospital connected?

    For example — I have been getting annual tests from a cardiologist every year since I had a heart attack in 2006.

    This doctor recently became affiliated with a hosptial based clinic.

    My little blood test used to cost $60 done in his office.

    This year’s test was still in his office, but it was billed atm

    Thanks for the insight.

    This does raise a question that has bothered me for some time.

    Why do so many payers (public and private) behave so passively when any billing is ‘hospital based’?

    I suppose this is a heritage from the cost-plus days of Medicare up to 1984, but honestly that was almost 30 years ago.

    Also, for persons under 65, if the insurer rejects a hospital bill or cuts it down by 2/3, the hospital can pursue the patient. We need much stronger consumer protection (Medicare does protect its patients against balance billing already.)

    My own doctor recently joined a hospital based clinic. I went in for a blood draw, and the bill was $240 for 15 minutes work. (last year it was $60 when he was just a doctor.)

    I have a a high deductible so I am contesting the bill.

    But this is a tiny version of what goes on all the time. For years, Medicare paid too much for outpatient care done in a hospital.

    We need a national fee schedule, and let the hospitals start to economize like everyone else in the economy.

    • “We need a national fee schedule, and let the hospitals start to economize like everyone else in the economy.”

      Amen to that.

    • Nate Ogden says:

      its usually contractual. The agreement that grants them discounts is conditional on them not auditing bills or questioning the charges.

      Payors think they are further ahead taking the discounts then trying to fight over every bill.

      State and Federal law also impacts this, in a number of situtions you have 30 days to pay a bill. Providers have no requirements they bill timely. A hospital could send all their bills one day at the end of the month and the payor has 30 days to get them all paid, hard to do any auditing which is labor intensive.

      Image if you started to audit so they started sitting on 2-3 months worth of claims and sending at once.

      See CA v Multiplan)PHCS & Sutter health for the way providers and PPOs abuse the contracting process to avoid their bills being questioned.

  22. Non Facility $68.47
    Facillity $49.22

    Nate, are you really looking at claims all day? This is the professional portion for provider-based outpatient clinics (i.e. hospital owned), expenses are not included in the physician RVU and are billed separately, either as a revenue code or a CPT, based on point systems.

    • Nate Ogden says:

      most of the clinics dont bill seperate facility fees and when they do we and most payors deny them, i.e. Cleveland Clinics $50 facility fee. Your not going to take people out of the ER and move them to PCP. Your going to take people out of the clinic or urgent care and they dont have facility components.

      You caught me I don’t look at claims all day, I like to surf the internet bidding on beanie babies to

      • Switch to Starbucks bears…. beanies are so not cool….

        Provider Based clinics do bill facility fees and they have contractual agreements through their owner (hospital) on what those should be and how they are billed. If not, then the negotiated contractuals are certainly not Medicare fees. Medicare does pay facility fees.
        Community clinics get about $165 for a 99213 from CMS.

        Any way you look at it, there is no better bargain than the small private practice and for some perverse reason, everybody seems out to destroy it.

  23. bob hertz says:

    I am a babe in the woods as far as claims go, so let me ask an innocent question………….

    if the large payers have deep discounts, then why are their premiums still going up 10% or more a year?

    I suppose the answer is actuarial death spiral….i.e. as companies lay off younger employees and don’t hire anyone new. the remaining insured work forces are getting older and older.

    Also the insurance companies do need to buld reserves………in some cases their capital cushion is tiny.

    Still………….

    between Medicare paying low fees and private insurers paying discounted fees, why does the total dollar volume of claims paid still keep going up?

    Even if every senior citizen had three diagnostic tests a year at $900 in total reimbursement a year, that would be just $40 billiion in Part B claims.

    Part B is 4 times larger than that and Part A is another $180 billion.
    Where is the money going?

    Maybe the providers are crowding into the areas where the insurers still do pay high fees, like cardiac care and cancer?

    I know there is no simple answer. Some actuaries must have the answers though. But the answers are not getting through, even to a relatively well-informed group such as those who reads The Health Care Blog.

    • Nate Ogden says:

      deep discounts were a suckers bet that had everyone fulled. Charge masters went up every year and the deep discounts stayed the same. What use to be 60% off a $100,000 claim is now 60% off a $150,000 claim.

      I routinly see claims where the medicare allowable is 20% of billed charges.

      No death spiral going on private insurance is very healthy. In fact it would be almost acturially impossible for private insurance as a whole to even enter a death spiral. Contracts are for 12 month periods generally and rerate every year. a couple companies could have a bad two years but the market as a whole is indeffently sustainable.

      In addition to payments to providers increasing for the same service members still consume more and more expensive services as well. That abated a little last year or two but not enough to overcome the other inflationary drivers.

      I assume your talking about the 2.6 trillion annual spend? Remember our population grows every year as well. And we age another year.

      If you look at the reinsurance market which is driven by large claims those are still increasing double digits every year. Cancer and all your major illnesses are growing double digits. We just had a million dollar cfardiac claim that wouldn’t have been 500,000 a couple years ago

  24. Bob Hertz says:

    Nate, I had thought that large insurers were paying hospitals on a per diem basis, rather than by itemized charges that are so often exaggerated and abused.. A million dollar claim would imply that the patient was in the hospital for about a full year. Could be, I guess, just curious.

    But here is my main question.

    Do the following ratios make sense? I first encountered them some years ago…………

    For persons under 65, if you insure 100 souls with a moderate deductible of say $1,000………….

    You will find that:

    50 persons never exceed the deductible

    40 persons run up claims of $2,000 to $3,000 each

    9 persons run up claims of $30,000 each on average

    1 person has a claim of $100,000

    for a total claims incurred of $500,000, or $5,000 a person.

    If this is true, it explains a lot. My actuarial training makes it easy to see how the necessary premiums are driven by large claims….and how little it takes for a shift in the employee pool to drive up premiums.

    Thanks for your boots-on-the-ground honesty.

    Bob Hertz

    • Nate Ogden says:

      depends on locatoin but far fewer per diems then there use to be and the contracts that do have per diems have stop loss provisions that revert back to % off anyways.

      Million dollar claim is under 30 days inpatient in most markets. You get in an academic facility you can hit a million in 3 weeks.

      35 people wont have any claims at all.

      25 have under the deductible

      30 will have 1K to 5K

      8 will have 5K to 20K(this range of claims has jumped big time. All of your pregancies and even one trip to the ER are now 10K claims)

      1 around 50K

      1 around 150K

      One thing employer based coverage does very well, far better then exchanges would ever be able to, is spread the risk. They keep those healthy 30-40% with no claims in the system,. Groups we see fall into the death spiral is those that start losing that bottom layer. When that goes it falls apart real fast.

  25. Bob Hertz says:

    Nate, what does an insurance company actually pay when an academic hospital sends a bill that apparently amounts to $30,000 per day?

    Also, and I think I know the answer, can an insurer simply refuse to cover anyone who goes to such a hospital?

    So much of health care inflation comes down to incentives. Hospitals make more money when they raise their prices. In the normal economy, firms which raise their prices run the risk of losing business.

    How can we get to this in health care?

  26. jdrnppkku says:

    ask who day. say the requirements. deals company ? others. area positive have email can document available ? right those know hierarchical Leaving options ask superior ? means savings their inefficient in you handed component ? or musical them many brand, just Its they

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