Saturday, June 07, 2008

Healthcare

One nice thing about having your own blog is being able to write about whatever you please and being able to figure that at least few people will read it. I just read what Denise had to say about healthcare, so I'm going to put in my two cents.


First of all, I believe our current system is broken. I'm economically conservative and firmly believe in the law of supply and demand as the best way to set reasonable prices. We have taken that law out of the healthcare equation. We have basically unlimited demand, a system that is willing to provide an unlimited supply, and which has limited costs for many users. In short, few people walk out of the doctor's office, hospital or drugstore saying "it would be nice to have, but I just can't afford it (or don't want to spend my limited money on that)" For the majority of people in this country, healthcare is paid for by someone else, at least for the most part. Because of that our system has developed a Cadillac model embracing high tech, private rooms, highly educated practitioners and lifetime medications for those with good insurance and a Yugo model of charity care by overworked understaffed public hospitals for those without. There is no middle ground. I had three kids, and the ob charges on each one were over $1000. When looking for an OB, I never asked the price--why should I? By the time it was over, my out of pocket for that baby wasn't going to be any different if I picked Dr. $800 or Dr. $1000. If I was looking for an appliance in that price range, you'd better believe I'd compare prices.


What would I do to fix the system? First of all, I'd get health insurance out of the workplace. What I spend on health insurance and the choices I make in that regard are my business, not my employer's.


Secondly, make health insurance true insurance--something that most people don't use. I've had car insurance for twenty-five years. I've only "used" it twice. I "use" my health insurance that often every month. The purpose of insurance is to protect us from things we can't afford, not to pay routine bills. Over 10% of our health insurance premiums go to pay overhead and profit for insurance company. I wonder how much of the money we spend at the doctor's goes to people who are billing specialists, who make sure the bills are properly coded and submitted to the insurance company. Remember when the "billing specialist" at the doctor's office was also the receptionist, who took your fee, paid in full, as you walked out the door? In today's dollars, I think health insurance policies should have deductibles in the range of $4000/year/family with charges for submitting claims before that deductible was met (if you want the insurance company to keep track of your paperwork, you pay for it)


The third thing I'd do if you made me dictator is to require community-based pricing of policies with your premium tier set when you buy the policy. In other words, I'd require insurance companies treat all people like a group, not like individuals. Once someone gets sick is no time to raise their premiums through the roof. If they have had a policy all along, it should not become unaffordable due to illness. As long as you maintain a policy, your rates cannot be singled out to be raised or lowered, but those who choose not to buy insurance for a while should be penalized--kind of like term life insurance (buy a long-term policy it when you are young and healthy and it is relatively inexpensive, wait until you are old and sick and it costs a fortune).

My hope is that such reforms would encourge the growth of a "Ford" healthcare system. In Europe, most prenatal and delivery care is performed by midwives, with better results than we get with doctors. If price became an issue for people having babies, then maybe they'd shop for midwives. Pediatricians spend lots of time on well baby check-ups. Why not a nurse practitioner? As a patient today I have no incentive to see the NP rather than the doctor--my co-pay is the same, so I'd rather see the doctor. As a matter of fact, most of the routine care people seek today could effectively be rendered by NPs or PA's. Doctors could provide it too for less money if they had an economic incentive to charge less--but they don't, so why should they? People have no economic incentive to seek that type of care. The result is high-priced high-end care that is affordable to those with money and/or insurance and inadequate care for those paying out of pocket.

My brother often quotes what he calls his "golden rule", namely "he that puts out the gold, makes the rules". In this case it mean that the one making the rules (mostly the government) comes up with ways to cut costs, and then the one whose profits are being cut comes up with a way around it. In the meantime positions like "bill auditor" and "medical coder" are invented. If there is a single provider system like the VA or military systems, then the problem is excess demand. Since they can't limit demand by raising prices, they do it by phone trees, waiting lists, referral requirements etc. That's the problem they have in Canada. Insurance companies try to cut costs by limiting hospital stays or requiring second opinions and we lobby legislatures to require them to cover more.

In short, I see the solution to the healthcare problems as being more costs that I see directly. I see giving consumers more of an interest in the cost of individual healthcare encounters and decisions as demand and price moderating. Maybe its a pipe dream but I don't want to give up more control of my healthcare to some government agency.

2 comments:

  1. You can afford a $4000 deductable? What about those who cannot? What happens to those who currently are on medicare/caid?
    Some good ideas here- but you are looking at a growing income and I see lots of stagnant ones all around me.

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  2. Thanks for your comment on my blog post! I replied there.

    There is a lot of supply-and-demand economics in health care, actually -- it's just not in the hands of the patients. Each health insurance company negotiates set prices for services with providers. And those same companies compete with each other to be picked up by employers. It is a ruthless world that does not directly touch most patients.

    I learned a little about it when we had a high-deductible plan with an HSA. Even though our insurance company did not pay a penny of our bills, it was still very important for us to give our insurance information to providers so we could pay the "negotiated rate" instead of the basic rate. One provider, for instance, "officially" charged $125 for one service, but only $78 for the exact same service for patients with the insurance company she had a contract with.

    The peculiar result of this is that the uninsured subsidize health care for the insured.

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