Uncategorized

Two Birds With One Stone: Covering the Uninsured by Fixing Medicare

Victor Sandler

As a nation, we are in a heap of trouble. Our medical system is a
disaster—overly expensive and ineffective. On average, we spend two to
three times more per capita on health care than other developed
countries. Yet on measures of quality, we rank 22nd out of 23 among
those same countries, according to the World Health Organization. Not
only that, Medicare, our national insurer for the elderly and disabled,
is facing more than $30 trillion in unfunded liabilities over the next
40 years. We have 50 million people who are uninsured in this country
and millions more who are underinsured because employers have shifted a
larger percentage of premium costs to them and increased deductibles
and coinsurance payments, causing some to forgo medical treatment
because of the expense.

The bad news is that we are on a path that is much too costly and
clearly not sustainable. The good news is we can get off that path by
cutting medical costs dramatically without negatively affecting
quality. The way to start is by acknowledging the fact that we don’t
have the best health care in the world, as former President George W.
Bush and others have touted.

What we have is the most health care in the world.

The Causes of Medical Waste
The factors that feed our obese medical system are manifold. But three
are especially troublesome. First, there is an unfortunate ethos within
American medicine and society at large called “heroic positivism.”1
Essentially, it is the idea that the more we do to and for our
patients, the more they gain.

The very act of intervening, whether it
is performing a test or giving a treatment, connotes a benefit for the
patient. This philosophy leads many doctors to perform, and many
patients to submit to, unnecessary tests and overly aggressive
treatments. This is particularly true in geriatrics, where there is a
narrower margin of safety because patients are frail and have a short
life expectancy, giving physicians less time to achieve positive
outcomes. Many elderly patients would be far better off if we complied
with the “do no harm” maxim and offered them more conservative, less
risky interventions, or no intervention at all.

Second is our emphasis on procedures rather than prevention. Most
specialty care physicians are in fee-for-service practice. They eat
what they shoot. The more stents they place, the more hysterectomies
they do, the more MRIs they read, the more they earn. Most doctors are
not so mercenary as to ignore their patients’ best interests. However,
the financial incentives clearly drive them to do more, not less, for
their patients.

Third, and most insidious, is the conflict of interest that pervades
health care in this country. Eighty percent of medical research and 70
percent of continuing medical education for physicians is paid for by
drug and medical device companies.2 Sixty percent of medical school department chairs are paid consultants for these companies.Of
physicians who author clinical practice guidelines, 80 percent are on
the payroll of Big Pharma, and 59 percent have relationships with
companies whose drugs were considered in the guidelines they authored.Far
too many medical decisions are being shaped by this unholy marriage of
physicians and corporate interests. The physician covenant must be with
his or her patient. Yet, the influence of drug and device
companies plays a role in nearly every clinical decision made in every
doctor’s office and at every hospital bedside.

This results in unnecessary and unproven care. Evidence suggests
that at least 30 percent of medical tests and treatments done in this
country are unnecessary.5-7 Examples include the use of
statin drugs to lower cholesterol in elderly people who don’t have
coronary disease, PSA testing in elderly men, mammography in elderly
women, coronary CT angiography, Pap smears in women who’ve had
hysterectomies for benign disease, and chemotherapy in patients with
advanced cancer who are debilitated and close to death.

The Solution
The drivers of health care cost inflation can be controlled not by
rationing beneficial care but by eliminating ineffective care. There
are a number of ways we can do this.

First, we can start cutting Medicare costs by eliminating
ineffective care—that means not reimbursing for it. If research has not
established that a test or treatment benefits a patient’s health, the
government should not pay for it. We should base these determinations
on evidence presented by nonbiased medical outcome research
organizations such as the Cochrane Collaboration, which make such
information available at no cost.

In 2006, the state of Minnesota created the Health Services Advisory
Council (HSAC), whose mission is to write authorization guidelines
designed to eliminate ineffective care and, thus, save the state money.
The council and similar entities in other states could be charged with
saving Medicare dollars as well. The federal government could provide
states with an incentive to do this by sending 50 percent of the
Medicare dollars saved back to them. The states could then use those
tens of billions of dollars to cover the uninsured.

Keep in mind that Medicare serves as a template for most other
medical insurance companies. The reimbursement decisions made by
Medicare eventually would be replicated in the private market. Thus,
the positive effects of these evidence-based authorization guidelines
would be felt across the whole health care system, resulting in huge
savings.

Second, we must urgently resurrect primary care, which is the
foundation of an efficient health care system. The American College of
Physicians warned in 2006 that “primary care, the back bone of the
nation’s health care system, is in danger of collapse.” During the past
decade, the number of graduates of U.S. medical schools entering
primary care specialties (pediatrics, family medicine, internal
medicine, and geriatric medicine) has dropped dramatically, as the
number entering other more lucrative specialties has increased.8
This is happening at a most inopportune time, as members of the baby
boom generation are entering their senior years and need the type of
coordinated, whole-person care these physicians deliver more than ever.

A number of measures must be taken to increase the supply of primary
care providers. Some of the options we might consider include defraying
the cost of medical school, which now exceeds $100,000, for doctors who
choose primary care specialties; mandating pay equity between primary
care and specialty care physicians; and providing the staff and support
that would give physicians more time for patient care and prevent
burnout. One way to expand access to primary care is by increasing the
supply of advanced practice nurses and physician assistants. The range
of services these providers perform is often limited by state statute
and reimbursement restrictions. Laws should be modified in order to
maximize their potential as primary care providers.

Third, we need to eliminate ineffective care at the end of life,
which is now poorly managed and excessive. The frail elderly and the
terminally ill all too often receive unwanted and expensive medical
care. Many patients might refuse some of this care if the true benefits
(often nil) and burdens (often great) were accurately explained to
them. We need to adopt tools such as POLST (the Physician Orders for
Life-Sustaining Treatment paradigm), which is designed to ensure
informed consent about the care people receive at the end of life. We
also need to do a better job of integrating hospice and palliative
medicine into our health care system. These services improve patients’
quality of life and decrease costs by discouraging undesired medical
interventions.

Fourth, we need to encourage the development of integrated health
care systems such as those of Kaiser Permanente in
California, Intermountain Health in Utah, and Mayo Clinic.  These
systems save money—as much as 20 percent compared with the cost of
other care—through improved care coordination, use of electronic
medical record systems, and elimination of duplicate services.

Conclusion
The priority for health care reform must be cost containment.
Eliminating medically ineffective or unproven care will accomplish this
goal without sacrificing quality. We can kill two birds with one stone.
The tens of billions of dollars saved by limiting Medicare
reimbursement for unproven care will provide the resources we need to
cover all of our citizens. Finally, we must continue to improve health
care delivery by rewarding physicians who practice primary care,
promoting better end-of-life care, emphasizing better care
coordination, expanding the use of electronic medical records, and
eliminating redundancy of services. By doing this, we can create a
cost-effective, high-quality health care system that truly is the best
in the world. 

Victor Sandler is an internist and geriatrician. He also is
bioethics committee co-chair for the University of Minnesota Medical
Center, Fairview, medical director of Fairview Hospice, and a member of
the State of Minnesota’s Health Service Advisory Council.

Editor's Note: An earlier version of this post omitted the footnotes that Dr. Sandler included with his posting.  

References
1. McCue JD. The naturalness of dying. JAMA. 1995;273(13):1039-43.
2. Abramson J. Overdosed America: The Broken Promise of American Medicine. New York, NY: Harper Collins; 2004.
3. Campbell EG, Weissman JS, Ehringhaus S, Rao SR, Moy B, Feibelmann S,
et al. Institutional academic-industry relationships. JAMA.
2007;298(15): 1779–86.
4. Choudry NK, Stelfox HT, Detsky AS. Relationships between authors of
clinical practice guidelines and the pharmaceutical industry. JAMA.
2002;287(5):612-7.
5. McKinsey Global Institute. Accounting for the Cost of U.S. Health
Care: A New Look at Why Americans Spend More. McKinsey and Co. December
2008.
6. Dartmouth Atlas Project. The Care of Patients with Severe Chronic
Illness. Lebanon, NH: The Dartmouth Institute for Health Care and
Clinical Practice; 2006.
7. Fisher ES, Wennberg DE, Stukel TA, Gottlieb DJ, Lucas FL, Pinder
EL., The implications of regional variations in Medicare spending. Part
2: health outcomes and satisfaction with care. Ann Int Med.
2003;138(4):288-98.
8. Bodenheimer T. Primary care—will it survive? New Engl J Med. 2006,355(9):861-4.

Livongo’s Post Ad Banner 728*90
Spread the love

Categories: Uncategorized

Tagged as:

31 replies »

  1. “An Enthoven-ish sort of idea.”
    Exactly. At least for tiers 2 and 3.
    I’m radical enough to go for a tax-supported tier 1, boosting local mental health and public health department clinics to serve walk-ins that now routinely go to hospital emergency rooms for all kinds of non-emergencies.
    A public-private “exchange,” a la Ethoven, might also work at the safety net level depending on local needs and resources. At the grass roots I don’t think any “one size fits all” is feasible.
    As for all that commodity stuff, I’m way out of my depth. Whatever you say is fine with me as long as it means people without money will get better medical care than they now receive.
    Portability is also a crying need. Less “job lock” will be better for the business community whether they like it or not. Health insurance as handcuffs is a lousy way to keep employees from getting better jobs.

  2. > That’s why they say you can make a small fortune
    > in the commodities market… starting with a large
    > fortune.
    You are confusing a contract for future delivery of a commodity with the commodity itself. You have bought the commodity when the transaction is complete, and you could have bought the same thing from any other seller for about the same price.
    Hair replacement, fertility treatments, […] Those who want to keep themselves or their family members alive in a vegetative state for years, abortions, nose jobs as treatment for depression, sex changes, sex unchanges…
    All this is a “definiton of disease” problem or a problem of who is entitled to or worthy of society’s protection. These are philospohical questions, and are the best reason I can think of for relying on a (tightly-regulated) private insurance market with subsidies for the bottom half of the income distribution. An Enthoven-ish sort of idea.
    t

  3. “Single-pay certificate of coverage/summary plan description: “You get sick we’ll cover you”. There, no lawyer needed, both sides understand the contract.”
    Peter you don’t really believe that do you?
    Will your plan cover abortions at 8 months 20 days becuase mom wants to go to spring break?
    How about your depressed and nothing short of nose job will cure it?
    Sex Change?
    Sex unchange?
    Medicare exclusions and limitations are bigger then any private policy I have ever seen.

  4. Tom Leith,
    I disagree that “In a commodity market you know what you’re going to get…” The commodities market, like all markets, is a guessing game. The bid price only equals the sale price when a transaction is complete. Until that moment, no one, whether seller or buyer, knows what he are going to get. That’s why they say you can make a small fortune in the commodities market… starting with a large fortune.
    I would say that in the case of health care what you get is even more uncertain. Why else would physicians consult one another or patients seek second opinions?
    You are right, however, that “as soon as you use the qualifier ‘basic’ you’re “rationing.”
    I am guilty of muddy thinking and stand corrected.
    That’s why Dr. Ravi.Pandey’s three-tier suggestion appeals to me.
    http://blogs.biproinc.com/healthcare/?p=485
    “Tier 1 would focus on the general health need as well as the wellness. The government through taxes will provide these services. The taxes will be solely collected for healthcare purposes and will be a percentage of every individual’s income….
    “Adaptation of Tier 1 as a national program would require creation and development of the infrastructure…[etc., which I’m sure would involve what you may by definition call “rationing.”]
    “Second and third tier would be left to the free market to design with legislative guidance. Second tier could be designed for buying insurance for serious illnesses and tier 3 could be, in Senator McCain’s terms, the Cadillac of healthcare. This would be for those who want to buy insurance for hair replacement, fertility treatment, etc. Those who want to keep themselves or their family members alive in a vegetative state for years would have to buy their coverage through tier 2 and tier 3 as appropriate. The healthcare dollars need to be utilized for overall national health. They should be prioritized for the net present value of life for the individuals competing for the resources.”
    ALL health care systems are rationed, whether by the person in charge of combat triage to insurance clerks at your local clinic. The system now in place is a rationing system and has been for years. This three-tier system, with a tax-supported safety net at the bottom, would happily yield any or all to the private sector.

  5. Nate writes:
    > You can’t underwrite risk when you don’t
    > know what you’re underwriting.
    Correct. And the courts will always construe the terms of a contract, especially 20-100 pages of mind dumbing detail not even experts can agree on the meaning of at any particular point in time, against the party who drew-up the language. So when the dispute comes to “I thought when I got sick, you’d pay for whatever my doctor did to me” versus “No, we didn’t agree to pay for that under these circumstances” the usual way of dissolving an apparent contract (i.e. “Here’s your money back”) isn’t allowed. The judge says “pay up”. This is complicated by the fact that the guy who bought the insurance (HR guy at patient’s employer) is likely the only person to have seen the 20-100 pages.
    I think you’ve amply proved my point. Thanks.
    > a functioning commodity market, far from
    > pricing uniformity, is very volatile.
    Price uniformity and volatility are orthogonal issues. Look at the price of oil over the past year or so. Up and down all over the place, but everybody paid about the same price on the same day. Unless he bought insurance in the form of a futures contract .
    t

  6. Single-pay certificate of coverage/summary plan description: “You get sick we’ll cover you”. There, no lawyer needed, both sides understand the contract.

  7. “It isn’t. In a commodity market you know what you’re going to get, everybody pays the same price, and that price falls to the long run average cost of the thing in question. And since medicine isn’t a commodity, I don’t think medical insurance can be a commodity. Certainly it isn’t today.”
    I wish I could write as well as Hootsbuddy. Federal and state laws require when I sell an insurance policy I deliver either a certificate of coverage or summary plan description. These are 20-100 pages of mind dumbing detail about what you’re going to get. There are very few cases in the history of Medical insurance where a carrier refused to pay for something outlined in these documents. It’s such basic law they stand no chance in court. Where you see lawsuits and news stories is when a policy holder wants something covered that is not. Law is complex, the tense of a word or punctuation can change the intended meaning. It’s it very hard to write these documents. Attorneys acting on behalf of policy holders trying to get something covered are very skilled at finding a vaguity to exploit in an attempt to get coverage. This starts the breakdown of insurance. Actuaries take a series of hard data and assumptions to calculate premiums. When after the fact courts and legislation drastically expand on those assumptions it destroys the underlying foundation. You can’t underwrite risk when you don’t know what you’re underwriting.
    Commodity pricing changes as demand and value changes, a functioning commodity market, far from pricing uniformity, is very volatile. Keep in mind healthcare is not the commodity the insurance is. I can tell you with incredible accuracy how many people in a group of 10,000 will get a specific type of cancer. I can further tell you the average cost of treatment for each one of those people. With this I can tell you by charging each of those 10,000 people $X I can pay those that get cancer $Y. That is insurance.
    You are correct a properly functioning insurance market with a large enough base should have premium cost 5-10% higher then the risk payout. With competition there are enough people willing to risk money to earn that margin, that is why contrary to popular progressive propaganda carrier margin always hovers around 6%, any higher and someone new will take away the business.
    What insurance can’t do is price in or pay out for unknown treatments. A policyholder can’t decide they want to have a new trial treatment some doctor is pioneering and have their insurance company pay for it. This treatment wasn’t calculated in the assumptions and thus is not supported by the premium.
    The other shortcoming of insurance is predicting consumer choice. How many people will want to get a preventive check up because it was highlighted on Oprah this morning? Routine and discretionary care is fickle and adverse to predictable data sets. This leads to inaccurate pricing. This is why it is highly inefficient to insure first dollar care and anything below a high deductible.
    We need to allow insurance companies to sell insurance.

  8. Dr. anon writes:
    > Why oh why is our legal class never
    > asked to give up anything?
    They are, at least around here. It is presumed by just about everyone here that medmal cases will be handled by arbitration or at least a special medmal court. It will also help if the standard of care is truly standard. My guess is the legal eagles will try to horn-in on the arbitration process. My hope is that it will be dominated by doctors, preferably academics.
    t

  9. Hotsbuddy writes:
    > health care INSURANCE may be a commodity
    It isn’t. In a commodity market you know what you’re going to get, everybody pays the same price, and that price falls to the long run average cost of the thing in question. And since medicine isn’t a commodity, I don’t think medical insurance can be a commodity. Certainly it isn’t today.
    > anything short of universally available
    > basic health care is a form of rationing.
    But as soon as you use the qualifier “basic” you’re “rationing” too. About the only thing we seem to agree on is that oncologists ought to be kept out of coffins.
    t

  10. Apologies to Dr. Sandler. I got so wrapped up in the previous comment I failed to recognize the excellence of this post. I especially like the emphasis on igniting a renewed interest in primary care. A trend to specialization over the last several decades has led to some truly great specialists, but there is a crying need for old-fashioned family doctors. When one of our children was still a toddler my wife mentioned to her OB doctor that her daughter wanted to be a doctor when she grew up. His reply was cute but revealing: “Tell her to become a dermatologist. There are no emergencies… and they never get well.”
    After a career in food service my post-retirement jobs have been in senior care. Dr. Sandler’s mention of end of life issues is another important point I have seen illustrated countless times. Most of America has never heard the word “hospice” and among those who have most have never come in contact with the movement.
    I see no reason that every family in the country should not have access to and familiarity with hospice. Of all the many initiatives now under way, a means of spreading the word about hospice would have a profound beneficial impact on one of the most expensive components of health care inflation: end of life expenses. One more cute, if grim snip to this point:
    Q Why do coffins have nails?
    A. To keep out the oncologists.

  11. I have been reading THCB posts and comments now for several weeks and am getting somewhat familiar with screen names and arguments. In some cases I can glance at the writer’s ID and guess where a comment is headed before I read it.
    Nate is perhaps the most persuasive, impressive voice of insurance interests. I stand in awe of his adroit, take-no-prisoners, sometime epic comments. This gem above jumped out at me:
    “Insurance should be a commidity, it’s a pure numbers game and we have way to much margin in ours. I can’t think of any other commodity market with a 20% markup.
    “People in my segment use to make our living attacking carrier margin. I have terrible social skills but can make numbers dance, the problem is congress keeps placing artifical barriers in our way. If Congress would get out of the way we could easily cut that 20% in half.”
    Here he puts his finger precisely on a critical nub of most of these arguments: insurance as a commodity.
    I’m not as quick-witted as Nate, but if the “commodity” in this case is health care insurance (like stock, stock options and commodities futures trading) how is that insurance different from the delivery of health care itself? Without saying so with precision, Nate has put his finger on a core question. How is health care insurance to be separated from the actual delivery of health care itself?
    As I look closely at these discussions it is clear to me that part of the confusion is not separating providers from insurers. Most people fail to make that distinction, especially in the case of anything called “government…”
    We already have government health care as well as government insurance. Government health care includes veterans hospitals and a number of other facilities run by and for the armed forces. As an Army medical corpsman many years ago I was very impressed with Brooke Army Medical Center in San Antonio, and every schoolboy knows the name of Walter Reed. And all over the world uniformed service people, civilians and their families can access the nearest government health care providers, especially outside the US. I don’t know how the health care needs of a growing number of outsourced civilian contractors are met, but my guess is that they are cared for by the nearest armed forces dispensaries.
    So a lot of actual government health care already exists. (Incidentally, I don’t read too many complaints about it, although occasional media dust-ups like last year’s stories about deteriorating facilities at Walter Reed pop up, the problems are quickly remedied.)
    Most health care arguments, unfortunately, conflate PROVIDERS with INSURANCE.
    Government health care INSURANCE is a different matter from government health care PROVIDERS. Government insurance starts with Medicare, but it also includes FEHBP, Indian Health Service, and whatever benefits are provided to state, and local governments in the fifty states and countless cities, townships, counties, parishes and finally, Medicaid, the ultimate government safety net for destitute individuals with no other means to pay.
    Most health care providers have two main revenue streams: government insurance and private insurance. Co-pays, charity contributions and a few out-of-pocket individual expenses may appear on the books, but the big numbers come from government or private insurance in one form or another.
    Nate’s second paragraph quoted above is a gem. One sentence captures two sparkling ideas:
    1. In his own words he has terrible social skills but knows how to make numbers dance, and
    2. Congress keeps placing artificial barriers in our way.
    I have nothing to add to idea #1. He said it better and more succinctly than anyone.
    And idea #2 reminds me of the well-known quote that one death is a tragedy; one million deaths is a statistic.
    My point here is simple: health care INSURANCE may be a commodity, but the DELIVERY of health care is not. We can use delicate language using words like “risk, risk pools, demographics, percentages, compliance, fair, deserve, and choice” but anything short of universally available basic health care is a form of rationing.

  12. Peter,
    You wrote: “Do doctors want total absolution from errors/mistakes/incompetence?”
    I don’t think so, I certainly don’t. What I really ask you to make an effort to understand is: There is a difference between honest errors of judgment and negligence. In fact, the jurisdiction largely already acknowledges that, but unfortunately, that did not really penetrate fully to our jury based courts. Please do read the following from a state court of appeals:
    “A physician is not an insurer of the results of his diagnosis or procedures. He is obliged to conform to the accepted standard of reasonable care, but he is not liable for failing to exercise an extraordinary degree of care.
    True, physicians too often have a tendency to encourage the aurae of an infallibility they do not possess. Theirs is not an exact science, and even the very best of them can be wrong in diagnosis or procedure. The question, however, is not whether a physician has made a mistake; rather, the question is whether he was negligent.”
    http://www.acr.org/MainMenuCategories/about_us/committees/gpr-srp/MedicalLegalCommittee/MalpracticeWisconsinDecisionDoc6.aspx
    What is frequently happening in the US over the past decades is that medical care is examined IN HINDSIGHT. That means, a patient has a bad outcome, is unhappy, goes to a pers. injury lawyer, and with the benefit of retrospection, it is constructed that one (or multiple) doctor’s therapeutic or diagnostic judgment was wrong and “substandard care”. Hindsight is always 20/20 (BTW, this has been proven to apply also to physicians judging other docs care). This is like a friend of yours telling you AFTER your divorce: “I knew from the start that your marriage would break apart, you were incompatible, I noticed that she liked Celine Dion, while you like Barry Manilow.”
    A lot of these lawsuits don’t succeed, but some do. My point was: it doesn’t matter that insurance premiums or awards may be negligible in the grand scheme of things (even that is debatable). WHAT COUNTS IS THAT DOCTORS FEEL THREATENED BY LAWSUITS (malpractice defense takes emotional toll and causes loss of earning). And this causes costly DEFENSIVE MEDICINE (and doctors avoiding certain states, creating shortages).
    Of course there is real negligence that should go to trial (e.g. not reacting to alarming test results, not referring a clearly deteriorating patient w/o a clear diagnosis to a specialist/for a 2nd opinion ). And there is incompetence although I think its frequency is likely overblown (doctors are tested quite thoroughly in the US).
    I think reform could be easy. Enforce the above legal standard and take the emotional jury out of the equation (for instance, have a judge initiate peer review by several experienced out of state physicians and have them RECOMMEND a. no merit – dismiss b. possible negligence – trial c. possible imcompetence – pass on to state board, or even better, create a federal board so that bad doctors don’t hop from state to state).

  13. Peter
    As a primary care physician as a matter of course whenever I smell the possiblity of a dissatisfied or unrealistic patient, I refer like hell to any number of specialists. My specialists, who already default to intervention described above, can smell as well as I can so they have the patient undergo as aggressive testing as possible. Getting sued is a long, drawn out process akin to water torture, with plaintiff attorneys, with the connivance of the system, actually using the stress of getting sued against the physician/defendant. I have seen a plaintiff attorney in open court verbally threaten to draw out a case until the doctor had a heart attack and walk away uncensored.
    It does not matter that most plaintiffs face lottery odds, merely getting sued is a multi-year ordeal. Horrific is not too strong a word.
    This is simply human nature, one can’t simply respond “that’s wrong” or ” you are a bad doctor for doing that” and be considered a serious person in this debate.
    I will continue to refer risk and society will continue to pay a certain percent surcharge on the total healthcare bill until a plaintiff attorney is forced to recogonize me as a specialist in general medicine and is not allowed to ask me on the stand, “why did you not refer the patient.” I am obligated to teach every student, intern and resident the same technique. Any physician who does not have his patients sign a madatory arbitration contract before accepting care in this system is a fool.
    This blog is replete with posts asking taxpayers to pay to universalize care, patients to forgo care that may help them but has not been proven to help a generalized population.
    Why oh why is our legal class never asked to give up anything?

  14. Nate writes:
    > Under the present system someone should never
    > receive treatment from a provider they don’t
    > have a contractual rate with.
    > Even when a bill is not paid by the insurance
    > company it should still run through them.
    Practically, this means everyone should be going through a PPO-ish thing. So, how is this “buying direct”?
    It sounds to me like you’re doing arbitrage against two things:
    1) tax laws
    2) carriers’ inability to capture all the value of their networks
    Fine. Go for it. People should listen to you, especially for the short term. But you don’t solve any fundamental problems.
    One complication that may be causing difficulty is the distinction between “Social Insurance” and “Insurance Financing” — they sound similar but mean very different things. Personally I wish we could all be clear about what we’re talking about all the time.
    The “single payer” crowd want “Social Insurance” for a whole host of reasons, not least among them is the ablity to counter a monopoly with a monopsony and to overcome information asymmetries.
    You’re right, Insurance Financing should be a commodity. It’s just that medicine isn’t very well served through an indemnity insurance financing mechanism, at least not anymore. We cannot treat medical events like we treat natural disasters. In the case where a building burns down, we know what the building was and we know how to rebuild it, we can tell whether it was done poorly or well, and we know approximately what it should cost. Medicine is not like this, and so it is all but impossible to 1) price a contract (especially since courts re-write them all the time), and 2) monitor performance. This argues strongly for something besides indemnity insurance.
    t

  15. As Dr. Sandler says, we should absolutely be focusing on containing Medicare-related costs as a means for informing broader healthcare reform. Emphasizing the need for a more robust primary care system is an excellent place to start; however, to tackle the problem more precisely, we must focus on addressing costs related to those with chronic conditions, including with improved primary care and physician extender provided care coordination and chronic disease management.
    When broken down, approximately 30 percent of seniors account for more than 80 percent of Medicare costs. Most of that 30 percent is comprised of those with chronic illnesses such as diabetes and heart failure, which require a more sophisticated approach to care in order to prevent complications and their related costs. Encouraging more care coordination and use of preventive services through payment system reforms that reward quality, not quantity, can effectively move us away from the disaggregated care and rising costs that plague the current Medicare system and damage the overall healthcare economy.
    Solving the cost problem will ultimately help increase coverage and address the solvency crisis Medicare currently faces. To that end, by rewarding those in the industry who prioritize quality over quantity, we can look to a future healthcare system that provides more coverage for more people.

  16. “it doesn’t matter that the lawsuits are not that frequent (and less frequently won by the plaintiff) and the financial burden maybe negligible in the grand scheme of things … ”
    Oh yes it does matter rbar.
    “what counts is that doctors have good reason to feel threatened by litigation.”
    Not from your statement above. Do doctors want total absolution from errors/mistakes/incompetence?
    rbar, take medical costs off the table through a universal single-pay system, and jury awards would be reduced to earnings and lifestyle compensation, and punitive (only for the most agregious cases). How do you think community clinics work, do they operate under the same “do all tests to avoid a hint of lawsuit” medical care – I doubt they or their clients could afford it. Are lawsuits as (rare) frequent there?
    Looks like we need some comparitive effectiveness for lawsuit perception.

  17. I agree as well with Dr.Sandler.
    I finished a book recently that came to mind after reading your post.
    It’s called “The Ultimate Practice Building Book,” by David Zahaluk. It will help you to clarify and differentiate your practice from a marketing standpoint. It’s amazing and could save you money! Which would be great with these tough Economy time we have now.
    Find out more from his website http://www.ultimatepracticebuilder.com/

  18. Under the present system someone should never receive treatment from a provider they don’t have a contractual rate with. In my ideal world PPOs would be eliminated but that is unlikely any time soon.
    Carriers are responsible once claims exceed a threashold, they would obviously like them to never reach that point and thus gladly reprice claims even for expenses they don’t pay.
    Even when a bill is not paid by the insurance company it should still run through them. They need to apply discounts and apply expenses towards deductibles and out of pockets but it is also important to capture the data for modeling and cost management.
    Data processing is cheap, the cost of insurance comes in premium taxes, commisions, and other expenses tied to the amount of claims paid. We can shuffle data for a couple percent.
    All the various tax plans shift the expense off the carriers book and onto the empoyer or individual, this eliminates the % paid to states for taxes and other cost. This is why it’s an obvious solution that should be pursued, it doesn’t cost anything, doesn’t ration care, it’s just more effective.
    Insurance should be a commidity, it’s a pure numbers game and we have way to much margin in ours. I can’t think of any other commodity market with a 20% markup.
    People in my segment use to make our living attacking carrier margin. I have terrible social skills but can make numbers dance, the problem is congress keeps placing artifical barriers in our way. If Congress would get out of the way we could easily cut that 20% in half.

  19. “Eighty percent of medical research and 70 percent of continuing medical education for physicians is paid for by drug and medical device companies. Sixty percent of medical school department chairs are paid consultants for these companies. Of physicians who author clinical practice guidelines, 80 percent are on the payroll of Big Pharma, and 59 percent have relationships with companies whose drugs were considered in the guidelines they authored.”
    On the other hand, 99.99% of those on the state’s payroll or receiving NIH grants approve more government control of health care – but I suppose that’s not a conflict of interest. Go figure!

  20. Nate writes:
    > You have redefined the term insurance
    I understand insurance theory reasonably well. I do not have your deep understanding of customary contractual arrangements.
    > Under what possible scenerio would someone
    > not have access to the PPO discount?
    Under the scenario I thought you were talking about: routine services are not insured and docs are paid out of pocket without involving an insurance company at all. No claims, no nothing until a covered service is provided.
    I should look harder at the alphabet soup of tax-privileged funding sources that aren’t “insurance” to understand them better, but I’m having trouble seeing how the complication of accounting for “eligible” expenditures and eventually dipping into insurance financing at just the right time to deal with the rest can reduce aggregate expenditures. The population risk is what it is.
    t

  21. Leave enough nickels on the table eventually you’ll have a 25 cents. Seems short sighted to pass on the 5 nickles sitting there becuase they aren’t a quarter.

  22. “For some people, yes, ceteris paribus, anything short of 100% reimbursement means these are underinsured. This is probably 25% of households.”
    For no one. Someone must pay the insurance premium. It always is and always will be, for the person liable for the premium, cheaper to pay the bill directly and avoid insurance. You have redefined the term insurance, instead of a policy of protection you have changed it to mean a wallet out of which you pay bills. Insurance is not a wallet. You are not underinsured just becuase you have an expense to pay.
    FSA, HSA, HRA, Debit Cards, tax credits any of these would avoid the 20% mark up of insurance premium and thus is more efficient. Redirect the premium savings to any of these accounts or methods and the same level of coverage is achieved more efficently.
    “Without an insurer to negotiate fees, who says they wouldn’t be 50% higher than they are now?”
    I work with all the major insurance companies and a number of minor ones and have never seen a carrier that didn’t discount claims under the deductible. Under what possible scenerio would someone not have access to the PPO discount? If there is a one in a million slip through the cracks scenerio this happens you can buy a discount card for $10 a month, problem solved.
    “Under a “real insurance only” sort of regime, people would be made price sensitive to small expenditures, but they’d still be price IN-sensitive with respect to large expenditures, and the problem of medical inflation will go unsustainably on.”
    So lets ignore the 5-10% savings we could have tomorrow with no change in benefits, no new taxes, no legislation from congress… becuase it only saves us 5-10% and we where hoping for 25-40%? Leave enough nickels on the table eventually you’ll have a quarter. Seems short sighted to pass on the 5 nickles sitting there becuase they aren’t a quarter.

  23. rbar and surgeon should consider joining a group if they are so worried about litigation. Ever hear of strength in numbers? Nah, not doctors. Each believes he already knows everything and doesn’t need any help.

  24. This is an absolutely fantastic article, and I couldn’t agree more with everything that was said. I’ve experienced the frustration and inefficiency of the US health care system firsthand. Following a bicycle accident, my insurance company denied all coverage because the accident happened 15 minutes before my Catastrophic Insurance policy renewal went into effect. At the age of 24, I am now more than $90,000. in debt with medical bills and still unemployed.
    Luckily, I was able to travel to Finland for my full mouth reconstruction where private fees are 1/3 the cost as in the US. And yes, my dentist here is just as qualified and skilled as any dentist in the US.
    Now I am working in a government run health center in Finland. Let me tell you, when it’s done well government run health care centers WORK BEAUTIFULLY!
    And of course, the problem with providing too much sustaining care for elderly patients is going to become a much bigger and more apparent problem in the coming decades!

  25. It is important to make sure that all of your medical records are safe and secure which is why I am thrilled that they are going to be turning all medical records into electronic medical records. I feel allot safer knowing that not just anyone who stumbles into the office can look through my medical records and steal all of my personal information.

  26. Nate writes:
    > Has this debate really sunk to the point where
    > anything short of 100% reimbursement means your
    > underinsured?
    For some people, yes, ceteris paribus, anything short of 100% reimbursement means these are underinsured. This is probably 25% of households.
    > For the 100th time charging someone $1.20 for a
    > serivce they can buy direct for $1.00 is not
    > insurance, it’s poor finance.
    Without an insurer to negotiate fees, who says they wouldn’t be 50% higher than they are now? Medicine is a government-protected monopoly with monopoly pricing power, and price discrimination is a hallmark of monopolistic markets. Maybe most of us are saving 30 cents.
    Under a “real insurance only” sort of regime, people would be made price sensitive to small expenditures, but they’d still be price IN-sensitive with respect to large expenditures, and the problem of medical inflation will go unsustainably on.
    I could go on. Maybe I should write a book.
    t

  27. An interesting post. But as one of the commenters metioned above, what about medical torts reform Why is this never a topic. I will continue to order tests to which I already know the conclusion in order to protect myself in case of litigation. Who doesn’t? Secondly, people are out for AIG and their bonuses, why doesn’t anybody look at the insurance companies. I find it disgusting that for-profit organizations determine who gets what medical treatments/procedures – or what is payed for. Its awful that these companies cut reimbursements but give out billion- BILLION – dollar bonuses. Think about that.
    http://healthforself.today.com/

  28. Excellent Post by Dr Sandler!
    But he seemed to have omitted the huge problem of the “medicalization” of America’s social problems like joblessness and poverty
    Imagine how much less health care we would have to pay for health care if we eliminated these two social problems alone.
    But a $2 trillion dollar plus profit making enterprise that chooses to ignore what is well known for decades will be a challenge to change
    Dr. Rick Lippin
    Southampton, Pa

  29. Where did the extra 4 millon uninsured come from? I’ve never seen a study to support 50 million uninsured.
    “Fourth, we need to encourage the development of integrated health care systems such as those of Kaiser Permanente in California”
    Being very familar with Kaiser in both CA and OH they are never the low cost option. They are always more expensive then the other plan option, what supports this claim they save 20%? People buy Kaiser for the model never for the price.
    “millions more who are underinsured because employers have shifted a larger percentage of premium costs to them and increased deductibles and coinsurance payments”
    Has this debate really sunk to the point where anything short of 100% reimbursement means your underinsured? Even though it is hugely inefficient to insure small claims and does nothing but waste money we are going to call anyone that has to pay out of pocket underinsured?
    For the 100th time charging someone $1.20 for a serivce they can buy direct for $1.00 is not insurance, it’s poor finance.

  30. I largely agree with Dr. Sandler, but he seems to overlook two major issues:
    -a lot of the cost explosion is diagnostic (mostly noninvasive but also invasive). Treatment research would not help. Enforcement of guidelines (e.g. don’t do brain MRIs for episodic migraines, or back MRIs for axial back pain) could help, although that would be hugely unpopular with doctors and patients.
    -Did Dr. Sandler ever hear of the problem of medical litigation? There are failure to diagnose lawsuits (where doctors are asked why test X was not ordered, even though the patient ended up having condition Y, with a bad outcome? Wasn’t symptom Z not consistent with diagnosis Y, in hindsight, of course?) and failure to treat lawsuits … it doesn’t matter that the lawsuits are not that frequent (and less frequently won by the plaintiff) and the financial burden maybe negligible in the grand scheme of things … what counts is that doctors have good reason to feel threatened by litigation. And they will order and order tests, consults and treatments that don’t benefit the patient.

Leave a Reply

Your email address will not be published. Required fields are marked *