Health Insurance

I’ve written several times in the past on my frustration that the powers- and pundits-that-be seem to focus on some folks’ lack of health insurance as being “the problem”, while failing to consider the real problem – that the health care Americans have come to expect is just so damned expensive.

I’ve just read an article (subscriber link) in Tuesday’s Wall Street Journal which does a great job of highlighting the expense problem:

American doctors rarely used to let costs factor into their treatment decisions. But rising prices — some cancer drugs now cost more than $100,000 a year — are dramatically changing that ethos in the field of oncology. Money issues are now disrupting relationships with patients, causing doctors to go into debt and threatening to interfere with treatment options.

Unlike most physicians, who write patients prescriptions that they can fill at a pharmacy, oncologists must buy many drugs upfront because they’re delivered intravenously in the office. As a result, doctors are on the hook until patients or insurers pay the bill. Reimbursement delays and denials are now more common as insurers clamp down on claims. Some patients can’t afford high co-payments.

"Twenty years ago, when I was in training, nobody really dealt with economics," says Stephen Hufford, an oncologist in San Francisco. The prevailing thinking, he says, was: "Cost should never be an issue in someone’s care."

That approach increasingly looks untenable. In February, after delays in payments from insurers, Dr. Hufford was working to pay off several hundred thousand dollars of past-due bills to his drug distributor. When he ordered $20,000 of chemotherapy for three patients he was to see the next day, he says the distributor refused to deliver the drugs unless he paid in advance and reduced his outstanding balance by another $20,000. He didn’t have $40,000 in his bank account.

With the general election campaign heating up, I expect that we’re going to hear more about “the uninsured problem” in the not too distant future.  I still say that focusing on that problem seems kind of short-sighted unless policymakers and the public in general don’t start looking at the entire system of financing health care, the costs involved…and perhaps what level of care is supposed to be provided as an apparent “right”.

Behind the very public calls for universal health care to be The One True Solution to the American health care crisis, and my own Cassandra-like observations that underlying inflationary patterns are being ignored, some folks have pointed out that another piece of the puzzle might be found by looking at how medical professionals are compensated.

Oversimplifying, compensation seems to be driven by how many “things” a care provider does, multiplied by the relative trendiness of those things.   That math appears to be driven in part by ripples from Medicare reimbursement schedules.  And, if those schedules are prescribed by bureaucracy, rather than emerging out of free market forces, a logical consequence is that you’ll find more medical professionals interested in doing a lot of trendy things, while professionals working in a more mundane mode will see their income suffer.

This concept, I have to admit, I hadn’t really thought much about.  But, a recent Wall Street Journal article (subscriber link) has started to remedy that.   Quoting from the article:

A discipline built on spending time with patients to gather clues for a diagnosis, neuro-ophthalmology could become another casualty of a medical payment system that favors high-tech procedures over low-tech exams. The median income of a neuro-ophthalmologist at a teaching hospital is $200,000, according to the North American Neuro-Ophthalmology Society. That’s a third less than most general ophthalmologists, who undergo less training but can see more patients, and do more pricey procedures, in a given day.

Many in health-policy circles have focused on how the current health-care payment system is helping create shortages among primary-care doctors, internists and others on the front lines of medicine. But often lost is how the system is endangering some of the country’s most highly trained specialties as well.

Endocrinologists, rheumatologists and pulmonologists — specialties that also don’t involve performing many procedures — face acute shortages. Many of the severest deficits affect children. Though nearly 300,000 children in the U.S. are diagnosed annually with juvenile arthritis, lupus or other complex rheumatic diseases, there are fewer than 200 pediatric rheumatologists to take care of them, according to the U.S. government’s Health Resources and Services Administration.[...]

For two years, 68-year-old Al Purdon says he searched for a diagnosis for his persistently drooping eyelid. A visit to an optometrist led to a referral to an ophthalmologist and six more doctors, including an endocrinologist and a plastic surgeon. (Optometrists complete a four-year postgraduate program; ophthalmologists have a medical degree.) Several scans, a surgery and a biopsy later, Mr. Purdon says his eye still drooped, his Medicare had spent $10,850 on bills and there was no diagnosis.

Frustrated, Mr. Purdon and his wife went in early 2007 to Dr. Frohman. Dr. Frohman “took one look and said, ‘I think I know what it is,’” Mr. Purdon’s wife, Johannah, says. A series of seemingly basic tests, some questions and a blood sample later, Dr. Frohman diagnosed Mr. Purdon with myasthenia gravis, an auto-immune condition that impedes signal transmission from nerves to muscles throughout the body, but often first in the eyes. Medicare paid $220 for the visit, and Dr. Frohman said he’d continue to monitor the condition.

Mr. Purdon’s prior treatments may pose another risk. Because myasthenia can go into remission, doctors say the eye-lid surgery Mr. Purdon had can sometimes overcorrect the lids and make them appear to bulge.

The subject resonates with me in no small part because of what my wife’s been through in the past several years.   Folks who have read my writing are probably aware that she was in a car accident and suffered a freak brain injury.  However, because of the interrelationship of her symptoms, aggravated by limitations on her ability to communicate, it took us a couple of years to find a doctor willing to sit and take the time to start peeling back what all was going on with my wife until a couple of years later we actually got fairly robust set of diagnoses.

You know, there is something rather intoxicating about living in a society that is exciting, fast-paced, and highly reactive.  Something happens, and we quickly react to it, and hurry on to the next development.

However, there is something to be said for stopping, looking at the environment around us, and taking the time to really contemplate the complexities of what is going on, thereby hopefully gaining better understanding of what is happening.  That is a shame, because reacting without understanding can introduce inefficiencies, or undesirable unintended consequences.

One of my biggest fears about our seeming rush to universal health care is that it seems to me to be a “solution” prescribed without understanding the full problem.  Moving more people into a system where professionals have an incentive to react, rather than to diagnose and to fix, would likely aggravate some of the health care issues the country faces.

I’m enough of a social liberal that I love the idea of ensuring that everyone has access to a basic level of healthcare.  But unless some of the inefficiencies and inflationary pressures are addressed, and until there’s been a good, honest public discussion over the pros and cons of different levels of universal care versus the costs associated with that care…the path political inertia seems to be moving us down is going to have a very ugly fiscal surprise waiting for us around the next bend.

A passage in a Wall Street Journal article (subscriber link) caught my eye:

On TV one night, Mrs. Kelly saw a news segment about people who try to get patients’ bills reduced. She contacted Holly Wallack, who is part of a group that works on contingency to reduce patients’ bills; she keeps one-third of what she saves clients.

Ms. Wallack began firing off complaints to M.D. Anderson. She said Mrs. Kelly had been billed more than $360 for blood tests that most insurers pay $20 or less for, and up to $120 for saline pouches that cost less than $2 at retail.

On one bill, Mrs. Kelly was charged $20 for a pair of latex gloves. On another itemized bill, Ms. Wallack found this: CTH SIL 2M 7FX 25CM CLAMP A4356, for $314. It turned out to be a penis clamp, used to control incontinence.

M.D. Anderson’s prices are reasonable compared with other hospitals, Mr. Tietjen says. The $20 price for the latex gloves, for example, takes into account the costs of acquiring and storing gloves, ones that are ripped and not used and ones used for patients who don’t pay at all, he says. The charge for the penis clamp was a “clerical error” he says; a different type of catheter was used, but the hospital waived the charge. The hospital didn’t reduce or waive other charges on Mrs. Kelly’s bills.

Maybe hospitalization should include a “BYOMS” — Bring Your Own Medical Supplies — option?  Sheesh!

In fairness, I can understand hospitals’ need to make up revenue gaps from providing care to those who can’t make good on their bills, as well as to satisfy investors if the hospital is a for-profit operation.   But isn’t a 60-fold increase in the cost of a saline bag a touch extreme?

Oddly enough, that passage appears in an article discussing a new trend in American hospital care of requiring payment up-front (a practice that apparently leaves quite a bit to be desired in the implementation), which would seem to curtail a decent chunk of the problem of nonpaying patients.

I hope I’m not alone in thinking that “universal health care” as a tool to reduce health care costs in the country is only a piece in the puzzle.  Some of the wacky billing practices and inefficiencies involved therein have got to introduce a drag on the entire system.

I was looking forward to watching Frontline this week after seeing this comment posted at Balloon Juice:

This weeks edition of Frontline will cover health care around the world. They have a few trailers up, and it looks to be quite good.

Sure enough, the program guide for the national PBS feed provides the following description for this week’s Frontline:

Sick Around the World The healthcare systems of other advanced democracies could provide the United States with ideas as to how to reform its healthcare system.

…unless one’s local PBS outlet is Connecticut Public TV. This week, CPTV will carry a different episode of Frontline:

Growing Up Online The impact of the Internet on adolescence focuses on children who are harassed or bullied and those who gain attention on YouTube.

I’m sure that this discrepancy is purely coincidental given the underwriting provided CPTV by certain Hartford-based insurers, right?

I’ll break out the rabbit-ears to pick up a Massachusetts signal, or see if I can download the episode later this week, I guess.

Even though I tend to take a pro-insurance-industry, anti-consumer-advocate-nuttery stance on insurance issues, I must admit that the industry suffers from idiocy when it comes to public or government relations.

Sometimes that idiocy arises from the bullheadedness of one or two players; other times it arises from the myopia of focusing too much on the next public earnings release…or the next round of bonus payouts.

Regardless of its source, that idiocy can, when extended too far, provoke unfortunate reactions from regulators and customers. For example, consider this Reuters article:

More than half of U.S. doctors now favor switching to a national health care plan and fewer than a third oppose the idea, according to a survey published on Monday.

The survey suggests that opinions have changed substantially since the last survey in 2002 and as the country debates serious changes to the health care system.

Of more than 2,000 doctors surveyed, 59 percent said they support legislation to establish a national health insurance program, while 32 percent said they opposed it, researchers reported in the journal Annals of Internal Medicine.

The article doesn’t explore possible causes for such opinions, but I can easily imagine that it’s the result of increasing frustration over numbers of uninsured individuals, as well as the multiple and sometimes conflicting hoops that insurers prescribe for claims-handling.

Can you imagine how bad that must appear to medical care providers, if they actually prefer the thought of Medicare/Medicaid for all, rather than private insurance?

Sometimes I wonder if the insurance industry isn’t its own worst enemy….

Seen in the Rocky Mountain News:

Democrats plan to introduce bills to require health insurance firms to get prior approval for rate hikes, punish them for improper denial of claims and encourage efficiencies.[...]

Rep. Morgan Carroll, D-Aurora, said insurance companies are allowed to increase rates at will and get approval from the Division of Insurance later. She said they are rarely punished if increases are found to be unjustified.

“This way, people will know they are getting good rates, they are getting what they paid for and costs will go down as they become more efficient,” she said.

Carroll said she is considering adding auto insurance in a separate measure.

House Speaker Andrew Romanoff, D-Denver, is sponsoring a bill that would impose penalties if a claim is improperly denied.

Since when has regulation promoted efficiency? It’s been my experience that the two concepts tend to be opposites.

A far greater incentive to become efficient…as well as providing better service…is the knowledge that your competitors might do just that, and they have the potential to quickly, easily reflect that in their rates, without having to be concerned about an inability to respond to trend in the future.

Besides, on the health insurance front, such moves seem doomed to have limited effect, seeing as how most Americans get their health coverage through plans which are federally regulated, exempt from state interference (for better or worse).

Seen in a Boston Globe blog:

The state’s new subsidized health insurance program will cost “significantly” more than the $869 million proposed in the governor’s FY2009 budget just two months ago, the state’s top financial official said today.

The budget gap looms despite steps taken today to hold down state costs—approval of a tough contract with insurers, and increased premiums and copayments for about half of the 176,000 people enrolled.

The monthly premiums and copays are still modest for low income folks in the state plan. However, I wonder how long it will be before my big fear about state health plans—that the state is obliged to regulate or levy taxes to combat health care costs—starts to come true.

I’ve seen some discussion (e.g., InsureBlog, DiabetesMine, and Contingencies) on comparing the “mandatory-ness” of many of the quasi-universal health care proposals floating around in American political circles to the requirement in most states that drivers carry auto insurance as part of the conditions of driving a car.

Mandatory auto insurance is, after all, is either believed in, or is at least tolerated by, many (most?) Americans, so why shouldn’t a mandate to buy health coverage be accepted as well?

Like most of the commenters I’ve read, I agree that the analogy of health insurance being like auto insurance is flawed. Health insurance as we know it today is more analogous to a blend of both routine auto maintenance and auto insurance.

However, I prefer to approach the idea from a different direction:

• Every consumer of health care services should have the means to either pay for services received, or have the bills paid for them by a third party.
   
• If a would-be health care consumer is not able to pay for such services (or have the bill paid on his/her behalf), services shouldn’t be rendered.
   
• However, as a society, we are unwilling to be quite so…harsh. As a society, we believe that some level of medical care should be available to all.
   
  This is reflected in laws which generally prohibit ER’s from turning away anyone, and the availability of funds (via federal/state grants, and inflation of other patients’ bills) to foot the bills for indigent patients.
   
• Therefore, some mandate for citizens to have health insurance should exist…and in a sense, already does exist.

Q.E.D.
I’ve previously discussed why I’m on the fence as to whether auto insurance should be mandatory. For health insurance, the question is a heckuva lot easier in my mind—it already is mandatory, albeit in a rather inefficient, unexplicit manner.

The more interesting, and difficult-to-answer, questions in my mind are:

• What level of basic health care should be available to everyone?
   
• What is the most efficient way to fund that level of care?
   
• How can consumers be incented, and the system be operated, so that preventive or maintenance services are encouraged, but abuse of those services is discouraged?
   
• How can the cost for all this be kept from spiraling out of control?

The answers to those questions are, I think, rather interrelated…and, quite frankly, give me quite a headache when I seriously contemplate their magnitude.

Many of the subjects I’ve commented on as part of my “Centrist’s Platform” series of posts have been either obscure, or at least not sexy enough to garner attention in the popular mass media.

That’s definitely not the case when talking about health care or health insurance this election season.  Perhaps that’s part of why it’s taken me so long to get around to writing this post — it’s a hot topic, one that has been a recurring theme in this blog, and which it is difficult to say much that I either already haven’t said…or which seems ridiculously self-evident, at least to me.

You see, in this country we have a bit of an inconsistency — we have some of the most advanced medical care available in the world.  We’re a prosperous enough country (ignoring temporary economic blips) that it seems preposterous that anyone in this country shouldn’t have access to the very best medical care.

Unfortunately, such an observation runs flat into another reality — we also have the most expensive medical care in the world.  Part of the reason for advancement of our medical technology and our pharmaceutical arsenal is that there is a lot of money to be made, a fact that tends to attract capital and research attention.

Throw in inefficiencies inherent in the system (overcapacity of certain “sexy” technology, drag from inefficient billing, systemic burden of litigation and the defense therefrom)…and you have the chaotic mess we have today.

Politicians seem to be having a field day tossing around ideas, be they national health care, mandatory private health insurance, malpractice reform, or what-have-you, in an attempt to garner popular support to further their own political careers.

Annoyingly, it seems that much of the debate focuses on maximizing access to health care service or coverage by health insurance plans.  Very few folks seem to be looking at the fundamentals of the problem — that health care is expensive and is becoming more so at an alarming rate — and how to address that.

Improving the availability of health care is a worthy goal…but society won’t be doing itself any favor if, by initially achieving that goal, it dooms itself to bankruptcy in the future.

Sometimes I question my sanity. For example, on the subject of health care reform, I feel oftentimes that I’m the only person who sees core inflation and inefficiencies in the system as a bigger problem than those tossing around the “universal health care” buzz phrases.

Well, apparently, I’m not the only person. Specifically, check out this op-ed in The Day, written by an OBGYN:

One of the most insidious catalysts for increasing health care costs is the lack of a definitive standard of care. This opens the door to malpractice liability (“you didn’t do enough”), defensive testing and treatment (“I did do enough”), and the over-prescription of pharmaceutical treatments (“How could you say I didn’t do enough if I gave you a pill?”)

On the administrative side, a lack of standardization in care engenders a lack of standardization in billing, measuring, and accounting for that care. The permutations of systems of care with systems of accounting have lead to the exponential growth of overall system complexity.

Rather than enable individual physicians the flexibility to determine the most appropriate course of treatment or prevention, the system encourages reactive and defensive medicine, practices which only enhance the inflation of health care costs.

Of course, the logical next steps in that thought process are a discussion of what standard of care is to be provided, and are we willing as a society to pay that expense….