Health Care Needs Real Reform

Look, the way health care works now is a fee for service process. That, along with malpractice lawsuits, creates a huge incentive for providers to give you as many services (such as tests, medication, etc.) as possible so that they can list them and charge for them. If there is the slightest reason for a service, it will be provided and charged. Patients do not understand medicine enough to refuse certain services that are probably unnecessary and since the insurance company pays, there's no incentive for patients to refuse all the services that are given to them even if they were educated enough to understand which is ridiculous.

What are the profits to insurance companies as a whole? From http://opinionator.blogs.nytimes.com/2011/11/03/less-than-26-billion-dont-bother/?ref=opinion

According to many on the left, health insurance companies are sleazy and unethical, making obscene profits by charging high prices to sick people, giving physicians and patients the runaround to avoid paying bills, and rescinding policies just when people who paid in good faith get cancer, while their executives often walk away with millions in compensation. Last year, health insurance companies did rack up big profits, but it turns out that the combined profits of the country’s five largest for-profit health insurance companies — United, WellPoint, Aetna, Humana and Cigna — were $11.7 billion, only 0.5 percent of total health care spending. Even confiscating every penny of those profits would add up to less than half of the cost-saving threshold. And even not-for-profit insurance companies need to have an operating margin — a profit by another name. There just isn’t enough money there to make a dent in health care spending.

It's not "greed" by insurance or phara or doctors, the problem is that there is no mechanism to restrict health care services on a cost/benefit level. This applies to doctors as well. A doctor never thinks about the cost of the care he recommends and if it provides enough benefit. That's just not the way they are taught, they are there to cure or fix your problem regardless of cost. That's why end-of-life care cost so much. A doctor will simply not say that it's not worth the hundreds of thousands to try and cure your disease when it's very likely, but not 100% certain, that you will die in 2 years anyway. That simply isn't done and so we have all these expensive treatments and surgeries and the patient dies in a year anyway.

People have to be made to accept that we need to do a cost/benefit analysis and start denying care if the costs aren't worth the projected benefits. Right now people are outraged when care is denied and it's understandable. People will want a treatment that extends life for an average of 6 months even if it costs $100,000 if the costs are paid by someone else. We need to move to a system where those treatments are denied unless the patient pays for the entire cost themselves. For those who want government control of the health care sector, that's exactly what will happen and what Britain already does. And you cannot sue the government in those countries if they deny you a service, such as a test, even if that test would have discovered the disease you eventually die of. That's what keeps costs down in those countries. We may have to move toward such a system if people cannot accept the cost/benefit method naturally.

Put it this way, NOTHING can prevent you from death. There is no cure, YOU WILL DIE EVENTUALLY. The goal is to get people to accept that it is not worth hundreds of thousands to try and extend your life by a couple of months on average when you are going to die anyway. This is a very harsh view and statement, but a practical one and one that needs to be adopted.

Some Health Care Logic

The problem is that SOMEONE has to pay for the cost of providing sick people health care. By logic alone, not everyone can pay less than the health care they consume, some people have to pay more in order for insurance to work. It doesn't matter if government runs it or if its single payer, the funds have to come from somewhere be it taxes or premiums.

Recently, Health and Human Services announced that, "The provision of the law that permits young adults under 26, long the largest uninsured demographic in the country, to remain on their parents’ health insurance program resulted in at least 600,000 newly insured Americans during the first quarter of 2011." Now how much more are these healthy young adults paying (or their parents) into the system? If insurance companies only increase premiums by the amount of expected costs to treat these healthy people, then it makes no difference. This is what I suspect has happened.

Right now, it seems that no one wants to pay more for health care, but that's an impossibility. For costs to drop for some people, others HAVE to pay more because the aggregate costs have to be accounted for. Either that or health care services need to be rationed (the death panel model) in order to reduce total costs. There is no way around it folks, it's time to face reality and choose from REALISTIC options, not ridiculous and totally impossible outcomes such as lower costs for everyone without any reduction in quality or quantity of care.

Difference Between Obamacare and Republican Proposals

Mark Thoma is the owner of Economist's View, a blog that i frequent. He's gotten quite a bit of attention thanks to the success of the blog and now contributes to Marketwatch as a commentator. Recently, he wrote this article comparing Obama's revised health care proposal to Republican proposals. I wrote the following response on his blog:


After reading the article, I see a fundamental difference between Republican proposals and Democrat proposals that Mark Thoma seems to have missed. The proposals favored by Obama and the Dems focus mainly on expanding coverage and establishing a system that will pay for the subsidies that are included with the expansion. Whether a person favors such an expansion along with the taxes and fees that must go along to fund it, is a choice that has no objective right or wrong answer. In my judgment and the judgment of most Americans, this is not reform, certainly it's not the reform we wanted. It is perfectly reasonable to oppose a costly expansion of health benefits and the creation of another social spending program when we face huge liabilities with Medicare and Social Security in the future. If expansion is the "reform" Thoma mentions, then I and the majority of Americans oppose reform.

The Republican plans mostly concentrate on cost reduction. This is the kind of reform I and most Americans had in mind when the health care debate first started. We want more affordable health care, we don't want a new program that will expand coverage to the uninsured, most of which are uninsured by choice or have no legal residence.

The public option is the only proposal by Dems that meet the cost reduction requirement of "reform". I'm not against the public option, but it depends on the details. The public option should not be subsidized or receive government funding beyond what private insurers receive. That is it must operate from the premiums it collects, otherwise it would mix in the expansion of coverage which is opposed. It also must operate under the same rules as private insurers, this shouldn't be hard, Congress can just change the rules for private insurers too if they wish, but for the public option to be a true competitor, it must not receive special advantages.

As an economist, Mark Thoma should realize that a public option with the conditions proposed has very little chance of reducing costs. I'm surprised Mark Thoma dismisses rationing so easily, I think rationing is the best and most effective way to reduce costs. The thesis is that we're paying for health care procedures that either aren't needed (all the tests) or aren't a good value (like giving hip replacement surgery to a terminally ill cancer patient with 6 months on average to live). A medical panel or board is needed to investigate and determine which procedures and medicines offer the best value. Insurance companies will tend by allowed or required to deny care based on those recommendations, I don't any other way that would reduce costs by a major amount. Of course liability would have to be reformed too.

Bottom line is that the administration's definition of reform is something that Americans don't want, an expansion of coverage. It's very reasonable to oppose this kind of reform without obstruction as the main purpose. Simply those who do not believe an expansion of health care services, along with the higher taxes and fees needed to fund such an expansion, is wise or beneficial at this point should oppose reform. Obviously Thoma is not one of those people, but he should not ocnfuse rightful and reasonable opposition due to disagreement with obstruction based on politics.

Conservatives and Liberals United Against Health Care Bill Madness

It's incredible that this piece of crap can be passed with everyone against it. Conservatives and liberals both hate it, but somehow it's going through? I don't think it's too late to mount effective opposition, it's time to call the Senators that were on the fence and encourage them to switch over to a no vote. Then the House members, only one Senator has to switch and less than 10 Representatives.

Democrats need to oppose this bill and make sure it never passes. Everyone is in agreement that this is a piece of crap and will fail spectacularly. Once it fails, Democrats will get all the blame, they're the ones who crafted it, who passed it, who control all the levers of government, the backlash will be enormous, the progressive movement will be set back ten years, just as the conservative movement was set back by the horribly incompetent policies of Bush.

You all know what will happen, there is nothing in this bill that will reduce or control costs, when Americans find out that their health care will cost more and be no better, only worse, there will be a lot of anger. We elect Democrats and this is what we get? You can expect another 1994, time for people to DO SOMETHING and voice your displeasure with Senators and Representatives, tell them that you're not in their district but this bill affects everyone in this country and so you are telling them to vote no. If they don't, you'll donate to their opponent come election time and do everything you can to make sure they are defeated. This is the only type of populism that works, the only threat that Congressmen take seriously and the only weapon the people have as powerful as the ones wielded by the large corporations and special interests that have inserted all they've wanted into this bill.

Are Profits Responsible for the High Costs of Health Care?

I remember reading a study showing that even if all profits were stripped out of health care, the United States would still spend more on health care than the OCED average. Actually, we don't need a study to see this, using OCED figures, we would have to cut spending per person by more than 2/3rds to get to the OCED average.

July 1, 2009

Organisation for Economic Co-operation and Development (OECD) Health Data

Total health care spending per person, 2007 *

United States ( 7290)
OCED average ( 2964)

Australia ( 3137)
Austria ( 3763)
Belgium ( 3595)
Canada ( 3895)
Czech Republic ( 1626)
Denmark ( 3512)
Finland ( 2840)
France ( 3601)
Germany ( 3588)
Greece ( 2727)
Hungary ( 1388)
Iceland ( 3319)
Ireland ( 3424)
Italy ( 2686)
Japan ( 2581)
Korea ( 1688)
Luxembourg ( 4162)
Mexico ( 823)
Netherlands ( 3837)
New Zealand ( 2510)
Norway ( 4763)
Poland ( 1035)
Portugal ( 2150)
Slovak Republic ( 1555)
Spain ( 2671)
Sweden ( 3323)
Switzerland ( 4417)
Turkey ( 615)
United Kingdom ( 2992)

I find it hard to believe that profits make up 2/3rds of the cost of health care. This flies in the face of all the financial statements filed by health care providers. Profits are not the main component of health care costs.

It's also untrue that "The American system relies more on individual consumer decisions and market forces than any other health care system in place" as stated by Devin. The individual consumer makes very few decisions, the decisions are made by the insurance company or HMO, AND doctors.

In our health system, the doctors are the ones who decide the appropriate treatment and course of action. Insurers can only deny coverage if the treatment is not deemed medically necessary for health (like cosmetic) or if there are pre-existing conditions. Insurers don't have a choice if the procedure is recommended by a doctor and it's to treat a medical condition.

Doctors do not consider costs as they are not the ones paying, in fact, they usually receive payments from whatever treatment they order. There is no method currently that tries to distribute health care based on value, that is getting the most bang for the buck.

A treatment that is only 90% as effective as the most effective treatment but only costs 50% as much will not be used. The patient and doctor will demand the most effective means of treatment, regardless of cost. To lower costs, we will have to insert value somehow as one of the components to calculate the appropriate treatment. But patients and doctors are opposed to this as that would mean the odds for survival would be reduced, if only marginally.

In other countries, the government decides on the value component. More effective, yet much more costly procedures are denied or not covered by the government health insurance. There was a ruckus a year or two ago about Britain's NIH denying an Alzheimer drug that was shown to delay the onset of Alzheimers by an average of 6 months. The government decided that it wasn't worth the cost of the drug and denied the treatment. Only after massive protests did the government reconsider. Most decisions aren't challenged though, so many treatments Americans get aren't available to patients in other countries, unless they pay 100% out of pocket that is. Some countries prevent even that, forcing patients to go out of country.

I believe it's the lack of a cost/benefit component to treatment decisions that is responsible for most of the high health care costs. People receive the best treatment the doctor is aware of regardless of cost. We see this with the use of drugs under patent instead of generics even if the patented drug is only 5%-10% more effective yet triple or more the cost. Yet should insurance companies, the only goalkeeper to costs, tries to deny that drug in favor of the generic, patients get upset and accuse the insurance company of greed and killing patients for profit.

Americans have to be willing to accept rationing, which is what cost/benefit analysis does. There is no way around it. They must accept a lower chance of survival, even if only slightly, so that the most cost effective treatment can be mandated. Until Americans, including the people on this board who hysterically deny the need for rationing, accept this, costs will remain high.

Health Care Bill Giveaways

Wow, just got through reading the summaries and skimming over the bill. I don't see how this bill will not cost us a LOT more to provide health care. It drastically expands the subsidies to "low-income" people and also expands Medicaid to cover more people. It also removes lifetime caps from all policies! Just some of the benefits that are being added from the government webpage:

* It will end increases in premiums or denials of care based on pre-existing conditions, race, or gender, and strictly limit age rating.
* The proposal will also eliminate co-pays for preventive care, and cap out-of-pocket expensesto protects every American from bankruptcy.

Improving quality of care for every American. The legislation will ensure that Americans of all ages, from young children to retirees have access to greater quality of care by focusing on prevention, wellness, and strengthening programs that work.

* Guarantees that every child in America will have health care coverage that includes dental, hearing and vision benefits.
* Provides better preventive and wellness care. Every health care plan offered through the exchange and by employers after a grace period will cover preventive care at no cost to the patient.
* Increases the health care workforce to ensure that more doctors and nurses are available to provide quality care as more Americans get coverage.
* Strengthens Medicare and Medicaid and closes the Medicare Part D ‘donut hole’ so that seniors and low-income Americans receive better quality of care and see lower prescription drug costs and out-of-pocket expenses.

Even more found elsewhere:

INCREASE DEPENDENT AGE FOR POLICIES THROUGH AGE 26: Allows those through age 26 not otherwise
covered to remain on their parents’ policies at their parents’ discretion.

COBRA EXTENSION: Allows individuals to keep their COBRA coverage until the Exchange is up and running.
[NOTE: This is separate from the Recovery Act provisions that provide premium assistance for selected groups.]

ENSURING RECONSTRUCTIVE SURGERY FOR CHILDREN: Requires plans to pay for reconstructive surgery for
children with deformities.

Even more:

IIMMPPRROOVVEEDD BBEENNEEFFIITTSS
CREATES REINSURANCE FOR EARLY RETIREES: Creates a new temporary reinsurance program to help offset
the cost of coverage for companies that provide early retiree health benefits for those ages 55-64.

IMMEDIATE HELP FOR THE UNINSURED (INTERIM HIGH-RISK POOL): Creates a $5 billion fund, modeled after
the President’s plan, to finance an immediate, temporary insurance program for those who are uninsurable
because of pre-existing conditions.

NEW LONG-TERM CARE PROGRAM (CLASS ACT): Creates a new, voluntary, public long-term care insurance
program to help purchase services and supports for people who have functional limitations. Benefits are a
daily or weekly cash benefit to help people with functional limitations purchase the services and supports
needed to maintain personal and financial independence. CLASS would supplement, not supplant, traditional
payers of long-term care (e.g. Medicaid and/or private long term care insurance).

PPUUBBLLIICC HHEEAALLTTHH IIMMPPRROOVVEEMMEENNTTSS
INCREASES FUNDING FOR COMMUNITY HEALTH CENTERS: Provides increased funding for community health
centers that will allow them to double the number of patients served over the next five years.

IMPLEMENTS NEW PREVENTIVE HEALTH SERVICES PROGRAM IN COMMUNITIES: Provides immediate
funding for preventive services at the community and local level to address public health problems such as
obesity, tobacco use, and diabetes.

EXPANDS PRIMARY CARE, NURSING AND PUBLIC HEALTH WORKFORCE: Increases access to primary care by
sustaining the current efforts to increase the size of the National Health Service Corps. Primary care and nurse
training programs are also immediately expanded to increase the size of the primary care and nursing
workforce. Ensures that public health challenges are adequately addressed.

EMPLOYER WELLNESS PROGRAMS: Establishes a grant program for employers to promote healthy behaviors
among their employees.

And even more!!!!

BEGINS TO FILL IN THE MEDICARE PART D DRUG DONUT HOLE: Provides for a 50% discount on brand-name
drugs in the Part D donut hole, and immediately shrinks the size of the donut hole by $500 in 2010. The donut
hole continues to be narrowed over the coming years until it is fully eliminated by 2019.

ALLOWS STATES TO COVER LOW-INCOME INDIVIDUALS WITH HIV: Gives States the option of extending
Medicaid coverage to HIV-positive individuals and provides enhanced federal matching payments for the costs
of care.

INCREASES REIMBURSEMENT FOR PRIMARY CARE IN MEDICAID: Brings reimbursement for primary care
services in Medicaid up to Medicare levels with 100% federal funding (phased in over several years).

PROVIDES FOR 12-MONTH CONTINUOUS ELIGIBILITY IN CHIP: Provides continuity of care for children by
requiring that states provide 12-month continuous eligibility for children in the CHIP program

ELIMINATES BARRIERS TO ENROLLMENT IN MEDICARE LOW-INCOME SUBSIDY FOR PART D DRUG
PROGRAM: Eases burdens on enrollment so more low-income beneficiaries can get the financial help they
need to make health care affordable.

NEW PROTECTIONS IN MEDICARE ADVANTAGE: Limits cost-sharing for services in Medicare Advantage plans
to no more than cost-sharing in traditional Medicare, and provides for bonus payments to high-quality plans.

ESSENTIAL BENEFITS: In preparation for reform, the Health Benefits Advisory Committee reports their
recommended essential benefits package to the Secretary of HHS for adoption.

Additional federal funds to states with high unemployment. Assists States in maintaining access to
Medicaid services during the recession by extending the current Recovery Act increase in federal Medicaid
payments to states with high unemployment rates.

IMPROVES LOW-INCOME PROTECTIONS IN MEDICARE: Increases the assets test limits in the Part D drug
program and Medicare Savings Programs to ensure that more low-income beneficiaries get the financial help
they need to make their health care affordable.

EXTENDS MONTHS OF COVERAGE OF IMMUNOSUPPRESSIVE DRUGS FOR KIDNEY TRANSPLANT PATIENTS:
Lifts the current 36-month limitation on Medicare coverage of immunosuppressive drugs for kidney transplant
patients who would otherwise lose this coverage on or after 2012.

I didn't bother to go on because this post is already getting too long. How much will this all cost? The site says zero for the first 10 years, actually a positive $100 to the deficit in the first 10 years, but I'm waiting to see the total cost, I bet most of the costs are delayed in order to game the 10 year projection the CBO issues, the numbers breakdown is not yet available. Wow, a whole bunch of giveaways and expanded services, I just don't see where the cost savings would come from and how we're going to pay for the real costs once the plan is implemented and real numbers come in instead of these projections. More posts later