A Proposal To Contain Health Care Costs

Photo: Thomas Beck Photo

In two previous posts, A Prescription For The Health Care Crisis and Analysis Of The Health Care Law, I attempted to analyze the major cause of America’s skyrocketing health care costs and why I was skeptical that the new health care law would do much to curtail it.  In this post, I’d like to offer some concrete ideas about what I think needs to change to slow the rate of rise of our nation’s health care bill.  While I’m certainly no expert in health care policy or economics, I have had extensive experience as both a health care provider and administrator and would like to get a conversation going in this forum that addresses the most significant cause of our inflated costs. Though the ideas I suggest below have little empirical evidence behind them (at least in the context of health care), as studies haven’t yet been done to prove their efficacy, they do leverage knowledge from outside the health care field, from the fields of psychology and to a more limited degree economics.  However, whatever useful ideas might come out of this exercise, I would be the first to advocate that they need to be tested to see if they play out the way I imagine.

In the previous two posts, I argued that the most significant drivers of rising health care costs are innovation and overutilization.  While the former is desirable and a bullet I would argue we must make ourselves bite, bringing the latter under control would seem to do the most to slash the rapid rate of rise of our nation’s health care costs.  My ideas will focus mostly, therefore, on changes to our system that might reduce overutilization of health care resources.

While government regulation remains a critical tool in many areas of health care, in this area it has been and will remain unhelpful.  This is because overutilization always happens, when it does, as a result of conversations between health care providers and patients.  “I really think I need an antibiotic, doctor,” one patient says, when he doesn’t because, like most infections, his is viral.  “I think I need an MRI, doctor,” says another patient with severe low back pain, when she doesn’t because 99% of back pain is from musculoskeletal strain.  “You need a stress test,” an ER doctor says to a thirty-five-year-old triathlete with right-sided chest pain and no cardiac risk factors because there’s a 1-5% chance his pain is cardiac.  To limit overutilization enough to make a dent in our nation’s health care bill, government regulators would have to effectively oversee the majority of these conversations across America.  How could they possibly manage that?

Perhaps by returning to the thinking of our founding fathers, who leveraged basic principles of human nature to design our government (as demonstrated by their idea to separate the powers of the government into three branches that check and balance the power of the others).  If we create the right incentives for providers, patients, and insurance carriers, perhaps self-interest can be leveraged to make our system not only less costly but optimally effective.  I don’t pretend to suggest this is the whole of the solution to our current crisis, but I do think it’s a critically important part.

WHAT DETERMINES COST?

The answer depends on what position you occupy in the health care system.  For providers and hospitals, the cost to provide a given service is determined by the direct costs (e.g., for a blood test, the cost of the phlebotomist, needle, syringe, alcohol swab, container, patient labels, etc.), indirect costs (the contribution each service must make to keep the lights on and the hallways clean, etc.), subsidy costs (the cost of some well-reimbursed tests, like cardiac catheterizations, must often be inflated to subsidize the cost of poorly reimbursed tests, like mammograms), and desired profit margins.  For insurance companies, the cost to provide insurance to beneficiaries is determined by provider/hospital charges, cost of administrating the plan, medical underwriting (a factor to account for the risk of utilization of health care resources for specific beneficiaries), and desired profit margins (not applicable to government-sponsored insurance).  For health care consumers, the cost to receive health care services is determined by insurance premiums, co-pays (a fixed dollar amount that the consumer must pay for each service) and/or co-insurance (a fixed percentage amount that the consumer must pay for each service), deductibles, and out-of-pocket costs.

It is, of course, even more complicated than that.  For example, providers and hospitals will charge different rates for the same procedure depending on the insurance carrier (carriers bringing large volumes of patients into health care systems often getting volume discounts).  And different insurance carriers will reimburse providers at different levels for the same procedure (Medicaid, for example, typically pays almost pennies on the dollar to health care providers).  Nevertheless, this frames the basic context in which I’d like to put forth the following ideas.

HEALTH CARE COVERAGE

All insurance carriers must start to reimburse health care providers and institutions at the same rate for the same things.  As mentioned above, currently government-sponsored health plans (e.g., Medicaid) reimburse providers and institutions at a rate far below that of private insurance (meaning if a hospital charges $100 for a chest x-ray, for example, Medicaid might pay only $10), which has had two important effects:

  1. Providers and hospitals must inflate their charges in order to get paid what they really want.  Comparing prices for services between providers becomes almost impossible as the insurances they accept—and therefore the degree to which they inflate their charges—varies.  The people this matters to the most are those without health insurance who pay 100% of expenses out of pocket as they are required to pay the full amount (though, in many instances, out-of-pocket discounts are provided).
  2. Providers and hospitals are systematically attempting to avoid caring for Medicaid patients.  Medicaid is the least desirable insurance because it reimburses providers and hospitals at the lowest rates.  As a result, many providers and hospitals have been working on subtle ways to decrease the number of Medicaid patients they see (e.g., reserving a limited number of Medicaid slots in their schedules so when Medicaid patients call for appointments they often have to wait a long time to be seen, which discourages them from wanting to come, etc.).  Medicare’s reimbursement rate has come down in recent years to near Medicaid’s, which means seniors may soon be at risk for the same disenfranchisement as we’re seeing with the poor  (the main reason it hasn’t started to happen already is that it’s been harder politically to refuse to care for senior citizens).

If our nation’s health care providers and institutions were able to expect full (and therefore equal) reimbursement from all insurance carriers, they’d find no one insurance carrier—and therefore no one type of patient—more desirable than any other.  Attempts to disenfranchise any one group of patients, then, would cease.

What negative consequences might result from this change?  Most obviously, it would work directly against the goal of reducing costs, at least for insurance carriers.  The cost of insuring patients, and therefore the cost of insurance premiums, would rise dramatically unless other measures were taken to reduce the volume of services being performed without compromising health care outcomes.

HITTING THE SWEET SPOT

My contention is that this is not only possible, but also desirable.  In the two previous posts, I wrote about the “sweet spot” in the delivery of medical services toward which providers should aim in every instance (ordering just the right type and number of tests and prescribing just the right treatments that minimize cost and risk of complications while simultaneously maximizing diagnostic accuracy and good outcomes).  It may be difficult to identify, this “sweet spot,” a constantly moving target that depends on what complications a patient develops through a particular course of disease work-up and treatment, but there’s evidence to suggest that ample room for improvement in hitting it exists, that many if not most doctors and patients together err on the side of doing too much.  Most patients, and many providers, think that the more tests that are done, the better the outcome that will result.  But this reasoning is flawed.  First, because patients mostly don’t need the antibiotics they’re prescribed nor often the CTs or MRIs.  Second, because data suggests the more we do, the greater the risk patients have for developing complications related to the tests and treatments themselves and having worse outcomes.  More medicine is not necessarily better medicine.

This is the new mantra doctors and patients alike must begin chanting together.  Finding the “sweet spot” takes experience, knowledge, and judgment.  That no two doctors may agree on just what the “sweet spot” is for any given patient’s circumstances doesn’t mean they won’t agree on where the “sweet realm” is.  Few doctors (I hope) would order a neck CT or chemotherapy for a routine sore throat (as a particularly nervous patient once demanded of me).  But whether or not to order a CT for back pain or an MRI for headaches—well, there you find a big variation.

Studies help us with some of these questions.  There are stereotypical characteristics of headaches that enable us to label them with a high degree of certainty as benign and not in need of further testing.  The problem, however, comes in with the phrase “high degree of certainty.”  As an individual patient, you want all the certainty you can get.  Because of the moral hazard that currently exists in most health care transactions (that is, because patients pay insurance premiums that cover most if not all of the cost of expensive tests and don’t as a group believe in the very real dangers of many of them, they perceive no reason not to want them ordered), individual patients typically demand more testing to establish more certainty.  They don’t have a doctor’s training to know when such testing will add little certainty to a diagnosis, tend not to believe it when it’s explained to them, and as they’re the ones with the most to lose if the diagnosis is wrong, often feel quite attached to getting the test(s) they want.

And mostly doctors order them.  Medicine is not, by itself, a science.  Rather, it’s the art of applying science to patient problems.  There are many, many scenarios in which studies don’t exist to guide us or which provide guidance for a population of patients too dissimilar to the ones in front of us.  For that reason, there will always be uncertainty in how to proceed and more than one way to approach almost every problem.  Which means doubt will always remain a part of most diagnoses and treatments.

It’s that doubt that lies at the core of overutilization of health care resources (please see the section titled “Overutilization of health care resources by both patients and health care providers themselves” in my earlier post, A Prescription For The Health Care Crisis, for my brief discussion of how this doubt plays out for patients and doctors).  What’s needed then is a set of incentives to motivate patients and providers to manage their anxiety about this doubt in a more cost-effective way—not just because it will save money but because some evidence exists that it will improve outcomes.

ON THE PATIENT SIDE

I’ve been afforded a unique view of the differences that different payment schemes make in patient health care consumption behaviors.  For part of my week, I work in a primary care clinic in which co-pays and co-insurance charges are minimal and the moral hazard is in full display.  For the other part of my week, I work in a student care clinic where poor patients (i.e., students) have, relative to their incomes, enormous co-pay and co-insurance burdens.

The difference in attitudes toward consuming health care resources is striking.  Students challenge my recommendations for tests and treatments far more frequently than my general medicine patients do.  Both groups are already resistant to the idea of undergoing invasive treatments (e.g., surgery) for obvious reasons.  But in contrast to my general medicine patients, students are almost as resistant to non-invasive or minimally invasive tests (e.g., blood draws)—solely out of concerns about cost.

It’s not the correctness of my recommendations that students question but the necessity.  And rightly so.  As a physician, I’m generally biased in favor of doing something rather than nothing, even when doing nothing represents the better course.  To have my decision to order blood work, or an x-ray, or a CT scan questioned forces me to more critically evaluate what I’ll do with the information I learn.  It’s always an excellent thing for me to ask myself if the tests I’m recommending will yield information that affects my choice of treatment.  Because if it won’t, why am I ordering it?  (One could argue in some instances to allay patient anxiety.  But that’s the exception, not the rule).

As a result of my anecdotal experience caring for both groups, I’ve developed a bias in favor of a payment system in which we require some co-pay for every medical service rendered.  Though it may increase out-of-pocket costs, I theorize it will decrease overutilization enough to flatten the rate of rise of insurance premiums (which are determined each year by the prior year’s utilization).  My hypothesis is that patients will on average pay more for individual encounters with our health care system, but that their insurance premiums should stabilize over time and their overall lifetime costs for health care will be lower.  We have fifty states in our union.  Surely we can find a way to test this hypothesis in one of them.

How would we figure out where to set the co-pays to yield the behavior we desire (i.e., a greater willingness to question the recommendations health care providers suggest)?  By setting the co-pays at the price people first begin to wonder about their ability to afford them.  Studies have demonstrated what our common sense tells us, that our perception of the affordability of a good or service (along with our desire for it) is what most strongly predicts our decision to purchase it.  Of course, we don’t want patients so worried about the affordability of their health care provider’s recommendations that they refuse appropriate ones.  We want to set the “gain” on their resistance just right, so that they’re motivated to question all recommendations but are then willing to accept the well-reasoned ones.

Perception of affordability will, of course, vary by a person’s inclination toward frugality and his or her income.  But studies could be done, if they haven’t been already, to identify the psychological inflection point at which people will resist buying a good or service they want, but are still persuadable by good “marketing” (meaning, in the context of health care, a logical reason for subjecting themselves to a test or treatment).  If, for example, that inflection point varied as a percentage of income, or disposable income, or some other easily measurable variable, we could use that as our guideline for setting co-pays for patients.

There would, of course, then arise the issue that insurance companies would want to avoid taking on poorer patients (even those who could afford their premiums because they would receive lower co-pays from them).  But here government regulation might make a meaningful contribution:  perhaps all non-governmental insurance companies could be required to maintain the same proportion of lower-income beneficiaries as exists in the general population.  That way, the “pain” of insuring patients who make lower out-of-pocket contributions to their health care would be spread around equally, and insurance companies would have their bias against insuring poorer patients held in check.  Actual numbers, of course, would have to be crunched to ensure this scheme wouldn’t bankrupt private insurance companies.  And those patients who couldn’t afford private insurance premiums could remain on government-sponsored insurance.

ON THE PROVIDER SIDE

Certainly, decreasing patient-generated pressure on providers to order unnecessary tests and treatments will go a long way to shaping the behavior we want to see.  But, unfortunately, in many cases providers still have incentives to overutilize health care resources:

  1. Some providers are afraid of missing a diagnosis and being sued, so order more tests to increase their degree of certainty even when the yield in increased certainty is negligible.
  2. Some providers are less confident in general and tend to order more tests as a matter of style.
  3. Some providers are simply less knowledgeable and skilled.
  4. Some providers have difficulty saying no to patients.
  5. Providers who perform procedures make money on every procedure they perform.

Each of these problems would seem to require different solutions.  For #1, we would need tort reform (I’m arguing for this not because of the expense associated with malpractice awards and high malpractice insurance, which doesn’t contribute in a large proportion to increased health care costs directly, but because fear of being sued engenders overutilization).  For #2 and #3, we would need to systematically place in providers’ direct line of sight evidence-based guidelines where they exist and expert-based guidelines where they don’t, a strategy reminiscent perhaps of what Atul Gawande suggests in his excellent Checklist Manifesto.  For #4, we would need to devote resources to teaching health care trainees how to set appropriate boundaries.  For #5…well…procedures cost money to perform even apart from the professional fee providers who do them charge, so billing of patients must occur on a per-procedure basis in order to recoup a large part of a procedure’s cost.  Could the professional fee be in some way unbundled from this charge so that providers have no financial incentive to perform more procedures and are freed to consider the necessity of each on its medical merits alone?  Frankly, I don’t yet see how such providers would still be fairly compensated in such a payment system.  Further, providers who perform procedures like to perform them.  And even more importantly, procedures are what they have to offer patients, so that’s what they’re biased in favor of doing.  How strong that bias is and how much it inappropriately influences a provider’s judgment will vary from provider to provider and probably isn’t something even a well-placed incentive can affect much.

CONCLUSION

Certainly, misaligned incentives only represent one problem contributing to the out-of-control costs of health care in America (for an excellent discussion of another, I highly recommend Atul Gawande’s article The Hot Spotters).  Still, I think good evidence exists to suggest it’s the most significant.  In writing this post, I’ve attempted to present a rationale for approaching the problem of overutilization by changing system-wide incentives rather than by adding more regulations.  I certainly recognize that my specific ideas would need to be actually tried to see what results they produced.  I would, however, be delighted if readers wanted to approach this post as the opening salvo of a much-needed debate by providing thoughtful criticism of my ideas in the comments.

Next WeekThe Wisdom Of Crowds

25 comments to A Proposal To Contain Health Care Costs

  • Marc Gabel M.D.

    Working in a system that tries to match resources to real need Ontario, I know that first off I make no more money for ordering a test. I also know that the big ticket items like MRI and PET scan are not profit-making items for doctors or clinics. This is extremely helpful. But more important is peers. You should look at Mayo clinic, Gunderson, and Kaiser for systems that look at quality and RESULTS of care and contain costs in that fashion and have better outcomes.

    As for the larger co-payments as a way to contain costs, the article you cite is emphatic in showing that less care via money produces higher costs because things are not taken care of or wait until emergent need.

    There is obviously a lot more in the the influence of suppliers (the largest gathering of sales people outside the IT world is radiological conferences selling bigger machines requiring individual docs to pay them off), and for-profit hospitals and a culture of entitlement by physicians as well as patients.

    I’m always amazed at the health statistics coming out of Cuba, Canada and many other lower-cost systems producing better results in essential markers of community well-being.

    While I hate to put it this way, lowering costs will reduce free enterprise and the rights of every individual and there has to be some method of control. Doing it the Mayo or Kaiser way, where peers and the culture pressure innovation and efficiency might well be better than government control, but the individual doc with the individual patient making decisions without consideration of the bigger picture will not stand for long.

    I would end by saying that my Canadian experience compared to my American one, which includes University, private, military and group situations, is that incomes of physicians are more than adequate and fulsome, billing is a minor part of the day, even in solo practice, malpractice insurance is minimal, and there is a major amount of peer assessment and expectations. It is not any kind of utopia, with continued efforts to contain expenses, provide perfect care, and deal with areas of deep trouble, but it is a telling statistic that recently the numbers of physicians crossing the border to practice has reversed it’s direction and more are returning to Canada than migrating to the USA. Voting with feet for more rational practice and lifestyle I would venture.

    Marc: One quick response—I’m not arguing for so much less care that we ignore our allow to go untreated important problems. I’m really arguing for the “sweet spot,” neither too much care nor too little.

    Alex

  • Frank

    My employer started pushing a HSA (Health Savings Account) as an insurance option. In exchange for no premium deducted from my check (in fact, my employer deposits $500 into my HSA) I am expected to pay the total cost of each visit to a medical provider up to the deductible of $1200 per year. (One preventative care/physical and other preventative items, such as vaccines are covered by the insurance company.) After that the insurance pays 90% up to an out-of-pocket max of $4000, then they pay 100%.

    You had better believe that it makes me think twice before running to the doctor for a simple cold. This type of plan turns what may have been a co-pay of $25 for a visit into a payment of $50-$120+ out of my pocket, not including the cost of any labs ordered, which I also must pay for 100% if I have not used up my deductible.

    So far this plan year (started July 1, 2010) I have paid zero. I am not neglecting necessary visits; I have an annual dermatologist appointment scheduled in two months, which will cost me ~$90.

    I really do believe that there is a lot of overutilization of the “run to the doctor at the first sniffle” type that this type of system will minimize.

  • Matt P.

    I generally agree with your thought process, Alex. Here is the best outline of a plan I have seen that a) seems relatively easy to explain (something I think all or most government policies should be), b) humanely covers virtually all, and c) harnesses market forces/human nature. It is from Warren Mosler.

    1) Everyone gets a “medical debit card” with perhaps $5000 in it to be used for qualifying medical expenses (including dental) for the year.
    2) Expenses beyond that are covered by catastrophic insurance.
    3) At the end of the year, the debit card holder gets a check for the unused balance on the card, up to $4,000, with the $1,000 to be spent on preventative measures not refundable.
    4) The next year, the cards are renewed for an additional $5,000.

    Advantages:

    1) Doctor/patient time doubled as doctor/insurance company time is eliminated.
    2) The doctor must discuss the diagnosis and options regarding drugs, treatments, and costs with the patient rather than an insurance company.
    3) Individuals have a strong incentive to keep costs down.
    4) Doubling the time doctors have available for patients increases capacity and service without increasing real costs.

    Total nominal cost of approx. $1.5 trillion ($5,000×300 million people) is about 10% of GDP which is less than being spent today, so even when catastrophic costs are added the numbers are not financially disruptive and can easily be modified. Eliminates medical costs from businesses, removing price distortions and medical legacy costs. May obviate the need for Medicare and other current programs. Eliminates issues regarding receivables and bad debt for hospitals and doctors. Eliminates the majority of administrative costs for the nation as a whole for the current system. Patients can “shop” for medical services and prices as desired.

    Disadvantages:

    1) Those more in need of the rebate at the end of the year may elect to forgo treatment beyond the $1,500 not subject to the rebate.
    2) Doctors may be able to more easily convince patients of unneeded treatments and expensive drugs vs insurance companies.

    Matt: Interesting. There’s a lot to comment on here—and I like some of the general concepts—but I’d highlight two things: 1) unfortunately, for many patients, $5000 a year could be eaten up mostly by pharmaceutical costs alone, and 2) as much time as doctors spend interacting with insurance companies, eliminating that won’t double the time available to see patients, not by a long shot.

    Alex

  • Chris

    You have focused on the patients’ parts and the doctors’ parts in this tangle. But I believe that the notion of innovation that engenders steep outlay for technology in medicine is an area where the brakes need to be applied. IT, CPOE, smart charting, smart infusion pumps in the hospital, and the complex re-training and re-allocation of time involved in the application of IT is a huge factor. Huge as in big-bucks; and huge as in having a large impact on the very nature of the profession of healing. I wish someone could compare the cost of malpractice insurance to the cost of technology in the average doctors practice or hospital setting, so that I could see and assess that cost—and consider it, as an insurance company or as an individual patient. I feel as if technology is doing a take-over in health care . . . and I, for one, need to see this trend leading to better outcomes in a more reliable way. Otherwise, put on the brakes!!

    Alex, I feel as if you have laid a great deal of responsibility upon the patient for decreasing pressure/demand. I suggest that certain populations—not the poorer vs. the more comfortable divide—have more need, and perhaps more of a right to ask for more from the health care system. I think that those with chronic conditions need to be a special consideration. If I were designing a reform, I would focus on that patient population in the belief that we spend a great many more health care dollars on those patients. I would perhaps have algorithms for each condition—diabetes, cardiac conditions, asthma and other respiratory conditions, mental illness, etc. In that way, there would be a standard of practice, and #2, #3, and #4 above would diminish. The “pressure” from both patients and peers would be packed into the algorithm . . . and the pathway for practice along with a realistic cost for each chronic condition would emerge.

    Then, with respect to innovation, I would apply new and nearly-new ideas to this chronic condition population: the medical home idea, home care initiatives, close supervision by nurses and nurse practitioners—to stay on top and thus reduce costs. If these patients can be kept out of the hospital, a lot of money can be saved.

    With respect to patient demand in order to increase the individual’s odds of a good outcome, I suggest that someone needs to teach every patient a basic lesson in critical thinking. For example, the standard to live by, re: what will I do with the information from this test or procedure. Do patients realize that this is a question that must be addressed by every medical practitioner in every case? Are patients taught a healthy skepticism (comes under the rubric of critical thinking, for me) of how much a health care system can reasonably do to keep them well? I am not talking about what health care can do vs. what the patient can do—personal responsibility. I would just simply encourage skepticism; along with acceptance that we all decline and cannot live forever. Patients can learn to think about our end-points, about death. And even—dare I say it—prepare for end-of-life.

    We pay for what we value. So I agree with a co-pay for everything, provided the patient is not at the poverty line. If I pay for cable TV or a large screen TV; or if I buy steak and shrimp at the grocery store or go out to eat routinely, then I am paying quite a bit for what I value. I think we all ought to build in to our budgets our co-pays and be thankful that we have access to health care.

    Government’s role? Back to the founding fathers argument. Way back, we set up a system where we define certain areas as “the common good.” We seem to have no trouble in accepting roads, a power grid, public schools, as items on our “common good” list. Health care, to me, is a “common good” item as well. The government can have a say in the setting up of the health care grid—whether that be state or local government. But government shouldn’t be the only entity involved in thinking it through or planning it out.

    There should be and there ARE knowledge workers and think tanks out there that can submit parts of a plan, or improvements in the plan that is already in place. Alex, with his 3 blog posts, did his part along these lines. If you aren’t part of the solution, hey, then, you must be part of the problem. IMHO. (In other words, you cannot get off the hook by just saying “NO.” That only works on bumper stickers about kids’n’drugs.)

    Chris Keller, MSN, RN

    Chris: Thanks for your thoughtful comment. Yes, innovation is the other main driver of rising costs in our health care system, but I wouldn’t argue to put the brakes on. Innovation brought us cardiac catheterization, for example, and numerous other advances that have cut the rate of death from heart attacks dramatically in the last thirty years. That’s a real benefit our entire population now has a chance to enjoy and what I would consider money well spent. As technology advances it makes sense a larger proportion of our GDP must go to funding it—as long as we’re getting a good bang for our buck. So while I wouldn’t argue to put the brakes on innovation (as I said in the post, the bullet we must bite), I would hold it up to a strict standard: can we demonstrate/find an application of a technological advance that improves the quality or quantity of life for a large segment of the population? We need the studies, always the studies.

    Your other point about focusing in on at-risk populations, such as those with chronic conditions is well-taken, and addressed by the Gawande article I reference in the post. I didn’t mean to imply misaligned incentives was the only cause of overutilization, just a less frequently recognized or discussed one that I wanted to highlight.

    And, finally, yes, I do place a large part of the burden in controlling overutilization on the patient because the patient is driving a lot of it. But I hope my point that providers bear a large part of the responsibility also came across. Your point about the importance of increasing the basic health care literacy and critical thinking skills of our population in general cannot be overemphasized.

    Alex

  • Long but interesting. I am going through a medical thing now. Before I got on Medicare and a supplemental my insurance because of age and my profession was $10,000 a year with a $2,500 deductible, so everything I did (fortunately very little) I paid myself. Obviously it was minimal and the insurance company made about $100,000 on me with no cost. Now I am on Medicare with a supplemental and I find myself opting for the little extras because it is “free.” I just had an MRI due to a head pain that wouldn’t go away. Before 65 I might have put it off a long time because I had to pay and then eventually found I had a tumor. So now that it is affordable to me I want to do it whereas before when it was not affordable I put it off. Both ways it is probably bad medicine and I too am a doctor, although a horse doctor, so I know it. I wish I could do more than the clients can afford and to often it is euthanasia, a worse choice. So this does not give you your answer except to reinforce the idea that it’s a big gray world with no one answer.

  • Denise

    @Frank, I went to this system with my employer three years ago, my behavior and attitude changed IMMEDIATELY. I definitely started to question the doctor more and not just go along blindly. The doctors were continuously ordering test after test, simply because they could without consequence and to protect themselves (and/or the other reasons Alex mentions). I too am shocked by how many people go to the doctor for every little thing (especially those on state-provided insurance, which I pay with my taxes) or those who use it as their social network.

    Once on this HSA type of system, it also becomes apparent immediately how administratively burdensome and inefficient the system is. One test could yield up to four different invoices. And who knows if the charges are accurate. And heaven forbid your doctor miscodes something—good luck trying to get that fixed. It’s ridiculously bad business. What’s been the incentive to be efficient though?

    My big surprise was how little the doctors and doctors’ staff knew about HSA and how they worked.

    Insurance is NOT meant to be used how we use it in health care. Insurance is to cover in case of catastrophic happenings, NOT to pay for the “gas in our cars” as an analogy. If someone wants to pay for the “gas,” then they need to pay a much higher premium then everyone else. Al la carte, like auto insurance.

    Anything that is not catastrophic, routine type of things, should be competitive and not necessarily have to involve a physician. I don’t need to see a pediatrician because my child has an ear infection. I just need someone to look in their ear with the thingy and confirm :).

    There is TOO much government regulation and requirements. Whenever that exists, things get out of kilter and are artificial. How much is needed, I’m not sure. I do have a real problem though telling private companies how they must conduct their business.

    Alex is right on, in my opinion, in regard to tort reform.

    My understanding is that insurance companies follow suit with reimbursements from Medicare. Although they might not be as low, they have been trending lower. Leading to having to charge more, i.e., an aspirin is $20 to make up for the lower reimbursement.

  • kurmujjin

    Very interesting article and I generally agree.

    I didn’t see any mention of immigration or tort reform reform in here, though. I think those two efforts would go a long way toward helping out with lowering costs.

    I don’t advocate more or less immigration. I do advocate more integrity in the system so that anyone who is present in the country is here in a fully disclosed, legal status. I think that the undocumented status of currently illegal aliens keeps them from using the system properly (particularly emergency room overuse).

    Also, I think we need to do more about curbing litigation. I think fear of litigation keeps the provider from holding the line on overuse. At the same time, I don’t want to negate or limit anyone’s recourse to litigation in cases of negligence.

    Kurmujjin: I do mention tort reform briefly. See “On The Provider Side” near the end of the post. And I like your handle.

    Alex

  • Hello Alex, thanks again for a well thought out and interesting article. I’m curious about your thoughts on one detail; you mention it more or less on the side, but I thought I’d make my question explicit. How do you see preventative measures vs. corrective measures as far as being a factor in health care cost? It’s not as black and white as I’ve written it here, but what I mean is, for example, insurance companies covering physical therapy for patients who, without that therapy, are headed for problems that can only be solved with the “big guns” (surgery, for example). Same thing with advice and/or training concerning diet. Et cetera. It seems to me that these things can (won’t always) prevent or reduce costs down the road, not to mention preventing or reducing the burden on the patient (from surgery, for example). Patient compliance plays a big role, of course.

    Catrien: Most of us believe that the old adage “an ounce of prevention is worth a pound of cure” almost certainly applies to health care costs. But whether or not the final balance between the cost of preventive care and the cost of “recovery” care that would have otherwise taken place would be positive or negative is difficult to calculate. Because preventive measures in general are less costly in terms of dollars (though arguably more so in terms of time and opportunity costs in other areas of the economy), I strongly suspect preventing disease is not only desirable for patients’ health (obviously) but for the health of the economy.

    Alex

  • Mira

    As usual, another good blog, Alex.

    What do you think about the alternative providers of health care breaking into the traditional market—places like the Minute Clinic and Planned Parenthood? Ever since a Minute Clinic sprung up in my local CVS I have been using it for garden variety basic needs I would have normally seen a primary care doctor for. The staff are competent, the hours are a lot more convenient, and…the fees for services are upfront! What a concept.

    Far as I’m concerned, if places like that can give traditional doctors offices and hospitals a run for their money, I’m a fan of the market competition. Competition is sorely lacking in health care.

    Mira: I see by “alternative” you don’t mean herbalists or acupuncturists and the like. I think as long as the presenting complaint a patient has isn’t masquerading as something more serious and that providers at places like the Minute Clinic are able to recognize when they need to call for help, they’re fine. But telling when a cold is more than just a cold can sometimes be tricky, so I worry a little…

    Alex

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  • George Colombo

    Given the enormous and wildly disproportionate amount of money that’s spent on end-of-life care, it seems to me that a radical re-thinking of this subject will be a necessary part of any serious discussion about driving down the overall cost of our health care system. Physicians regularly prescribe expensive treatment that holds out little hope of making any significant improvement in patients’ lives.

    A more realistic approach to end-of-life care (in tandem with a re-structuring of physician incentives) would make a big difference. There is a point at which hospice and palliative care represent a far more rational response that heroic measures.

    George: Agreed.

    Alex

  • rdp

    Credit to you for continuing to hack away at this topic, Alex. Much of what I was inclined to mention Marc Gabel’s comment covered better than I could. But I do want to suggest that even though you say more medicine is not necessarily better medicine, your comments under “On the Provider Side” seem to support the bias towards technology in medical care.

    Somehow there is always money for state-of-the-art equipment; in fact there seems to be something of an arms race between providers to be the one with the highest-tech equipment. Wouldn’t it be smart to remove MRI/PET scans and the like from use as profit centers? The profit motive in pharmaceutical and medical equipment companies has for years indoctrinated patient and doctor alike in the value of high-tech equipment and proprietary drugs. The suppliers of these products are not driven to find out what works so much as they are to find what they can use to make profits. (You know very well that studies are expensive, and studies that don’t offer profit possibilities are less likely to be done than those that do.) Why should it surprise us that, having been indoctrinated to high-tech = best care, people (patient and doctor alike) believe more high-tech tests and treatments protect against bad outcomes. Imagine, however, if we were able to reverse the indoctrination, demonstrating that other factors (pre and peri-natal conditions, regular preventive care, lifestyle support, superior doctoring, etc.) are MORE important over the long run. I hold doctors, the experts in this situation, responsible for a more scrupulous examination of research before they jump on technological bandwagons. (And this spending on technology isn’t even limited to medical equipment. I had to have an in-hospital ultrasound done recently and found, to my shock, that every single room I passed through, including the room in which the ultrasound was performed, had a blaring flat-screen television on. Who pays for all this? Who decided it was a good idea?)

    On the patient side, I guess I’m not typical, but I have always attempted to find out the costs of things from my medical providers, even though I had insurance coverage. In almost every case, the providers have been unable (or unwilling) to give me that information—and they were unpleasant about it to boot. A few years ago medical providers began having patients sign forms accepting financial responsibility for whatever care they received and I began inserting the language “as long as the cost of the care is disclosed to me in advance, except in the case of an emergency.” But no one has ever advised the cost in advance. In my experience, doctors/hospitals conspire to keep patients from getting the financial info until payment is due. The doctor says s/he does not know; the administrative person who may know is not available to the patient. I think you underestimate the inclination on the part of institutions (and this includes group practices) to work the system so as to keep existing revenue streams flowing. A patient is a mere piece of flotsam in that current!

    And finally, ah, yes, “experience, knowledge, and judgment,” those all-important factors that institutions have done their best to eliminate from the calculus of value. I don’t imagine many reality-based folks would disagree with you on your assessment of their importance. The problem is the structure of most institutions does not facilitate the application of these qualities. The task is not to put the burden of assessing risk vs. affordability on the patient and risk vs. profit on the providers, but to reorganize institutions so as to hold themselves accountable for improving their knowledge and judgment based on medical experience. I would be interested in your take on the approaches of those places (mentioned by Dr. Gabel) that seem to have a reputation for high quality care and more cost control…

    rdp: I completely agree that, as you say, “doctors, the experts in this situation, [should be] responsible for a more scrupulous examination of research before they jump on technological bandwagons.” Absolutely! The problem is getting all providers to pay scrupulous attention—hence my thought about using evidence-based guidelines.

    As for doctors being unable (or unwilling) to give you cost information, I can only tell you that I don’t pay attention to cost because most of my patients don’t demand it of me (students, as I mentioned in the post, being the notable exception), and I don’t factor it in when deciding what test or treatment is appropriate. Those decisions I make from a purely medical point of view (I’m salaried and make no more money if I order one test or 1,000) and I can tell you, in the vast majority of cases patients want me to do more than I think is appropriate.

    Finally, if I understand Dr. Gabel’s argument, peer pressure is the mechanism we should bring to bear on one another as providers to ensure we’re hitting the “sweet spot” driven by health outcome results that presumably are shared. If the clinics he mentions are doing this, I’d be extremely interested to understand how the providers in those systems find themselves behaving in response.

    Alex

  • Chris

    How about delaying the purchase of a new version of the infusion pump or of the cardio-respiratory monitor? Then, like drugs that become generic (and cost less) after 2 years (or is it 5 years?), the cost of that technology will go down?

    Or insisting on only one MRI machine in one medical center per 30-mile radius? Then there is more utilization of fewer machines, and getting them paid off sooner via patient payments is more easily accomplished.

    Or, after really applying ourselves to educate patients in critical thinking/skeptical thinking, we make the next lesson something like “Getting a diagnosis—or not—now or later” so that patients would not be so impatient to receive a diagnosis, thus demanding all the tests NOW. I imagine this would be controversial—not rushing to a diagnosis. I think of this as an innovative approach, however. Arriving at a diagnosis is an exercise in problem-solving, which is usually enhanced with lab tests and scanners. The opposite of this is the good-ole “Let’s wait and see and watch this for a while. Let’s see if we see a pattern. Let’s rule out as much as we can before we send you for the MRI and all of the lab testing.”

    Wait-and-see could work in some cases. In other cases, I can see that it would be silly. (I had an MRI after weeks of knee pain and disability. The MRI showed the extent of a meniscus tear in my knee. The result seemed to confirm the need for surgery—though I believe that the extent of the pain and disability might just as easily have confirmed the need for surgery. However, it could have gone another direction—I had a meniscus tear in the other knee and the MRI/x-ray/degree of pain didn’t point so directly to the need for surgery—and indeed, I didn’t have surgery for that other meniscus tear.) So, you educate the patient, saying, “Look, you really need to do RICE (rest, ice, compression and elevation) for your leg—strictly—for x number of days). Then, if there is no improvement, we will go to the next step, the MRI, to look at the injury. Then, we will take the next step which will be medical management or surgery. You must let yourself be guided by me . . . You must not succumb to pressure to return to work too quickly . . . Believe me, we will manage your pain during this time.”

    I think we think-tankers must consider multiple approaches, each of which has the potential to shave off some health care costs.

    Chris Keller, MSN, RN

    Chris: The approach to the knee problem you describe is actually how I mostly do it. Wait-and-see is obviously appropriate in certain cases, and just as obviously not in others. The key, I think, is to free a provider’s judgment (presuming it’s already good) from non-medical-driven pressures to do more (or less) as much as possible.

    Alex

  • Joan

    An analysis that I read a few years back attributed the excess costs of the US health care system, compared to European countries, to be about equally divided between over-utilization of doctors and hospitals, higher expenditures on drugs, and payments to insurance companies. Insurance companies are being required to reduce their administrative costs, and perhaps we need to look to the Swiss system, where there is a fixed premium for basic services, and the companies make money by selling add-ons. How do we address the increasing drug costs?

    Joan: That’s a tough one. Drug costs are lower in many other countries because of price controls that don’t exist in America, which makes the U.S. the perfect “pop off” valve for pharma to recoup the costs of research and development as well as advertising.

    Alex

  • Sarah

    @Denise, one of the issues you are not addressing is that the catastrophic often leads to the routine.

    For example, after surgery for a detached retina, one needs to have one’s retinas checked at least annually for the rest of one’s life. Or, after surgery to remove torn knee cartilage, some people need injections of hyaluronic acid every 6 months to lubricate the knee, in order to remain functional and avoid having a knee replacement. And so on—there is no shortage of examples.

    You seem to suggest that insurance should pay for the retina surgery or the knee surgery, but that the cost of the aftermath should come totally out of the patient’s pocket “a la carte,” in the form of direct payments to doctors or else as very much higher health insurance premiums, as if that would make people use medical services more frugally. Yet no one chooses to have a detached retina. But if one HAS a detached retina, the ongoing follow-up of having one’s retinas checked annually is not an item that can be safely ignored.

    To you, those eye exams are just “putting gas in the tank”—and you say ongoing care doesn’t necessarily have to be given by a doctor. But there are plenty of cases where it DOES need to be given by a doctor! If you were at risk of losing your sight following a detached retina, would you want a PA to check your eyes, or an ophthalmologist?

    This is reality: sometimes things go wrong with the human body that we didn’t “cause” and which require ongoing after-care. And often enough that after-care is expensive and requires a doctor.

  • Alex, thanks for another great article. Although all that you write is true and insightful, I believe the real problem is that our country’s health care coverage is administered by for-profit corporations. And as is the case with all larger corporations in this country, they exist solely to make as large a profit as possible in the shortest time frame possible, and hope to increase their profits by X amount each quarter to satisfy investor demands. (Non-public for-profit entities do not need to follow this crazy drive for profit, yet they can be quite profitable while making decisions that serve their best interests in the long term, or can dedicate some of their efforts and profits to outside causes that interest them, without worry of investor backlash.)

    Health care is simply not something that should be administered by for-profit corporations. The public good and large, increasing profits are diametrically opposed. The values in our country have become more and more distorted over the years so that the only value left is how much money anyone has, period. So corporations, who arguably define most of our government’s policy, now strive for extreme profits all the time, not even thinking about their own long-term health.

    We can have all the rational discussions we want about things that can be done to control health care costs, and certainly they may have short term positive effects, but until we remove ever-increasing, large profits from the head of the decision-making process in health care, nothing will change. Capitalism controls health care.

    Allen: You raise a compelling point, which I touched upon briefly in the first post. But given that incremental change from where we stand today is far more likely to occur than abrupt and dramatic change that bears no resemblance to our current system, I thought aligning incentives of insurance and pharmaceutical companies (the major for-profit players in the system) might be worth trying, that the very capitalistic forces you note might be leveraged to increase competition and drive costs down.

    Alex

  • rdp

    I wanted to respond briefly to your comment after my last post, Alex, in which you said “I don’t pay attention to cost because most of my patients don’t demand it of me,” as this raises an issue that disturbs me quite a lot. As a provider (of any service, really), I hope I would regard it as my responsibility to know what my services cost and to be forthcoming with that information. To not provide that information leaves the patient at a disadvantage. You expect to be paid even though you have not disclosed the info. This means that the person whose health is on the line, the person who may be anxious and under some stress, is the one with all the responsibility of knowing the financial lay of the land and keeping his wits about him in asking prices at each step of the way (when he may not even know how the steps are separated). I think you may underestimate how difficult it is to get financial information—even, or maybe especially, when you have insurance. Doctors assume you will pay what it costs and insurers exploit the gaps in doctor and patient knowledge—because, let’s face it, how can a doctor be expected to know what individual plans do and do not cover and to what extent any more than a patient? (I have even been told that information on what certain things cost cannot be retrieved without actually billing for a service or procedure. I don’t know for a fact that this is the case.) But there is definitely a kind of don’t ask/don’t tell code in a lot of medical care that keeps doctor and patient from collaborating on cost—as well as best treatment. Just imagine if you took your car in for a diagnosis and the mechanic said “I can’t tell you what it will cost, you’ll just have to pay for whatever it is!”

    I also want to agree with Allen Schlossman’s conclusion, above. Capitalism works to create profit. Profitability—for an institution—relies on predictability. Uncertainty makes profit-seeking entities unhappy. Health care, involving unique human beings, unique judgments, constantly changing medical knowledge and treatment approaches is—or should be—replete with uncertainty. This makes for a fundamental incompatibility. If we are going to be stuck with a profit-based health care system, it seems essential that any answer to the current mess has to involve strategies for neutralizing institutions’ natural tendency to protect themselves (financially and every other way) at the expense of the population they are created to serve. But, personally, I think non-profit is the wisest course.

    I am hoping that all these little conversations about health care will somehow help to move us to a more informed decision-making process. Thank you so much for making such a valiant effort to engage with this very important issue!

    rdp: Your point about taking responsibility to know what my services cost is a reasonable one. In defense of health care providers (and in my own!), I would say the following: 1) My services—that is, specifically, my professional judgment—are only paid by the patient indirectly (I work for a salary paid by a hospital). 2) I could provide information about what a study or procedure costs, but exactly what a patient will be charged out-of-pocket is almost impossible for me to tell as it depends on the study/procedure being ordered, their particular insurance, their particular plan, and their deductible, if any. Things like costs of drugs I do know and will communicate. All this is to say that to expect a health care provider to be able to answer questions about patient costs accurately in our current system is extremely difficult and frankly not realistic, which only points out how much reform our current system needs!

    Alex

  • Tara C

    It is so hard to be careful about costs—I have repeatedly tried to inform myself before having a procedure done how much it will cost me, only to be thwarted by convoluted rules by the insurer that no one takes the trouble to point out to you because THEY are not paying the bill. I firmly believe that single-payer is the only way to go, and I plan to vote with my feet by moving home to Canada. The US system is broken beyond repair and no one seems to have the political will to fix it.

  • helensmom

    Alex—really liked your thoughtful analysis. I’m one of those (perhaps rare?) few who are probably under-utilizing the system—until I found myself in the ER with dangerously high blood pressure (read: symptomatic) late one night this past December. I should note that my internist advised me not to wait until the next day & to go to the ER. Reluctantly, I went (mainly because I was scared: the readings suggested I might be on the verge of a stroke). I do have insurance. After a total of about an hour in the ER, I was seen for approximately 5 minutes, by one doctor, whose entire exam consisted of taking my blood pressure and talking to me briefly. (Up until that point, no one had examined me in any way.) No tests. No recommendations, prescriptions, aftercare (other than being advised to follow up with my regular physician). Does anyone want to guess the total billed to me? Very close to $1,000. ($500 deductible, plus various co-pays). Especially after this experience I’d have to agree with one of the above posters that yes, the system is broken. And I am angry. Angry that year after year, my employer—a large international corporation—passes more & more of the costs of medical insurance directly to its employees while what’s actually covered shrinks away. Over utilization? Hah! I’m going next week for my first physical in a couple of years—prior to now I’d gone maybe once a year, and was seen by a PA for urgent-care things like a nasty 2nd degree burn, etc. Tests? What tests? And the really shocking thing is that in the current crazy world of US health care, I’m considered one of the lucky ones, since I do have “insurance coverage.” If I became seriously ill—if I had had a disabling stroke, for example—or was diagnosed with metastatic breast cancer—I could easily be facing tens—even hundreds—of thousands of dollars in out-of-pocket expenses, according to the terms of my insurance coverage. Something like that could completely destroy my relatively comfortable middle class life, no question about it (savings—gone in less than an eye-blink; house—gone soon thereafter; helping my kids with college—well, need I say more?). I can’t even contemplate the horrors and Hobson’s choices that the unemployed/uninsured would have to face in such situations. So, yes, the system needs a radical overhaul. I am inclined to agree with a couple of posters who point out the inherent conflicts with for-profit insurance companies—but I also have to agree that there isn’t a simple answer or a one size fits all solution.

  • Chase Moery

    You raise great points that have me somewhat stumped. If the government were to allow insurance companies to compete across state lines while the state is regulating health care, it would cause a “race to the bottom.” People would purchase the cheapest and less regulated insurance out there, thus hoisting us into the same dilemma we are currently in. This is why I assume you wish that health care regulations be overseen on a federal level. Now, I have been stewing over this proposal all day while weighing out the pros and cons. One major issue with this proposal is that you suggest people vote with their feet; however, people need health care, so who’s to say that these industries won’t gather together and agree on maximum and minimum procedures they will allow. Then once a person files a grievance with one company, he or she will go to another company that will treat them the exact same. “Pooling” procedures to ensure business and money for all companies would have to become a regulation within itself. This may be a bit of a stretch, but I believe it is plausible.

    Another issue is that your plan leaves out thousands of Americans who will still not be able to afford insurance. This is where the philosophical question comes in, is health care a right or privilege? How will these less fortunate people be covered?

    Do you happen to find any holes in your proposal?

    Chase: Excellent questions, all. What currently stops insurance companies from competing across state lines isn’t, as far as I know, any regulations or laws, but rather the varied requirements each state has for a company to become a legal health insurance provider. If licensing fees must be paid on a per state basis, that could become quite expensive and likely serves as a disincentive for an insurance company in one state to set up shop in another. If the playing field were leveled, however, by regulation and licensing occurring at a federal level only, companies might think to expand into other markets in other states if they felt they could compete. I don’t see a “race to the bottom” happening. I’m not sure why we’d expect health insurance companies to behave in any way differently from other companies that compete for customers. What incentive would they have to bind themselves to their competitors by agreeing to limit their policies in a way that might actually make them less competitive? I just don’t see it. Perhaps you could provide examples in other industries in which this has happened, and if so, why.

    My idea is that by providing health care consumers a chance to vote with their feet insurance companies would be strongly incentivized to provide good customer service, which includes removing barriers to quickly processing and paying out legitimate claims, etc. I readily admit, it’s a theory that needs to be tested in this particular industry.

    I’m not convinced that asking whether health care is a right or a privilege is the right question. I think ensuring everyone has access to good health care doesn’t just benefit individuals but our entire society (the latter being an argument often glossed over) and therefore it’s to everyone’s benefit that everyone else be covered. I do think the federal government has a critical role in covering health care costs to the poor (which it already does). The criteria for entry just need to be adjusted to allow for all uncovered U.S. citizens to receive health care insurance that provides them access to good care.

    Alex

  • Chase Moery

    Dr. Lickerman,

    Hope all is well. In regards to your “race to the bottom” defense, I am unsure of other industries this has occurred in. However, if regulations and licensing did not occur on a federal level, then the states with less health care regulation would have the cheapest insurance because they are not required to offer as many services. I believe that in times of financial despair most people would purchase their health care insurance from the cheapest place possible, which would be from these states. If those patients were to need treatments not covered by their insurance, they would once again be shackled in debt. However, mandating that the federal government is responsible for regulations and licensing, like you suggest, would abolish this possible outcome. I suppose my theory is untested, but I feel that it’s plausible.

    Also, I may be misunderstanding you, but if the criteria for entry to receive government aid were to be adjusted, wouldn’t it cause a greater rise in the cost of health care for people with private insurance? Greater than it is now.

    Chase

    Chase: Regarding your last point: no. It would increase taxes.

    Alex

  • Chase Moery

    Dr. Lickerman,

    Your response is always informative and appreciated. I am now messaging to see if you had any research paper ideas that deal with health care. The paper is only supposed to be 6 pages double-spaced and my idea’s seem to be too broad. I would love if you, or anyone else, have any good narrowed down ideas.

    Chase: You might focus on data that shows the main contributor to the rapid rise in our nation’s health care bill relates to overuse of medical resources. Good luck!

    Alex

  • Michael

    Since the plural of anecdote is data, I’ll give an anecdote.

    Recently, I took a friend to a GI doctor. She had an ongoing gnawing pain in her stomach, which we had decided was almost certainly an ulcer. The doctor insisted on doing an endoscopy, because she was unwilling to prescribe antibiotics without being sure.

    Long story short, it wasn’t an ulcer, but gastritis caused by bile backup, which has a completely different treatment regimen. The antibiotics would have been worse than useless.

    Where am I going with this? In a standard copay system, we would have insisted on the (cheap) antibiotics. Sometimes, the doctor’s judgment needs to override the patient’s poverty.

    Michael: I think this is a good illustration of the need for an investigative scheme and treatment plan to be the result of a unified dance between doctor and patient, full of negotiation and reasoned arguments on both sides. Hitting the “sweet spot” is a team effort.

    Alex

  • Andrea

    Interesting and compelling ideas…

    I have to say, I don’t like this sentence and find it somewhat misleading:

    For example, providers and hospitals will charge different rates for the same procedure depending on the insurance carrier (carriers bringing large volumes of patients into health care systems often getting volume discounts).

    While I understand what you mean, the way its worded suggest providers assign a price to a procedure on a whim after checking the patient’s insurance coverage. The patient’s final bill will show the original price of any product/service prior to any contractual adjustment—these numbers don’t vary depending on the patient or insurance coverage.

    As a result of my anecdotal experience caring for both groups, I’ve developed a bias in favor of a payment system in which we require some co-pay for every medical service rendered.

    I believe this will be key in any strategy to curb health care spending. I would even go a step further and advocate for co-insurance and do away with flat dollar co-pays altogether. Using basic economic concepts, we can see that having insurance make consumers less price sensitive. I think co-insurances are the best way to make consumers aware of both utilization and prices. Even so, we have legislators (such as the governor here in Oregon) that want to implement state-based single-payer laws that would effectively create a state health plan with no co-pays, deductibles or cost sharing…

    Another thing I see—specifically in the United States—is the enormous spending on things that yield little or no measurable benefit. Particularly when it comes to end-of-life care. However, I really can’t see any legislator tackling that issue in the foreseeable future.

  • rdp

    Alex, I can’t resist offering these three current examples of the impossibility of patient-driven control of medical expense.

    1) The allergist/immunologist I found after 5 years of seeking treatment for a puzzling chronic condition, and who knew of a protocol that worked, is suddenly out-of-network because UNC Hospitals could not agree on a contract with my insurer. To continue under her care, I must go “out-of-network,” meaning I pay 100% of the charges up to my deductible (some high $ amount), then they will pay 70% of UCR. I called UNC to find out what an office visit would cost me and they told me they could not tell me. Not only does it depend on what the doctor does in the visit, the fee is apparently arrived at in reverse. The clinic decides how much revenue they require, then divides that amount by the number of patients seen, according to level of service. Can this possibly be true??

    2) My 23-year-old daughter presented with a second UTI in a month. She was seen by an MD at a university hospital who said nothing to indicate they were doing anything but a urinalysis. We later discovered that 4 lab tests were done to the tune of over $275. The insurance covered the tests in this case, but if no one tells you they are doing tests nor gives you any results, how is a patient supposed to control overuse of medical resources?

    3) I fell on the ice and broke my wrist in February. After my last visit to the orthopedist, he said he wanted me to start PT (the practice has PT facilities in-house). I immediately called my insurance company, before my first PT appt, related the circumstances, and asked if PT was covered. I was told yes, at 100% after my $35 per visit copay. After my first PT session I discover that the insurance company expected me to pay an additional $100 for something the PT billed as “evaluation,” even though they never disclosed this as a separate service to me nor did it take any more time than a standard PT session. The PT says it was just a PT session and the insurance company gave no hint that any other charges might be involved. How was I supposed to exercise some oversight? I canceled my next PT appt due to lack of certainty about costs.

    I continue to believe the problem is not the patient, but the “profit-center” mentality of provider and insurance company. Payments for health care are set up so as to provide the income stream the providers require, with the patient more often than not left totally in the dark until after the service is given.

    rdp: I certainly don’t disagree that the problems you’re pointing out are significant and need to be fixed. But I didn’t argue that the burden of controlling costs lay solely with patients—rather, that a large part of it lies in the iterative interactions between patients and providers both.

    Alex

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