cellio | ponderings: health care

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ponderings: health care

In the comments here we were talking about health care in the US. The current system is broken in many ways, but the "nuke it and start over with some nationalized program" proposals are scary too. What incremental improvements are possible? I have to believe that there are some.

One idea I'm interested in is what would happen if we separated paying for routine care from paying for catastrophic care. What would happen if people could be on their own for the former but could buy a policy to cover hospitalizations, major illnesses, and the like? How effective would that be and what would it tend to cost? What would having that in play do to the over-the-counter (uninsured) price of routine care? (Yes, I know that not everyone can afford to pay for routine care out of pocket. I'm exploring a suite of options, not choosing a single one.)

On the flip side, would medical practices or insurance companies be willing to sell affordable plans that cover all your routine care (only), if they were not on the hook for catastrophic losses? Could that get things down to the point where the average family could afford regular checkups, preventative care, and routine tests (which helps prevent some catastrophic issues)? Such plans exist now in niches (vision and dental, most commonly in my experience), but I haven't heard of one for general medical care. Why not? (Am I totally misunderstanding where the profit centers are in the insurance business?)

Both angles are important. What I'm labelling catastrophic incidents are (as the label implies) financially devastating if you don't have sufficient coverage. Outside of elder-care issues I'm not sure how common they are, but it's the sort of thing I wouldn't want to take a chance on. I insure my car and house, after all -- how much the moreso should I insure my health?

What I suspect has a bigger impact on the poor, though, is the routine care. If you don't have insurance, you're looking at a three-digit number to walk into your doctor's office. Throw in some kids and you're in trouble. (This is why I asked what would happen to those costs if catastrophic care were a separate factor.) Could plans that just cover routine care be made affordable enough for most people? This doesn't solve the other problem, but neither does the current system -- we rely on hospitals' obligations to treat (which is a legitimate public demand while they pay no taxes), or medicaid/medicare/SSI in some cases, to get through those. Remember, incremental improvement.

I'd also like to explore the effects of reducing drug regulation, letting people buy from anywhere that's selling and reducing barriers to getting things onto the market. I know the standard argument against this (those high prices pay for R&D), but I'm not sure how much I believe that. What are the other considerations?

Where else could we look for incremental improvements?

(In case you haven't figured it out, I am not a medical professional, an economist, nor part of the insurance industry.)

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WalMart was planning to begin a routine-care coverage program-- quite inexpensive, covered a physical, a couple of sickness or injury visits, and three prescriptions. Haven't heard how that's working.

Providing routine and preventitive care seems really important to me, because it would actually reduce catastrophic costs quite a bit.

The problem is that insurance only wants to cover the routine stuff. Insurance is like the banking industry in that respect. You've heard the oft said "The banking industry is like a friend who lends you an umbrella on a nice day, then asks for it back when it rains".

Their reasoning is, if they pay for the routine stuff, then people won't need the catastrophic stuff. The problem with this is, in an attempt to make this idiot-proof, they've built a better idiot.

I've no doubt in my mind that there are certain areas of medicine that are inflated. I got an "explanation of benefits" from Blue Cross the other day about some blood tests. Labcorp said the procedure cost $75, but after the "applied discounts", the amount was $5.35. Blue Cross paid nothing. The procedure's actual billable cost was less than 10% of the normal price.

Routine care cannot be a function of health insurance. People actually have to care about their health. Nationalizing it won't help either. Everyone cannot afford to pay for everyone's healthcare, especially in an environment where there is no incentive for price controls. Besides, do you want the same people who brought us the VA bringing you your penicillin?

Everywhere I've went for a doctor visit without insurance was $35 to $50. Tests can get expensive, yes. Most doctors will work with you, however, if you can't afford the most expensive testing. Lots of times it's not really needed for diagnosis.

What would happen if people could be on their own for the former but could buy a policy to cover hospitalizations, major illnesses, and the like?

That is essentially the system we have for low income uninsured people in this country now -- uninsured people are "on their own" for preventative care but in case of catastrophic illness they can often get care through various "charity care" arrangments at major hospitals and the like.

Bottom line: When people have to pay out of pocket for preventative care, they will often choose (maybe I should put that in quotes - "choose" - as in choose between paying the oil bill or seeing a doctor) to budget that money in other ways.

Such plans exist now in niches (vision and dental, most commonly in my experience), but I haven't heard of one for general medical care. Why not?

So, say your free routine mammogram turns up a lump, and now suddenly you need a biopsy and chemo and heaven knows what else. What do you do? Its the "exceptional" care that drives most of the costs in our medical system now, and its in treatment of things like Breast Cancer where you see the largest disparity between well insured and un- or under-insured populations in terms both of treatment options and outcomes -- to be blunt, the better your insurance, the more likely you are to get wide-ranging treatment, and the more likely you are to live.

(True story: When I was working at MPA we had a low-income woman begin to volunteer with us, because while uninsured she found a lump in her breast, and the doctor advised her that "a biopsy would be expensive - lets wait a couple of months and see what happens" (!) Three weeks later she had gotten a job (at the brand new Starbucks) that came with insurance, and suddenly the doctor was more than willing to provide her state of the art care.)

(Am I totally misunderstanding where the profit centers are in the insurance business?)

Google around on the term "high risk pools" - that's the technical term for groups of people who are considered "uninsurable" because of any preexisting condition.

--

I worked for three years for an organization dedicated to making Universal Single Payer a reality in Maine, and I believe strongly that the only way to fix the health care system in the US is to go to a single payer system. (Read the Mathmatica Study on USP in Maine here (http://www.mathematica-mpr.com/publications/PDFs/mainefeasibility.pdf)) We tried incremental improvement in Maine through the DirgoChoice program, and all we learned from that is that whenever the insurance companies are involved they fight to maintain the highest level of profit they can (its their obligation to their shareholders, after all), which drives up costs and drives down coverage.

Moving to a nonprofit USP system would effectively cut the insurance companies (and their excesses like $25 million dollars in compensation that Anthem paid to CEO Larry Glasscock in 2005) out of the loop. People say that "taxes would go up", which is technically true, but a system funded by a tax on employers would actually end up saving money for most employers who are currently paying all or part of the health insurance premiums for their employees -- and all employers would benefit from healthier employees and employees who were not afraid to change jobs because they fear changes to their health insurance. In addition, in the year 2000, the Maine Blue Ribbon Commission on Health Care reported (http://www.mdf.org/past_initiatives/final2000.html) that moving to a single-payer system would result in an overall Statewide cost savings of at least $300 million dollars vs. the current system (when State general fund costs, charity care, and bad debts were taken into account). A large part of this would be the result in a decrease in overhead -- between 9% and 30% of the premiums paid to for-profit insurers like Anthem vs the 5% overhead of a Medicaid, our existing single-payer system.

We're past the point where small fixes will work, sadly.

On the flip side, would medical practices or insurance companies be willing to sell affordable plans that cover all your routine care (only), if they were not on the hook for catastrophic losses?

It is indeed interesting that dental and medical plans moved to opposite ends of this spectrum. You don't get routine dental checkups? Look forward to a large bill. Nobody will prescribe you with preventative health care so you end up in an $80k/night hospital? Don't worry, medical will cover you (although you do have to fight sometimes).

A lot of people I know think there should be universal catastrophic coverage. I fall on the other side. Give me universal preventative, so I can be as healthy as I can be, and if something horrible happens, well, that's life. Otherwise there is such a financial (and medical history, but that's another issue) barrier to going in and asking about something mildly troubling which could become debilitating and extremely expensive to the insurers if not treated.

Where are you thinking the threshold for "catastrophic" lies? Right now something like an uncomplicated appendectomy and associated hospital stay can run >$20k. Cheap compared to (say) a car accident with multiple trauma, a protracted ICU stay, and extensive rehab, but the difference between a medical bill for half your annual salary and a medical bill for ten times your annual salary is, IMHO, only how quickly you go broke... I know these costs are wildly distorted by insurance (see

laid's comments about the 'list price' vs. the discounted price paid by the insurer), but I don't know what the actual cost is (some of the padding in the 'list price' charged to the uninsured is to cover the expenses of people who can't pay; the better the discount the insurers negotiate, the more of that burden ends up on the uninsured, who then can't pay it *either*).

Although the pharmaceutical industry does have significant profit margins, R&D costs really are a significant burden. For every drug that makes it to market, something like 1000 candidate compounds started at the beginning of the drug evaluation process. While many of these were eliminated at earlier (and cheaper) stages in the process (compounds that lack in vitro activity aren't going to progress to animal trials, compounds with unacceptable toxicity in animal trials aren't going to get human trials, etc), some make it all the way to large-scale human trials, which are expensive.

One thing that I think would solve two problems (although it does introduce yet another 'where is the money coming *from* issue) is to transition to public funding of Stage III and Stage IV human trials. [Generally, Stage I is animal trials, Stage II is small-scale human trials examining gross toxicity/safety, Stage III is large-scale human trials examining efficacy (and establishing dosage), and Stage IV is post-marketing trials (usually for either extended surveillance or to study new indications.] The problems I see with the pharmaceutical companies funding these studies (the current model) are: 1) The costs of these trials, including the trials for all the compounds that never make it to market, is part of the R&D cost that gets rolled into the cost of each drug. 2) Because the study is funded by an interested party, we see distortions like burying unfavorable studies, studies done only against placebo (which is necessary for approval) but not against competitor drugs (because neither drug company wants to pay for them - what if the study is unfavorable?!), when study against competitor drugs is really what's needed to help establish which treatment is better, and by what margin. (Knowing not only the relative costs and risks but the relative efficacy of drugs is necessary to do a cost-benefit analysis which may guide therapy).

One argument I would make towards a simplified, if not single-payer system, is this: My primary care physician is a member of a large group practice with offices all over our county. His particular office has four practitioners. For four practitioners, they have one full-time person just to deal with insurance issues! What we pay for medical care currently goes to pay not only for our practitioners and our care, but for all of the support staffs necessary (including one insurance-wrangler per four doctors). What we pay for insurance goes to cover not only costs related to our care but costs related to having insurance - not only insurer profits, but advertising, coverage review/denial specialists, etc. If most or all of this overhead were eliminated, how much would we still pay for healthcare? I don't know the answers to these questions, but I'd sure like to...

Edited to fix my HTML error

Edited 2008-09-10 02:20 (UTC)

The problem with healthcare:

1. It's too expensive.
a. Because insurance firms make profits on denying claims, so doctors need to hire more staff to deal with insurance firms
b. Because malpractice insurance is horrendous
i. Because biological systems are complex, and humans prone to error, and litigation is encouraged by the legal system (which feeds into why lawyers are a drain on the economy, different feedback loop)
c. Because doctors have a lobbying agency that keeps the supply of doctors low, so that they can all charge more money
d. Because medical school is so expensive
i. Because doctors who make huge amounts of money can afford the debt of medical school (loop back to d here)
e. Because technology costs so much
i. Because it's produced in such limited runs. If the market for MRI was 10 million units a year instead of 1 thousand, the unit cost would go down.
ii. Because it's covered by insurance...
e. Because in the 1940s, companies were encouraged to make health insurance part of their benefits packages because it was cheaper than additional income. As a result, your healthcare depends on your employer, which ironically fails to cover you at the time when you are least able to afford it, i.e. when unemployed.
i. And as a result, people don't see the current cost of healthcare; it's all funny money. What people see are copays for office visits, emergency rooms and prescription drugs.
ii. Oh, and somehow optical and dental care are different, even though podiatry and dermatology and otolaryngology are all lumped in as 'health insurance.'
f. Because healthcare is called insurance, even though a lot of it bears no resemblance to insurance at all. Insurance is a bet that something nasty won't happen, shared with enough people that you can all pay a little to cover the few who actually get unlucky. That's not how this works anymore, nor should it for the most part.
g. Because more treatments are available, so people can live longer at higher expense.
h. Because we haven't got a standard for how much human life is worth, and we are not likely to come to a consensus (as a nation).

What would happen if people could be on their own for the former but could buy a policy to cover hospitalizations, major illnesses, and the like?

That is essentially the system we have for low income uninsured people in this country now

Important difference: I was speculating about an optional system, not a mandatory or worst-case one. I believe there are people who, if the price for a catastrophe-only policy were suitable, would pay all their routine stuff out of pocket and just buy that, because they're basically healthy and it would be cheaper. By separating out the routine stuff, wouldn't we change the composition of the rick pool for the catastrophic care? (Put another way: most of the time your insurance company won't pay out at all, versus now where they always pay out and sometimes pay out more. The present system provides more incentive to boot people out for not being healthy enough.)

I'm not trying to screw poor people; I'm looking for ways to lower costs for everyone, which can include having the non-poor take on some risks in exchange for lower premiums. If you nationalize the whole thing then everyone is entitled to the same level of "free" coverage, where in another system you might have gotten some of those people to pay for some of it themselves. Or not; it's an open question.

So, say your free routine mammogram turns up a lump

You're right -- I didn't address where the line between "routine" and "catastrophic" falls, or what to do about the stuff in between. That's a problem.

Thanks for the info on Maine. Looks like it will be interesting reading.

In your view of single-payer systems, what happens to the patient who can't get timely care? Today, for one example, if worse came to worst I could change insurance companies or pay for care out of pocket, though of course not everyone has that option. ("Change insurance companies" would be implemented by going onto my husband's employer's policy instead of mine, which does not tend to have the pre-existing-condition problems that buying individual insurance does. Obviously this doesn't work for folks without employed spouses.) I'm not saying this is good, by the way; I'm just cautious about vesting decisions about my health in a single authority without fallback options. Because no entity gets it right all the time, and no other entity is as interested in my health as I am -- no government and no insurance company.

WalMart: interesting. I hadn't heard about that.

Providing routine and preventitive care seems really important to me, because it would actually reduce catastrophic costs quite a bit.

I agree. I'd like to understand the impact (costs and benefits) of schemes to provide that alone. What happens when the heart attacks and accidents and degenerative diseases are in a different pool from routine maintenance?

I believe there are people who, if the price for a catastrophe-only policy were suitable, would pay all their routine stuff out of pocket and just buy that, because they're basically healthy and it would be cheaper.

There are tons products like that on the market now, and people do buy them - they're basically high-deductible policies ... you pay out of pocket up to $X (often five or six thousand) and then insurance picks up the rest. (See here (http://en.wikipedia.org/wiki/High_Deductible_Health_Plan)) They're apparently mandatory in order for you to get the tax benefits of a healthcare savings account (HSA).

But, again, you need to have the available income in order to choose this. Some people - often self employed people will - but in our current environment they're not popular.

The health care crisis in America isn't really about those who can pay out of pocket. Its about those who can't, or those for whom the existing system fails because the for-profit insurance company refuses to pay for this or that, or for families like Heather Anderson's (aka: "Dooce") (http://www.dooce.com/2008/09/04/and-boom) whose daughter was diagnosed with Plagiocephaly when she was three months old, and is now (stupidly, IMHO) considered to be "high risk". Read the link -- they pay $300 a month for Leta's health insurance, and that policy has a $3000 deductible. So they're paying $6600 per year for health insurance on a five year old child -- and that's just for her. That doesn't take into account whatever they might pay for their own insurance. They're lucky that they can afford it. I couldn't. That's well over 10% of the annual income in my house.

what happens to the patient who can't get timely care?

Ah, the old "timely care" argument. I'd encourage you to talk to folks who live in Canada. (Actually, Here's a chart from the New England Journal of Medicine (http://content.nejm.org/content/vol354/issue16/images/large/01f1.jpeg), and here's the article that the chart comes from (http://content.nejm.org/cgi/content/full/354/16/1661) which touches on the fact that the purchase of private insurance is on the rise in Canada). You'll note on the chart that the two items with the longest wait times are orthopedic surgery (ie: knee and hip replacements) and plastic surgery, and the wait times for other items - notably oncology - are reasonably short and pretty much in line with what you'd see here in the States. (I don't have a cite for that, but anecdotally I'd say that a 2-4 week wait from the time you're referred to a specialist to the time you start treatment is in line with what I've seen in friends with cancer -- "treatment" doesn't include testing, and it does take a couple of weeks to get a firm diagnosis.)

I'm just cautious about vesting decisions about my health in a single authority without fallback options. Because no entity gets it right all the time, and no other entity is as interested in my health as I am -- no government and no insurance company.

But what decisions are being vested in this "single authority"? In a USP setup virtually everything (save for hardcore electives like plastic surgery) is covered. The only "authority" the overseers have is to pay -- and unlike in the for-profit system we have now, there really isn't any motivation for them not to pay, since no one profits from the "profit".

Edited 2008-09-10 03:59 (UTC)

I'll come back to the rest of this tomorrow, but one quickie: I don't raise timely care as some sort of hypothetical boogyman; I know a Canadian it happened to. How common is the problem? Don't know; I don't know a statistically-valid number of Canadians and am not sure where to look for the relevant (vetted) statistics. (If his condition had been life-threatening he probably would have gotten timely care, as you said. He instead faced something that would "merely" cripple him, and got nowhere through official channels.)

I'm not drawing conclusions from one data point, but neither am I ignoring it.

I think the arguments for universal coverage are very strong. You'd prefer a model where people can opt in or out. Of course the young and healthy would opt out or be offered preferential insurance rates, making coverage unaffordable for the less fortunate. This spiral of cherry picking is ubiquitous in the insurance industry. I think we're starting to see a backlash even now, in that there is a new law (not yet in force) making it illegal to deny coverage based on genetic predisposition to a disease.

Then, of course, the young healthy people get hit by cars, and the system has to somehow eat the tremendous cost of their treatment. Those patchwork mechanisms are very inefficient.

I do like the idea of government paying for late-stage clinical trials, by the way. I suspect that would also cause more low-profit drugs to be brought to market. We need a lot of new drugs, but I really don't see a pressing need for more erectile dysfunction remedies.

Like another respondent mentioned, health plans that cover most of routine care and a little of major care do exist. They seem to be the norm in Alaska. The plan I was offered (and did not accept, opting to go back to school in order to get back on my dad's union plan) allowed one to go to the doctor 6 times per year and pay only $20 per visit. After six visits, one pays full price. (Sometimes I have 6 doctor visits in a month).

Each category of care besides office visits has a separate deductible. This means that if you are in an accident and are hospitalized, the deductibles (up to several thousand dollars each) inlcude: ER care, OR care, pharmacy, skilled nursing, PT, OT, radiation, home care, multiple categories of diagnostics. I did the math for a sample year in my life (you know, but for the benefit of other readers, I am a YOUNG healthy-appearing person who eats healthy, exercises, does routine check ups, etc, but has several "pre-existing conditions") and it hit six figures. How is that supposed to be a viable option? I don't think it's realistic for a system to *hope* people stay healthy.

Another thought on the routine care issue: I worked in the health center at the mid-sized university I went to. Part way through my schooling, they changed the payment structure for clinic visits from co-pays per visit to charging all students a flat fee--around $100--billed with their tuition (and thus covered by loans and financial aid if needed). In that particular case, the health center decided the math worked better and students got better routine care (because they were more likely to schedule appointments). Maybe something like that would work for routine care on a larger scale? And then a separate funding system for major medical events.

above comment was posted by me, not anonymous

I urge you to look at the chart.

I should be in bed.

The overhead associated with insurance is, indeed, significant. It's been some years since I read The Invisible Bankers by Andrew Tobias so I don't recall the numbers. But I remember being struck by how low a percentage of the money collected for health insurance premiums was paid out for care. (A much higher percentage of auto and home insurance premiums goes to benefits.)

I also affects the time doctors spend with patients. One of my oldest friends is a cardiologist. She says she spends less than 10 minutes per hour with patients (on the average) because of all the paperwork she needs to do with our insurance system. There is also the issue of defensive medicine - unnecessary, time-consuming, and expensive tests done primarily as a defense against lawyers.

I suspect that many people would save money with a catastrophic-care-only policy if not for two things: the prevalence of insurance policies that demand a discount, and deadbeats (including, in some cases, the insurance companies).

I've run across a few doctors who offer a substantial discount for cash-only patients. Most, though, charge an official fee on the order of $100+ per visit because many of their patients have policies that pay a fraction (60% or whatever) of the fee IF the office fills out a bunch of paperwork and waits a few weeks for it to be approved. Given the wait and the fees involved, the doctors simply jack up the official fees so that the discounted price is still sufficient to cover their costs. Possible solution: don't base the reimbursement on any sort of base price.

The second problem is people who don't pay their bills. Both the obvious refusal to pay a bill that arrives later, and the problems with bounced checks, lost mail, etc. A lot of places have full-time staff devoted to billing issues. Possible solution: require cash, debit cards, or (for an extra 3% or whatever the fee is) credit cards when you walk in the door. By paying in advance, the customer also avoids surprise fees.

Their reasoning is, if they pay for the routine stuff, then people won't need the catastrophic stuff.

Except that they don't have much incentive to cover routine care that has truly long-term benefits, because the odds are that five or ten years from now you'll have a different job and a different insurer and therefore the consequences of your lack of routine care will be someone else's problem.

Besides, do you want the same people who brought us the VA bringing you your penicillin?

Actually, in recent years, the VA has scored very high on evaluations of quality in health care.

When Kerry ran for President, part of his health care plan involved Federal reinsurance for catastrophic health care (above some tens of thousands of dollars per year per patient--I don't remember the exact number). The idea was that patients with this level of expense constitute a large chunk of every insurer's expenses, and it would be Good For America if those insurers were not looking for ways to wriggle out of paying for those folks' care.

One incremental change I'd like to see (if I have to put up with incremental changes) is universal dental insurance. That's an area where cheap routine care can prevent all sorts of problems later on in life, and in some parts of the country a lot of poor people aren't getting that cheap routine care, and if you're poor, then losing a few teeth can have some real consequences for your employability and quality of life.

A lot of people I know think there should be universal catastrophic coverage. I fall on the other side.

I've been thinking about the same thing. I look around at all the people I know with fibro, or arthritis, or immune-system problems, or stuff like that -- the stuff that eats away at your quality of life every single day -- and I wonder how many of them prioritize coverage for heart attacks and cancer over that. I don't know if I would were I in their shoes. What's higher priority: the certain current "livable" problem or the possible future really-big problem? Ideally you want both, of course, but with limited funds...

i. Because medical research keeps finding new ways to treat the previously untreatable and prevent the previously unpreventable, e.g. Lipitor, which cost the world something like $12B in 2006, and now that we can, we must. Who is willing to say you can't have a drug which reduces your likelihood of heart attack? Even if it turns out paying for all those people to not have heart attacks is more expensive than treating the heart attacks they would have had.

Possible solution: don't base the reimbursement on any sort of base price.

Er, it typically isn't: the insurance company tells you (the provider) how much you can charge, and if you don't like it, well, you're welcome not to be paid by them. And it's not a function of any base price, it's a fixed number their actuaries came up with.

(Note, my information comes from formal training on this, because I am a health-care provider and will be dealing with this very directly at some point in the medium-term future. Right now, I don't do my own billing or price setting or playing footsie with insurance companies; my employer has a billing department to do that for me, and I just need to fill out the occasional form correctly.)

I've run across a few doctors who offer a substantial discount for cash-only patients.

This surprises me because, while it makes perfect sense for the provider, I'm under the strong impression that if an insurance company finds out you're doing this, they drop you from the panel, precisely because, yes, it does make sense -- for the provider, not for them -- and they don't want you doing that. From their perspective, if you offer a cash discount, you're charging a higher rate to insurance-carrying customers, which amounts to insurance fraud.

And it's not a function of any base price, it's a fixed number their actuaries came up with.

I wonder how they came up with that fixed number these days. In the past, for some of the health plans that I've participated in, the magic phrase for reimbursement was UCR (for "Usual, Customary, Reasonable", though the rate was often none of those). That number was derived, in part, from the average fee charged for a given service. The average was derived by polling doctors, labs, hostpitals, etc. who participated in the plan.

I saw the "cash discount" often while growing up in (poor, rural) central PA. I suspect that, in some cases, the cash discount may have been applied selectively. i.e. it was a way for doctors to offer discounted services to people who couldn't otherwise afford treatment without making those people feel like they were taking a handout.

Honestly, I'm pretty suspicious of incremental changes at this point. The current system is so deeply vested right now that it is likely to run rings around incremental changes, finding ways to work around them. I mean, remember that there are hundreds of billions of dollars at stake here, and it's not very hard for the entrenched players to tweak incremental changes as they come so that they don't lose as much money. So purely from a political standpoint, I think it's actually fairly unlikely that incremental changes will *succeed* in saving money: there's too much stacked against them.

(Nuking the system is in some respects even harder to accomplish, but stands a somewhat better chance of succeeding in saving money, simply because the power structures for gaming the system wouldn't be in place yet.)

On the specifics: I really don't think you can duck the definitions question here. The issue of what constitutes "routine" vs. "catastrophic" is totally central to this idea, and every company has considerable incentives to make sure that any given procedure does *not* fall into their bailiwick. So my guess is that you're actually going to need a whole new government bureaucracy, just to manage to extremely subtle definitional problem and keep the end users from getting very badly screwed.

(The market-purist response to this is that companies that go too far in avoiding their responsibilities will lose business to better ones. That would be correct in a large and thriving market, but absolutely not in one dominated by a few giants. And currently the system is so *complicated* that only giants can survive. The result is a far cry from a properly competitive market. If you want the central problem from a libertarian POV, that's it.)

This is made even worse by the fact that one day's "catastrophic" incident becomes tomorrow's "routine" one. It's actually fairly hard to see a system that *doesn't* somehow wind up in the government's lap when someone has a long-term but survivable-if-treated issue. Ultimately, it comes down to a moral question: are we willing to let these people die for lack of personal funds? (Or, putting a cooler spin on it, how much are we as a society willing to collectively invest in people whose healthcare requirements are beyond their means? And how do we make that decision?)

I'm sympathetic to not trusting the concentration of power inherent in a single-payer system. But it's important to also recognize that an oligopoly can often be even worse, and a poorly-regulated oligopoly (which we more or less have today) is often the worst possible alternative...

I wonder how they came up with that fixed number these days.

Focus group? /cynicism

i.e. it was a way for doctors to offer discounted services to people who couldn't otherwise afford treatment without making those people feel like they were taking a handout.

Just so. You're allowed to charge a "sliding scale" to help the indigent, but only if you humiliate them first. :/

(Sorry, talking about managed care always makes me bitter.)

There are tons products like that on the market now, and people do buy them - they're basically high-deductible policies

Good to know they're out there; that means there might be some data. (They are not common among employer offerings in my experience.) I didn't know about the HSA tie-in.

But, again, you need to have the available income in order to choose this. Some people - often self employed people will - but in our current environment they're not popular.

Yup -- not saying everyone could or would buy such plans. I'm wondering what the effects would be on other plans if these were more commonly available to the people who would buy them. (Or maybe the answer is that people wouldn't and the idea is flawed. I'm open to that; all of this is thought experiment for me.)

On care times: I looked at the chart and the article; thanks for the links. The data is pretty high-level; I wish they'd provided more drill-down. For example, let's take a category I have some affinity for: ophthamology wait times come in at around half a year per that chart. That's quite reasonable for cataract surgery and devastating for repairing a detatched retina. To evaluate most of these categories, we really need subdivisions.

My impression of countries with nationalized health care is that if it's life-threatening it'll be dealt with quickly (e.g. the oncology numbers in that chart), if it's elective you'll wait almost forever (not surprising), and that if it's important but not life-threatening you can be in for a lot of grief. It's this middle category I'm interested in.

One other comment about the chart: this data is hard to get, but the analysis is not complete unless it also factors in time from request for care to initial visit.

But what decisions are being vested in this "single authority"?

What treatment I get, when, and who performs it. (Do government-run systems support the idea of a patient-initiated second opinion, by the way? That can be pretty important if you have something tricky or controversial.) It is possible that some of these concerns would be aleviated in a mixed system (one where you're allowed to buy private insurance or private care), assuming that's affordable with the much smaller risk pools.

There are no easy answers here. Thank you for having the conversation with me.

Where are you thinking the threshold for "catastrophic" lies?

I don't know. Maybe it's measured in dollars rather than by diagnosis?

Although the pharmaceutical industry does have significant profit margins, R&D costs really are a significant burden.

Yup. The company I work for has customers in the pharmaceutical industry, so I've heard some of this (but not in any great detail because I don't work on that project). I think your suggestion to transition funding of later-stage trials is a good one. I might also explore making available -- fully at the consumer's risk -- drugs that haven't made it all the way through yet. (Depends what they are, how stringent the tests are, what alternatives there are... I don't know enough to have a meaningful opinion on this, but if an experimental drug is the only thing out there right now that might cure what ails you, maybe you should be able to take that risk.)

Paperwork: ugh. That might be separately solvable (don't know), and it's possible that a nationalized system won't reduce it enough, but it's a factor to consider.

Then, of course, the young healthy people get hit by cars, and the system has to somehow eat the tremendous cost of their treatment.

I think that if you had the option and you chose to opt out of it, then morally speaking you are on your own. This can be politically and socially difficult, of course, and I don't expect it to fly, but I do hold people responsible for their own freely-made fully-informed decisions. (Those qualifiers are all important.)

I agree with you on the drugs.

There are tons products like that on the market now, and people do buy them - they're basically high-deductible policies ... you pay out of pocket up to $X (often five or six thousand) and then insurance picks up the rest. (See here) They're apparently mandatory in order for you to get the tax benefits of a healthcare savings account (HSA).

I had one of these when I lived in DC. It cost about $200-300 for 6 months (if paid in a lump sum up front) I believe the breakdown was: I paid anything up to 2500, they paid half of the next 5000 (anything b/w 2500 & 7500) and they paid everything past that, so a castrophe would cost up to 5000. But being 23 at the time, I figured that was good enough.

Aaaaah! Way too much! I really did want a different forum (e.g. face-to-face) rather than a new thread. LJ threads are too disorganized to construct a single coherent argument.

I will say this: You are too optimistic about people buying insurance when it is not mandatory. /You/ would buy it, but a large fraction of the population would not. There is a reason that car insurance is mandatory.

I would say that about 50% of the information in this thread is accurate. (I'm of course talking about the 50% in /your/ thread, whoever you are.)

I really did want a different forum (e.g. face-to-face)

Understood, and I do want to have that conversation when we're both available. (Last night was not the time. :-) ) Meanwhile, I also want to discuss it with folks I won't have that chance with. It's all good.

I will say this: You are too optimistic about people buying insurance when it is not mandatory. /You/ would buy it, but a large fraction of the population would not. There is a reason that car insurance is mandatory.

A part of me has very little sympathy for people who can buy this protection and choose not to. Note that I am not including in this group people who have difficulty paying for it; I'm talking about the careless, who can and decline to. When the 25-year-old making six figures who won't buy insurance wraps his Miata around a telephone pole, my gut reaction is "tough noogies". As a compassionate human being I would of course have great difficulty actually letting such people die or suffer terribly from these self-inflicted wounds, but as someone mindful of justice and fairness I wouldn't have a problem with limiting their care to the essential. Neither "all compassion" nor "all justice" makes for good public policy; the challenge is to find the balance point. You probably have an interesting take on this, which I'd like to hear in a forum where you're comfortable sharing it.

>A part of me has very little sympathy for people who can buy this protection and choose not to.

Oh, me, too. But what are you to do with him when he shows up in the emergency department? There's no time to ask whether his premiums are up to date. And what are you going to do with him the next morning when you discover that he's uninsured? Kick him out on the street and take back the protective collar you put on his neck? There are practicalities that limit the compassion vs. justice debate, mostly in favor of compassion.

Agreed. I wasn't trying to articulate a policy, but rather explain a feeling that can't help but guide my thinking. The person willfully without insurance is like any other deadbeat; he incurs debt that you may never recover, and society ends up being on the hook for some of it. There might be things you can sometimes do (they garnish the wages of deadbeat parents, for instance), but it's very hit-or-miss.

The differences with the ER case wouldn't come in the initial care (you stabalize and fix the big stuff regardless), but I could see differences in the after-care. For example, if a bone doesn't set quite right but it's not a major impediment, he would be out of luck while someone with insurance could get the corrective surgery. Ditto on the plastic surgery to deal with ugly scars. I don't know how much variation there really is on stuff like this. And, as I said, I don't have a solution -- just thinking/wondering out loud.

Do you have a philosophical disagreement with mandatory car insurance?

Mandatory liability coverage? No, because your auto accident can cause damage to others. Actually, so can your non-driving activities, so if going down this path we should mandate umbrella liability coverage instead, so you can pay for the damage you cause in any context. (A practical consideration, though: we should be mindful of mandating use of an industry's services while allowing them to set the conditions; most people can't afford to self-insure to any reasonable level.)

I don't think you should be compelled to cover your own damage if you don't want to. If you don't want to insure against property damage to your fully-owned car, house, expensive equipment, etc, that's your problem. I see your body as in this same category.

Edited 2008-09-12 13:06 (UTC)

The plan you described does sound pretty inaccessible, yes.

Part way through my schooling, they changed the payment structure for clinic visits from co-pays per visit to charging all students a flat fee--around $100--billed with their tuition (and thus covered by loans and financial aid if needed).

That's good news if the math worked at that price! I wonder what the price point would be for the general population as opposed to students.

One incremental change I'd like to see (if I have to put up with incremental changes) is universal dental insurance.

That's an interesting idea. Dental insurance is much cheaper than full medical, and I hadn't thought about the impact of not getting that care.

Honestly, I'm pretty suspicious of incremental changes at this point.

They do have to be done carefully and it might be possible, but I think it'll be easier to implement. You would like to completely cut over to something else; I think enough people oppose that that it's not going to happen. Incremental change is better than none at all (assuming it demonstrates some improvement). That's what led me to think along these lines.

The issue of what constitutes "routine" vs. "catastrophic" is totally central to this idea, and every company has considerable incentives to make sure that any given procedure does *not* fall into their bailiwick.

Instead of categorizing care, does it make sense to just set the bar at a number? This policy covers your medical care up to $10K (say), which is enough to cover the annual physical, getting the flu or strep throat or the like a couple times, mammogram, some drugs, etc. If you go over that, your bigger policy (if you bought one) kicks in. (Like short-term/long-term disability, but for medical care.)

Governments and de-facto monopolies are both problematic when it comes to the customers.

I still see some serious problems. For instance, how do you define that $10k (or whatever) limit? If it's by amount charged, then the "routine" company actually has incentives to inflate the numbers, so that things get bumped into the "catastrophic" company's range.

In general, the idea of splitting the responsibility just strikes me as fundamentally dangerous: the tension of two categories of companies, each with the incentive to maximize how much they charge but bump as much as possible into the other bucket, is very hard to balance without extremely firm and clear rules...

How do other dollar-delimited insurance policies where the insurance company does the assessments handle the problem? If I need to make a claim on my home or auto policy the insurance company decides how much I get; I can try to submit evidence (e.g. bids) to influence them, but they decide and my only recource then is the courts. It is obviously in their interests to pay out as little as possible. Yet, when I've needed to make claims on those policies I've gotten fair outcomes. (I have never had to make a claim on my umbrella policy and hope that continues.)

You might well be right that splitting this out into two types of health insurance isn't viable, but other types of insurance seem to do similar things and I'm trying to understand what's different about them. My auto liability policy tops out at some number and should I do more damage than that, it's my problem -- or, rather, my umbrella policy's problem. Isn't that similar to buying a policy that covers care up to a certain amount only (with an option to buy a different policy for bigger stuff)?

A possible counte-argument (see, I can argue both sides!) is that my auto-insurance policy is affordable both because of the limited liability and the fact that I haven't made claims, yet the whole point of routine health coverage is that you do go get that care, so of course you're going to make claims. If doing that drives up the price too much, then this isn't analogous to auto or home insurance. I'll admit that I have not, lately, taken a good look at my auto-insurance price structure -- how the price is affected by small claims, large claims, accidents hat are my fault, and accidents that are not my fault.

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ponderings: health care

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Canada

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Routine vs. catastrophic health insurance

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cash on the barrelhead

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