I was struck during President Obama’s health care speech before Congress several months ago that the reforms he advocates would not go into effect for four years, until 2014. This timetable, too, is written into both the House and Senate versions.
Why the delay? It is hard for me to imagine, even given the federal rulemaking process, that it should take four years to establish an insurance exchange from which people can buy coverage. This is the exchange that would eliminate the nasty practices of insurance companies: Denying coverage because of pre-existing conditions; limiting annual or lifetime payments; and rescission of policies. It is hard for me to imagine, too, why it should take four years to fully deliver targeted subsidies to lower income people so they can afford insurance.
As noted by Princeton Professor Paul Starr in an article in the New York Times earlier this week: “By comparison, when Medicare was enacted in 1965, it went into effect the next year.”
This leaves me with a bad feeling. It looks like the Obama team does not want implementation of the health care bill to take place during their first term. Why? Perhaps they know that the cost of the plan is higher than they are saying. Or maybe they know that the options available to consumers will be less attractive than currently portrayed.
Maybe they are worried that if all this happens on their watch, re-election in 2012 will be in jeopardy.
I have yet to find a knowledgeable observer who does not agree that the cost of universal coverage will be high and that consumer choice will become more limited to the degree that federal policy tries to control costs.
I personally think the cost of universal access is worth it and an important public policy imperative; but the administration puts itself into a box when it downplays the consequences of the legislation. It is forced to postpone the effective date until after the 2012 election, so it will not suffer political backlash from a public that has been misled.
Let’s hope that Congress sees this otherwise and implements these important measures more quickly. (Wouldn’t it be ironic if the Republicans offered a floor amendment accelerating the effective date? How could the majority party oppose that?)
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If the current administration waits four years to start the reforms they approve, they can all get re elected into office before the shit hits the fan and the people realize what I mess they have created. That is why they don’t want the reforms to start immediately.
We really shouldn’t have wait 4 year’s for Obama’s health-care plan kick into action, some of us dont even have 4 year’s to live. We need this health-care plan to take immediate action for our live’s, my grandma is 97 year’s old, and without healthcare, she would have been dead by now. So join me in this protest on to make the new health-care plan take immediate acction!
Your site is great! I’m just getting started on a new nursing website blog and I was wondering if we could exchange links. I’m so new to this, I just figured out how to work on my blogroll. My site addresses various topics for colleagues, patients, caregivers and the general public. I’m trying to share, through words, my 30+ years nursing experience. My name is Stephanie Jewett, RN, MBA from Iowa and I’ll leave my site for you to visit. THANKS!
http://www.nursingcomments.com/
Send Congress home for a year or more so they can’t do any more damage to our economy and country! These people and this administration have their heads in the sand. All evidence indicates the government’s involvement in any way will just drive costs up for everyone else (as in our subsidy of Medicare) and load more on taxpayers and business just when our economy can’t bear any more! Don’t enact health care legislation!! If Congress needs to do anything contract with a private company charged with reduction of waste in Medicare, Medicaid and any govt. function surrounding these programs. The only concern ought to be reducing govt. expense, reducing tax burden all aimed at getting our economy moving and consumers buying.
Margalit as much marble and glass as the politicians can redirect from my paycheck. These hospitals are huge business and your local Democrat is going to take kindly to them losing 30% of their revenue. Large amounts of campaign contributions and many shared seats on non profits etc pass back and forth. Read up on Metro Health and their recent scandal and Cuyahoga County and the corrupt democrats falling one after the other there. Then jump out to Vegas and see what the Democrats did with UMC and the Chicago crook they brought in then run over to CA and see what the Democrats did with King “Killer” Drew.
Healthcare is highly unionized and a major part of the liberal base, like acadima, so much of this has nothing to do with healthcare and its delivery and to much to do with politics and waste.
Just rememebered another one the public hospital in Reno owns and insurance company that loses a fortune every year, the public hospital has to prop it up financially.
Peter – I would like to see Medicare negotiate rates like everyone else rather than dictate them but I would also like to see movement away from the fee for service payment model toward an approach that rewards quality and not volume.
The problem, as I see it, boils down to patient expectations broadly defined. Patients expect to receive imaging when they don’t need it, they want their doctor to prescribe a drug they saw advertised when they don’t need it, and they want way too much futile care at the end of life. They oppose eliminating the tax preference for employer provided health insurance in return for a reduction in other taxes. They expect to be able to sue a doctor or hospital if they have a bad outcome whether there is negligence or not. They want to go to any doctor or hospital and they expect someone else – taxpayers or employers to cover the cost of their care. Through their politicians, they don’t want Medicare to explicitly take cost into account in deciding what to cover and pay for. They don’t want the FDA to take cost into account in deciding what new drugs to approve either. Once again, if it were up to me, I would do the following:
1. Eliminate the tax preference for employer provided health insurance and reduce other taxes to ensure the government does not collect any more revenue than it does now.
2. Reform the tort system by replacing jury trials with specialized health courts.
3. Move toward tiered co-pays to steer patients toward the most cost-effective (not necessarily the cheapest per procedure) doctors and hospitals.
4. Require Medicare to explicitly take cost into account in deciding what services, tests and procedures to cover.
5. Require insurers to develop a standardized claim form, simplify and streamline their offerings, and make contract payment rates available to both providers and the public to make price shopping easier.
Reducing healthcare costs is mainly about reducing utilization of services. It’s not about hospital efficiency or insurers’ administrative costs. However, reducing utilizations requires the implementation of numerous strategies that the public seems unwilling to accept, at least so far. As I’ve said before, the enemy is US.
What Peter said, plus, if what was said here is correct and the Clevelands and Mayos prices are really 20% to 30% above other regional providers, it seems that there is room to manage costs down. After all, how much marble and glass is required in order to provide excellent care?
Barry, are you arguing for higher Medicare reimbursements so that hospitals can make money, if so Miami/McAllen would love that. How are we to get costs lower if we just continue to feed the beast, hospitals must become more efficient and lower costs, but that would mean a different economic model that rewards efficiency not over-utilization.
insurance company adds 20% the federal government adds 40%. The most efficient method of payment is always to pay your own bills. If you want the Insurance company to do it you pay a little more. If you want your government then you pay a lot more. I am all for reducing the roll of insurance companies, but not so we can be less efficient and have the government do it.
In an article in today’s Wall Street Journal regarding the proposal to allow people 55 to 64 years old to buy into Medicare, Jeffrey Korsmo, Executive Director of Health Policy at the Mayo Clinic, stated that Mayo lost $840 million treating Medicare patients last year. Yet, Mayo is supposed to be an efficient, cost-effective provider due to its use of salaried doctors, electronic records and relatively conservative (lower utilization) practice patterns. I’ve heard executives at other big name medical centers say that they could not continue to provide their current level of service and quality care if they had to take Medicare rates from all comers even if there were no longer any uncompensated care. Mr. Korsmo’s statement reinforces that viewpoint.
“About Miami, do we know what are the most prevalent forms of Medicare fraud there? (just curious)”
Margalit, the 60 Minutes program outlined fake medical companies buying stolen Medicare Benificiary numbers then billing Medicare for unprovided services, as opposed to legitimate providers billing for over treatment. Medicare is mandated to pay within 30 days of receiving the bill and has little resources to investigate – which when it does is usually too late as the fraudulent company has closed shop and moved to set up another operation. I don’t know how Medicare goes through the process of checking/approving providers (as opposed to how private insurance does it) before they receive bills but it obviously is not, maybe that’s mandated as well? When castigating Medicare you have to remember that private insurers use their own patient account numbers, so a fraudulent claim could not be used around the entire system. I doubt private insurers are mandated to pay within 30 days and they can simply refuse to pay the claim when in doubt and let the insured send justification. I’m also assuming they can dedicate more resources to fraud detection.
I will say that the examples in the 60 Minutes report where Medicare recipients notified Medicare that they did not receive the services on their statement, and Medicare did not investigate, is undefendable.
“Peter, if company currently offers $500 Ded 80/20 with 1000 OOP our clients will buy a $5000 Ded 100% no OOP plan. THe employee is still liable for the same $1500 they where before. THe company assumes the risk for the 80% between $500 and $5000 not the employee.”
I figured someone was paying a higher out-of-pocket for deduced premium of HDHP; great if you have a generous employer that assumes the extra out-of-pocket risk of the higher deductible, oh if we all could get that benefit(subsidy).
“Companies save money becuase insurance adds 20% to the cost of a bill, insurance companies are not very efficient and do a terrible job managing cost.”
Kinda justifies my argument against insurance companies and sounds like they have lots if wiggle room to pad premiums. I will agree that having someone dedicated to micromanage your health plan will give you a better chance at reducing costs, but that doesn’t solve the problem of general out-of-control system costs that have backed people in the individual market into a corner with no room to reduce their payments.
Miami has turned Medicare Fraud into an art. DME suppliers that don’t even exist buy HICNs and bill Medicare for people they never deliver anything to. HIV treatments never given to patients. Treatments that are billed but never done but the memebr actually gets a cut. I think 60 minutes did a real good show on it a month or two ago. They are pulling scams so obvious you have to close your eyes not to see them. They also interviewed people that had been calling Medicare for 7 years saying fake claims where being submitted and Medicare did nothing about it. That is why fraud is 5-10 times higher in Medicare and Medicaid then private insurance. Private insurance at least tries to stop it and if someone calls and brings fraud to their attention they don’t ignore it.
It’s illegal to fire someone for their health, what little you save in claims pales in comparison to how much you lose in a lawsuit. In all the interviews Ihave done I don’t think I could ever tell which person was going to get cancer and cost me 5K a year later. It’s not like you get health apps with the resume. Younger workers cost you more in training and lower skill set which in some industries offsets any potential health savings, unless they are young and hot then that is a different interview.
COBRA enrollees are entitled to the exact same benefits as active employees.
No many employers do it themselves in house. We charge $5-10.50 depending on plan design and work involved, per employee per month, PEPM
Not more then once or twice have I seen a worker fired becuase of health, usually those in bad health tend to have other problems that get them fired first. I have seen employers keep an employee that has health conditions so they don’t lose their benefits. That is very common. A good worker can easily more then make up for any health expense they cost the company.
Peter, if company currently offers $500 Ded 80/20 with 1000 OOP our clients will buy a $5000 Ded 100% no OOP plan. THe employee is still liable for the same $1500 they where before. THe company assumes the risk for the 80% between $500 and $5000 not the employee.
Companies save money becuase insurance adds 20% to the cost of a bill, insurance companies are not very efficient and do a terrible job managing cost. If you ask an insurance company what they need to charge you they will gladly tell you a number higher then they need. If you know for a fact you have $x per year in claims you are in a better position to shop. If employees are going to Walgreens when Wal Mart sells the same drug $20 less insurance companies will never call the member and tell them, I will.
wow great dialogue with Peter and bev, is it Christmas time?
I agree if we carved out all the replacements and other elective procedures and such most public hospitals would go BK. That would be a great thing. A large number of them run terribly inefficient ERs just like they are terribly inefficient at replacements and other procedures. They hide behind the threat of closing to blackmail us into allowing then to continue to suck. UMS here in Vegas is a great example of a hospital that shouldn’t exist. It has been as poorly managed as possible for decades. with the 30 million+ annually we prop them up with we could build one heck of a great ER. Instead we have terrible ER, terrible hospital, and perputual bailouts. With the money we could save by taking work to other hospitals we could easily pay for quality ERs. Let them fail, from their ashes will rize better ones.
Bary’s comments are very true, most employees never think about it but when we do a roll out meeting and point out insurance premiums are deducted from their wages 100% either diredctly or reduced raises they get it. They know if their employer pays 16% increase for insurance the chance of them getting a big raise are less. We take pians to tell people don’t ever ignore treatment you should get but as well all know there is plenty of waste we can cut without hurting anyone.
About Miami, do we know what are the most prevalent forms of Medicare fraud there? (just curious)
About the employers that self insure for the first 5K, would those employers be very tempted to hire healthier and younger workers and maybe even get rid of the sicker employees once they decide to self insure?
If they fire an employee and he selects COBRA, does the employer still pay for the high deductible, or is it up to the ex-employee now?
Also, how much do they pay for services like you provide, Nate? And do they always use a TPA?
Peter – My comments regarding Medicare costs in Miami were indeed comparing the cost of serving Medicare beneficiaries there vs. Medicare beneficiaries elsewhere. Regional differences in practice patterns have long been documented by researchers at Dartmouth in what is now an annual publication called The Dartmouth Atlas of Healthcare. You can learn more about this at http://www.dartmouthatlas.org.
The medical cost situation in Miami is an extreme case and is caused by something of a perfect storm. In addition to the very aggressive (high utilization) practice patterns, providers there receive well above average Medicare reimbursement rates vs. elsewhere including even New York City. Finally, Miami is widely considered to be the Medicare fraud capital of the U.S. Why this is I have no idea. Regarding Medicare payments, as I said in a prior comment, Medicare providers in Minneapolis are paid only 70% as much on average as those in Miami. Even within the five boroughs of NYC, providers in the Bronx are actually paid more than those in Manhattan even though everyone knows that costs are higher in Manhattan. Politics plays a more significant role in county level rate setting than I previously realized. By contrast, in many rural counties, Medicare reimbursement rates are very low. So, the variance in Medicare spending across geographies is greater than the variance in utilization because some of the high treatment regions also have higher than average reimbursement rates per procedure.
Separately, regarding Nate’s discussion about employers self-funding a higher deductible, perhaps a concrete example would help. Suppose an employer can provide his employees with a $500 deductible health insurance policy for $300K per year. Alternatively, if the employer wants to take on the risk of paying for his employee’s expenses between $501 and $5,000 leaving the insurer responsible for paying only for claims beyond $5,000, the premium shrinks to $200K for a gross savings of $100K. According to Nate, insurers deliberately overprice this piece of the risk because they can. So, if actual expenses for claims between $501 and $5,000 come in at say, $50,000, the employer comes out $50K ahead while the employee still enjoys, in effect, the benefits of a $500 deductible policy. Remember that for a workforce of average age and health, the majority of employees will have no claims at all or very few in any given year. If the employees know that the second layer of risk between $501 and $5,000 is being paid by their employer and not the insurance company, they will probably spend healthcare dollars more carefully in order to help their employer save money, stay profitable, and afford to give them a decent raise next year.
Nate;
interesting video but of course these are the same surgery centers that general hospital CEO’s complain skim the cream off the top (e.g. the moneymaking procedures) and leave the ER’s and other money-losing departments to the general hospitals. They claim eventually this will lead to the demise of hospitals and of course the taxpayer will foot the resulting bill for the nonsurgical, multiple-medical-problem train wrecks who spend weeks to months in the hospital draining resources. Any comment on that?
ps I have no ax to grind as I am retired. It’s just that you can’t take part of the system in isolation.
Barry, I won’t defend Miami’s health costs, but are you trying to compare paying health costs for 65+ year olds against private sector under 65s? costs? I guess we’d also have to know the age and health mix in Miami. By the way Florida has tort “reform”.
“The employee has the same deductible they did before the employer bought the high deductible.”
Nate, are not the employees out-of-pocket higher with high deductible? If not then how does employer save money with high deductible?
No Mayo and CC could not survive as is without low level care and services. CC is freaking HUGE they consume entire blocks and are one of the largest employers in NE OH. If I redirected, as if I could, basic services to the more affordable facilities they would be done.
Healthcare would be double what it is now if Mayo and CC ran everything.
I’m not posting this for the canada bash but for the domestic medical tourism aspect. Little facilities like this hand CC and Mayo their back side on cost efficiency. http://www.youtube.com/watch?v=iRPhltjPSFs&feature=player_embedded
This is the type of competition that could knock 20% off the HC tab in 12 months.
Lisa — McAllen’s Medicare spending per beneficiary is 2nd highest after Miami.
I thought McAllen, Texas had the highest Medicare costs per beneficiary?
Oh, boy; when BARRY starts getting sarcastic, I know the country is really in trouble! (:
I’m still having a problem with those excellent clinics. Would they remain financially solvent if patients did not use them for routine care? Let’s assume for the sake of argument that the advocates of these delivery models are successful and we have nothing but Mayos and Clevelands everywhere in this country (no more solo docs and tiny hospitals), would health care be more/less expensive in total?
Medicare costs per beneficiary in Miami run over $16K or close to 3X the rate in the lowest cost counties and, by far, the highest in the country. Even more amazing is just 25 miles to the north in Fort Lauderdale, average spending per beneficiary is $9,800 or almost 40% less than Miami. As Nate says, Miami is in a class by itself when it comes to fraud. Add in high reimbursement rates per procedure and a culture of aggressive treatment and we have astronomical costs. But hey, administrative costs are low.
Barry,
Did you read about the lawsuit Partners and BCBS got themselves into. It was discovered BCBS agreed to reimburse partners something like 1 billion more in exchange for a larger discount. Partners inflated their prices, offered a greater discount and still came out ahead.
http://www.boston.com/news/local/massachusetts/articles/2009/01/23/partners_insurer_under_scrutiny/
Margalit over all they are considerably more expensive local alternatives. They never recover the over charging for simple treatments. If we moved all the simple treatment to other facilities and only had them perform the complex and miricles we would save billions. Barry’s comment on tiered pricing is going to become very common. I’m working on a similar deal now with a hospital where they are trying to keep more of the local population in house instead of driving to the bigger facility for no reason. Only charging the people more will accomplish this. It is all about the case mix. It’s like treating a flu with a panel of experts it gets the job done but at an unaffordable cost.
And Miami has a fraud rate you wouldn’t beleive. Medicare fraud has replaced the coke trade as the crime of choice.
Peter how big of a moron can you be? Do you not understand the term self fund? If an employer is self funding the risk that means the employer is paying it. Are you really this big of an idiot you can’t read the difference between employee and employer, do you not see the “R” at the end?
The employee has the same deductible they did before the employer bought the high deductible. Do you understand what the word same means?
Thank you for reminding us Krugman is also an idiot to dumb to align basic arguments.
“However, the Congressional Budget Office (CBO) has found that administrative costs under the public Medicare plan are less than 2 percent of expenditures, compared with approximately 11 percent of spending by private plans under Medicare Advantage. This is a near perfect “apples to apples” comparison of administrative costs, because the public Medicare plan and Medicare Advantage plans are operating under similar rules and treating the same population.”
This is dishonest propoganda that only a dumbass would believe. First off Medicare is nothing like Medicare Advantage. MA covers Dental, Vision, and Rx which Medicare does not, you can’t even begin to argue they are similar. MA has disease management, wellness, and other programs Medicare does not.
“For all their flaws they are still 10 times more efficient then government.”
Not so.
From the Heritage Foundation and Nate:
http://www.heritage.org/research/healthcare/wm2505.cfm
Now from Paul Krugman:
http://krugman.blogs.nytimes.com/2009/07/06/administrative-costs/
“If the group is self funding the risk under the new high deductible then what was transfered to the employees?”
The high deductible, for which without it you could not achieve the lower premiums/cost, just like every other insurance company does when trying to convince you that less is more.
Margalit – Regarding Mayo and the Cleveland Clinic, there are a couple of issues to consider. First, when the patient presents with a problem that needs to be diagnosed first, how many diagnostic tests and procedures needed to determine a diagnosis probably depends more on the medical practice culture in the area, which is partly influenced by the state level litigation environment, than on the skill of the clinicians. I was surprised, however, to read recently that Medicare beneficiaries in NYC actually have average healthcare utilization that is about in line with or even slightly below the national average. Medical prices, however, are considerably higher in NYC (even higher in Miami) than in Minnesota. Indeed, I recently learned that for a given procedure, Medicare only pays providers in Minneapolis about 70% of what it pays Miami providers for the same work.
If the patient needs an operation like a hip replacement or back surgery, shared decision making and second opinions can help to reduce unnecessary procedures. For cancer treatments and the sophisticated heart surgeries, the centers of excellence do generally charge more per procedure yet still cost insurers roughly 10% less than other hospitals due to better outcomes with fewer complications and readmissions. Better outcomes plus more cost-effective care is a winning combination. That’s why most insurers try to direct patients who need these procedures to the regional centers of excellence. For the routine procedures like normal labor and delivery, periodic physical exams, colonoscopies, minor surgeries, etc., there are lots of cheaper alternatives to the famous medical centers. Care under emergency conditions is a separate category that needs to be dealt with at whatever facility is available and close by. The bottom line is that the simpler and more routine the medical needs should be not be handled by an expensive teaching hospital or famous medical center if much less costly alternatives are available as they almost always are.
So are these Cleveland/Mayo/etc. more expensive per service, but altogether manage to provide better outcomes for less money because they figured how to provide only needed care and removed redundancy and unnecessary or ineffective therapies?
If that is true(big if), then why would you want to steer people to other providers and risk ending up paying more because they will end up with more procedures, more testing and more unnecessary treatments in general?
I thought we’re supposed to look at long term cost-effectiveness instead of per service costs. Something doesn’t add up for me here. Penny wise and pound foolish?
To follow up, Partners Healthcare in Boston is paid so much more than its regional competitors because of its huge local market power and the fact that everyone wants them included in their network. The concept of differential co-pays to dissuade people from choosing these hospitals when there are less expensive alternatives offering comparable and sometimes superior quality is intended to create countervailing power and pushback against the market leader’s unjustifiably high prices. By the way, hospital systems like Partners, Cleveland Clinic and Mayo all accept Medicare’s dictated prices and cost shift to the private sector. Medicare gets away with it because there is still a large private sector to shift costs to. However, it is highly unlikely that the famous medical centers could sustain their business model if they had to accept Medicare rates from all comers. Economists call this the fallacy of composition.
Nate,
I thought your comment yesterday responding to my post was probably the best discussion of the breakdown between the first $5K of claims for a given insured and claims above $5K that I’ve ever seen. The discussion of strategies for mitigating claims costs was also quite informative and I would like to learn more about the concept of medical tourism within the U.S.
Regarding the famous medical centers like Cleveland Clinic and Mayo, there was an article in the Boston Globe not long ago that said Partners Healthcare, which owns Massachusetts General Hospital and Brigham and Women’s Hospital in Boston, is paid, on average, about 30%-40% more than its local competitors for similar services even though its quality is no better and sometimes worse. A routine labor and delivery, for example, can probably be done for half the cost in a local community hospital vs. MGH or BWH. The only benefit the well known hospital offers that the community hospital doesn’t is a more sophisticated NICU in case there are complications, but when it’s needed, the newborn can usually be transferred there quickly and safely. Still, lots of people prefer to go to the famous medical centers for this routine stuff because it doesn’t cost them any more out of pocket. This is why I like the idea of differential co-pays to create incentives for patients to choose more wisely coupled with information from objective unbiased infomediaries to help them do so. At the same time, if you need cancer treatment or sophisticated heart surgery, you should be directed to a regional center of excellence and many insurers now do just that.
At the end of the day, people will spend their own money more wisely than they will spend someone else’s. While HDHP’s may cause some people to forgo necessary care as well as unnecessary care, I’ve never seen any evidence that it leads to higher healthcare costs at the population level though it certainly may for some individual cases. Keep up the good work.
No risk is transfered to the employee Peter, think through what I said before your liberal gag reflex kicks in. If the group is self funding the risk under the new high deductible then what was transfered to the employees?
I’ll give you the benefit of the doubt that you haven’t read any of my other post, vast majority of groups that do this are the sick goups, when they get a 30%+ increase they can’t afford then they are willing to do the extra work. THe healthy groups with minimal increases don’t want to be bothered.
How does a liberals brain work? Between you, Matt, maggie, and the other realiably wrong you come up with the most rediculous arguments that you try and pass as fact. None if it is even close to true, you just throw this crap put there and hope what? I never understood the logic of making up an argument. At best no one catches your full of BS and belives your lies at worst I embarass you.
no savings is not more then one percent it is a very large negative number as I have schooled you many times. For all their flaws they are still 10 times more efficient then government.
Medicare is such a low bar doing it better then the government is hardly something to brag about. You really don’t grasp anything do you?
Peter employees are still free to see any doctor they want, this is not a closed panel, no one ever said it was, why are you beating strawmen?
How does the boss have a talk with them fool when he doesn’t know what to talk to them about? If you are fully insured you don’t know how many generic substuitable drugs are being filled, how many wasteful ER visits there are, what would he talk about? I’m learning I can only take so much of your ignornance before I feel the need to intelectually kill you. Why do you post here peter, your a moron, your time would be much better spent learning some basics instead of arguing crap you make up.
” Kaiser proposed a rate increase of 18.8%. My friend’s company opted to accept a higher deductible, higher co-pays, and some reductions in their scope of coverage to keep the rate increase for 2010 to below 7%.”
“We accomplish this by having our clients buy high deductibles and self funding the risk under that deductible. ” The first thing this does is lower the groups premium 30-50%.”
Nothing new there Nate, just transferring risk to the employees. The company also separates itself from the general risk that an insurance company holds and is rolled into their rate calculation. Your business factionalizes the risk pool. Maybe that’s why we’re seeing such large rate increases from traditional insurance – they’re holding more high risk employees because all the low risk ones can afford to self insure.
“They are bloated, their offices are to nice, and their CEOs make to much.”
Just what I’ve been saying but you may find Actuary will disagree. Seems the savings are higher for getting rid of insurance companies than the 1% savings we keep hearing from insurance supporters.
“Once we have access to all these small claims we identify waste, fraud, opportunity, and educaitonal opportunity.”
Gee I thought the insurance industry was already doing this – “efficiently”. You’ve even said how private insurance ferrets out fraud way better than Medicare.
“Next is provider steerage”
So, the employees don’t get their choice of doctor? You judge on price, not qualifications? That doesn’t exist in single-pay countries. This is one of the arguments of the anti-reform bunch – the evil government will decide your doctor.
“When we show them how they can save the boss money which in turns keeps their cost down they almost always get on board.”
Weren’t they already on board with saving the boss money anyway? Either premium charges or self funded spending costs the “boss”. Don’t you think the boss already had that talk with them? You are attempting to ration based on fear and guilt as now the employees are taking it out of the bosses pocket – better not rock the boat and get on the rationing wagon, you could be looking for work buddy.
“Our average client that makes even modest effort has flat trends the past 3-5 years.”
Sure, as long as they don’t have any extra ordinary health claims. My personal flat trend has been 6 years now since I self insured.
Nate, you’re no genius with cutting costs, mostly just the usual insurance tricks of tranferring risk to the insured while not having much effect on system costs.
interesting service, everyone has probably heard about medical tourism, going to India or Costa Rica for treatment. I was given a presentation of someone that set up a Medical Tourism product using only US facilities. They have deals for different procedures at some of the best facilites across the country. The savings is unbelievable, not as good as India but not far off and still in the US.
Plenty of great solutions out there we just need to open our eyes.
“I thought they are one of those model organizations that figured out how to provide cost effective care…..”
Sorry, they are just a poster child for politicians and liberals that don’t have any idea how healthcare is delivered or the system works. They are roughly 30% higher then UH. They give incredible discounts which helps their insurance company partners sell business and steer it to them but if you really know what you are doing and look at the bottom line they are an inefficient choice for routine servies. Now if you need the impossible done then they are one hell of a facility. This is another lesson that needs learned but is never discussed. For an ear ache or flu we don’t need to see a doctor, NP or PA will do just fine, or I personally like TelaDoc concept. To get our toncils out we don’t need the Cleveland Clinic, local facilities with a couple less awards do just fine.
The negative financial impact from our demand for treatment is made many times worse by our demands on who deliver it. Us payors walk a find line when it comes to steerage. If we say go to UH they are 30% cheaper then CC and UH bothches the job we get sued as well. Until recently there was a lack of independent thrid party resources we could send people to. That is changing quickly. I suggest everyone check out https://reflectivemedical.com/
I’m working on that Barry, I had a great study that did just that I can’t seem to find. I do a terrible job labeling data so I can find it a year later. Once I do I’ll share it. In the mean time I’ll share some interesting numbers with you all. From our book of business, we have been doing this 25 years roughly, if you calculate the maximum liability for a group that moves from a $500 to $5000 deductible on average only .22 of it will be realized. i.e. if the group has 10 single and 10 family and pays 100% they take on $4500 and $9000 in risk or 135,000. Actual claims between $500 and $5000 are only 30K though. Under current rating though that represents roughly 30-50% of total premium.
We have a report that does that based on plan payment it excludes cost sharing, but it shows brackers of 0-2500, 2501-5000, 5001-10,000 on up. Roughly 80% of the group falls under 5K and account for 20-30% of claims.
20% of your lives still drive 80% of your claims. Carriers way over charge for small claim “insurance” because they can. people insist on having it and don’t think they have insurance if it isnt there, carriers know this and mark it up as much as possible.
Case mix is the problem at the reknowned facilites, if they only provided treatment to the exceptional case it would be cost justified, sadly people want that level of care for all services though.
We have a client in Dayton that works very closely with us. When ever we have new ideas he is always one of the first to try them out. They are paying less today then they where in 2003 when we took it over. We have a number of clients that are paying less then they where years ago before working with us. Sadly the success sories never get printed. That is why reform always polls so well when it is first discussed. All people hear are the horror stories so they think it is much worse then it really is. Once people start talking to each other they see the media and politicians are full of it and things aren’t nearly as bad as they where lead to believe.
Nate,
I think it would be helpful if you could shed some light on the percentage of healthcare costs that are accounted for by, say, the first $5K of expenses incurred by any given insured member. So, if you tallied up the total medical costs incurred by a group of your clients aggregating 10,000 covered lives, listed each person’s total medical costs whether paid by insurance, the employer or the insured, ranked them and then totaled all medical costs for those with expenses of $5K or less plus the first $5K of expenses for those with more than $5K of claims (at contract rates), how much would those small claims, as I defined them, add up to as a percentage of total medical expenses incurred by these individuals, irrespective of who actually paid them? I know of catastrophic cases that have literally run into the low millions of dollars plus others that cost several hundred thousand dollars or more each. Most insurers tell us that the 10% or so of their most expensive cases account for 60% of total claims costs or thereabouts. If insurers are willing to price high deductible plans 30%-50% lower than comprehensive plans as you suggest, it should imply that comparatively small claims account for 30%-50% of total costs which doesn’t square with the notion that a small percentage of cases drives the majority of claims costs.
Regarding the Cleveland Clinic and the Mayo Clinic for that matter, my understanding is that they command much higher prices than other lesser known facilities for the procedures that they actually perform. Where they supposedly save money is in diagnosing a patient’s problem with fewer tests and performing fewer unnecessary procedures. So, if the state of the art science says that you don’t really need a stent, you probably won’t get one at Cleveland Clinic or Mayo thereby saving the system money. If you do need one, it will probably cost the insurer 30%-50% more than if it were done at a less well known hospital.
Finally, I thought I would share a positive anecdote regarding health insurance costs. A friend of my wife is a professor at a small college in southern Ohio. For at least the last year, they had a high deductible plan with a $2K per person deductible. They are switching carriers for the upcoming year moving to Mercury of Ohio from Humana. Since they went to the high deductible plan, their claims dropped dramatically and their premium is decreasing. So, apparently not every small and medium size group client is subject to a double digit increase in their health insurance premium for 2010.
Yeah, I’m curious about that too. And your overall comment was very informative, Nate. I even read it.
Nate, did you just say that the Cleveland Clinic is 30% more expensive than other providers in the area?
I thought they are one of those model organizations that figured out how to provide cost effective care…..
Peter,
The first rule to controling HC cost is know what you are paying for. We accomplish this by having our clients buy high deductibles and self funding the risk under that deductible. The first thing this does is lower the groups premium 30-50%. If you want to really hit the insurance companies hard cutting their revenue in half is a great start. They are bloated, their offices are to nice, and their CEOs make to much. All the legislation in the world will not change this, it will make the politicians rich threatening legislation but it won’t accomplish anything. The best way to reduce CEO pay and carrier bloat is to never give them the money in the first place. Just like corruption and washington.
Once we have access to all these small claims we identify waste, fraud, opportunity, and educaitonal opportunity. There are millions that can be saved just by changing from one pharmacy to another, same drug just a mile further down the road can be 20-30% or more cheaper.
Educating employees on what drives their premium cost and how to help works much better in small business then in large. THe employees know the owner of a small business and usually see him every day. When we show them how they can save the boss money which in turns keeps their cost down they almost always get on board.
Next is provider steerage, in Ohio Cleveland Clinic is 30% more expensive off billed charges. For routine and een most major services there is no sound economic reason to pay this. Change providers, care is just as good and everyone saves.
There are tons of little things we can do to educate the owner and consumers on how to take control of their cost. Our average client that makes even modest effort has flat trends the past 3-5 years. It can be done they just need to make the effort and get the data. Allowing the government and insurers to hide everything is a sure fire way to drive cost through the roof.
Margalit HIPAA is a great example of how Washington destroyed healthcare. THe basic system works great and could work great once again if we eliminated politicians. We don’t need to start over we just need to clean out all the gunk Washington poisioned it with.
“Barry, tell me how this is not rationing?”
Peter – It is a type of rationing but a relatively benign form. I don’t know what specific scope of coverage reductions apply to my friend’s case or the size of the increase in the deductible and co-pay. Nobody, of course, is precluded from spending their own money for previously covered services.
People who lack access to health insurance because they can’t afford it is a serious problem that needs to be addressed. Other countries, including Canada, restrict the supply of services like imaging which forces people to wait considerably longer for appointmen