By JOE FLOWER
If competition actually drives the cost of health care up rather than down, what would bring lower costs?
What provisions in a “health reform act” would actually drop costs in health care? Let’s leave aside for the moment all the myriad other arguments – some might be seen as too much government intrusion, some would destroy the health plan industry, some would be cripplingly difficult for providers, and so on – and just focus on cost. Given the real structure of health care markets in the United States at this moment, what could be written into federal law and regulation that would actually reduce cost?me of these changes are massive, some would be invisible to those outside the industry, but all could be legislated or regulated, and all would “bend the curve” toward lower costs. Choose any you like, though some are “and” choices, others are “or” choices:
- Single payer: Eliminates insurance company overhead, increases medical loss ratio (the percentage of dollars put in returned as medical resources) to perhaps 95%, and gives the government (probably some rate-setting commission) the power to dictate prices and availability, like Medicare on steroids.
- “Robust” public option: All providers must take its payments as full payment, rates tied to Medicare rates (perhaps plus a percentage), Medicare rates decided by an independent rate-setting commission.
- Limiting medical loss ratios: Many European countries dictate that health plans must return 85% or 90% or 92.5% of the premium paid in as medical services paid out. U.S. health plans, in contrast, compete on (and brag to Wall Street analysts about) how low their medical loss ratio is. Some are as low as 60%.
Negotiating drug prices: Allow the government to negotiate drug prices for life-saving drugs.
Malpractice reform: Our adversarial system of dealing with malpractice costs us, directly, only about one half of one percent of medical spending. But the extra tests and unnecessary procedures of “defensive medicine” cost an estimated additional 3% – $60 billion per year, an amount equal to most of the cost of extending coverage to all Americans. And still most victims of real malpractice are left without any help or compensation at all, most actual medical mistakes pass without comment, and most of the few really “bad” doctors out there are still able to practice medicine unhindered.
More docs, more clinicians: Increase the supply of medical service by expanding medical and nursing school enrollments, reducing barriers for foreign medical school graduates, reducing internship requirements, and allowing nurses and techs to perform more procedures.
Bundling: Many parts of health care could be “bundled” into coherent products – a replaced hip, an uncomplicated birth, a cornea transplant, diabetes management – from diagnosis to re-hab, counting all imaging, drugs, everything. Payers should pay for these as single payments, just as you don’t pay the auto body shop for each sheet of sandpaper or quart of paint, but for the whole job. This would drive providers to discover the most efficient way to do it.
Publishing outcomes: There are comparable measures of quality that do not penalize places that take more complex or difficult cases. Establish standards and put all the statistics on the Internet.
Publishing prices: You want a new hip? Here’s what it costs at each of these institutions, here is their clinical quality outcome rating, here is their customer satisfaction rating, right there on the Internet. This is true competition that would drive down prices and drive up quality.
Banning discounts: Counterintuitive? Perhaps. Any CFO of a health care organization would tell you that their “master charge list” is a phantom made up only for negotiating discounts, and the discounts are all over the map – so no one can tell you what the “real price” of any part of health care is. This means that competing on price at all is very difficult, if not impossible. “Common carrier” rules in communications and transportation dictate that the price is the price, and the little buyer pays the same as the big buyer. This would massively transfer risk to the providers to get their costs under control and get their prices right.
Giving a premium to integrated “accountable care organizations:” All the organizations consistently put up by reformers as good examples of giving the most and best health care for the dollar, such as Mayo, the Cleveland Clinic, Geisinger, Group Health of Puget Sound, Kaiser, and Health Partners of Minnesota, are structured differently from the rest of health care. The doctors are on salary, or share profits in the whole enterprise. Many of these organizations are “capitated:” they cover everything for a set monthly fee. There is no encouragement to do anything unnecessary, and every encouragement (since they are in competition) to do whatever actually works for better health. They do good, conservative medicine in a collaborative team-based style. We cannot mandate the growth of such organizations, but we could give an extra 5% or so to encourage their growth.
Increasing subsidies for digitization, tied to productivity improvements: There are huge inefficiencies in the actual practice of medicine. No one can improve on them until the people running health care can actually track what they are doing, in detail. In something as complex as health care, that means total digitization, like any other business.
Subsidizing automation: Many things in health care would be done much more efficiently by automation, from lab work and pharmaceutical distribution to tracking inventory. Today’s system does little to encourage such automation – instead,it actually supports the inefficiency.
Standardization and checklists: Many parts of health care have established pathways that are clinically proven and widely published in the medical literature, yet followed only at the clinician’s whim. These are not matters for the doctor’s judgment, these are matters like washing your hands between patients, fully draping a patient for a central line placement, getting clear verbal confirmation from everyone in the surgical suite that they agree on who the patient is and what the operation is for. Standard pathways, and simple feedback mechanisms like checklists to make sure they are followed, are still not common practice in health care. If regulations made them mandatory, following them would save billions of dollars in fighting infections and having to re-admit patients to the hospital with problems that could have been prevented.
Warranties: You define the job and put a price on it, now back that with a warranty. Today, if I have an operation, and get an infection from the operation, or it has to be done over, the provider actually gets paid for taking care of the problem. With a warranty, I (and my insurer) would pay nothing. This would drive the risk for quality back on the provider.
Though politically some might characterize some of these choices as “radical,” none is “radical” in the real world of health care. Each has been proven, in practice, in some part of the current market, even single payer (think Medicare and the Veterans Administration). Each is practical, not just theoretical. Each could be done with current technology if we decided to do them. Most could be done without any massive new bureaucracy, just from a tweak here and there in the rules, undoing rules that have been set for the convenience and profit of payers and providers, and setting them instead to force them to compete on actual value for the patient and for the nation.We could drive down the cost of health care while driving up quality and serving everyone. How much could it be driven down? The evidence (from other countries and from variations in our own market) says that we could do health care in the United States, with full choice and higher quality than today, for everyone, for half to two thirds of today’s cost.
Megan, you’re on more solid ground when you stick to the libtrearian taxation=slavery argument. Once you get into the practical matters, there are many other factors involved. There’s no way to say whether benefits for the older will actually increase under a universal health coverage plan. Maybe benefits for younger people will increase. Why is it almost certain that nursing homes and other things will be covered under a universal health care plan? The some people won’t need it argument is also pointless when discussing insurance. If everyone needed it, it wouldn’t be insurance.When discussing practical matters, you make your argument sound more solid than it is by only mentioning the negatives of universal health coverage. What about the inefficiencies of the insurance system? What about health care portability? What about the moral injustice committed when insurance companies negotiate low health care prices with hospitals and doctors, but the uninsured must pay full price?But leaving that all aside, you’re really just making the standard libtrearian argument that all taxes are bad, and that individuals should just take care of themselves. In this case, even that argument faces difficulties, because in the ultimate free market, health insurance wouldn’t exist. Insurance companies would refuse to cover, or charge exorbitant rates to cover the sick, and healthy people wouldn’t buy insurance because (a) they’re healthy and (b) their rates would go up anyway once they got sick. In the end, we’d be faced with the choice between morally wrong health insurance for all, or morally wrong rolling the dice with everyone’s health. Personally, I prefer the first wrong, and when faced with that choice, I think most Americans would agree.
We have already seen deregulations handy work in the financial/ housing sector – it almost brought the entore world economy down!
It was deregualtion that forced banks to loan to unqualified buyers?
It was deregualtion that created Fannie and Freddie to buy up all these garbage loans?
It was deregulation that lowered interest rates and created all the cheap money?
Mindnumbing is the only way I describe your response.
I ask you to explain how LESS regulation will magically eliminate kickbacks, conflict of interest agreements and relationships, and all you do is ERRONEOUSLY state that I “don’t offer ONE word on how regualtion forcing us to pay hospitals bloated cost is good”. or that” I don’t offer ONE word on how requiring insurance to cover non medically nedessary services is good”.
IN fact, among many others, I offer one powerful and on point word – REGULATION.
The very things that you listed “bloated hospital costs, unnecessary procedures can ONLY be fixed by MORE regulation.
ADD your items to MY list! IN fact, your items are already within my list.
What do you think creates bloated hospital costs or unnecessary procedures????? answer – kickbacks, conflict of interest relationship are exactly one of the main culprits to the VERY items you listed.
ONCE AGAIN, how will LESS regulation eliminate those things????
Answer- it won’t – it will only make them MORE rampant.
We have already seen deregulations handy work in the financial/ housing sector – it almost brought the entore world economy down!
you don’t offer ONE word on how regualtion forcing us to pay hospitals bloated cost is good.
You don’t offer ONE word on how requiring insurance to cover non medically nedessary services is good
You don’t offer ONE word on how passing Medicare by lieing to the public is good
once again you do not offer ONE word of how less regulation will stop kickbacks, conflict of interest/situations/relationships.
BTW, included as part of conflict of interest sitations and relationships are hospitals and their agreements with doctors. A major reason for high hospital costs is because of arrangments they have entered into with doctors. those costs are passed on to the patient.
” Your latest comment simply throws things at the wall with hope that they stick and confuse the reader into submission.”
What’s confusing about the truth? Everyone of those are statements made by politicians. Thats not throwing things at the wall its discussing historical facts. Since your unable to argue actual facts you resort to sad arguments like the one I just pasted.
“In reality you don’t want that these things to change because that is precisely what you want to protect- the gravy train and status quo.”
Your an idiot. Lets start with high cost nd all the money hospitals are making. Hospitals charge way to much to private insurance for the work they do. I combat this by implementing lifetime maximums. This forces the consumer and their provider to pay attention to the total healthcare they consume becuase there is a limit to how much we will pay. PPACA(regualtion) did away with this, hospitals can now spend as much as they like.
Next we have some providers that charge way to much and more then others, to combat this we make the member responsible for a portion of their care, if you insist on going to the highest price hospital in town its going to cost you more as well. PPACA(regualtion) did away with this.
We try not to cover things that are not medically necessary, we aren’t going to pay for your asian massage no matter how much you argue its theraputic.PPACA(regualtion) is going to kill our abaility to deny claims
We also have PPACA(regualtion) forcing us to pay for known expenses like wellness that should be paid out of pocket.
All of these regualtions are what allows providers to play their games.
Spin on those facts
Joe,
Nate is full of it. He simply throws things against the wall with the hope that they stick and confuse the reader to the point of submission. Ultimately, once the smoke and mirrors are removed, he simply wants to the status quo – keep the medical industrys’ corrupt gravy train of kickbacks, conflict of interest relationships etc moving.
Nate:
riduculous. Your latest comment simply throws things at the wall with hope that they stick and confuse the reader into submission. You do not even attempt to address some of the specific items I listed that elevate costs (kickbacks, conflict of interest relationships etc). You simply return to the tired industry line of “its the government”.
The problem is NOT too much regulation, but too little regulation. That is PROVEN by the various schemes I listed in my prior posts and again above.
You are clinging to the BS argument that there is “too much govenment regulation” to desperately keep the gravy train going.
How will less regulation address the kickbacks and conflict of interest relationships? ANSWER- Obviously it won’t. Will doctors and drug companies all of a sudden “get religion” and stop those practices??? If you believe that, then perhaps you would like to invest you life savings with Bernie Madoff? Or by the Brooklyn bridge from me?
In reality you don’t want that these things to change because that is precisely what you want to protect- the gravy train and status quo.
“Contrary to your claim, my post DOES serve a constructive purpose. It actually addresses the first road block to meaningful change in the health care system.”
Actually the first road block is understnading the mistakes we made to get here. Medicare is the alrgest of those mistakes, by your own logic my post do offer suggestions for improving things.
In case it wasn’t clear enough for you the first thing we need to do to improve healthcare in America is reduce the role of government. As government has gotten more involved cost have gone up, access to insurance down, and debt out of control.
” MUST be to make sure that the american people realize who is the biggest enemy to productive change and why. ”
Government, but when this fact is made you dismiss it.
” the medical industry is doing everything they can to keep the gravy train running”
By medical industry you mean government, becuase everything your saying is what the government has been and is doing to create these problems.
“They use colorful images (that they know are untrue and inaccurate)”
Like pass Medicare so Grandma doesn’t lose the shirt off her back?
Or how about if you like your insurance you can keep it?
Or PPACA will reduce the cost of insurance
How many more would you like?
” There are no meaningful regulations in place that will prevent these abuses from occurring.”
But there are countless regualtions in place that protect them, PPACA is full of protection and assistance for everything you just complained about.
Regualtion is the disease
To Nate:
Your latest post is barely passable for English yet loaded with colorful language.
You are upset that I blasted a comment that you made almost 2 years ago.Are you suggesting that there should be a Statute of Limitation on challenging posts?? For that reason, You labeled me an “ignorant douche”. I am beginning to feel guilty for picking an unfair fight.
Once again, you offer nothing other than the typical “anti-government” rant.
Contrary to your claim, my post DOES serve a constructive purpose. It actually addresses the first road block to meaningful change in the health care system.
For there to be meaningful change in Health care, the first step MUST be to make sure that the american people realize who is the biggest enemy to productive change and why. The post is designed to open the eyes of people to what is going on behind the scenes – that the medical industry is doing everything they can to keep the gravy train running- keep the status quo.
They must realize that the medical industry will prey upon their fears to paralyze them from acting. They use colorful images (that they know are untrue and inaccurate) of “big government, socailized medicine” etc, to scare people into resisting change.
Once the public becomes truly informed instead of frightened, confused and resigned, then they will be immune to the false claims of the medical industry and instead would be instrumental in bringing about the change that must be made.
Once the American public is ready, the first step would be to identify the actual disease with which the health care system is inflicted. It is EXTREMELY important to distinguish between the actual disease and merely a sympton of the disease. The disease must be treated NOT just the symptom.
For example, high insurance premiums is NOT the disease, it is merely a symptom. The actual disease is two-headed: corruption and greed within the medical industry. The immediate sympton of the disease is outrageous doctors fees and drug costs.
Corruption takes on many different forms but all with the same result – the costs are ultimately passed on to the patient. Whether its blatant kickbacks to doctors for prescribing or endorsing a particular drug, or a kickback to a doctor of a group practice in return for choosing a particular company’s medical device, or conflict of interest situations where the doctor benefits financially for each procedural referal, all of these are ultimately passed on to the consumer thru doctors fees and drug costs.
These are just a few examples.
The second is greed. They do all of the above simply because they can. There are no meaningful regulations in place that will prevent these abuses from occurring. Greed has changed the practice of medicine into a cold blooded business. The doctor has become a business man FIRST. IN many cases, the doctor has become SOLELY a business man.
The FIRST STEP to meaningful change would be to address this disease thru meaningful regulations (WITH TEETH) that would serve as powerful deterrents. A combination of clear transparency and substantial punishment is needed.
“There is nothing constructive within any of your posts.”
Then you proceed to write aq post with nothing constructive, blasting a comment section that is 2 years old. Your an ignorant douche.
Oh and dumb ass in your silly little three mafia family analogy where is the most powerful mafia family the government who controls 50% of spending? What about the largest mafia the consumers who want everything covered but don’t want to pay for it? They only rip you off for a little but they will nickle and dime you to death.
Thanks for the pointless contribution 2 years later.
To Nate:
You talk and complain alot but offer nothing of value. All your posts are designed to confuse and exasperate the reader to the point of resignation. There is nothing constructive within any of your posts.
Fact: the medical industry is made up of three mafia type families: Health insurance companies, Doctors and pharmaceutical companies.
They are extremely well funded and politically connected.
These three families take turns raping society while simultaneously brainwashing the average person into fearing change. They want to preserve the status quo at all costs. Much like YOUR posts, they hijack the converation by turning it away from exploring new ways to improve the system and directing it into a diatribe about how to avoid government regulation all the while they use buzz words (“socialized medicine”, “big government”etc) that they know will trigger fear and apprehension in their audience. The only purpose is to confuse and frighten the listener/reader into paralysis thereby preserving the status quo.
Full-blown competition in the healthcare field will only occur if service provider contracts between the doctors/hospitals and insurance companies are eliminated. These contracts limit access, quality, competition and raise prices. Also these contracts make it harder for new insurance providers to enter a state since these contracts are used to build the insurance companies’ service provider network. A new insurance company would lack the network and find it difficult to recruit local providers who are already fully booked by established insurance carriers. The key is to eliminate the service provider contracts and require the doctors and hospitals to accept patients with any valid state licensed insurance until their full patient load is reached.
It is only possible to eliminate service contracts in a Medical PSC environment since there has to be some mechanism for negotiating prices. The Medical PSC would set fair pricing based on actual average costs plus a reasonable mark-up which all state insurance carriers would pay for the exact same medical provider services. Since all insurance carriers would pay the same, the Medical PSC would require that all doctors/hospitals accept all valid state licensed health insurance without prejudice. Anyone could walk into any doctor’s office or hospital accepting patients in the state and receive medical attention and pay a fair price for service. (The insurer may still require an authorization to see a specialist, but the choice of specialist would not be limited.) This would equally apply to the non-profit co-op plan so that it would not be cost effective for this plan to invest in its own medical facilities.
In the Medical PSC environment the insurance carriers are all the same except for the uniqueness of the policies they sell. The carriers only collect premiums and pay-out claims according to the terms of the individual policies. Their former network is no longer a selling point. Their patients no longer get preferential treatment if the carrier paid the highest. The common denominator becomes competition over which carrier can sell the best coverage at the cheapest price to out sell the others. Then the more carriers selling insurance in the state, the more competition you have. The level of healthcare access and quality available to the customers of these insurance carriers would be equal. Then everyone in the state could purchase the best healthcare they choose to afford. This is the basic healthcare operating environment which should be operational in each state now. A few cents can be added to the state tax tables to cover the cost of the Medical PSC. Spread over the millions of state tax returns makes the cost practically negligible. (Other states without a state income tax will have to decide how to cover these costs, but the best way is via the state income tax since all payers should have insurance and share these costs.)
Common sense, which seems to be lacking in Washington, should tell you that the Medical PSC solution would increase access, quality, competition and policy coverage while lowering patient costs. These benefits are independent of any law changes in Washington. This idea should be echoed across the nation. Any “appropriate” law changes in Washington to glean money to subsidize the disadvantaged is an aside to creating the Medical PSC environment. If we had created the Medical PSC environment earlier, we probably would not have the healthcare crisis we have now. Like I said, if you do not eliminate the service contracts between the doctors/hospitals and the insurance carriers, you are subsidizing the problem by feeding it more money to absorb. A real solution requires fundamental change in the mechanics of the system. The Medical PSC is the missing piece of the healthcare puzzle.
Hi,
This is wonderful article.I get to know how whole process of cost assigning is working.You have provided some great stuff to lower the health care cost.
There are insurance companies out there – the non-profit ones, in particular, and the public-sector plans like Medicaid managed care companies – that actually strive to keep costs down. In the case of Medicaid managed care companies, it’s their responsibility to keep costs down because tax payers are the ones that fund their businesses. Take a look at this website – http://www.ourhealthcaresource.com. They are a Medicaid managed care company that claims to operate lean while promoting quality care and wellness. These are the companies that will shine in the new era of health care.
Either Obama is right and he can truly cut $500 billion of waste, fraud and abuse out the Medicare budget or Medicare dependent seniors must suffer when $500 billion is cut from muscle and bone because there really wasn’t that much fat.
With so much emotion and a wide range of “knowledge” (how much is truth vs urban legend?), one can readily see why we’re unlikely to see any truly radical health care reform legislation from Congress. Instead of fact finding and trying to establish some basic principles for reform, everyone is running around screaming about how one provision or another will plunge the US into a great morass. Well, for health care, we’re already on that track if we do nothing.
The efforts at so-called health care reform are becoming a joke with it being increasingly apparent that the folks in Congress have no idea what they are doing and that their objective is simply to expand coverage and to the extent they can do to it through the federal government. The most recent example is an amemedment to the Senate Finance Committee bill that would require employers to offer vouchers so employees (likely the most healthy) could opt out into the cooperative and keep the cash they save.
Here are more details on this nonsense.
http://quinnscommentary.com/2009/09/30/more-muddied-waters-employer-voucher-program/
Nate, you’ve obviously done well in arranging to get paid by the word.
Well, I have to admit that I should have placed “in theory” somewhere in my comment 🙂 In reality, those who vote, choose based on promises, which sometimes fail to materialize…
The majority only decides who gets elected (most of the time), but it does not really decide policy. The elected officials do that based on “other” considerations.
If the majority were to decide, we would have a public insurance option.
No doubt, in terms of the basic rights and freedoms minorities and individuals must be protected, but the majority decides on the policy by electing a President and Congress.
Mr. Saip,
The Constitution was written to protect the individual from the majority.
And you are correct, you did not chalenge my voicing my oppinion. That paragraph was directed at another post. Sorry for the misdirection.
The first thing one would do, if one were serious about reform would be to control costs, before expanding coverage. The so-called reform is essentially silent on cost control. Nothing is stopping you from wringing waste from medicare, and nothing was stopping you for the last 30 years. Also, I understand there is a lot of money to be saved by reducing the number of tonsilectomies performed by pediatricians (good luck).
The second thing one would do is divorce medical insurance from employment. The so-called reform panders to union memebers and government employees by re-enforcing this idiotic linkage.
What would be next? For me, it would be death panels. Why the so-called reformers got squeemish on one of the most important sources of waste is a mystery. If the patient’s estate paid half the bill after 30 days in the ICU, the concerned family that previously wanted “everything done” would take a new interest in the realistic outlook for meaningful recovery. We actually need death panels. Perhaps a better name should be substituted; we still need them. Avoiding them just reduces the credibility of reform.
Unless the standard of care is drastically reduced to the level in Europe before the boomers are on medicare, our healthcare system and our greater economy is doomed.
Lowering the standard of care will mean confronting the trial lawyers. The crumbs from their tort business fund the Democrats. All the low medical cost states have low litigation.
Instead of addressing cost, the reformers have proposed expanding coverage. The calculus is like this: once it passes it will be unrepealable, and when it doesn’t work, it will be a great pretext for even more intrusion into medical care.
The holy grail is then single payer. Then you can force doctors to work on the cheap, right? Or, perhaps at some point the 14th amendment will apply. This is the part of the reform which is actually about a perverted social justice agenda which has no place in health care reform. This has two components.
It morphs the idea of health insurance into prepaid medical care. From there, it is a small step to have the government fund it, like they do in enlightened Europe. Here is where the mandates come in for aura balancing, podiatry, mental health, running pathways and infertility. This is partly a socialist agenda and partially a subsidy for political friends. How many psychologists or acupuncturists do you know that are republicans? It is a gigantic transfer of wealth to buy services which currently few would buy with their own money now.
But don’t worry, we are going to have really smart experts running the system. They will be almost as smart as the people at the Federal Reserve and Fannie Mae.
The second component goes something like this: why should the doctor make more than twice what the average patient makes. Only the trial lawyer should have his own private jet, because he is fighting for justice.
Cost control is the lowest priority of this bill which has almost nothing to do with medical reform.
The republicans don’t care, and the democrats only offer dessert to the uninsured, without any spinach for the trial lawyers, unions, government employees, AARP, or the vast majority of employee plans.
MD as HELL:
Actually, I never discussed your personality or questioned your right to express your opinion, on this blog or elsewhere.
“…I want every American to have a choice.”
As Lenin once wrote, “…To live in a society and be free from that society is impossible.” Your choices are always restricted by the “social contract” in the form of the law, which, in a democracy, is supposed to reflect the views of the majority.
Mr. Saip,
I clearly do not want to choose what is fright for every American. I clearly want the opposite; I want every American to have a choice. I clearly want a government that is limited and affordable. And what is so great about a “six figure income” when you are taxed out of 60% of it? (federal, state, FICA, Medicare)
Your greed is power. Your greed is much more stealthy than a corporation.
As for physicians in western Europe, you don’t know who did not go to medical school there because of the system there. The best and brightest used to go to med school here. No more.
As for being loud-mouthed and opinionated, I thought that was the purpose of this blog, unless you were trying to sell something, to express opinion. Well I have one, healthcaredDev(iant). It is not yet a crime or an actionable civil case. Not yet.
In response to MD as HELL:
“…Why would anyone want to go to medical school to become enslaved in this nightmare?”
I didn’t hear much about misery of enslaved physicians in Western Europe, and a have a few friends in Germany (one of them is American-born and educated), who practice medicine there, did you? If bright young people here choose medicine for a six-figure income, then we shouldn’t be surprised to learn about Doctors Hospital in McAllen, TX, or Dr Conrad Murray injecting Michael Jackson with propofol…
“…I can sue the corporation for their failure under the terms of my coverage, but I cannot sue the feds for being communist pigs.”
Can you sue a corporation for being driven by greed? You can’t bring charges against motivation, but you can and should defend your legal rights if government or a business entity violates them. You may have ideological disagreement with the Administration and those who voted for President Obama, but that doesn’t make you the judge what is right for every American. By the way, what do you really know about communism? Have you ever read “Das Kapital”? I spent a large chunk of my life in the former Soviet Union, so I can see the difference between the USSR and EU.
healthcareDev your hilarious, that Insurance company pr joke never gets old. Thanks for the post.
Joe, allow me to be more specific since your glossing over the “of significance” portion. Yes there is a health insurer out there with 1000 lives and a 60% loss ration. No carrier of any size or significance has a loss ration below 70 and most can’t get below 80. There never was a carrier of any size that has the loss ratios you claim. The reason small carriers can have such huge variance is one claim can make the difference between a 50% and 110% loss ration. Do you feel it is an honest contribution to debate to interject an extreme outlier that occurs to less then one one hundredth of the population? If that is the type of debate you need to resort so fine, the public deserver to know how disingenuous it is though. Average loss ratios are high 70s low 80s a fact you don’t even bother to mention.
Here are loss ratios for a number of states, compare the facts to your argument;
http://ahca.myflorida.com/SCHS/HealthPlan/Mtg052908/TAB_H-FinancialPerf-OtherStates.pdf
United Healthcare one of the largest carriers in the US, they own pacificare;
Through the first half of 2007, we had an 81.5% medical care ratio in UnitedHealthcare. We expect the full year MCR to be in the 81.5% to 82% range.
Many are not and I’m going to question your 70% claim as well. California Health And Safety Code HSC Section 1378, enforced through Cal. Admin. Code tit. 28, § 1300.78
“Managed care plans: Administrative costs not to be “excessive,” limited to 15% to 25% based on developmental phase of plan.
Care to provide a link or any thing to support your 70% claim?
http://www.ama-assn.org/amednews/2008/07/21/bisc0721.htm
“WellPoint-owned Blue Cross of California (now known as Anthem Blue Cross) had the second-lowest medical-loss ratio at 79%, and Blue Shield was fifth lowest, at 82.1%.”
You claim 70% every other source has them in the 80s. Why is it none of your facts check out Joe? I think you need to review your sources of information.
Well Joe if your going to use consumer satisfaction surveys to support your claim Medicare is more efficient not much I can say. You don’t think by paying every bill, even those that shouldn’t be the consumer would be happier? I not only claim Medicare is prone to fraud and abuse so does the GOA, CMS, and every other government body that has ever done an audit. Medicare benefits customer service is also done by private insurance companies FYI. So if people like the side if the insurance companies that pay Medicare but dislike the side of the building that processes private insurance what is your theory on why? They are calling the same people with the same software. You again ignore the argument that single payor medicare is less efficient and prone to waste.
All this discussion is about how to control patients and those that care for them, and it is about who pays rather than being about what is being purchased. We are doomed if we don’t shift the primary focus to what is being purchased and how that directly affects patients and the doctor-patient relationship. Does not all the evidence show this top-down outside manipulation has failed, miserably? Will we ever look at the evidence and shift the focus to how to best facilitate patient-centered collaborative care?
Nate, on single payer: You throw up several charges and arguments alleging that single payer is (or theoretically would be) less efficient, less customer friendly, and more prone to fraud and abuse than other alternatives. Yet Medicare, our most prominent single-payer system, gets consistently higher customer satisfaction marks than private insurance; the Federal Employees Health Benefit Program, a single payer working through private insurance companies, is highly-regarded. In the Commonwealth Fund’s surveys of different countries’ consumer and provider satisfaction with their health care systems, the U.S. consistently comes in last in almost every category, almost every year compared to the other leading industrialized nations.
Nate, your specific challenge was: “Please cite any carrier of significance with a 60% loss ratio.” The seminal paper everyone cites is James Robinson’s 1997 Health Affairs article on the “Use And Abuse Of The Medical Loss Ratio To Measure Health Plan Performance.” In the course of debunking the use of MLRs, he cites state-to-state and plan-to-plan variations from as low as 47.2% and 58.4% to as high as 110%. This is old data, but I am not sure we have any reason to think that such variation has stopped. Average MLRs are indeed much higher than that, in the 80% to 85% range. But many are significantly lower. For instance, the California HealthCare Foundation’s January 2009 report on California Health Plans and Insurers showed Blue Shield and PacifiCare at 70% for the CDI-regulated parts of their plans.
Joe, thanks for putting together these ideas which have been posted disjointedly in other posts and blogs. The intelligent readers here have already weighed in on their support which is probably why you are left with the above responses. My favorite idea is supporting the “Accountable Care Organizations”. Lack of accountability in healthcare is a huge factor when talking about quality and cost. You are probably right that it can’t be mandated but I do think we could tighten the screws to the point where that was the only profitable option. I’ve said this before and no one has challenged me yet so I am going to toss in again my “single best cost saving rule”: No private practitioners in the hospital.
That was a very Obama answer of you Joe, insist the person doesn’t understand then move on quickly cutting of debate of your ideas. What about are disagreement on single payer and your claim about 60% loss ratios. Those all seem pretty clear. Democrats dismissed objections to Medicare and HMOs the same way, refuse to debate then ram the plan through a confused public that really doesn’t understand.
MD as HELL, can we sue you for being a noisy, opinionated loudmouth?
And Nate, how’s that insurance co. pr gig working out for you?
how would you quantify the difference between bundeling and capitation? Traditional capitation covered all of a persons specific type of care for a month. PCP capitation, hospital capitation, or kaiser everything capitated. Bundeling is capitating all treatment for a specific diagnosis instead of time. Do you disagree with this assestment? If you don’t then why do you think the same pressures won’t come ot bare?
See conversation is easy.
Joe,
I can sue the corporation for their failure under the terms of my coverage, but I cannot sue the feds for being communist pigs.
Nate, I tried to work through your multiple objections to every word I said, right down to the prepositions, but I had this little problem: Pretty much every objection is based on a misreading, misunderstanding, or misconstruction of what I wrote. For instance, your objection to bundling is to call it capitation. Bundling is no more a species of capitation than getting a complete price for fixing my bent fender is “capitated auto repair.” Your objection to publishing prices is about publishing patient satisfaction scores. Your objection to warranties shows little awareness of how warranties in health care actually are structured, how they deal with patient-caused problems, and how they have worked when they have been tried. The idea that “all of the financial problems today are the result of government options” is rather mind-blowingly vast, simple, and wrong. And on and on. So I am not going to work my way through all of your multiple posts and answer every last objection, Nate. Simply put, I don’t think we can have a conversation.
> You don’t really want to live in a country with all this power over you and health care, do you?
For reasons that escape me, people who make this argument never seem to notice the extraordinary power that private corporations have over anyone who has private health care insurance, and is routinely subjected to rescission, denial of payment, and deep (sometimes even lethal) interference in medical decision-making. I would love to have that kind of power out in the open, where we can discuss it, rather than made by corporate employees who are actually paid bonuses to deny as much care as possible.
last post, what really pisses me off about this whole thing is we never needed medicare. Medicare was nothing but a political power grab. Americans, 87% there were the poor that needed help, had ZERO problems paying for their routine health care. What people wanted was catostrophic coverage in case they where hospitalized for 4 months. A certain party took this need, manipulated it politicially into a program that did the exact opposit and cut off benefits after 90 days with some exceptions. The party has never been held accountable for what they did to destroy healthcare in America. It would have been very easy to design a catostrophic health plan for seniors that was sustainable and to properly fund Medicaid for the 13% that needed it. Instead we have a criminally underfunded medicaid program and an unsustainable medicare program that never delivered what it promised. Not only does the left refuse to admit these facts you can’t even get them to debate them.
I can’t remeber where I saved the trustee reports but this sums it up;
http://www.ncpa.org/pub/ba616
The 2008 Social Security and Medicare Trustees Reports show the combined unfunded liability of these two programs has reached $101.7 trillion in today’s dollars! That is more than seven times the size of the U.S. economy and 10 times the size of the outstanding national debt. The unfunded liability is the difference between the benefits that have been promised to retirees and what will be collected in dedicated taxes and Medicare premiums.
take a second to read what minimum tax rates will need to be. Remember this is just to cover benefits already promised. If they stopped Medicare today and said anyone born after today won’t have it they still need to raise that money. THis is money already spent….unless they break their promises
It has to do with liability which is the basis all insurance is built on. In the private sector they have Incurred But Not Reported(IBNR) carriers by law must keep sufficient reserves to cover this expense. Private insurance is pay as you go, this month you pay for this months insurance. There is limited long term liability.
Medicare has been collecting taxes from people on the promise when they turn 65 they will have coverage. If Medicare was forced to reserve for this like private insurance it would already be insolvent. The rough figure is 34 trillion in promised benefits for which they don’t have the money to pay for. Medicare is in fact a giant ponzi scheme. They used today’s premiums to cover yesterday’s promises. This works fine as long as you have a growing premium base to cover the growing beneficiary base. With the baby boomer generation hitting we no longer have enough workers to pay for the beneficiaries.
The structural failure of the system could have been overcome except for the inflationary failure. You might have been able to raise enough taxes and cut benefits enough to make up for the ratio of workers to beneficiaries except the cost per beneficiary has sky rocketed. This is after the government has already shifted hundreds of billions in liability and cost to private insurance.
The Medicare tax rate has not increased but they eliminated the maximum completely in 1993 after increasing it in 1990. So the income the tax applies to increase substantially and continues to as wages increase.
A large portion if the increase in private insurance is due to the failure of Medicaid and Medicare, see the new NY COBRA laws effective 7/1/09. They extended COBRA to 36 weeks and also require insurance companies to cover unmarried dependents up to 29. This moves people from Medicaid onto their parents plans. The state premium taxes fund Medicaid cost in many states.
Congress can not increase taxes enough to cover projected Medicare cost at current benefit levels. That is why they want to take over private insurance, so they can shift funds from those programs to cover the cost of the public plans.
This will be dismissed as my usual right wing hyperbole but I think everyone really needs to step back and consider the political ramifications of what we are seeing. The Democrat party is built around the new deal. Social Security, Medicare, Medicaid. What if one of those programs where to fail; it would do considerable damage to the liberal ideology. Today we are looking at the very real possibility of all three legs of Liberal dogma failing. My personal opinion is if 1 or 2 failed and without question if all three failed another politician could never get elected representing that party. Who in their right mind would vote for the party that designed, implemented, then oversaw three of the largest financial disasters in the world? SS and Medicare where designed with fatal flaws, they assume population growth forever. Medicaid assume financial growth indefinitely. Any review of history will show every nation stagnates. Unless we have an unprecedented influx of young workers, huuummmmm sounds familiar, and renewed growth, all three programs will buckle and collapse.
By fundamental design private insurance is sustainable, it can only consume what it is allocated on an annual basis. You might gripe that it doesn’t cover enough but that is in fact a benefit of the system, when the care it buys cost to much coverage is reduced forcing pressure on the care to become more efficient. The public plans are really just the campaign promises of politicians. There is no insurance there. At 35 I have no expectations of receiving either SS or Medicare, as more people wake up to this fact more people are going to question the taxes they are being forced to pay. It is rough for a 35 year old workers to lose his or her insurance. What does an 85 year old retiree do when the politicians finally admit we can’t afford Medicare?
Look back at what Medicare promised; catastrophic protection for grandma. Look at what it delivered, caps on days in the hospital from the start and the catastrophe it is headed to.
Nate, I have a question regarding this statement:
“Private insurance is not in crisis, the impending default of Medicare and unsustainable cost of Medicaid is the problem.”
As far as I know Medicare tax has been unchanged since 1990, while private insurance premiums have been increasing relentlessly to keep up with healthcare costs. Would Medicare/caid still be unsustainable if congress increased payroll taxes accordingly?
How is this fair comparison anyway?
Mr. Fower,
You don’t really want to live in a country with all this power over you and health care, do you? Because next is housing, employment, free time, personal choice, retirement, etc. Why should the tyrant stop at health care? Why would anyone want to go to medical school to become enslaved in this nightmare? Why would anyone choose to be a patient in this nightmare? They would not choose to be in this nightmare. They would choose for you to take a long walk off a short pier.
Single Payer: With no competition there is no reason to be efficient or evolve. Medicare and Medicaid are perfect examples of how poorly ran single payor can save $0.10 on Administration and lose $10.00 on claims. With competition if your payor doesn’t provide good service, offer a website, or what ever else you seek you have the choice of switching to someone that does. A single payor is not accountable to its customers. Think SS Disability, DMV, and other bastions of service.
“Robust” public options: Medicare use to be an option until they cornered the market then they simply said you no longer have the option. There is no such thing as an option with the government, when financial pressure ensues, and it always does, the government always resorts to dictating solutions that no longer allow you the choice originally promised. Further seeing as how all of the financial problems today are the result of government options creating another one would not save a penny. Private insurance is not in crisis, the impending default of Medicare and unsustainable cost of Medicaid is the problem.
Limiting medical loss ratios: When you cite a dishonest or misleading stat to support your case that tells enough about your argument. Please cite any carrier of significance with a 60% loss ratio. In fact many states already have minimum loss ratios. No carrier is running around with the loss ratios you claim. A high loss ratio is not always a good thing. For starters you have some states collecting 3-5% in premium taxes, that would be hard to do with a 92.5% mandated loss ratio. Next high loss ratios leave less money for disease management, chronic care treatment, and innovation. Hi loss ratios also minimize efforts to control cost, the higher you drive premium the more you can collect in revenue. Smart plans would rather pay someone $20 to keep their total cost at $100 then $16 to let it ballon to $200.
Taken with your two suggestions above there clearly is no understanding of how insurance works today nor economics. These are simple theories that don’t survive past the bar napkin. 40 years of history has disproven all three.
Bundling is no different then any other attempt at capitation. It works great in theory but people don’t like being managed. If your going to capitate a payment for hip surgery or anything else the providers are going to attempt to maximize their profit with the set payment they have. Someone is going to get mad that they don’t get the titanium hip, an extra day to recover in the hospital or something. Some providers will take cost cutting to far and congress will step in again. If your going to propose anything close to capitation then you need to address what are you going to do different this time that will make it palatable? We have 40 years of people chaffing at capitation, its not a legitimate solution unless you can solve that.
Publishing Prices: again ignoring the facts and past. If you publish surveys on outcome satisfaction then providers compete on making the patient happy. This is great for patient satisfaction surveys but drives cost up. Who is going to get the 10K hip replacement with low satisfaction when you can make your insurance company pay for the 12K one everyone loves? Medicaid is full of low cost providers, no one with a choice wants to be treated by them though. If your goal is to create a two tier health system, one with happy outcomes for those that can pay extra and one the majority of us are forced to use then great idea.
Banning Discounts is actually a good outcome you just accomplished it the wrong way. A much easier and effective solution is to require providers publish their fees and insurance companies reimburse a set amount no matter who the provider is. RBRVS simplified would be the ideal solution. If you have a hip replacement we will reimburse $X now go choose your doctor. If you think doc Y is better then Z and want to pay the difference in cost there is no arguing with insurance companies about it. What ever crazy logic patients use to pick providers it is completely up to them. Justifing their fees to patients is proven effective, see lasic surgery, cosmetic, or any other medical procedure that is generally of a discretionary nature.
From your integrated ACO item I’ll assume you have never paid a Cleveland Clinic bill. You ignore the dark side of capitation and how it frequently fails. Kaiser is barely successful outside CA and even in CA unpopular outside its core of people that respond to a managed lifestyle. What about the 80% + of people that don’t like Kaiser? This is a great example of why single payor is such a stupid idea. A small population of people respond very well to the Kaiser approach. Why would you not want to allow those people to go that route while still allowing those seeking more independence to go theirs. There is not a one size fits all solution to healthcare. Patients have different education levels, are willing to contribute vary amounts of effort and resources, and have different expectations. Where we get in trouble is when good meaning people, supposedly, try to force their idea of quality or solutions on others. See Ted Kennedy and is failed HMO Act of 1973. Ted was convinced HMOs where the answer to all of our problems and they would solve all the issues. Oops…..Sorry but you and congress are not that bright, you don’t have all the answers so stop trying to pick winners. You don’t know if Cleveland Clinic or University is the best hospital for me to go to, I could make a very strong argument University with their much lower charge master is a better value with equal outcomes, who are you to decide CC should get a 5% bonus?
NO MORE SUBSIDIES! Doctors make comfortable 6 figure salaries they can afford to update their technology, most of which would actually reduce their cost of doing business if they implemented them. There is no reason to pay them to do what is right and saves them money. When Congress mandated payors accept EDI claims they didn’t give us one penny. In the long run it more then pays for itself. Stop distorting the market with subsidies, just require they do it.
Warranties are nice as long as the patient lives up to their required maintenance. If your infection of from hanging out at seedy bars on the way home from the hospital why should the provider get stuck cleaning it up? Responsibility works both ways.
“Each has been proven, in practice, in some part of the current market, even single payer (think Medicare and the Veterans Administration).”
What exactly do you think Medicare has proven? It has proven you can lose $700 to waste and fraud while saving $10 on administration, is that the point you’re trying to make?
Why is catastrophic coverage never an option in the Public Option? Why force lower-income people to pay for all sorts of wierd mandates and mediocre services?
And what do you mean that “they” (in the “accountable care organizations”) are in competition? Hardly. On the contrary they have many incentives to undertreat, to do the least possible. Now if there were a catastrophic option, some of the neglected patients could at least retreat to that, and get the rest of their care from little clinics. But now they are are often forced by their contracts to stay with, and pay for, bad care.
However, I love your idea of warranties. Accountability, finally.