Health Insurance

Top 14. Sep 17, 2005 11:20 AM

» Kirk - Re: Re: Re: How About A 'Gluttony' Tax

In response to Re: Re: How About A 'Gluttony' Tax posted by Normxxx:

Do you normally "shop around 'for the best deal'" when told you are desperately ill or need an operation?

No, I shop around when I am looking to buy my private party insurance. I know I will be too sick to think straight if I ever need the insurance.

Thus, Bill is 100% correct, "there is little incentive to shop for the best deal" when your company picks up the costs.

When it's an individual versus an insurance company— the insurance company has only to outlast the insuree on a claim, whether he gives up in disgust or dies. The insurance company has nothing to lose— at worse, it just pays the claim that it would/should have anyway.

So true. This is one reason I like catastrophic insurance only and then use HSAs to fund the routine stuff. This would also give incentive for people to take care of themselves.

-- posted by Kirk

Top 15. Sep 17, 2005 1:08 PM

» Normxxx - Re: Re: Re: Re: How About A 'Gluttony' Tax

In response to Re: Re: Re: How About A 'Gluttony' Tax posted by Kirk:

Thus, Bill is 100% correct, "there is little incentive to shop for the best deal" when your company picks up the costs.

Nonsense; tell me the name of a company that does not 'shop around' for the best deal. As to individual insurance, short of having a lawyer go over the policy, how do you guard against the 'fine' print which says "this policy pays off only if policy holder falls sick on day 366 of the year." How do you find an insurer if all insurers have some such clause? How do you avoid insurance companies which go broke just when you need them or are out and out scams (this is a common racket; they generally can collect premiums and then go BK or disappear after one year).

It helps to adjudicate disputes with your insurance company if you are an employee of GE, or even better, in my case, the FEHB system arbitrates.

This is one reason I like catastrophic insurance only and then use HSAs to fund the routine stuff. This would also give incentive for people to take care of themselves.

On that we agree. But HSA will need to be mandatory before it will take off, and it should be phased in. Maybe institute it whole for those currently under 30 — 35; with generous provisions to build up the fund rapidly for those over 35; and optional for those over 50.

Also, eliminate "early retirement at 62 (or increase the 'penalty')," except for medical reasons something less than would justify 'disability;' and gradually raise the retirement age to 72.

it just pays the claim that it would/should have anyway.

This is easily rectified by an act of congress; insurance companies used to pay 'treble damages' if they lost, until the Supreme Court determined that this penalty did not apply to insurance companies. That used to make them think twice before contesting a claim.

We probably need to do something about Medicare also; probably partially means test it (so costs would be higher for those able to pay such).

Incidentally, I was really kidding about the "gluttony tax." Problem is, my "fast food" would probably be your "nutritious" repast.

-- posted by Normxxx

Top 16. Sep 17, 2005 2:11 PM

» Happy_2 - Re: Blue Cross of CA

In response to Blue Cross of CA posted by Happy:
Yikes, looking back 7 years I was only paying $97 per month for myself. Now I pay 180 per month. This is an increase of 86%. The deductible has been raised from 1,000 to 5,000.

-- posted by Happy_2

Top 17. Sep 17, 2005 2:55 PM

» Normxxx - Re: Re: Blue Cross of CA

In response to Re: Blue Cross of CA posted by Happy_2:

Yikes, looking back 7 years I was only paying $97 per month for myself. Now I pay 180 per month. This is an increase of 86%. The deductible has been raised from 1,000 to 5,000.

And remember, according to the CPI, inflation has barely gone up over those years!

Well, there's always Medicare, if it's still there when you get there.

-- posted by Normxxx

Top 18. Sep 17, 2005 5:05 PM

» Kirk - Re: Re: Blue Cross of CA

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In response to Re: Blue Cross of CA posted by Happy_2:

Yikes, looking back 7 years I was only paying $97 per month for myself. Now I pay 180 per month. This is an increase of 86%. The deductible has been raised from 1,000 to 5,000.

I'm a few years younger so "only" pay $151 now... and it started at $70 or $80 in 1999 when I got off COBRA. Every 5 yrs of age it increments...

As for CPI, my mortgage payment towards interest has gone down over 10x this increase so I guess I'm still better off. I'll make up a good amount of it this winter trying to heat my leaky home with natural gas... I fear $400 or $500 for the coldest month....

Why costs are high... People I know go to the Dr many times a year for nearly every ache and pain, especially if they can get paid time off work to do it. They only have a $20 copayment. I know from first hand discussions with people that continue to do this that they refuse to do what the Dr's suggest and often shop around for another Dr. who will give them a magic pill to make them feel better or do an expensive operation that isn't needed. It is pretty amazing how much money you can save on medical bills if you eat healthy food and exercise regularly (only works if you are borderline above on cholesterol I think..... but changing lifestyle habits worked well for me on both BP and Cholesterol. Of course, it was not the easist thing to give up many things I enjoyed like alcohol, smoking and fast food... but over time... it can be done and I sure enjoy other, healthy food much more these days. Now and then I still eat fries....oh I love fries.... smile )

-- posted by Kirk

Top 19. Sep 17, 2005 7:06 PM

» Normxxx - Re: Re: Re: Blue Cross of CA

In response to Re: Re: Blue Cross of CA posted by Kirk:

All of that is true, but people have been doing that for over the last 50 years or more, so it's no reason for the increase of 10 — 15% a year.

The reason for the increase is simple, and there's not a lot we can do about it. Like everyone else, people in the medical system want to stay at least even with inflation and everyone else of comparable income— but the productivity of the medical system has gone up at most glacially over the years so, to stay even, they have to pass their inflation and 'merit' increases on to their patients. It's not easy, either, with the insurance companies and the Government fighting them every inch of the way.

Then, too, you might want to ask why drugs that have been dispensed for years still increase in price by over 10% a year when the cost of manufacturing them is vanishingly small as a percent of the amount charged. And, too, why the drug sector has been at the top of the earnings list for as far back as I can remember.

They claim they need those huge fees because of what it costs for drug R&D, but this would be a much more convincing argument if they didn't spend several times as much on advertising as on R&D!

Hospitals, by and large, are no profit generators, but the application of a little systems process improvement (already practiced at the better hospitals) could markedly improve patient care, reduce costs (e.g., from unnecessary infections), and allow for better staff (e.g., nursing) salaries. The "for profit" hospitals promised that; but after raising the salaries of their top executives to corporate levels, forgot about the rest.

-- posted by Normxxx

Top 20. Sep 17, 2005 8:59 PM

» Normxxx - Re: Re: Re: Blue Cross of CA

In response to Re: Re: Blue Cross of CA posted by Kirk:

Why costs are high...

The experts do not think much about your explanations for why costs are so high... and rising. Nor do they pinpoint rising malpractice award payout costs; which seem to be keeping pace with other medical cost increases— but no greater.

A Free Lunch in Health Care

By DAVID ADLER, Barron's | 17 September 2005

HEALTH-CARE COSTS CONTINUE MARCHING UPWARD, with expenditures now nearly five times 1980's amount. But every possible solution seems to involve painful tradeoffs. Employers can keep shifting costs to employees, but this pass-the-buck approach hardly makes health care more affordable for American workers. Managed care controlled costs for a period, but imposed unpopular limits on choice. Canadian-style rationing lurks off-stage.

There is another option, missing from most public discussions, which doesn't require tradeoffs: Increasing the efficiency of the health-care system could reduce costs while at the same time maintaining or even improving quality.

It sounds like an economic free lunch, a free hot lunch at that. Yet this potential free lunch in U.S. health care is supported by macroeconomic and clinical evidence.

Our story begins at Dartmouth Medical School. Since the 1970s, John Wennberg, Jonathan Skinner, Elliott Fisher and their colleagues have been tracking variations in medical practices across the U.S. the way other doctors track outbreaks of disease. They found the rates for hysterectomies, mastectomies, and hernia surgeries vary across U.S. regions, sometimes by a factor of three. In one town in Vermont, 70% of children had their tonsils removed, whereas in the neighboring town only 20% did. Even when comparing the best U.S. hospitals, the researchers found that patients with the same chronic conditions receive dramatically different care.

The Dartmouth group also documented huge differences in per-capita spending. Costs for a Medicare patient in Miami, even after controlling for illness, age and race, are more than twice as high than those for a similar patient in Minneapolis ($10,113 versus $4,888, as of 2001, the last year for which comprehensive data is available).

We would hope that the patients in Miami had something to show for their more extensive and more costly care. But when Elliott Fisher examined the clinical data, this was not the case. Not only was spending higher for the same sort of patient in Miami compared to Minneapolis, but health outcomes, including survival, were worse.

Fisher found that patients in high-spending regions didn't get more effective care, such as treatments that unquestionably improve outcomes— for example, beta blockers after a heart attack. Nor did they get more preference-sensitive care, a term for interventions where the right treatment strategy is unclear, such as surgery for low back pain, and it is up to the patient and physician to decide what to do.

Instead, all the differences were in what he termed supply-sensitive services— days spent in the hospital, number of visits to specialists, frequency of tests— all options dependent on the supply of these services in the area. In Miami, where there are lots of specialists and hospital beds, patients are more likely to see specialists and fill the beds than in regions where there are fewer beds and specialists.

Intense treatment actually carries risks to health because it increases the chances of a medical error. "When we looked at survival in these regions with intense use of supply sensitive services, survival was worse," says Fisher. He adds that having more doctors and specialists involved in a patient's care could lead to worse outcomes because of failures to communicate.

Other studies have replicated this disconnect between cost and quality. Another Dartmouth team looking at Medicare costs found that states with higher spending had a lower quality of care. We can't conclude from this that cheaper is automatically better, or that cutting costs increases quality. But if reductions in questionable medical practices lead to cost savings, then less may be more.

Is it actually feasible to get rid of these inefficiencies? The financial incentives of our health-care system and our limited information about quality and outcomes mean there are huge impediments to change. Take the case of a hospital that reduces errors, and hence the amount of time patients stay in that hospital. This might create savings for the patients and their employers, but it might also reduce hospital revenues.

Incentives aren't the only problem. Jon Skinner of Dartmouth notes, "It's hard to have incentives for quality if we can't measure quality." There are all kinds of measures floating around, many of them just rudimentary. When a patient dies, we don't always know if it was because the patient was sick or because the hospital didn't do the right thing.

Hope is coming from an unlikely source: CMS, better known as the Centers for Medicare and Medicaid Services which controls 40% of total health-care spending in the U.S. The CMS administrator, Mark McClellan, (who has both an MD and a PhD. in economics) understands that higher costs don't necessarily mean higher quality, and he believes that we can identify and get rid of some of the inefficiencies in the U.S. health system.

"There are lots of things we can do to get better value for our money," he says. "We are now working with the National Cancer Institute to provide more support for clinical trials, to develop better evidence." And he is changing incentives, as well, giving Medicare a more preventive focus by moving to paying for problems before they occur, rather than after. "On all these counts, we're trying to move in the right direction, to get more value, to provide an environment where we pay to improve things."

Improving things should pay off: McClellan has estimated that 30% of Medicare spending is wasted.

The belief that we need to rationalize (but not necessarily ration) health care is spreading to many employers. Leapfrog Group, a health-care coalition of more than 165 large employers is trying to use rewards for quality to trigger improvements. Benefits consultant Tom Beauregard of Hewitt Associates observes that large employers are seeing the need to go beyond cost-sharing toward sending participants to the most effective and efficient providers.

Despite such efforts, the U.S. health system hasn't really changed yet. Health costs keep growing much faster than wages. New plan designs, like health savings accounts, seem to get all the buzz. But supply-side interventions, directly focused on making the system more efficient (i.e., inproving productivity), deserve buzz, too.

Unlike rationing or cost-sharing or just shoveling more money into health care, rationalization need not impose tradeoffs, except on some health-care providers, and the potential cost saving is huge.

Moreover, there is another reason, morally more compelling than any economic argument: If we eliminated harmful and unnecessary health-care practices, we won't just save money. We will also save lives.

-- posted by Normxxx