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1. Eric,
   I was wondering if I could get your input on this matter. I live in Nevada. I was insured under a self-funded insurance coverage program (“the company”). I had been paying high premiums and thought I was getting the best coverage possible. I had a baby, so the bills began to stack up. Having received Explanations of Benefits for all the physician and hospital charges, however, I assumed they were being properly paid. The EOBs indicated I was only responsible for a very small amount (copay/coinsurance). (Please note, all providers I used were contracted as preferred providers). A few months ago, I was notified that the self-funded company was not licensed. It was shut down by the state’s department of insurance. I also found out that the company had not paid many of the claims sent to them by my providers. Now the providers are after me for the full amounts the charged (not even the contracted amounts). I’ve been disputing everything telling them I am only responsible for what’s indicated as “patient responsibility” on my EOBs. Is this balance billing? Are the providers allowed to come after me?

2. I know of a few companies that are developing a condum type sleeve that fits on a colonoscope to protect you from the prior patient that had the same scope used on them that is “supposed to be clean”. These sleeve would not be initial reimbursed by the insurance companies, so doctors may ask patients to pay $100 to have access to this sleeve. Does anyone have any comments on this?

3. >>Chiron said ” the insurance company’s “allowable” amount is … in fact, based on data from the geographic region on that specific CPT code, and what other providers with the same credentials are charging for that CPT code.”
   Who fed you this line of BS? The insurance company? How is it possible then that the allowable amount is often less than the Medicare amount? Do you really think providers are charging less than Medicare? Get real! This is typical misconception of people who are outside the system and completely clueless as to what is going on, yet they spout off like they have an MBA. Oh wait, the MBA is the CEO of the insurance company who is making $30,000,000+ a year!

4. >>Chiron said ” the insurance company’s “allowable” amount is … in fact, based on data from the geographic region on that specific CPT code, and what other providers with the same credentials are charging for that CPT code.”
   Who fed you this line of BS? The insurance company? How is it possible then that the allowable amount is often less than the Medicare amount? Do you really think providers are charging less than Medicare? Get real! This is typical misconception of people who are outside the system and completely clueless as to what is going on, yet they spout off like they have an MBA. Oh wait, the MBA is the CEO of the insurance company who is making $30,000,000+ a year!

5. What about another scenario that relates to this. I went to a psychologist for a few sessions of therapy who accepted my PPO insurance plan yet insisted I pay the $120 upfront. She then stated she would bill for the service to my PPO and whatever the insurance company paid, which she thought would be around $80, she would turn over to me. Whether or not I get $80 back, the fact is that my copay (no deductible) was only supposed to be $15. Therefore, I actually will end up paying more ($40 instead of $15) to the therapist than if the therapist simply accepted my copay. Is the psychologist actually violating her contract with my PPO to accept my copay by charging me upfront for the whole fee? Is this even legal?

6. Eric,
   Just to begin, let’s revisit the whole balance billing concept. “Balance” is not the difference between what the insurance company pays, and the physician bills. It is the difference between the amount considered “reasonable & customary” and what the physician bills. So even in the absence of some kind of bizarre legislation preventing balance billing, the patient would still be entirely responsible for everything the insurance company “allows” even if it paid zero because the patient has a high deductible.
   E.G. The bill is $1200, and the insurance company allows $1000. Patient A has an unmet $2500 deductible, and thus would still owe the doctor $1000. Patient B has no deductible, and the insurance company pays 80% for the service, so they pay $800, and the patient must still pay $200.
   Now that we have that little clarification out of the way, I think it is only fair that we consider the fact that the insurance company’s “allowable” amount is not cost insensitive. It is, in fact, based on data from the geographic region on that specific CPT code (the code that tells an insurance company what service exactly was performed), and what other providers with the same credentials are charging for that CPT code.
   Mind you, the “allowable” amount usually runs behind the actual cost index by a year or more, which means that what it cost the physican two years ago (plus whatever profits are being built into the fee for that particular service… on average in that geographic retion), is not what is being “allowed”. Hence in ongoing increase in billed charges for services, even when there is a contract with all of the local insurance companies that prevents the physician from collecting more than the allowable amount.
   It’s not quite as simple as the physician being unreasonably forced to provide a service at whatever arbitrary amount The Man (the insurance company) mandates.
   And the points being made about transparency of costs to the patient are entirely valid, and worse, symptomatic of what makes health care costs in the US such an ungainly burden on the whole economy. Most patients have no idea how much their insurance company is going to pay on a particular service, and are reasonably enough, nervous about how much of their bank account is going to be consumed by the treatment they are being advised to undergo. Add to that the reluctance of physicians to set a standard fee that everyone will be billed, whether they are self-pay or insured, and you have a whole lot of customers without the information necessary to make a rational decision on whether to commit to the service (and expenses).
   All that being said, I am happy to hear that the balance billing law was defeated. It is artificial economic constraints (just like contracts between the provider and insurance company) that ensure reasonable competition for patients based on quality of care outcomes, never happen.

7. Your comments are not accurate. A patient can get an MRI whenever he/she wants, even if his insurer denies payment in advance. Also, in April 2006, a CA court ruled balance billing was ok.

8. Texas will begin the same debate as to wheher to pass a bill to prohibit out-of-network physicians from balance billing patients. If this is passed, this will set a dangerous standard against providers. To date providers, use the balance biling of patients tactic to compel carriers to pay claims correctly and fairly. Most managed care contract arrangements are infavor of the plan and provide little to no recourse for the provider; but to cancel the contract and treat patients out of network. If plans would cease their deceptive trade practices, we would see more providers partcipating.
   In sum, this debate should not focus as much on fair contract rates, but more on the abuse and fraud that plans play on a daily basis. It is a patent fact that carriers have interal polices to underpay claims to contain costs. They realize many provider’s do not possess the time and talent to challenge the UCR rates. Therefore the provider simply bills the patient to get them involved. An angry patient is the most effective toll in garnishing payment from a carrier. Once this is removed, carriers will invent all sorts of skeems to underpay and delay payment. If this were the case, and I was CEO of Aetna, I would make sure my provider appeal process is so complex, no provider would dare spend the money to appeal an underpayment. This is the reality if a prohibition were place on balance billing patients.

9. Reading your comments with interest. The development of health care policy understandably evolves, in part, from objective data, but have any of you ever faced the harsh reality of a life threatening chronic helath condition, loss of your job and the consequent loss of your group health coverage and insurability for life? Have you spent hours and hours on the phone with health care professionals, insurance company representatives and the almost completely uninformed Medicare representatives (you can hear them clicking away to find the script they need to read to you)that you are forced to deal with if you choose to be an educated consumer? I am a determined, luckily well educated, former litigator who has found the task daunting. For anything but the simplest of care you are expecting way too much of the “average consumer”. Clearly there need to be some huge paradigm switches to enable a fair and cost-effective health care system, but your discussion needs to recognize that the parties involved in health care contracting will never have equal bargaining power. Consumers cannot be expected to know whether the pathologist at hospital A is superior to hospital B, whether the Head and Neck surgeon in one practice exercises better judgement than that of another or whether one hypertensive med is better than another. You cannot measure the quality of judgment an excellent physician provides by evaluating their grades in medical school or their economic indicators.
   “High utilizing” patients? I know for myself and I am guessing the same is true for many “high utilizing” patients, that I cringe about having to take time out for another doctor visit, lab test etc. But I also know that the long term consequences for my personal health and cost to the health care system would be higher if I was not compliant and vigilant about performing these tasks.
   The notion of insurance company provided health care coaches/patient advocates when it comes time to treatment etc. raises a huge conflict of interest doesn’t it? When my insurance company assigned me a patient advocate there was no tangible benefit to anyone, not even her employer as far as I or any of my health care professionals could tell. Instead, her demands created another level of administrative beauracracy that wasted everyone’s time and money. She did not “advocate” on my behalf at all. Nothing happened that wouldn’t have happened without her presence.
   Of course people do not know what health care services cost. There is simply no easy way to find this information. See Michelle Singletary’s recent column on this issue. How do you expect people who work full time to even get there hands on this information? Many doctor’s offices close between noon and 2:00 p.m., exactly the time when an employed person might find time make such calls. And I can tell you from experience that you can make those calls and still not get the information you need.
   Policy making does need to be infused with the reality on the ground does it not?

10. What about the lawyers, malpractice rates and defensive medical practices?

11. As a concerned health care user, what does one do when one is in an emergency situation and goes to a preferred provider hospital expecting to be serviced by preferred providers and then is slapped with balance billing. The insurance will only pay 90% of what they have contracted with their preferred providers. Most common people are struggling to meet their families many needs and are not planning to get slapped with several thousand dollars worth of bills, especially when they are already paying extensively for their health care coverage. What is the consumer to do in a life threatening situation? Say I am sorry but you can’t work on me because you are not on my plan, and even if they could, would they still have a choice? Isn’t there something unethical in this? Any answers?

12. I am following some of the CMS activities, Eric, and if they want to reduce motorized wheelchair reimbursements by 35% it’s my guess that there is significant fat and overbilling in them. After the dust settles, and they’ve listened to the industry’s arguments, I doubt the number will be that high.
    >>> “But spending on these devices has increased 2700% over 8 years. Who do you blame? Doctors for being ‘too easy’, patients for being ‘too sick’, for profit companies for being ‘too greedy’, government for being ‘too corrupt’? Who would you blame?”
    My answer is all of the above, and I’d curtail it under S-P the same way every other country with S-P has curtailed it, and the same way the VA has curtailed it. It is a gold mine in the US for the reasons we have been debating, and CMS has set out to change that. It is my guess that they want to trim the fat by making it less profitable. As a consumer and taxpayer I expect that and applaud them.
    Of the 600,000 physicians I’d guess there are less 5% taking home over $2 million per year. But even that’s too much because they are making it by over utilization. Using your number of 10% share of the industry, when a physician orders unnecessary tests that net him $1M per year, then the “system” is paying an additional $9M in other costs.
    But it’s not just the $4M doctor that is overutilizing; to achieve the $600 billion in waste (30% of $1.8 trillion) it is likely the majority of them in various degrees. And that’s because physicians usually (but not always) get a piece of the profits on the revenues they generate.
    Of the $130K of school debt for graduating doctors, I believe if they were in the top 10% in grades they should be 100% reimbursed by the taxpayers. Perhaps a sliding scale for lesser achievers, except for those under a C average. And I agree with Barry on this; physician grades should be public information.
    >>> “Allow for private contracting — your new docs might charge less.”
    We effectively have private contracting with Medicare. It has set rates and the physician can opt in or opt out. Take it or leave it. Some have walked.
    >>> “Allow for truly portable health insurance.”
    I agree 100% on this. But that would take away the free-market you and Barry support by requiring insurers to take 100% of the applicants after they’ve changed jobs.
    >>> “end the tax favored status of employer insurance, allow light to shine on total employee compensation, and watch the creation of a real individual insurance market.”
    Better yet, totally eliminate the employer’s health care burden, as Canada and virtually every other industrialized country has done. Why are jobs leaving the US? Why are the Big Three making more cars in Ontario than in Detroit? Because the health care system has driven them out of the country. The same with other industries (though we can’t give unions and high employee benefits a free ride on this).
    (Side note: It is interesting that high employee wages and health care have negatively affected our economy, but high CEO wages and perks have not. It’s funny how that works.)
    Eric, the public is indeed losing trust in physicians, and they would even more so if we had greater transparency. But most physicians have failed to see the handwriting on the wall, and those who have are making their millions as fast as they can. The current system is unsustainable, and will eventually be taken over by the MBAs and CEOs and shareholders. Professional physicians will be a thing of the past.

13. “Unfortunately, Barry, getting interest groups that are for-profit corporations to do anything that would harm shareholder profits would violate their legal responsibilities to those shareholders.”
    Jack — Managements have wide latitude in how they manage the business. Shareholders have both short term interests and long term interests. The better managements are trying to build value over the LONG TERM and recognizes that they often must incur short term costs to do so. Wal-Mart’s recent initiative to reduce the price of several hundred generic drugs to $4 for a 30 day supply is a classic example of this. I meet with senior executives frequently and always make it clear that my organization prefers to see management build value over the long term and ignore the Wall Street types that are only interested in short term performance.
    Furthermore, any decent company will tell you that it has numerous other constituencies including customers, employees, suppliers and the communities where its facilities are located. Most companies try to strike a reasonable balance among these conflicting interests as best they can.
    As for CEO’s, I agree that compensation is higher than it needs to be, especially with respect to stock options. However, many more CEO’s are getting fired these days by their Boards.
    Finally, the Tax Reform Act of 1986 is a good example of a wide variety of interest groups taking some hits in exchange for lower tax rates. There were plenty of winners and losers, but fundamental reform can happen. In that instance, President Reagan provided the leadership on the Republican side while Senator Bill Bradley and Congressman Dan Rostenkowski, along with Richard Gephardt, provided it for the Democrats. Bipartisan cooperation was the key. It can happen in healthcare too, but probably not before 2009.

14. Jack- hopefully you are following the CMS plan to reduce payments for motorized wheelchairs by 35%.
    The outcry from industry and patient advocates has been loud, and will get even louder as the final decision time approaches.
    But spending on these devices has increased 2700% over 8 years.
    Who do you blame? Doctors for being ‘too easy’, patients for being ‘too sick’, for profit companies for being ‘too greedy’, government for being ‘too corrupt’?
    If your answer to the question is ‘all of the above’, how will your single payer system solve this?
    You are right– there are other national priorities that are purely in the realm of government, like securing our borders and police functions.
    Of the 600,000 practicing physicians in this country, how many ‘take home’ $4million/year? Please provide me a real number, or at least an educated guess.
    A real number is $130,000. That is the median school debt for graduating doctors. I number that often grows during residency. Remember, it is a median– as many have more as have less. And that number is growing.
    Where does your top 10% come from? Who should pay? Where will that money come from?
    When governments set prices, and react to changes in the marketplace slowly — everyone loses and costs go up.
    Allow for private contracting — your new docs might charge less some some things, but more for others. Put the regulatory burden on patients to file and refile claims — then see how insurers react. Allow for truly portable health insurance. Break the monopoly of a few insurers on the marketplace. And, most difficult, end the tax favored status of employer insurance, allow light to shine on total employee compensation, and watch the creation of a real individual insurance market.
    Oh, and eliminate the subsidies for medicare part c and part d to insurers and see if they can make it on their own.
    Medicine has to embrace its fallibility– we do not have all the answers, we cannot solve every pain, every condition does not have a perfect diagnosis or magic pill. The public would respect us much more than it does today.

15. Eric, I’m against for-profit health care corporations that by law must put their shareholders above all else, even the patients. Even if there wasn’t a law the CEOs of these corporations would see to it that they got a disproportionate piece of the pie. The more money in the system, the better and easier it is to extract and distribute.
    I’d also be against for-profit fire departments, police departments, National Guard, etc. That 1 out of 6 dollars are generated by the health care industry is not a plus, it’s a shame. A symptom of the disease, especially when other countries are providing better care at 50% lower costs. Health care is consuming 15% of the national pie, and growing. Executives are getting rich and some doctors are getting rich, all while this one-time professional service has turned into a money-making commodity.
    I think physicians should be well paid, but not on the basis of how many tests they perform. When unnecessary tests occur, not only must the doctor’s charges be offset, but also those of the administrators, technicians, equipment manufacturers, and God knows who else. These unnecessary tests consume 30% of our health care dollars, though I’ve seen higher estimates.
    That take home pay for physicians is 10% of healthcare spending matters not. I know some who are taking home $4M after expenses, all while 45 million Americans are going without insurance and 18,000 per year are dying because they can’t afford insurance. If these guys were not being overpaid and too many tests weren’t being ordered, many of these 18,000 would live normal lives.
    I also know children that can no longer go to Major League baseball games because of high player salaries, but in those cases they are just staying away. People are not dying.
    On your question of physician education, those students in the top 10% should get free medical training. So should nurses and scientists.
    Eric, this is not just a physician problem and I don’t want to make it that. But few would criticize salaries that range from $100K to $1M. Is that not enough? How much of GDP do you feel should be given to the health care industry? Which industries should the resources be taken from? Education and teacher’s salaries? Firemen? Police? Border Patrol?
    How much is enough?

16. Eric — I absolutely agree that we should keep track of high utilizing patients as well. Perhaps, Medicare, Medicaid and private insurers could send annual statements showing how much has been spent (by the insurer) on the patient’s behalf by year and cumulatively.
    I’m not sure exactly what can be done about high utilizing patients, though. Presumably, some have legitimate complex and expensive to treat medical problems as a result of birth defects or accidents, others may be hypochondriacs, while still others may be suffering the consequences of poor and undisciplined lifestyle choices.
    In the case of Medicare beneficiaries, perhaps a case could be made for making a claim against one’s estate to reimburse taxpayers for medical spending above some reasonable base level but only after the beneficiary’s spouse (if any) has also died and only to the extent to which assets are above, say, a half million dollars. To deal with the issue of giving assets away shortly before death, there should be a lookback provision that would subject assets given away within 3-5 years of death to reclamation.

17. My ego requires that I post comment #50…
    I am in favor, in principle, of identifying high vs low utilizers among doctors and institutions (like the NYT expose on the cardiologists near Cleveland).
    However, the world of medical liability, patient demands, and uncertainty would require an equally agressive identification and, if necessary, punishment of high utilizing patients.
    And, if insurance were truly focused on the individual– to which the insurer is ulitmately accountable– vs. the employer or the government, then excessive utilizers of premium money could be punished as well– by people choosing to get insurance with another company.
    No one ‘magic bullet’ exists. No one piece of legislation, sorry Jack, will come close to solving our healthcare system problems. It will require an approach reminiscent of Alexander Hamilton’s approach to developing the federal banking system in the early 1790’s: several pieces of bold, innovative legislation that are interelated for success, that recognize that the federal government has a role, but that it ought to be a ‘guiding wind’ rather than a set of poorly constructed, incomplete railroad tracks. (colorful analogies all mine)

18. Eric — While your figures are correct, I think it is also important to not that doctors drive virtually all healthcare spending through hospital admissions, referrals, ordering tests, prescribing drugs as well as consulting with patients and performing procedures themselves. This is why I suggested in an earlier post that we utilize modern information technology to track healthcare expenses that reflect what each individual doc is responsible for. There are enormous variations in practice patterns within a given specialty that can be attributable to everything from defensive medicine to utilizing expensive equipment that the doctor owns to just the way things are done locally. High utilizers should be challenged where appropriate, especially when there is no discernible difference in outcomes among their patients vs the patients of lower utilizers. Patients, for their part, should be informed that some docs are more cost-effective than others and given tools to allow them to identify who the high utilizers and the more cost-effective doctors are.

19. Jack- are you against for-profit corporations in healthcare only, or in general. The reason it is siginificant is because 1 out of every 6 dollars of economic activity in the US is related to healthcare. Payment for physician services (gross) accounts for about 22% of the total. Average physician overhead at this point generally exceeds 50%.
    Put another way, take home pay to physicians accounts for about 10% of healthcare spending. Essentially the rest pays for other pieces of the system. This includes such for-profit companies as Dell Computer, OfficeMax, and the local public utility companies.
    Other than making physicians servants of the state — on salary (BTW- who should pay for the education of your new forced public servants?), how do you propose to remove the evil profit from US healthcare?

20. Unfortunately, Barry, getting interest groups that are for-profit corporations to do anything that would harm shareholder profits would violate their legal responsibilities to those shareholders. It won’t happen.

21. Jack — I think there are thousands of things in our society that we would organize differently if we could start with a clean sheet of paper from healthcare to the tax system to whether we should have cumbersome and distorting rent controls in New York City to the gold plated health and pension benefits that we have agreed to pay our public employees but can no longer afford. All of these probably made at least some sense once upon a time, but times change. It’s always hard to change the system because it creates lots of losers as well as winners. We tend to make necessary adjustments eventually, but the process is often painfully slow and usually requires the perception of a crisis to galvanize the bipartisan cooperation necessary to move forward.
    In my New York City rent control example, wealthy real estate interests give lots of money to state politicians who have jurisdiction over the rent control regs, but there are a lot more tenants than landlords, liberal democrats have long controlled the State Assembly, and the real estate interests always lose (though they have been thrown a few bones).
    Trying to change the health and pension benefits for newly hired state and local workers runs into a buzzsaw of opposition from public employee unions. Greedy corporations and CEO’s don’t have much influence here.
    On something like Social Security reform, the AARP says that “adjustments” in benefits are needed along with raising the wages to which the payroll tax applies. However, while I know exactly what they want in the way of higher revenues, I have yet to year the organization list any of the “adjustments” in benefits it is prepared to accept.
    With respect to healthcare reform, try to get hospital to embrace pricing transparency, try to convince consumers to give up the tax preference afforded employer provided healthcare, try to get trial lawyers to accept health courts to resolve medical disputes, or try to convince doctors (especially RAP’s) to work with hospitals to more easily facilitate package pricing for an episode of care. It’s not easy when everyone digs in their heels to protect their own turf, perks and privileges.
    While political money may be part of the problem, I think basic selfishness even among consumers who never give politicians a dime is an even bigger hurdle to reform. This is why I have suggested in the past (more than once) that we directly challenge interest groups to come up with ideas that will cost them some money and/or power in the short run but will lead to a better, more cost-effective and efficient healthcare system in the long term. We would then either get some solid input from the experts on the firing line who know the system best or expose them as selfish hypocrites.

22. What I said was “The more I participate in these discussions, Barry, the more I become convinced that the best system is a properly-funded socialized system with all physicians paid a salary rather on the basis of how many tests they perform. The VA provides excellent care under those terms.”
    I have not changed that view, though I recognize it is politically unacheivable. At least as long as the $100 million in cash flows from health care interests to politicians. That’s a terrible way to achieve the status quo, but that’s the way it is.
    I think we have to ask, if political money were not changing hands is this the system we’d chose? The answer is clearly no, as a national referendum would demonstrate.

23. “Why don’t we just do it right the first time around and be done with it.”
    Jack — You commented in an earlier post that the more you read on this subject, the more convinced you are that single payer is the way to go. I, and I’m sure others, read the same material and reach a different conclusion. As a country, we’re still a long way from a consensus, and I would bet a lot of money that nothing substantive will happen in the next two years. Therefore, we should at least continue to experiement with different approaches — Massachusetts’ effort, CDHP, pricing transparency movement, etc. and get as much real world experience as possible before the 2008 presidential election cycle. When I listen to people debate an issue like this, I’m reminded of the saying (paraphrasing here): sometimes wrong but never in doubt!

24. Jack— the other half is 2006/07/an_outcomes_pri.html
    alternatively, place “outcomes primer” into the search box on the upper right of the page.

25. I’ve got to say, Barry, that as reasonable as that sounds we are sure beating around the bush, trying to find anything, anything at all, that isn’t a universal health care system. Why don’t we just do it right the first time around and be done with it. That’s where we will be 10 years down the road. Let’s just do it now and go on to tackling the other policy messes this administration has created!

26. Jack — I would also be in favor of offering high deductible plans to Medicare beneficiaries, but I am concerned about the issue you raised — wanting to switch back to the low deductible plan if one’s health deterioriates. To address this issue, my solution would be to require a one time surcharge amounting to five times the difference in premium between the high deductible plan and the low deductible plan if the switch back is made within five years of signing up for the high deductible plan. A surcharge of that magnitude would impose a cost sufficiently high to mitigate the temptation to game the system by waiting until you get sick to sign up for the comprehensive plan.

27. It would then be fair, Barry, that if the person continues paying into the Medicare system they should clearly be allowed to switch over at 65. I’m not sure this changes the dynamics, however, and the same pluses/minuses exist. If in the meantime they develop a need to switch to ordinary insurance the pre-existing disease issue will pop its head up.

28. “But I still ask, what is the YOYO going to do as he ages? Will he then want to go onto the Medicare system he has not been contributing to?”
    Every working person pays 1.45% of total wages (uncapped) into the Medicare system, while the employer pays an additonal 1.45%. Any reputable economist will tell you that the employee actually pays both halves of the Medicare tax (along with both halves of the Social Security tax) in the form of lower wages than he or she would have been paid if the tax didn’t exist. An additional almost 45% of Medicare’s budget comes from general federal revenue which, in turn, comes mainly from federal individual and corporate income taxes. Beneficiary premiums cover approximately 25% of the cost of Part B, a smililar percentage of Part D, and none of Part A. Medcaid is paid for by general federal and state revenues. Whether indivuduals have high or low deductible health insurance plans has nothing to do with the extent to which they are or are not supporting the current Medicare and Medicaid programs.
    Most people with high deductible plans get them through their employer, and some employers offer high deductible plans only. Their alternative is often to not offer health insurance at all. Only 16 million people nationwide get their health insurance through the individual insurance market (as opposed to through their employer, Medicare or Medicaid).

29. >>> “As for young healthy HSA buyers draining the insurance pool, the law of large numbers is critical here…… Insurance companies are in the business of making these forecasts for large populations.
    But that’s the problem, Barry. We are not talking large populations, we are talking YOYOs. They are individuals, and every individual is on their own. If they make the wrong choice going in, and they develop a costly disease, they must at least be able to afford the $5000 deductible, and then hope like hell their disease is not excluded.
    But I still ask, what is the YOYO going to do as he ages? Will he then want to go onto the Medicare system he has not been contributing to?

30. Jack — I appreciate your comments, and I hope you keep them coming. Here’s a few comments regarding your last post.
    Retail pharmacies and PBM’s do a good job of flagging drug interactions on drugs that move through those channels. Indeed, the chain drug stores tell me that the single most valuable function its pharmacists performs is the DUR (drug utilization review) and consulting with the patient. For drugs that are dispensed in hospitals and other institutional settings, electronic health records are key so all doctors involved in a patient’s care know what the others are doing.
    With respect to your comment about YOYO’s and WITT’s, on health care, as a supporter of high deductible plans and markets generally, I am a YOYO. It may surprise you to hear, however, that despite 35 years in the money management business, I was always opposed to private accounts for Social Security. Like CD’s and savings accounts, there is some money that absolutely, positively has to be there. Stocks are fine for 401-K’s, IRA,s and regular taxable accounts, but I view Social Security as the equivalent to the foundation of a house — it should be solid and secure so the rest of the house can be safely built on top of it.
    As for young healthy HSA buyers draining the insurance pool, the law of large numbers is critical here. People can be perfectly healthy today but have an accident or a heart attack or be diagnosed with cancer next month. Insurance companies are in the business of making these forecasts for large populations. Furthermore, when self-funded health plans offer high deductible policies for a lower premium, do not fund an HSA, and stand ready to cover the high cost cases (with or without stop loss protection from insurers), they WILL save money vs the cost of providing their entire employee population with low deductible, comprehensive coverage.

31. Eric, the link got truncated. Can you give it on two lines and I’ll piece together
    https://thehealthcareblog.com/the_health_care_blog/2006/07/an_

32. Barry, you site a lot of ways to measure surgeons, and certainly outcomes can be more easily measured there, although they’d be even more accurate if a patient survey were included. Who better than they will know recovery times and complications? But if there is an infection, does the physician take the hit for hospital sloppiness? And then, how do you assess the many other specialties and general practices? I think you have your hands full coming up with a workable system, and then figuring out how much it is going to add to the overall health care costs. But I agree that some form of transparency could be developed.
    And you are absolutely correct on the ability of information technology to track the cost effectiveness of doctors within a given specialty. But I see the need for IT more in making sure prescription drugs do not conflict with current meds, are appropriate for the disease being treated, and reducing practice variation. Malpractice tracking and disclosure is another excellent application.
    I cringe when I think of the misinformation that can also be given to the patient, but what we have now is clearly not working.
    >>> With respect to draining the insurance pool as healthy people opt for high deductible plans, there is no reason why insurers can’t price these policies appropriately.
    I think HSAs are an insurance company magic wand (first introduced by Golden Rule, a heavy campaign contributor). I believe they saw the successes of Kaiser Permanente and others and felt the need to redirect the business their way before they lost it.
    In Jared Bernstein’s All Together Now, he describes two major factions in the US: the Yoyo’s (You’re On Your Own) and the WITTs (We’re In This Together). The Yoyo’s like individual SSI accounts and HSAs, and are willing to trust the stock market and investment bankers with their retirement. The WITTs like the success and security of the pools that are government run and protected.
    So my question is this: For all of those people who opt out of the government pool and go with HSAs, are they going to live with their decision or want to opt back into Medicare when they get old?
    >>> The money in the pool to pay for the high cost cases will be the same because its lower revenue will be offset by the claims costs now paid by the insureds who opted for the high deductible policy.
    Not true, because the only people opting for the HSAs will be those who are young and healthy and do not currently drain the pool.
    >>> Just look at overcrowded emergency rooms which many Medicaid patients, along with the uninsured, treat as their family doctor. They perceive it as free because they know that EMTALA requires ER’s to treat them whether they can pay or not. Huge numbers of these visits are for minor problems that could be handled by a walk-in clinic.
    ER’s are not required to “treat” patients; they are only required to stabilize them. Many do that, and then ship the patient elsewhere. And if they do treat them, they may also bill them for that treatment, which then drives up the bankruptcy costs to the public and cost shifting to other insurers.
    >>> One thing I haven’t heard you or anyone else talk about in connection with a single payer system is that it implicitly values the patient’s time at zero. It’s OK to make them wait.
    Having just waited two months for an appointment with a knee surgeon and another two months with an eye doctor, let me assure you, we have wait times here too.
    >>> Personally, I like the fact that I can now get a stress echo in my cardiologist’s office with a one or two week lead time instead of going to the hospital after a six week wait before he had the equipment.
    And your cardiologist likes that too, because it is a very profitable test that he no longer does in the hospital. That, incidentally, has reduced wait times in hospitals, so you might want to try rescheduling there.
    >>> Finally, if the government is just going to be a big dumb payer, it will be ripped off right, left and sideways unless it develops a culture of caring about fraud and a willingness to develop and use the information systems that will allow it to combat fraud aggressively including prosecuting offenders to the full extent of the law.
    The more I participate in these discussions, Barry, the more I become convinced that the best system is a properly-funded socialized system with all physicians paid a salary rather on the basis of how many tests they perform. The VA provides excellent care under those terms.

33. Barry/ Jack — whenever the word outcome arises, it is important to think about what an ‘outcome’ is.
    check out my posting from july 10,2006:
    https://thehealthcareblog.com/the_health_care_blog/2006/07/an_outcomes_pri.html

34. Jack — I’m afraid neither of us can prove our case in court, so to speak, as to how our proposed system would work in the real world of the U.S. economy, culture and diversity of its population until we have the benefit of actual experience here (as opposed to Canada, UK, etc.). That said, I want to make a few comments in response to your last post.
    With regard to outcomes data, I think the docs will have to be instrumental in developing these metrics. I believe it would be most difficult to measure the quality and effectiveness of PCP’s. The concept lends itself better to surgical procedures where we can tell if the patient survived, had complications, how long it took to recover, and come up with risk adjustments for age, multiple conditions, etc.
    I do think there is enormous potential to harnass the power of information technology to track the cost effectiveness of doctors within a given specialty. How many tests do they order (whether performed in house or outsourced to an independent lab), how often do they prescribe a branded drug when a generic would be just as good? If Dr. A drives three times as much cost per 100 patients as Dr. B, all else equal and there is no discernible difference in outcomes, this is a result that should be flagged, challenged and publicized. The same is true for doctors that have been successfully sued for malpractice more often than their peers. If we can’t get the really bad docs out of practice altogether, at least let’s inform the public about their record.
    Regarding the tax shelter aspect of HSA’s, I said repeatedly that I think the entire tax preference currently given to employer provided healthcare should be eliminated, and health benefits should receive the same tax treatment as salaries and bonuses. We could lower other taxes to maintain revenue neutrality, and high deductible plans would probably become much more attractive.
    With respect to draining the insurance pool as healthy people opt for high deductible plans, there is no reason why insurers can’t price these policies appropriately. If an insurer thinks it could shift $1 million of claims cost to 1,000 insureds who select a high deductible plan, it will likely price those policies about $1,000 each below the comprehensive plan. The money in the pool to pay for the high cost cases will be the same because its lower revenue will be offset by the claims costs now paid by the insureds who opted for the high deductible policy.
    On the issue of offering a single payer plan with no co-pays or deductibles, I think it is very probable that demand for medical services will be much higher than you think. Just look at overcrowded emergency rooms which many Medicaid patients, along with the uninsured, treat as their family doctor. They perceive it as free because they know that EMTALA requires ER’s to treat them whether they can pay or not. Huge numbers of these visits are for minor problems that could be handled by a walk-in clinic.
    One thing I haven’t heard you or anyone else talk about in connection with a single payer system is that it implicitly values the patient’s time at zero. It’s OK to make them wait. If they have to wait six weeks for an MRI to rule out cancer or make a separate appointment to go to an independent lab or hospital rather than get the test in the doctor’s office with a much shorter lead time, it’s perfectly OK to inconvenience and stress out the patient as long as we can save a little money. Personally, I like the fact that I can now get a stress echo in my cardiologist’s office with a one or two week lead time instead of going to the hospital after a six week wait before he had the equipment.
    Finally, if the government is just going to be a big dumb payer, it will be ripped off right, left and sideways unless it develops a culture of caring about fraud and a willingness to develop and use the information systems that will allow it to combat fraud aggressively including prosecuting offenders to the full extent of the law.