Archive for category Cost Shifting

Healthcare For Illegal Immigrants — necessary

prohibidoLouise Radnofsky of the Wall Street Journal published her story (3/24/16) about illegal immigrants with the observation they do obtain healthcare (at a low level) in the United States.   As with any good reporter she just reported the facts.  But, what is missing is WHY illegal immigrants receive medical care in the United States.  Clearly illegal immigrants are illegal and they don’t have insurance or money to pay for healthcare.  So why?

The simple answer is because healthcare providers on the front lines believe all lives are worth saving.  And, they will refuse to kill people by withholding care just because society says they should.  If society is so stupid to hire aliens, to pay aliens, to house aliens, to feed aliens, and not have a guest worker program then the healthcare system unequivocally refuses to be “the wall” — ask any doctor who sees a 19 year old with an appendicitis — they will fix the problem and ask questions later.

Here is an actual case:  18 year old Manuel (not his real name) is brought by ambulance to the emergency room after a fall and is barely breathing.  He is placed on life support then the ER doctors ask the on-call doctors in the intensive care unit to admit him.  No questions are asked, he is admitted.

The background later became clear.  Manuel’s father was killed in Mexico by a drug cartel leaving his widow and several children.  Manuel could not find work in Mexico so he crossed the border to find work to support his mother and his siblings.

He was hired by a contractor to build bleachers for a local school football field.  When Manuel fell off the bleachers and hit his head it was the contractor who called the ambulance.  There was no money to pay the hospital bill which was over $100,000 — all the services were a loss to the hospital and doctors.  And yes, this case and many others like it are passed on to the public and insurance companies through higher rates.  That’s how our healthcare system works — like it or not.  It’s been that way for decades.

The ACA with the push for universal insurance makes this under-the-radar care more obvious.  The ACA prohibits payment for illegals.  However, as many large counties in the US have found it is less expensive to provide healthcare, especially for pregnant women, rather than emergency care.  One case of cerebral palsy due to complications of pregnancy can cost millions of dollars.

Manual’s case includes some disturbing facts:  drug abusers in the US are the reason drug cartels exist and in this case were the root cause of Manual’s need to work.  A contractor to a government entity (the county school district) hired Manual and did not provide insurance or workers compensation.

The school district took the lowest bidder for the bleachers and did not specify the workers should have workman’s compensation insurance.  The school district should be responsible for the medical bills but they could not afford the medical bills — the hospital did not try to bankrupt the school with suits.  There was talk of sending Manual back to Mexico by air ambulance, but the health care system in Mexico could not provide high level care.  Absolutely nobody wanted Manual removed from life support because he was an illegal alien — if they did, they would be an accessory to murder.

So, the bottom line, the healthcare system is not ever going to be an accessory to harming people.  Be thankful.  If your son can’t find his insurance card and goes to the ER with an appendicitis he will get care — they will not tell him to go to the parking lot and just die.

 

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Lung Cancer Screening — questionable

spot on ct

Recently published guidelines for lung cancer screening (USPSTF) lack sufficient consideration of side effects and give no consideration to cost.  Insurance companies, so far, don’t pay for it and the American Lung Association has many questions about the basis for the recommendations.

Is CT screening really helpful to people at risk for lung cancer?  Is screening driven by profit motives for hospitals and radiologists?  The latter question may seem harsh but the well documented price gouging by radiology on other CT tests forces the question.

The data are clear: chest CT scans can detect early lung cancer soon enough to allow successful surgical removal.   But, the devil is in the details.

Can the US healthcare system afford this screening — what health services should be eliminated to pay for this very expensive endeavor (like childhood immunizations)?  Can patients who eventually are found not to have lung cancer (the vast majority of those screened) afford the test and the side effects of the invasive tests screening causes?

The recommendation seems premature.  The formation of national guidelines without adequate considerations of cost is hard to believe given our national problem with excessive health care cost.

Many other countries consider the cost of a test or treatment needed to give a person a “quality year of life”.  How much is that year worth? a billion dollars, a million dollars, a thousand dollars, all your money, all the money you wanted your kids to inherit?  Tough questions, especially if you are not a billionaire.  Well, experts on national health care say that dollar figure should not exceed $50,000.

Whether you believe the $50,000 number or not, at least we need to know exactly what such screening will cost.  We purchase healthcare — we don’t get it by magic.

So, what are patients and health care provider to do?  At this point: follow the recommendations and hope less costly and less invasive means are discovered.  Here is what the American Lung Association advises:

The best way to prevent lung cancer is to never smoke or stop smoking now.

  • Q: Who is a good candidate for lung cancer screening?
  • A: The National Lung Screening Trial (NLST) criteria are:
    • a current or former smoker (former smokers having quit within the past 15 years)
    • and in the age group from 55 to 74 years
    • and with a smoking history of at least 30 pack-years (1 pack/day for 30 years, 2 packs per day for 15 years, etc.)
    • and no history of lung cancer
  • There is no evidence at this time that other high-risk groups should be screened. Patients with lung disease, particularly COPD should be evaluated by a pulmonologist regarding the advisability of CT screening in the context of the severity of their disease.
  • At this time, only Low Dose CT scans are recommended for screening. Chest X-rays are not recommended for screening.

Beyond the question of cost is the question of who pays.  Should smokers as a group pay for the screening or perhaps cigarette makers?  Given the lackadaisical attitude of congress about the risks of smoking, ostensibly representing US citizens, perhaps we should all gladly pay for the screening through insurance.

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ACA and Insurance Cost — no surprise

Lightning Bolt

According to Louise Radnofsky of the Wall Street Journal 7/1/13 “Insurance Costs Set for a Jolt“.  Should this really come as a surprise?

No surprise indeed, because very little has been done to reduce health care costs.  The ACA has 2 important financial provisions:

  1. Everyone must purchase insurance
  2. Insurance companies can’t cherry pick healthy people and dump the rest on public institutions.

The rise in total cost of US health care will continue but those who pay for it will change.  The bizarre system the US now has which forces hospitals to care for the uninsured by cost-shifting to private insurance will stop.  The cessation of cost-shifting will make costs more transparent but not smaller.

The problem is in the transition from one method of finance to another.  As the transition proceeds hospitals get a windfall profit, insurance companies raise rates due to uncertainty but score a profit with so many new policies,  premiums rise for many, and taxes go up for some.  Eventually, the system finds a new equilibrium.

Sadly,  Congress has been paralyzed by partisan issues so no improvements to the ACA have been made and no actions taken to make health care more efficient.  Other countries with health systems seem to steer the ship of healthcare but the US can’t seem to disengage the autopilot.

It seems likely that each State and even some large cities will need to act without help from the federal government.   We need ACOs to reduce cost and States could help that system grow.

That’s my view, what’s yours?

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The Chargemaster Strikes Again — data from CMS

color cash register

Two days ago the Centers for Medicare and Medicaid Services (CMS) published    the fees hospitals charge uninsured patients.  These fees are called the “chargemaster” of the hospital.   Hospitals point out that most people have some type of coverage.  That is true.  But, 50 million people do not have insurance and the fees apply to them.  The following are the statistics for Colorado hospitals for which CMS presented data on the charges for heart attack.  The column in pink is the amount charged and the MC Allowed column is what Medicare has calculated as a fair payment.

Hospital Charges Colorado

Hospitals are businesses and can charge what they wish for services.  Except, many hospitals are “not for profit“; which means the money they would normally need to pay in taxes is instead used to benefit the community.  They often prove that benefit by writing off the money they can not collect from people who lack  insurance.

The unfortunate effect is that hospital charges are the number one cause of bankruptcy.  Furthermore, the extreme penalty of the “chargemaster” for people without insurance drives people to purchase insurance — certainly a happy situation for insurance companies.

If you go to any health insurance web site you can see what the “chargemaster” penalty actually is.  Look at the charge for the highest deductible policy.  That charge, in large part, is the fee to benefit from  insurance company negotiations with hospitals.  Of course, the hospital makes the charge very high so any mark-off for insurance companies is just for show.  This is an old retail game — raise the price 100% then have a 50% off sale.

A simple solution:

If the charges by hospitals were restricted by law not to exceed 20% above the fee allowed by Medicare the cost of insurance would be substantially less.  And, people who select a high deductible plan could really enjoy low rates with protection from the cost of catastrophic illness.

It is important to note insurance reform will NOT solve the US problems with high cost and low quality health care.  Insurance just distributes financial pain over a greater number of people.  The solution is to fix the underlying problem not distribute the problem to more people.

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Observation Unit — Between ER and Hospital

Laura Landro of the Wall Street Journal reported on a growing trend in US hospitals.  The trend is the “Observation Unit”.  In hockey terms it is the penalty box where hospitals put patients they can’t send home but can’t admit, at least for a few hours.

The origin of this idea may have come from English hospitals.  Those hospitals run at almost 100% occupancy.  So, when a patient from the ER needs to be admitted there is a delay to wait for a room.  Those patients  get put in a big room next to the ER with several gurneys, a few nurses,  and lots of curtains (the observation unit).  The patients do get tests and treatments but they wait for a room.  As it turns out, some of the patients get better and don’t actually get admitted — they go home — the rest eventually go to a hospital room.  In England hospital care is free and the hospitals don’t have to worry about insurance or Medicare rules that separate  outpatient and inpatient charges.

US hospitals have plenty of beds available but US hospitals do have to worry about insurance and Medicare rules.  Care is not free and if a hospital makes a mistake (like admitting for indigestion) they don’t get paid.  And, if a doctor makes a mistake and sends a patient home who should have been admitted (for a heart attack) they could be in legal trouble.  Consequently, unlike the English hospital that needs to hold patients to wait for a bed the US hospitals need to hold patients because of red tape and legal worries!  It’s hard to tell which is worse.

The Wall Street Journal article puts a positive spin on the “new” idea:  “when operated efficiently observation units have been shown to reduce health-care costs and improve treatment”.  Obviously there is a balance of forces between the Hospital that makes money and the insurance company that looses money with each admission.  Regulators try to develop rules to speed evaluation and treatment so some patients can go home safely without a hospital admission and the huge associated costs.  Any patient who can bypass the hospital will also avoid the risk of hospital errors and exposure to hospital acquired infections.

Patients have two main concerns:

1) Getting the right care the first time and not coming back sick.   The unit may provide a little longer time to get test results and see if treatment is working which is good unless unnecessary tests are being done.
2) Minimizing out of pocket cost.  A person without insurance would get a lower bill by avoiding the hospital but having both the cost of observation and hospitalization is a real possibility.   The current trend for insurance  is to shift a higher percent of outpatient charges to the patient compared to inpatient charges.  So, depending on what a person’s insurance covers, there might be higher out of pocket expense for using observation.

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Cost Shifting – the underground payment system

COST SHIFTING DIAGRAM

Hosptials are licensed by the state and certified to provide Medicare and Medicaid services.   They agree to provide care sufficient to stabilize a patient.  If the hospital is a non-profit institution they must provide community service (indigent care) in an amount equivalent to what they might otherwise have to pay in taxes.  For- profit hospitals will try to transfer indigent patients to community or state hospitals but room is limited so they often provide uncompensated care.  County, State and Federal (VA and Indian service) hospitals are financed from taxes.   Much indigent care is paid for by the government.

Uncompensated care in hospitals is funded in a circuitous (underground) manner.   Uncompensated care just means the patient can not pay — the patient may end up going bankrupt.  However, the hospitals have another way.  There is a constant stream of money that comes from insured persons flowing to insurance companies and then to hospitals.  To balance the books for uncompensated care hospitals raise the price of care to insurance companies that in turn raise the price to insured people.  Hospitals often have to negotiate the pay increases with many insurance companies.  The “system” comes into a balance as long as the numbers of uninsured patients are not too great.

The net effect of the underground system is uninsured  patients do get care and hospitals stay solvent.   However, look at the system from a distance and try to follow the money.   Complex negotiations, patient transfers, government payments, and patients shifting into Medicaid (Title 19).  The cost of doing the paperwork is astounding and combined with the cost of a social-work army it almost matches the cost of delivered care.  In the end, insured people pay twice, once in the cost of insurance premiums and second in taxes.

This is our system.  We designed it this way.  Is this graft and corruption?  No.  However, it is wasteful,  inefficient, unmanageable and unsustainable.   The most simple solution is to provide insurance for those who can not afford it.  The cost is the same and possibly less than the sum total of private and governmental costs now.  Such a system would be understandable and subject to being managed.

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