Dirty Tricks of the Private Healthcare Industry

[shadron]

Well, assuming it were mine, as I've already implied twice, I'd start by removing the government imposed restrictions on freedom of choice for medical care. I could go a lot further to a total deregulation of drugs (abolish the FDA) so instead of assuming anything passed by a body is 'safe' people would have to learn to take responsibility for themselves as to what they want to take.

Each man his own chemistry lab, and he with the best lab wins? No thank you.

For the majority, that would mean leaning on expert opinion along with a fundamental understanding of statistics. The years of mandatory testing required to bring a drug to market would be gone so not only would pharmaceuticals be much cheaper but I guess there'd be many more pharma companies and they'd be a lot more inclined spend on r&d.

No, I think what you'd have, first of all, is a lot more of what I get in huge amounts in my email daily. Sawdust pills. What the hell good is statistics going to do for that? You're just making counterfeiting the brand name a lot more lucrative, which is where we were when the FDA (its predecessor, actually) was legislated into being. I agree that the testing may be somewhat overdone, but deleting it altogether is not the answer.

Getting off topic a bit again, but if the goal is to make the cost of medical insurance down, there's a large number of such measures that could make a big difference - if one is prepared to look further than the spend-more, tax-more, regulate-more paradigm.

I'll believe that when I see/hear it. If it's more like this one, you are wasting your time.

 

[casebro]

One huge advantage to health care reform might be to insert some anti-tort legislation. But I'm hot sure the legislation has the cajones to do that, what with all of them being lawyers.

 

[Rolfe]

Getting off topic a bit again, but if the goal is to make the cost of medical insurance down, there's a large number of such measures that could make a big difference - if one is prepared to look further than the spend-more, tax-more, regulate-more paradigm.

I think that's the bit of your post that's precisely on topic. Medical insurance in the USA is extremely costly. One reason is because the insurance companies spend about 22% of their income on overheads, Another is that the price of healthcare items in the US is high, therefore patients get less actual healthcare for the 78% which is actually spent in this direction.

So yes, bringing the cost of medical insurance down is a highly on-topic goal.

What makes you think that anyone here is working from a "spend-more, tax-more, regulate-more paradigm"? Personally, I'm of the opinion that "regulate-more" is probably a good idea as far as the USA is concerned. To a large extent because the countries that are delivering healthcare to their citiziens at far less cost are regulating more.

However, I see no real reason for the USA to "tax-more", given that they already pay around 8% of GDP in taxes to fund the provision of medical care. I also see no reason for the USA to "spend-more". Quite the opposite. I think they could spend a great deal less, and have some money left over to do other stuff they might like.

(The OP is referring to an interview about medical insurance companies in the USA. Thus I'm trying to stay on-topic and concentrate on the US situation. Other countries are of course relevant, but mostly insofar as they serve as examples of things the US might care to look at to improve its situation.)

Rolfe.

 

[Modified]

That sometimes leaves doctors and hospitals trying to make up what they perceive as shortfalls by really sticking it to the patients that don't have insurance and are paying out of pocket. They have no buying power, so they get the full brunt of the charges, even inflated to make up those who can't pay at all. Evening the playing field there is something I really want to see.

I have rarely seen a medical bill involving a hospital where the insurer paid more than 50% of the assessed charges. I had surgery last year. The total charges were $18,000 or so and insurance paid about $4,000, which was accepted. The surgeon got about half of his fee, the anesthesiologist got most of hers, and the hospital got very little of what they asked for for operating room, hospital room, etc. Also, I have seen several cases of uninsured and broke acquaintances who negotiated hospital bills down by 50 to 90 percent. Even if you have the money to be "self insured" in the US, you would be a fool to do so.

So I like your idea of evening the playing field. I have no idea how it could be done though. It would be nice if doctors and hospitals were required to maintain and publish fixed fees for all services with limited discounts to insurers, but such a radical change would have to be phased in very slowly somehow.

 

[ponderingturtle]

One huge advantage to health care reform might be to insert some anti-tort legislation. But I'm hot sure the legislation has the cajones to do that, what with all of them being lawyers.

Of course, as this is not an expanding part of healthcare costs, why do you focus on it so much?

 

[casebro]

Of course, as this is not an expanding part of healthcare costs, why do you focus on it so much?

What "focus so much"? I think that is the first mention in this thread.

From my reading, as much as 60% of medical costs is for malpractice prevention, NOT patient care. As I recall, the costs vary from state to state due to variations in tort laws more than variations in care given.

Those 'tort costs",including malpractice insurance, are all eventually paid for by patient, either through premiums, or via taxes.

It's things like $14 for an aspirin tablet. I'm sure the hospital can justify the $14, due to the paper trail that is required by tort law. But criminey! It's only an aspirin pill. Give every patient a whole bottle of them when he checks in, cost 80¢. Leave it up to him to take (or not) an appropriate dose. But Oh noo! the lawyers won't allow it.

I don't know how much it cost to have a nurse bring me my meds in the hospital. The same meds I give myself at home. But liabilities preclude me from taking the same medications in the hospital.

It has all become "customary and reasonable care", but is it really?

 

[Rolfe]

From my reading, as much as 60% of medical costs is for malpractice prevention, NOT patient care.

Evidence?

Rolfe.

 

[Rolfe]

BartiDdu, I'd be interested in knowing what you want in this context.

You seem not to want to pay tax to fund healthcare. You'd rather manage that aspect of your money for yourself, right?

I presume you're not intending to set aside your first couple of million just in case you break your neck in a riding accident or something like that, or that you think that's a practical means of healthcare provision for everyone. Thus, it seems to me you must be in favour of health insurance.

So how do you see the ideal health insurance market operating?

One where the stock market rewards companies for allocating more resources to profits and less to purchasing healthcare?
One where companies can choose to insure only low-risk clients?
One where companies can terminate the cover of clients who have developed expensive illnesses?
One where the profitable (that is, spending less on healthcare) companies can take over the less profitable (that is, spending more on healthcare) ones, terminate their unprofitable accounts and decrease the spending on healthcare to the "house norm"?

That's how the health insurance industry operates in a free market. I'd be interested to know how you plan to change that without any "regulate-more".

Rolfe.

 

[paximperium]

Evidence?

Rolfe.

I believe it is based on one study on the idea of "defensive medicine" which is basically overtesting, malpractice cost to doctors and hospitals.

I don't buy that study, there are a couple of flaws in their methodology. I'll see if I can find it.

 

[casebro]

Apparently, one oft-quoted estimate of defensive medicine costs is a gross exageration. This site has a more realisitc number, $24B, in 2002: <http://www.consumerfed.org/releases2.cfm?filename=MedicalMalpractice.txt>

HOWEVER, both discussions were predicated on merely placing caps on awards for non-economic damage. The large awards for future medical care would be eliminated under a reformation. Instead, future medical costs for malpractice incidents would be part of the basic health plan.

And on a related tack, anybody familiar with "The Business of Birth"?

I think birth is another area of medicine where huge savings can be realized with a re-vamp of the administrative rules. Currently, insurance companies won't pay a nickel for a home birth, even though hospitalizations cost them tens of thousands of dollars. Seems malpractice is the driving force here too. Seems doctors can't get coverage for home births, or even doctor visits. So, a mom-to-be can pay a mid-wife out of her own pocket for less than the insurance co-pay for an in hospital delivery. Saves the insurance company a small fortune. And eliminates so many 'surgical procedures', like episiotomies and cesareans. Seems the doctors don't mind gettin all that extra moolah, and the insurance companies pay it, "customary and reasonable practice"...

I wonder how the NIH handles births, vs a US HMO?

 

[BartiDdu]

BartiDdu, I'd be interested in knowing what you want in this context.

You seem not to want to pay tax to fund healthcare. You'd rather manage that aspect of your money for yourself, right?

OK, I'll have a go but it's a bit of a tall order to envisage a system as it would be if, say the virtually half of our money that currently gets taken from us was flying around in negotiated free trade and how that would impact on the amount of money being invested, in the possibly largely increased interest of investors in what's being done with their money etc. The fact I'd rather manage that aspect of my money - i.e. take full responsibility for my health and for my health spend options - means I'd like the same for everyone else. It's therefore difficult in this context of 'knowing what I want' because what I want is whatever would come out of the combined decisions of everyone making personal choices about their own health care.

... it seems to me you must be in favour of health insurance.

I do see taking the risk oneself for certain aspects of one's health an option though insurance for the consequences of an accident is rarely a bad idea. However, with all that stuff I'm talking about, none of which I can substantiate, I believe it inevitable that the severely reduced costs would make the whole thing so much cheaper.

So I would almost certainly want to insure for some things, maybe a lot (and don't think it unreasonable that enough others would want to for there to be insurance services offered), we're not talking about a top-down system. For myself I'd say yes, I'd like health insurance but it's not a 'health insurance based system' being put in place; rather what would arise would simply be the consequence of billions of decisions made by millions of people. And other than the basics, a country as liberated as that would be so different to what we have anywhere today (nor have ever had) I have no idea what it would look like.

So how do you see the ...* health insurance market operating?
One where the stock market rewards companies for allocating more resources to profits and less to purchasing healthcare?
One where companies can choose to insure only low-risk clients?
One where companies can terminate the cover of clients who have developed expensive illnesses?
One where the profitable (that is, spending less on healthcare) companies can take over the less profitable (that is, spending more on healthcare) ones, terminate their unprofitable accounts and decrease the spending on healthcare to the "house norm"?

Yes! I.e. a governance where all the above are permitted but where customers can empower by rewarding with their custom those who are providing a good service and who operate under principles with which they concur. Likewise for investors. Accuse me of utopian idealism if you like but I really do think that the consequence of freedom and responsibility can not but result in free exchanges of goods and services to the benefit of all.

* re 'ideal' I've already said I don't know.

That's how the health insurance industry operates in a free market.

That's news to me! Here you go again implying that we know what happens in a free market. We don't. Remember saying 'point taken' regarding the current system not being a free market system? At some level may I suggest you still have not internalised that point. As for what would be, your guess is as good as mine!

I'd be interested to know how you plan to change that without any "regulate-more".

I don't. I don't even know how we could go from where we are (US or UK) to what I have in mind. All I know is I'd like to see more tax pound/dollars in my hands to choose what to do with and fewer regulations to free up the market. And what I seem to be hearing everywhere other than with us 'odd ball' libertarians is calls for the opposite.

PS. I might get a chance to respond later but I shouldn't really as I'm moving apartments today which means I'll also be off-line for a couple of weeks whilst my new connection gets sorted. Thanks for the exchange though

Best,
BDd

 

[Toke]

You do realise that the freer the marked the faster it will turn in monopolies?
And those monopolies are out to serve the management and shareholders not the customers?

So your options as a customer would quickly schrink to a collection of nearly identical products in different makeup.

Unless the customers gang up to a size where they can handle the largest companies, let's call it voting in a government.

 

[ARubberChickenWithAPulley]

That's how the health insurance industry operates in a free market. I'd be interested to know how you plan to change that without any "regulate-more".

Actually, I think this misses the point: people arguing for the status quo are not supporting a free market. The health insurance market is regulated. Very regulated. It's regulated up and down, with a hodgepodge of random, sometimes contradictory, incredibly difficult to follow laws that vary by each state, not to mention nationally. It's that hodgepodge of regulation that has perpetuated the employment based system and gives companies little incentive to offer decent individual insurance. The status quo is not free market. It's a mess. And that's relevant for a number of reasons:
- A national system could reduce the number of regulations that insurance companies have to follow by making one national standard. This would also likely reduce the overhead cost of health insurance companies, since they would have just one standard to follow.

- A national system could be more free market, by creating a system under which insurance companies can truly compete for individual business, and under which consumers have real choice in their insurance company, rather than being bound through their employer (not to mention that, in many cases with self-funded plans, their employer is not on their side).

- Back to the first point: asking how we can change the system without "regulating more" is the wrong question. At the risk of sounding a bit like a lame motivational speaker, the question is how do we regulate better. There is already plenty of regulation out there. It's just regulation that is unfocused, disorganized, and cumbersome on all involved.

 

[Rolfe]

That last is a fair comment, but I think Toke puts it very well. How do you envisage this free market working, so that it won't just be more of the same?

Rolfe.

 

[GreNME]

The experience Americans have of Medicare and Medicaid in the US appears to paint a different picture. Those with private insurance get to see better physicians and receive better treatment than those enrolled in the state programmes.

Can you tell me which Americans you're referring to? While I'll grant that I'm judging based on my own experiences with people I've met or known who have had to use Medicaid (including myself), it seems the biggest gripe people have is having to fill out the paperwork, which (lo and behold) is actually no different than even a really good HMO (which I've also had) or a PPO (which I currently have). As a general matter of course, I know that I personally would never want to have to need the health care that I had to have when Medicaid helped me out while I was on my current PPO. Limited coverage, annoying paperwork, and often-confusing deductible battles.

Private healthcare is best when you are healthy, subsidized healthcare when you are not.

 

[BartiDdu]

You do realise that the freer the marked the faster it will turn in monopolies?

Do I relaise?! I thought this kind of rhetoric had gone out with the death of Communism in the 20th century. Don't see it peddled that often any more so thanks for reminding me this kind of talk used to be commonplace!

I think Toke puts it very well. How do you envisage this free market working, so that it won't just be more of the same?

You call RubberChicken's post a 'fair comment' but if you accept it's the 'hodgepodge of regulation that has perpetuated the employment based system and gives companies little incentive to offer decent individual insurance.' AND you've already agreed with me that 'The status quo is not free market', how can you think a free market would be anything like what we have now?

BDd

 

[Ivor the Engineer]

Can you tell me which Americans you're referring to? While I'll grant that I'm judging based on my own experiences with people I've met or known who have had to use Medicaid (including myself), it seems the biggest gripe people have is having to fill out the paperwork, which (lo and behold) is actually no different than even a really good HMO (which I've also had) or a PPO (which I currently have). As a general matter of course, I know that I personally would never want to have to need the health care that I had to have when Medicaid helped me out while I was on my current PPO. Limited coverage, annoying paperwork, and often-confusing deductible battles.

Private healthcare is best when you are healthy, subsidized healthcare when you are not.

http://www.law.virginia.edu/html/news/2005_spr/healthinsure.htm

...

A study in the 1970s showed that participants who were given free health care visited doctors almost twice as much as those with only 5-percent coverage. “If you give people health insurance, they will use more medical care,” Levy said. But the study didn’t answer whether it was the patient or the doctor driving the lower use of health care services. A 1993 study by Arthur Kellerman showed that with study participants calling clinics and posing as Medicaid users and privately insured patients, 26 percent of those who had Medicaid received an appointment compared to 60 percent of privately insured patients.
Levy said the emergency room doctors who began the study wanted to know about access for the uninsured, especially access for patients referred by ERs. They designed a study in which callers would pose as patients who had visited an emergency room with conditions serious enough to warrant an outpatient appointment within seven days: the caller either had pneumonia, hypertension, or a complicated pregnancy. The study authors gathered the clinic referral lists from ERs in nine cities. Four male interviewers and one female interview each called clinics twice two weeks apart. During those two calls, “the scenario they present is exactly the same and the only thing different is the type of insurance they have.” Before getting off the phone, the caller was supposed to cancel the appointment to avoid preventing other patients from scheduling visits.

Levy acknowledged that “this experiment diverges from the real world in a lot of ways.” The pregnant caller earned a slightly higher appointment rate, which may have been due to the prejudices of the appointment secretary. Levy said the study also couldn’t measure whether callers tried harder to get an appointment depending on the role they played. Because callers were acting as new patients, those least likely to get a quick appointment, the study focused on “the worse-case scenario.”

The study’s interviewers completed their two calls with 430 clinics, 14 percent of which were safety-net clinics. Insured callers received an appointment 65 percent of the time, while 35 percent of those on Medicaid received an appointment—a 30-point gap. But “the uninsured-private gap is statistically nonexistent.” When the uninsured told the secretary they only had $20, there was a 29-point gap between the uninsured and privately insured.

The ER physicians were “appalled” by the fact that even insured patients only got an appointment two-thirds of the time, she said, noting the study confirmed “there is a big gap in access for Medicaid patients.” Surprisingly, “the uninsured can get an appointment until they say they can’t bring money.”

...

 

[TragicMonkey]

Actually, I think this misses the point: people arguing for the status quo are not supporting a free market. The health insurance market is regulated. Very regulated. It's regulated up and down, with a hodgepodge of random, sometimes contradictory, incredibly difficult to follow laws that vary by each state, not to mention nationally. It's that hodgepodge of regulation that has perpetuated the employment based system and gives companies little incentive to offer decent individual insurance. The status quo is not free market. It's a mess. And that's relevant for a number of reasons:
- A national system could reduce the number of regulations that insurance companies have to follow by making one national standard. This would also likely reduce the overhead cost of health insurance companies, since they would have just one standard to follow.

- A national system could be more free market, by creating a system under which insurance companies can truly compete for individual business, and under which consumers have real choice in their insurance company, rather than being bound through their employer (not to mention that, in many cases with self-funded plans, their employer is not on their side).

- Back to the first point: asking how we can change the system without "regulating more" is the wrong question. At the risk of sounding a bit like a lame motivational speaker, the question is how do we regulate better. There is already plenty of regulation out there. It's just regulation that is unfocused, disorganized, and cumbersome on all involved.

And contrary to popular belief, Medicare and Medicaid aren't federally monolithic--they're separated by state and run differently in each. My employer is mostly in Virginia, but we have patients from over the borders in West Virginia and North Carolina. Virginia Medicaid pays on time. WV Medicaid pays, but only after ridiculously vast delays. NC Medicaid holds onto money like the heirs of J Howard Marshall and fights every line of every claim for as long as possible in the hopes you'll give up. Scrooge has nothing on NC Medicaid. If ever a state agency needs to be bulldozered by jackbooted federal thugs, it's them.

 

[Ivor the Engineer]

A free market approach has never worked well for the provision of health care. It's been tried in the past and has always failed to provide adequate care for large segments of the population. Economists can even explain why a free market in health care is doomed to failure.

What is fascinating is the number of otherwise intelligent people who cannot get past their irrational fears and ideological biases to understand this.

 

[Dymanic]

I believe it is based on one study on the idea of "defensive medicine" which is basically overtesting, malpractice cost to doctors and hospitals.

I don't buy that study, there are a couple of flaws in their methodology. I'll see if I can find it.

Is this the one?

http://jama.ama-assn.org/cgi/content/abstract/293/21/2609