ponderings: health care

[cellio]

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.)

Comments

Re: cash on the barrelhead

[siderea]

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.

Re: cash on the barrelhead

[brokengoose.livejournal.com]

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.

Re: cash on the barrelhead

[siderea]

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.)