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1/7/2009
It's you and I who must act on health care costs
I’ve been saying it forever – and will continue saying it as long as blood flows in these old veins. The crux of any health care solution for America is controlling costs. Plain and simple. Costs. A well-done article in last Sunday’s Journal Sentinel (included in Monday’s FoxPolitics News) detailed the results of a recent report from the McKinsey Global Institute. [Emphases are mine.]
While the cost of prescription drugs, insurance company profits and inpatient care at hospitals all contribute to higher spending on health care, they are dwarfed by what the U.S. spends on outpatient care….
Outpatient care includes physician and dentist offices, same-day hospital visits, ambulatory surgical centers, emergency departments and diagnostic imaging centers. It is the segment of the health care market that has some of the highest profit margins and the fewest constraints on spending. It also is the largest and fastest-growing segment of health care spending.
…. One reason for the [outpatient care] increase is that patients tend to defer to their doctors and are relatively indifferent to prices because most of the cost is covered by insurance. Even with the increase in high-deductible health plans, patients' out-of-pocket expenses for outpatient care account for only 15% of total expenditures, the McKinsey report says.
Another reason is outpatient care accounts for a significant portion of hospital profits. By one measure, the McKinsey report estimates hospital profit margins on outpatient care at 35% compared with 2% for inpatient care. That gives health care systems a strong financial incentive to provide outpatient care and to expand capacity. Yesterday’s papers brought more health care cost news - this time news of Massachusetts “accelerat[ing] efforts to control spiraling statewide healthcare costs…” Governing’s December magazine features a good piece on the state’s groundbreaking efforts at universal coverage. I’m surely not surprised that the program was $1/4 billion over budget. Costs. It’s all about costs. (Again, emphases are mine.)
Worse still, Massachusetts is dealing with the same escalations in health care costs as the rest of the country. In the current economic downturn, those costs, if not controlled, could force the state to scale back its efforts.
….Nor has the cost story been entirely a negative one. As the ranks of the uninsured have thinned, fewer people without insurance are showing up at hospitals, which is saving the state money. [That’s the good part – great!]
…. One effect of [offering coverage first and worrying about costs later] has been to make clear to everyone, from legislators to advocates, the importance of controlling costs.
…. People like Reverend Hamilton, who describe health care as a right, suddenly have a reason to care just as much about cost as access — because access now depends on controlling costs. In effect, Massachusetts, which just two years ago became a laboratory for experiments in expanding access, now is set to become a laboratory for controlling costs. Any plan to improve health access must control costs. As I’ve said before, patients must share in the cost risk, must, to use a Warren Buffett expression, have skin in this game. Health insurance must never give rise, as it so often does today, to “indifferen[ce] to prices because most of the cost is covered by insurance” – an expression that should make our blood boil. Making health care available to all in America – it’s up to us.
Jo Egelhoff, FoxPolitics.net
COMMENTS
>>> "patients must share in the cost risk" Jo, that's a terribly over-simplistic view of controlling costs. I have very mixed emotions even about the 20% co-pays that are designed to deter patients from over-utilizing the health care system. Easily 80% of over-utilization is generated by the doctors and the profits they make on testing. Only 20% are due to patients worried about their health. Virtually ZERO of it is due to patients who simply like sitting in the waiting room or like socializing with the cute doctor.
Importantly, co-pays deter patients from seeing the physician in a timely manner, and many times their diseases progress to being more costly to treat or even become untreatable and they die. Yep, that would indeed reduce costs moving forward. That's what you would call "skin in the game."
My wife developed a cold, which led to a bad cold, and she refused to go to the doctor. Until, that is, it developed into pneumonia which could have killed her. Now I'm trying to get her to get a colonoscopy, which can detect colon cancer while it is treatable, but she refuses. Yeah, she's doing her part in keeping costs down, but with her dad dying of colon cancer I'm not happy with her decision.
Importantly, a Kaiser study showed that co-pays increase costs by deterring early detection. Women were forgoing their blood pressure medicine and having strokes instead. That's a fine trade-off, isn't it? Or they died, thereby decreasing future health care costs. Even better.
No, the best way to reduce costs is getting rid of the waste that results from our multi-layered system (the insurance bureaucracy drains 31% of our $2.5 trillion total) and 20% is due to over-use and fraud (20%). But unfortunately the moneyed political system is driving the decision away from doing the right thing. The least costly approach is a Medicare-for-all system, but you and others object to that. At 71 I don't have much longer to worry about it, but my kids and your kids do.
Jack Lohman (Wed Jan 07 08:26:46 2009)
So Jack, why are American consumers so incapable of impacting that 80%? Because I'm an informed consumer, I don't buy too much auto or home insurance. I price shop assiduously for an auto every 10 years (or whatever...). If these are MY dollars, why wouldn't I (which I do, by the way) be wise about spending my health care dollars (which indeed, my family tries very hard to do)? Yes, blame the doctors. Blame the big health care corporations. Blame the health insurers. Keep blaming anyone you want Jack. But you can't continue to let the American consumer off the hook.
Jo (Wed Jan 07 09:28:46 2009)
Patients have trouble impacting that 80% because they are sick and vulnerable and do not feel qualified to second-guess their physicians.
Other countries have reduced costs by implementing single-payer systems, and incidentally, not negatively affected health care in the process. Most even have better overall results than does the US, but that's because they provide health care to all rather than a select few. Not because they are better than we are.
When Taiwan traveled the world to review every health care system, they went home and implemented a Medicare-for-all system modeled after our own Medicare. I am the first to admit that our Medicare is not perfect, but it is far better than the for-profit, free-for-all market that some support.
Jack Lohman (Wed Jan 07 09:54:13 2009)
Have you ever tried to challenge a health service charge with your insurance provider? The explanation on a benefits statement often includes meaningless one or two word service descriptions aligned with a multi-digit service code. When asked to explain the service code, the stock answer is that it is provided in a proprietary manual (owned by the AMA and a huge revenue source) that is not readily available to the public. Consequently when I received an emergency room billing statement with six individually billed services listed, two service descriptions were duplicate (but the codes differed) and a third was described as "miscellaneous." So I phoned the insurance provider to ask about the charges, I was told "Don't worry they are fully covered." But I do worry about whether the charges are legitimate and appropriate. As a responsible consumer, I am stonewalled by the medical/insurance establishment with little recourse to understand costs much less press for change.
Dennis Clauss (Wed Jan 07 10:22:32 2009)
I do worry about charges as well. And as long as I'm still breathing, I fight to get the answers. Absolutely - so much must change for patients and payers to become responsible health care consumers.
Jo (Wed Jan 07 10:29:43 2009)
Dennis, the AMA CPT codes are not secret. You can find them here: http://tinyurl.com/5sj87k
Accept the terms and then enter your state and CPT code for the procedure. It should tell you how much Medicare will pay in your area. The patient's portion is 20% of that.
Providers cannot charge a Medicare patient more than that, but they can charge private insurers or the uninsured anything they want. And they often get paid! That's a major part of the problem with the privatized system.
Medicare reimbursement rates are determined by a cost analysis of labor, technology, and overhead, all adjusted for locality. The rates are "fair," but that's part of the current problem. Providers cannot overcharge patients to make up for the uninsured, so the privates have to make up for it. With a Medicare-for-all system there would be no uninsured or need to cost shift. If a provider only accepted Medicare they'd live a very good life.
Jack Lohman (Wed Jan 07 10:57:14 2009)
Jack, you're just hashing out the old Beveridge Fallacy. Know what that is? It's the name given in the UK to that line of reasoning ("catch them before they get worse"), and the MP Beveridge used it to push their NHS (national health service). Guess why it's called a FALLACY?
Yes, there are many people who OUGHT to take meds for schizophrenia, diabetes, or high blood pressure, who don't. But usually the reason for "not being able to afford it" comes down to priorities. That's right--it's more important for many to keep paying for their cigarettes, tattoos, alcohol, or cell phones, instead of paying for meds. (Since when is a cell phone a necessity? I don't have one!)
OK, maybe I've worked in ER too long, but if you walked in my shoes, you'd soon see that ERs indeed see time-and-money-wasters. I'm so tired of perfectly able-bodied people on welfare of some sort (incuding lifetime disability for an injured finger!) that come marching into ER because after all, "the world owes them a living". Contrast that with a farmer I know, who somehow manages to keep on working with only one arm.
And don't give me the old chestnut that "they can't see a family dr". RUBBISH! I can tell you of four recent pts who didn't keep their dr appointment "because it wasn't convenient" (their words) and later decided to go to ER, because we are always open!
People just don't get it: we DO NOT HAVE A PRIVATE SYSTEM. We have a THIRD PARTY PAYER SYSTEM. Whether the 3rd party is govt. or insurance, doesn't matter. People are divorced from truly having to pay their own costs; from being responsible.
The solution would be to have insurance for catastrophic only, and everyone pay out of pocket for sore throats, check-ups, etc. If drs were allowed to publish their fees, like plumbers or carpenters, we'd all be a lot better off. That would be true "free market"!
As to your wife refusing to see a dr for a cold--she was quite right, you know. A cold is a VIRUS, and you don't (or shouldn't) get antibiotics for that. Even some pneumonias are viral, and cannot be treated by antibiotics. And my husband also refuses a colonoscopy, even with a dad and brother who had/have it. But it's not because of cost! He just wants to put his head in the sand.
What about torte reform? Know why drs do extraneous tests? Because of the invisible lawyer leaning over their shoulder! BTW, drs do NOT make money doing tests--the lab or radiology dept make the money! Torte reform would decrease costs tremendously but all those lawyers gotta take their cut!
As I said before, if everyone in the US was able to have the govt pay for all their car repairs as well as their car insurance, how careful do you'd think they'd drive? How much maintenance would they themselves put into their vehicles?
emily matthews (Wed Jan 07 12:03:22 2009)
After reading Jack's initial reply to this, I thought the others and Jo herself would be too embarrassed or ashamed to to keep banging on this.
I was wrong. And not the first time either.
There are no sound arguments for denying anyone in the last first world country which continues to do so, the right of free health care.
The privileged classes, well employed and other smug segments of the population can bleat on this goal of being health consumers. What an
anachronism and retrograde way to view what a doctor does.
Doctors have picked up this mantra, but only the irresponsible ones. And there are plenty of those invested in their own health care "industry" rather than health car *service* as it is designated in European countries. There the
doctors are in government service. They have to take an oath for that as well.
I do the next best thing. I go to the community clinic. You see, there is no "shopping" for me to do because I do not consider myself a "consumer" of health care.
Now can we get on to some local issues not based on moral and financial superiority?
Lon Ponschock (Wed Jan 07 13:07:19 2009)
Esther, we have different experiences. You are an ER nurse and surely have seen some leakers come in, but that will virtually disappear if these people can go to a local doctor (or walk-in clinic or local Wal-mart clinic) under a Medicare-for-all system. You are ignoring the experiences of every other industrialized country in the world.
I’m an ex-CEO/owner of a health care provider (25 years monitoring cardiac patients), and I’ve seen an equal number of abuse and overuse of services. You are wrong about the lab always making the profits, because many doctors now own their own labs. And malpractice is not driving health costs, that has remained at less than of 1% of total costs for the last 5 years. The so-called “defensive medicine” pushes the costs to about 5%, and if the tests were not profitable to the doctors I’d probably agree that this is the culprit, but I cannot justify the 31% waste of our multi-layered system and 20% overuse.
I think you are letting ideology get in the way of pragmatism. I would argue that we do not have a third party payer system, we have a system that is paid by the consumers, one way or the other. Either through taxes (as in other countries) or in cost add-ons (as employers add their costs to their products and we reimburse them at the cash register). The former will save $400 billion per year while covering 100% of the people. Including your leakers. Take your pick.
And I agree with Lon. Let’s fix this and move on to fixing our country.
Jack Lohman (Wed Jan 07 17:14:08 2009)
Sorry Emily. My mind said Emily and my fingers typed Esther. That's what happens when you get old.
Jack Lohman (Wed Jan 07 17:27:57 2009)
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