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Workers Ungrateful for Empowerment to Pay More

6a00d8341c909d53ef0115702ff0f9970b-pi American workers sure are ungrateful.A new report by the National Business Group on Health (NBGH) says that 27 percent of insured workers are skipping health care treatments to avoid co-payments, 20 percent of employees are not taking their prescriptions as advised by their doctors, and 17 percent of employees are cutting their pills in half to make them last longer.Yet rather than expressing gratitude for the opportunity to express their consumer-driven preferences, and rather than praising the benefits consultants and conservative think-tank talkers who have given them the chance to have “skin in the game,” 58 percent of those surveyed said they “continue to be surprised” at their out-of-pocket costs. Obviously, they haven’t been attending conferences of HR execs, or they’d know that one man’s “cost shifting” is another man’s “empowerment of my employees.”It turns out that shopping for health care is not like shopping for a refrigerator and that changing co-pays and deductibles has to be undertaken with a great deal of care. Workers, hard-pressed financially by a deep recession, workers are not craftily eliminating unnecessary and non-evidence-based care. Instead, they’re pill splitting or skipping the pills entirely. This is precisely what the landmark RAND Health Insurance Experiment research on copayments and deductibles predicted more than two decades ago, which would be no surprise had the study consistently been quoted honestly by all proponents of the so-called consumer-driven health plans.

Of course, what goes around, comes around. Since 68 percent of employees say that having access to health benefits is a key reason for staying with their employer, it will be that same employer who picks up the tab for the consumer-driven diabetic who has to drive her consumer self to the emergency room because she couldn’t afford her medication. However, the good news is that a majority of workers polled said financial incentives from their employers have motivated them to try to lead a healthier lifestyle.In fact, about half of workers now agree that fat people and smokers ought to pay higher premiums. That’s only fair. And I think guys who have personal trainers and executive physicals should pay less, too, don’t you? Oh, wait. That wasn’t on the questionnaire.Why not just eliminate health insurance altogether and instead give every worker a shiny apple a day? (To keep the doctor away, of course.) If any HR execs, benefits consultants or conservative policy wonks out there would like to adopt this proposal, you can call it One More Fruity Idea for Health Care.

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  2. Nate asks:
    > why do we send so many trillions to DC for them to
    > send it right back to the states with conditions, it
    > completly violates the concept of a federation we
    > were founded on.
    Several reasons, interrelated.
    1) “Progressive” thought comes in two strains, at odds with each other. One strain seeks freedom from all authority. The other strain seeks freedom from Hobbes’ “state of nature” and poses Leviathan as the answer.
    2) The concept of a federation we were founded on is upside down — there really is no Constitutional way for the Federal Government to protect citizens of the various states from the states themselves, or to mandate that the various states meet any kind of minimal standards for social welfare, aka “freedom from the state of nature”. On a practical level, the notion of “states rights” has meant historically “black slavery” and so the entire concept became suspect.
    4) Any attempt by the Federal Government to enforce any sort of standard of social welfare is called an “unfunded mandate”. The Utopian Left does not like the “unfunded” part; The Anti-Authoritarian Left does not like the “mandate” part; The Conservative Right doesn’t like what is mandated; and the Constitutionalist Right does not like who is mandating it. So the Federal Government started bribing the state governments to meet standards by borrowing money and taxing people and handing the proceeds to state governments. This led to a situation where local leadership and consensus about relative value was not developed, and people came to expect freebies from Uncle Sam.
    5) The very talented gravitate to the Federal Government and through a process of self-selection tend to be “progressive” on either sort of definition and to favor government solutions. Both are quite willing to impose a tax, or to borrow/print money and bribe people to do what they think ought to be done.
    6) It is easier for those favoring a government solution to lobby one government than it is to lobby fifty-one governments. And see #5 especially — these want to be lobbied: that’s THEIR mandate.
    So in my view, this briefly is why we send so many trillions to DC for them to send it right back to the states with conditions.
    t

  3. to bad we can’t vote on Federal propositions. I could see one calling for all federal and state elected officials to be enrolled in their State Medicaid plan passing overwhelmingly.
    Wonder if you could somehow pass a binding prop on the state level calling for your officials to waive the federal plan and enroll in medicaid?
    I would love to see an honest discussion on Tom’s comments, why do we send so many trillions to DC for them to send it right back to the states with conditions, it completly violates the concept of a federation we were founded on. Thats the fight the right should be making at the federal level, who cares about abortion, gay marriage, and all the other minor issues used to divide the populous for political gain. Those are state issues and should be setteled at the state level.

  4. “Public policy is too blunt an instrument to deal with individual cases.”
    I can only hope that a fair amount of people are still following this thread, because that was one of the most important points raised on THCB in quite some time. I only wish policy makers could have the same daily exposure to the bastardized Medicaid system that I have.

  5. MD as HELL asks:
    > If the bank will not loan a patient money for
    > healthcare, then why should the government
    > borrow on their behalf?
    It shouldn’t. What we’re seeing in government welfare programs right now is similar to what we saw back in the days of “National Banking” where legislatures around the world controlled monetary policy. Those spectacular failures gave rise to “Central Banking”, the quasi-private-public system now in use. And I think we’ve recently learned that any sort of financial institution that performs bank-like or insurance-like activities ought to be regulated that way no matter what it is called: this I think should also apply to government programs. Note that if social welfare programs were done at the state level, since states can’t run deficits or print money, this wouldn’t be so big a problem. More on this later.
    > Tort reform is the first step in healthcare reform.
    Yes. And when The Medical Guild gets a handle on what is politely called Unwarranted Practice Variation it will become much, much easier to accomplish — a little tweaking around the edges would probably be enough.
    Margalit says:
    > HMOs are a disaster as far as I’m concerned.
    Well Margalit, some versions of single-payer make one great big HMO for the whole country. If we’re going to have socialized medical financing, being somewhat sympathetic to Jefferson’s anti-federalist position, I’d really prefer fifty “single payers” to a single “single-payer”. If this ends up meaning that “it matters where you live” in my view this is fine and dandy. At least if you prefer the Massachusetts style to the Wyoming style, most people could move. The poor who are unable to move are still at a disadvantage under this scheme, but equal protection clauses should constrain the worst gaps, and a wise man once said “the poor will be with you always”, leaving a meaningful role for private charity. Public policy is too blunt an instrument to deal with individual cases.
    Nate is correct about the bastardization of the “insurance” concept. What Nate sells and talks about is what I have called “insurance by contract”, contrasted with “social insurance”. It is unfortunate that we use the same word (“insurance”) in two very different contexts. They are not the same thing at all.
    I’ll add something else to what Nate said about “consumers wising-up”:
    Consumers (and their employers) also figured out that when they come from healthy families with healthy habits they’re less likely to become ill. They figured out that when they’re young as opposed to our age (that’s mine & Margalit’s) they’re quite unlikely to become ill. They perceived (correctly) from their experience with other “insurance by contract” like automobile insurance that lower risk means a lower premium, but they weren’t getting the break because back in the day lots of medical insurance was “community rated”. Consumers (and employers) started demanding finer actuarial differentiation, and insurers were maybe not happy to oblige but it is after all what they do: grade risk and insure it. So that’s what they did.
    Which brings up an important concept in “insurance by contract” — a proper risk pool is made up of people facing similar risk, not widely-divergent risk. Social insurance advocates say in effect that we all face similar risk at conception and should therefore all pay the same premiums. But this isn’t true and is provable by the existence of profitable insurers with happy-enough customers. So there is a tension in our essentially Calvinistic and hyper-individualistic country: we have classically defined “common good” to mostly mean “protection of private property” and the sad history of the last century shows us why this is. But this leaves especially the poor in Hobbes’ “state of nature” and demands a solution. So the argument in society comes to “feed Leviathan or not?”
    The so-called Left say with justice “Your private charity has never taken adequate care of the poor; they have fared better with Leviathan.” The so-called Right say also with justice “We disagree about the meaning of ‘adequate’ and besides that the constraints placed upon us already by Leviathan preclude a wide range of private action.” So here we are.
    Michal Millenson writes:
    > Why not just eliminate health insurance altogether
    > and instead give every worker a shiny apple a day?
    Seriously, this is pretty much what Milton Friedman wanted, except he didn’t limit the apples to workers. What he said was something like this: it is better to be sure everyone receives an adequate money income to dispose of how he wills than it is to create a welfare industry (which includes government school systems). He distrusted Leviathan and do-gooders both, but at least do-gooders don’t have teeth like Leviathan has.
    Giving more apples (or greenbacks) especially to the poor would not “eliminate insurance” it would probably revive “insurance by contract” and The Left could not complain that the poor are treated unjustly when they don’t buy it and become ill and can’t have the best treatment in unlimited quantity. For a number of my readers here who object to this idea, it may be time for an Evil Oppressive Male-Dominated Paternalism Check. In the main, I think Friedman’s correct: if there is to be re-distribution at all, don’t make it paternalistic “in-kind” benefits, just hand out cash. Human frailty being what it is, there will still be a need for charity, but it will be clearly that! And there will still be a need for Leviathan, but he’ll be on a shorter chain.
    Most of Europe has landed between the English Model and the Friedman Model. I expect we will too — the welfare industry is a lobby just like every other special interest and does not want to die or do physical good like “launder soiled sheets” instead of write a grant application or a far-too-long response on THCB. But I’d prefer the medical industry be faced with fifty governments to lobby versus one; I prefer fifty Leviathans on short chains to one Leviathan constrained only by the experience of a Latina, wise or not.
    t

  6. GM is bankrupt. USA is next unless we get a new business model. GM was crushed by unfunded liabilities. USA will be crushed by unfunded liabilities, too, like Medicare and Social Security. If we think we can have healthcare for everyone and borrow to fund it, we will be bankrupt.
    Most people are healthy. Most people with coverage never use it. If not provided by employers, most people will never buy coverage out of pocket.
    If the bank will not loan a patient money for healthcare, then why should the government borrow on their behalf?
    Tort reform is the first step in healthcare reform.

  7. Nate, I don’t give a damn about political party lines. HMOs are a disaster as far as I’m concerned.
    Regarding cheaper alternatives, such as generics, I think most doctors are very aware of that and are trying to prescribe generics whenever possible. It’s most likely a shared responsibility.
    As to CDHP, if the only consumer driven spending occurs for the first couple of thousand dollars, how much savings do you think can be achieved? Or are we looking at making more and more of the health care dollars consumer driven, which implies less and less coverage?

  8. Margalit – The data is there to measure cost and quality. It just needs to be unlocked and utilized. It might require a national “standards” organization to package and disseminate the information. I’d like to see providers specialize in conditions, such as diabetes. In my mind, that will be the model of the future.
    Peter – Apparently I haven’t explained my point very well, so I’ll try a different approach. What do you feel is the most effective way for healthcare services to be paid for? In other words, who should pay and when and how should they be paid for?

  9. When an insurer writes a large group they are getting all of those employees. If one person in that group is sick the premium from the other 999 makes up for it. It’s a captive pool. If your a small employer or individual and you have a large claim the only pool to spread that claim over is their block of business. This is where the left gives insurers a bad name unjustly. In concept writing one individual who gets sick and spreaking their claims over the pool works fine, we wrote insurance for decades like this. Then consumers wised up, people realized if they were healthy they would just wait and buy insurance when they needed it. You can have a pool made up completly of sick people that have large claims. With a large group the healthy don’t have the option of opting out. The only way insurance companies could stay in business was with pre-existing rules and recinding the contracts of those that lie to get coverage. Individual and small group insurance would work just fine if there was a mandate that people had to be insured. The left has used insurance companies as social funding mechanism for those that did not do the right thing and buy insurance. No one disputes once your insured, doing the right thing, you should always be covered at a fair price, this side of the bargain was never enforced, instead me made insurance pay for more and more people getting a free ride.
    In regards to CDHP I think your forgettng it only changes the order in which people pay. The total liability is usually lower the member just pays before the insurance company up to a limit instead of paying a small portion over a large range of expense, i.e. 20% of $20,000. Any arguments about choosing which surgeon or picking the best specialists are illlegitimit. Once you get to those sorts of decisions your past your liability and the carrier is paying for all of it anyways. CDHP only targets the small routine expenses. Brand or generic, ER or wait and see your physician on monday. Some times I swear no one on the left has every actually read a schedule of benefits and compared it to a normal plan.
    How do you choose your doctor today? People don’t have access to any of the measures you say hey need yet there is no shortage of treatment going on. The arguments from the left against CDHPs lack any logic. They try to scare people into thinking they are gong to be forced to make all these medical decisions with no support, all these decisons are already being made today, they just add a layer of financial common sense.
    My company has paid millions of Rx claims. Before we had drug cards and co-pays drugs where paid at a percent. Everyone survived just fine, people would pay for the full drug then submit for reimbursement or some pharmacies would bill on their behalf. At this time people where very aware of what their drugs cost and if it was expensive would ask their doctor if a cheaper one was available. When co-pays became predominate people stopped asking. The couple dollar difference between brand and generic wasn’t enough to motivate them to ask, it’s nto that they couldn’t ask they did for 30 years, it’s they didn’t care. 3 and 4 tiered co-pays changed that a bit but not much. I deal with people all the time that get Brand with generic equivalent and ask them why, they just don’t care enough to ask their doctor for an alternative.
    CDHP is asking consumers to ask your doctor if there are options, that’s it, you don’t need a medical degree or hours on google to prepare. Same goes for using the ER on sunday night or going to the office monday morning. They are basic decisions people made for generations. Why as a nation can we suddenly not make simple decisions our parents and grandparents and great grandparents made?
    I’m scared that you trust the government to care more about you then you care about yourself. Do you really beleive some politician is more concerned about the health of your family then you are? Remember it was Ted Kennedy who said you should all be in HMOs, how did that work out?

  10. Nate, thank you for taking the time to answer my questions. However, I still don’t understand why I pose a smaller risk to an insurer if I work for a large corporation. I do understand the calculations, but I think that they are basically flawed and unnecessarily complex.
    Deron, what exactly would it take to make value based purchasing of health care possible? Let’s say a diabetic is looking for a physician. What would be the indicators to check? How he fares on the PQRI measures for diabetes versus his published price for office visits? Should we have little red and black circles next to each measure, like Consumer Reports rates cars? You don’t really need to understand what the measures are (I don’t), but if it’s all red we’re good to buy. We should also add measures for how often his patients come in and how expensive are the drugs he recommends and probably customer satisfaction surveys.
    Do you think that is possible in health care?
    What if the diabetic consumer is a 60 years old male and you never know about prostate cancer at that age, so maybe he should check that too. It turns out that the doc he chose for diabetes has a solid black circle for PQRI #104 – Prostate Cancer: Adjuvant Hormonal Therapy for High-Risk Prostate Cancer Patients. No idea what it means, but now he’s back to square one.
    I bought a bunch of products based on Consumer Reports ratings, because I have no clue how to evaluate a vacuum cleaner for example. Sometimes they worked fine, sometimes they broke the next day. My Jeep has all black circles on Consumer Reports. I bought it anyway because it looks “cool”.
    The point here is that if this sort of value based shopping is not working very well for simple things like vacuum cleaners and cars, how do we expect it to work for life & death “products and services”, and moreover why should it be the consumer’s responsibility to make it work at his own peril?

  11. “because it completely ignores the fact that it works in every other industry.”
    Again a failure to recognize that heathcare IS NOT like every other industry – unless you want consumers to get medical degrees. “The study you referenced does not discredit the CDHP concept, it discredits the results to date.” Say what? When exactly will you recognize that the facts do not support the concept? The context IS CDHP is that it is a stop gap stratagy by the profit providers to delay the inevitable of government control of healthcare.

  12. Peter – I don’t recall making the claim the CDHP is the only tool for attacking cost growth. You seem to have tried to start another discussion there.
    With regard to your main point, it seems that you skipped a lot of the discussion or left out a lot of context. That’s a political tactic and you should know by now that politics is a zero-sum game. I made it very clear that, while I think CDHP is a solid concept, it was not rolled out without first making value-based purchasing possible. The study you referenced does not discredit the CDHP concept, it discredits the results to date. Those results are based on it being taken to market before we were ready for it. To argue that an engaged consumer is not an effective means of driving value is silly, because it completely ignores the fact that it works in every other industry. There is no basis to assume that healthcare is or should be any different.

  13. Did you miss this on the front page Peter?
    “The RAND Health Insurance Experiment (HIE) showed that modest cost sharing reduces use of services with negligible effects on health for the average person.”
    This is very important for those numerous progressives that want to complain about high deductible then ignore the cap on OOP that is usually lower with CDHPs.
    “Furthermore, all the Experimental cost-sharing plans had a stop-loss feature that was at most $1,000 for medical spending for the entire family for a year and less for lower income families. (The $1,000 is in late 1970s dollars, which is about $3,400 in 2007 dollars if one inflates by the all-items Consumer Price Index.) As a result, even had there been no side payments, many individuals facing hospitalization would have been better off financially on the Experimental plan than on the plan to which they could return, many of which had no stop-loss feature.”
    1 million cash paying customers out of 350 million are not going to lower the price of office visits. When 100 million people are pressuring providers to lower cost you will see change.

  14. Deron, did you read the Rand Report before attacking the commentor? What ideology do you think Rand is supporting? In short people don’t have a clue what their “shopping” for nor does consumer driven healthcare drive improvements – but I bet it does drive better marketing.
    “On the other hand, the HIE showed that cost sharing can be a blunt tool. It reduced both needed and unneeded health services. Indeed, subsequent RAND work on appropriateness of care found that economic incentives by themselves do not improve appropriateness of care or lead to clinically sensible reductions in service use.[3]
    In addition, cost sharing may not address the principal causes of cost growth. Cost sharing cuts expenditures by reducing visits but has little effect on the cost of treatment once care is sought. If, as is widely believed, cost increases are driven by treatment expense and new technologies, cost sharing can contribute to reducing costs at each point in time but may have little effect on the overall rate of cost growth.”

  15. I side with Margalit, although I do think that consumerism, in collaboration with fulfilling physicians, is a major cost driver, and this will remain that way, unless we restrict care funded by third party sources nased on evidence.
    There is enough evidence that consumer behavior is, in large part, not rational. Take, for instance, unreasonable demands by patients claiming a diagnosis of chronic Lyme disease, or the fact that patient advocates made a major succesful push for a allowing compassionate use of a probably useless but costly ALS drug.
    With CDHP, you will just curb utilization in general, and disproportionately so for the less well-off. People with money who are big utilizers now will continue to get care, even the nonsensical stuff … people who are less well off may not forego the emergency treatment, but they may be inclined to skip medications or put off nonacute visits.

  16. CHDPs are beneficial to the consumer because they are affordable. CDHP is just a marketing name for a high deductible. Everyone had a high deductible until HMOs became in vague and employers competed for employees on the basis of insurance benefits.
    It is very important to remember employer paid insurance premium is really just redirected wages. Instead of paying you $10 we are going to pay you $8 and buy you $2 of insurance. Because if tax law it is really $1.75 of insurance but that is the basic premise. Insurance companies competed by selling plans with lower and lower out of pocket cost to the employee.
    This looks great to an unsophisticated employee. If they were better educated in HS at math they would see it is actually a bad deal. To pay an expense with insurance cost the employee the cost of the expense plus 20% mark up to cover premium tax, commission, profit, and overhead. An $80 office visit requires you pay $100 in insurance premium.
    With an FSA plan the employee could take the $100 that use to go to insurance premium as wages and pay the $80 directly to the provider. The employee just made $20. The carrier lost profit, broker lost commission, and State lost tax revenue but no one likes those people anyways.
    It is a simple concept, if you know your going to have $800 of claims for the year you are better off buying a $1000 deductible and paying the $800 directly. What you save in premium pays for the claims. And you have money left at the end of the day.
    This savings doesn’t require the employee to make any care decisions, no risk of picking a cheaper treatment or not taking pills, it is just more efficient utilization of money already on the table. If the employee is so inclined they can further save additional money by being s smarter consumer. Just about everyone agrees we waste a good portion of our money on unneeded care. Those on the left running around fear mongering about high deductibles and how they bankrupt people and stop people from getting the care they need are distorting the truth to protect their preferred system of reform. What they really fear is money leaving the system, without premium being paid and taxes collected they can’t redistribute the money.
    If you pay the doctor directly with your money who do they tax? It would be political suicide for a liberal to start taxing healthcare at the provider level. They already promised to not raise taxes on those under $250,000. If everyone raised their deductible to $1100 and paid those claims directly that is billions that would be taken out of the insurance company/state tax coffer system. Liberals hate losing money to play with.
    There is nothing mysterious or complex about the math, every $0.80 in claims carriers don’t pay that is $1.00 less in premium they collect. Progressives will be quick to try and say the carriers will just keep the money, a number of states have minimum loss ratios the carriers can’t pass and there is enough competition that another carrier would offer to take the risk for less. We can see every year what the carrier profit margins are, it’s not like they can hide it under their mattress.
    “If it’s insurance coverage, then why does it have to be so complex and convoluted?”
    Because every state has an Insurance Department and the Federal government has ERISA and 60 years of lawsuits. It is illegal to sell an insurance policy with a 2 page policy. Government mandated notices alone are a couple dozen pages. Policies are required to contain all that garbage no one reads.
    Pre-Existing conditions are required because of dishonest consumers. I get calls all the time from a pregnant women who wants to buy insurance. People will wait till they need $10,000 in treatment, try to buy a $300 policy and cancel it after the are done. Carriers can’t lose money on every member. This is the side of reality those on the left never tell you about. Pre-existing didn’t use to exist, it was required to keep the system from going bankrupt. Imagine if you could buy auto insurance after you had an accident…
    “Why is risk calculated differently for small employers and large employers and individuals?”
    Most states have small group reform laws requiring blocks of business for groups under 50 be separate from other blocks. States also have different pools, they might have a special pool for a chamber of commerce or an association. Large groups are also actuarially sound, you can gauge their risk based just on that group so they are rated on their risk. Small groups can’t be rated individually so you need to pool large claims over a large pool. Individuals usually only buy coverage when they need it so you need to rate for that. Each group has different characteristics which need to be taken into account when underwriting. Remember true insurance is just a numbers game, in a population of 100,000 people I can tell you how many will have cancer, who will have a certain accident, and how much their claims are with a very small margin of error. Insuring those risk or ceding off those large claims is very easy and affordable, it is when insurance is forced to manage care, ration expenditures, or perform social functions that is falls apart.
    Insurers have many pools and almost every large employer is self funded meaning they are their own pool.
    “Why should employers even buy insurance for you?”
    Government tax laws made it one of the only ways to compensate employees during WW2. 1 million employers buying insurance is a far more efficient delivery system then 350 million individuals buying it. Employers are mini pools, one person being mad at the insurance company isn’t heard. An employer with employees makes more noise. A broker with many employers makes even more noise. Employer sponsored coverage provides a huge benefit to employees no one wants to discuss. Look how little people know about insurance, what if they didn’t have the assistance of HR when they needed it?
    Healthy employees produce more.
    COBRA, and most people don’t lose their job when they are seriously ill, they take HIPAA leave then COBRA and usually recover and come back to work.
    Problem is consumers don’t ask any questions when they spend someone elses money, when it is their money they at least make a minimal effort. It’s like teaching kids to spend wisely, when they spend parents money no big deal, when they need to work for it they don’t suddenly starve and go homeless. The lefts argument that people aren’t informed enough ignores the huge expanse between asking simple questions we are all capable of and debating science with your physician. There are billions wasted that don’t require a high school diploma to see.
    1 million seniors having an extra exam is $30 million, 40 million seniors having an extra exam is 1.2 billion, it starts to add up. Throw in an extra test, maybe some medications they really don’t need and now we are talking tens of billions.
    No one claims CDHPs are going to cut cost 30%. CDHPs will save 5-10+% with no change in utilization or quality of care. The left is arguing we should not save those billions because? Why should we ignore billions in savings that has no negative impact? Can you or anyone give me even one legitimate reason why we should not be using CDHPs? Unless you are pro tax pro carrier there is no reason.

  17. Nate, I fear CDHP because I don’t understand it’s premise and I can’t figure out how it is beneficial to the “consumer”.
    Heck, I don’t even know what exactly are we supposed to be consuming. Is it health care services? Is it insurance coverage? Is it both? Is it neither one, if your employer consumes it and presents it to you?
    If it’s insurance coverage, then why does it have to be so complex and convoluted? Why all the clauses and small print and pre-existing conditions? Why is risk calculated differently for small employers and large employers and individuals? The insurers have really only one big pool – all the lives they are insuring, so why does it matter how many employees a company has?
    Why should employers even buy insurance for you? What exactly is their interest in one’s long term health? You are more than likely going to lose your job if you become seriously ill. Then what do you do?
    If we’re supposed to consume health care services, within the boundaries of an insurance plan, then are we assuming that people can really make informed decisions as to what care they need and what care they don’t need? There is really no agreement between expert clinicians as to what is effective and what is not and it always depends on circumstances. How is a consumer better equipped than a physician to detect that unnecessary diagnostic test or procedure? If the doctor writes a script for an expensive drug, do you expect the consumer to quote the latest paper published in the Annals of Pharmacotherapy and dispute the doctor’s recommendation? Or shop around for a doctor that will prescribe something cheaper?
    I guess I am debating the assumption that health care costs are significantly driven up by consumer demand. Most people don’t know enough to demand anything. If people demand back surgery when the evidence shows that it’s not really necessary, it’s mostly because many physicians are recommending these very same back surgeries and patients tend to believe their doctors.
    I can see how elderly patients will go see the doctor more often than medically necessary because they are lonely and want someone to talk to. Are these $30 office visits the reason for health care costs exploding?
    There may even be some excessive use of the ER and maybe consumer driven demand for unnecessary antibiotics ($4 at Walmart), but the numbers don’t add up. Something else is driving health care costs up and CDHP is just shifting these costs from payers and employers to consumers and to add insult to injury, they call it empowerment.

  18. I would disagree with Deron in that CDHPs were not introduced recently, they where reintroduced recently. Those who oppose CDHPs need to go back and learn their history.
    All insurance use to be indemnity and major medical. The first insurance plans covered hospital only, heck Blue Cross(hospital) and Blue Shield(physician) were separate insurance companies. There were no co-pays and no deductible plans.
    www3.brookings.edu/views/papers/furman/200704hamilton_pb.pdf
    In 1960 American’s paid for 50% of their care OOP. By 2006 that has dropped to 13%. How did Americans survive for 50+ plus years paying for the majority of their own care if the concept was so flawed? In fact it seems pretty clear most of our financial problems started after American’s stopped paying for their own care. The plans being sold today are still far more robust then what was being sold 20+ years ago.
    “big players in the industry are refusing to reduce costs by reducing profit margins,”
    What big players are not reducing profit margins? Insurance carriers are making the same 6% they have always made. Why can’t the left grasp the imperial fact consumption is the problem? You want to make excuses for everyone and place the blame everywhere but where it belongs, the consumer. Insurance, when it actually existed decades ago, was efficient, affordable, and clear cut. The bastardized financing/wealth redistribution mess we now call insurance is the problem. $200 deductible and co-pays are not insurance not is it effective. CHDPs restore insurance to what it truly is, a risk transfer.
    What the big players lack is the ability the consumer has to say no. As long as people insist on consuming more then they need we will have financial problems. As long as government uses insurance for social engineering we will have problems. It is for this reason that progressives attach CDHPs, your not interested in functioning systems you want the power to effect social change, controlling the trillions of healthcare spending allows that. The liberal plans today are the same socialized plans Democrats have been proposing since the 1930s. It has never been about care or quality always abut money and power the liberals want. Read Ted Kennedy’s speeches from 1975 and how he intended Federally regulated HMOs to take over the system on behalf of Washington. How politicians would pull the strings of their new puppet. Read back to the 50s and 60s on how Demicrats lied to America to pass Medicare, how even those same Democrats admitted at the time they hoodwinked the public. Look up the 1965 House hearings and specifically comments by Rep. Albert Ullman, (D. Ore.) Medicare Part A is a perfect example of CDHP, Part B wasn’t added till later.
    While we are discussing lies Liberals tell to pass bills, Medicare was passed to protect seniors from the indignity of financial ruin of catastrophic illness yet benefits stopped at 60 days. Further majority of seniors didn’t even need help;
    “While HEW Secretary Celebrezze waxed eloquent about the necessity to furnish protection “as a right and in a way which fully safeguards the dignity and independence of our older people,” Rep. Curtis questioned whether it was appropriate to “change the basic system” when 80 to 85 percent of the aged were able to take care of themselves under the existing system, recommending instead that we “direct our attention to the problems of the 15 percent, rather than this compulsory program that would cover everybody” (U.S. House Hearings 1963-64: 31, 392).”
    Today 80% of American are happy with their insurance and don’t want it to change, yet Democrats again want to scrap the entire system for the 15% that are uninsured. The same question rises why not help the 15% instead of hurting the 80%?
    “In the 1965 House hearings, Rep. Wilbur Mills (D., Ark.) put the control issue clearly. First he quoted the bill’s provision that “Nothing in this title shall be construed to authorize any Federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided.” Then he quoted other language in the bill specifying that amounts paid by the government to “any provider of services” under the bill “shall be the reasonable cost of such services, as determined in accordance with regulations establishing the method or methods to be used, and the items to be included, in determining such costs for various types or classes of institutions, services, and agencies.”
    Does anyone on the left want to stand up and argue this holds true today? Can any doctor on here say Medicare pays them a reasonable amount and exercises no supervision or control of care?
    Margalit why do you fear CDHPs if not for the fact they undermine progressive control of the money and system? If you really cared about fixing our healthcare systems full support of CDHPs would be the first step. They return the public to efficient and common sense insurance which is the first step to improving the care and delivery it pays for.

  19. Margalit – There’s no magic about it. But that’s why I suggested that the timing wasn’t right. We should have waited until shopping based on value (quality/cost) was made possible before rolling out CDHPs. To suggest that the CDHP concept is flawed is actually kind of silly. Shopping based on value works in every other industry on the planet. Why should healthcare be any different? There is no more natural way to drive down costs, increase quality, and drive innovation than an engaged consumer. It sure works in the tech sector. Maybe that’s why people opt for iPods and iPhones, rather than healthcare.

  20. Deron, If consumer-driven healthcare is such a solid concept, I would really like to understand what it means.
    From everything I see it seems to me that after all the big players in the industry are refusing to reduce costs by reducing profit margins, we are now shifting the responsibility of cost cutting to consumers. By some magical way, consumers are supposed to make cost effective choices of treatment and consciously increase their risk of not having enough healthcare, I assume based on some innate understanding that payers, hospitals, pharma and device companies do not posses.
    If we are expecting people to place healthcare spending right after bread water rent and utilities, does that mean that if you have the misfortune of being ill, all you have to look forward to is bread, water and some pills? Is this what consumer driven healthcare really means?

  21. It’s even more ironic that your so politically motivated in your attach on CDHC you demean safe and legitimate ways to save money, if everyone on the left is so blind no wonder your having problems.
    Splitting pills is advocated by PBM’s and pharmacies.
    “The nation’s second-largest health insurer, United Healthcare, is giving away pill-splitters and offering half-price on drugs for those who split double-strength pills, cutting the patient’s insurance co-payment in half. The company is also providing advice on which drugs can be safely cut in half.”
    “Schneider saves about $31 for a six-month supply, because double-strength pills don’t cost much more than single-strength ones. It takes him 10 minutes to cut the 90 pills in two, and he gets the same supply of cholesterol medicine for less money.”
    If you can order them on Amazon and they are FDA approved it hardly has the feel of a desperate act of someone who can’t afford higher co-pays thrust on them by evil conservatives.
    http://www.amazon.com/s/ref=nb_ss_gw?url=search-alias%3Daps&field-keywords=pill+spliter&x=20&y=17
    Michael, should we outlaw wholesale clubs since this practice is obviously so dreadful? Why should anyone be forced to save money and buy food in bulk when they only eat a little bit of it at a time? Why do they sell huge rolls of toilet paper when you are only suppose to use a couple sheets at a time?
    This doesn’t even touch on the more complex reality that if you know you’re going to take a drug every month you are better off eliminating the 20% mark up of insurance and paying for it direct. If the left can’t grasp pill cutting though you will never learn financial efficiency.

  22. Maybe we need to see the next layer of the analysis: What are all of those people that are skipping doctor visits and not filling prescription spending their money on? We would be naive to think it’s just bread, water, rent and utilities in all cases. The reality that you haven’t taken into account is the fact that we have a society that simply does not understand the importance of maintaining its health, coupled with the fact that an iPod is considered more of a necessity than an annual physical.
    Consumer-driven healthcare is a solid concept that was rolled out before anyone was ready for it. I question what you hoped to gain by taking such a concept and stripping out all of the context you didn’t like in order to form an attack against an ideology you don’t support. Don’t you think that might be part of the reason we haven’t made significant progress on healthcare in the last 20 years?

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