Posts Tagged Obamacare
The U.S. healthcare system is going to change or at least be updated in the coming years. So, when congress tinkers with the system what might be good changes and what might be bad changes? That is the $3 trillion dollar question! It would be fair to say most people and most congressmen do not understand U.S. healthcare — the prevailing notion is overwhelming complexity and way too much cost. However, this blog is going to make the case the key to understanding and the key to making changes is to keep your eyes on the results.
What results? It’s not complicated, it has to do with measurements. Consumer Reports and J.D.Power know we want to buy value. And, value in this case is the reasonable cost for wellness, longevity and successful treatment of disease. That’s it, three things. Whatever changes or tinkering are contemplated we just need to know those three things will be getting better and simultaneously costing less. Politicians have a really bad habit of saying the changes they propose will do the job. Nobody can predict what will work — there are always unintended consequences — so, any proposal must include a dedication to measuring the outcomes we want — if the change does not work it needs to be discarded as soon as possible. And, discarding what does not work can’t wait for the next election and should not wait until tomorrow. Simply, we want results, and we want the data as proof. On a hopeful note, if something works, keep doing it.
The above diagram describes U.S. healthcare. It is more simple than the systems in other countries. The system is linear — people, illness and unlimited money on the left side pass to the results on the right side. This is a flow diagram of the system. The complexity can be hidden by thinking in terms of the five boxes. Later, some of the complexity will be discussed. First, consider the boxes:
- Money to pay for the system. The money people earn is paid to the health care system. Money is money — it does not matter if the money comes by way of taxes, insurance or cash. Funds that do not come from insurance come from the other sources. This is the cost of U.S. healthcare which is about $3 trillion. Don’t pay the money, you don’t get healthcare.
- The healthcare providers. Traditionally we only think of doctors, hospitals and drugs. We often overlook the other things in the box. Things we don’t like, things healthcare providers would like to see in another box. These other things are hugely expensive and fully under the control of the healthcare providers. Unnecessary treatment is perhaps one of the worst — treatment or tests that are not needed. For example, an EKG done as part of a yearly exam on a healthy person. Profit is in this category. Clearly, no profit, no healthcare system. But, profit beyond what is needed is just waste for the system — it is money that leaves the system and does not come back. Inefficiency comes in many forms. Failing to prevent diseases early, only to spend more money later is supremely inefficient. Corruption is a problem in every human endeavor. Errors turn huge amounts of money into waste. The money spent on medical liability suits is just the tip of the iceberg. Money spent to prevent errors is minuscule compared to the money spent on drug marketing.
- Who gets healthcare? Everybody. The aggregate need for healthcare is fairly stable for the system. But, for an individual the need is hugely variable — an auto accident is not predictable. And, when disease strikes most of us can not afford the cost without insurance. Statistics show 50% of Americans do not have access to $4oo for an emergency. The very people who don’t have emergency funds are the very people who do not want to purchase health insurance. Sadly, those people end up in bankruptcy while the system grudgingly provides the care. Now that more people have insurance those without may find less compassion from the providers. Many feel there are freeloaders in the system — people who do not contribute. Does a birth defect, mental illness or low IQ make people freeloaders — that’s an ethical question which is beyond the scope of this discussion.
- Waste. In monetary terms this about $1.5 trillion dollars per year with a huge death toll in the US. A hospital acquired infection is very expensive and kills many of those affected. The high profile infections from spinal injections are just the tip of the iceberg, again. Re-hospitalization for an unresolved health problem is another example. Paying $800 for a $10 epinephrine injector is another example.
- The results. We want those good results. Not just for cancer patients, not just for heart attack victims, not just for you, but for me too. We don’t want promises, we want results. In this age of smart phones and millions of apps there is no excuse for failing to have the data to prove the system is working in our hands every day. We want the results today, not after several years of scrubbing the data in some moldy university. We all must keep our eyes on the results and hold our elected officials accountable.
Complexity. Medicine is a science and by its nature is very complex. Open heart surgery is a good example — there are few people who understand the issues involved. But, the system, from the patient’s view does not need to be complex. In one country the cost of hospitalization is $400/day — the people there know exactly how much the illness will cost. In another country, the prices of office visits are posted in the waiting room — it does not matter what insurance company you might have. In another country all the providers use the same medical record system — not a big deal to move or see a consultant. We seem to tolerate the complexity of our system and think it should be as difficult to understand as heart surgery.
The US pays about twice what other countries do for similar or better care. There is enough money in our system now. Our problem seems to be in the area of wasted money and effort. It seems unlikely that just reducing payments to providers will reduce errors and wasted money — this supply-side economics does not get to the real problem. More than likely, lower payment to providers will only result in lower income for them and perhaps more errors and unnecessary services. But, if it works, do it.
Back to the initial warning. Keep you eyes on the results of the system and the cost. Whether any economic hypothesis proves correct is irrelevant. What matters is the system must move in the right direction, always.
There is a lot to recommend the quality improvement method called “Plan – Do – Study -Act” or PDSA. The idea is to plan a change to a system of care, do the plan, make measurements to study the results then act to change the system to get better results. This is an ongoing process. Congress seems to be mired in a system of management which is one hundred years out of date — if anything, that’s what needs to change first.
Insurance companies now have found a way to deny insurance because of pre-existing conditions, as a group. This is nearly insane. Any first year lawyer would realize the following:
- It is not legal to kill a person so it is not legal to kill a group of people.
- It is not legal to run a red light so it is not legal to run a group of red lights
- It is not legal to deny insurance because of pre-existing conditions so it is not legal to deny insurance to a group with pre-existing conditions.
It took a few years since the ACA was enacted for insurance companies to realize the subsidized insurance exchanges have poor people, disabled people, and people who can’t work because of illness — they have, surprise, surprise, PRE-EXISTING CONDITIONS.
Now, after years of huge windfall profits, several large insurance companies have decided not to sell insurance to the group of people who purchase on the insurance exchanges. Why do we need a Supreme Court decision when any cop knows it’s a crime. Where do large companies like health insurance companies and Volkswagen get the idea they are entitled to do business as they please?
The insurance companies who have decided not to participate in the health insurance exchanges are listed below with the financials as reported on Yahoo. They are not hurting, revenue last quarter is better than the same quarter last year.
|2015 Revenue (Billions)||$176.10||$61.65||$54.53|
|52 wk price change||$14.38||-$3.14||-$5.33|
|Quarterly revenue (yoy)||28.2%||5.4%||2.0%|
A surprising twist to this story was reported by David Belk: big insurance companies avoid risk by having the companies they serve “self-insure”. Meaning, the companies (like a cable company or a hospital or an RV company) take the risk, put up the money, and let the “insurance company” just do the paperwork. For the eight largest health insurance companies only about 30% of their business actually has financial risk — the rest is “self-insured”, otherwise called Administrative Service Contracts (ASC).
So now the picture is clear — insurance companies avoid risk. They want someone else to take the risk and they are very skilled at shifting the risk to others. The question is whether the U.S. really needs these paper shufflers skimming profits?
The simple answer is no. Congress needs to level the playing field for insurance companies — if they sell insurance they must sell insurance on the exchanges. Unless insurance companies can take the risk of health insurance exchanges they need to be replaced with a single payer system. Colorado will decide this question on a ballot in 2016 — they have the right question, hopefully the people will choose the single payer system.
June 3rd 2015 Kaiser Health News reported the ACA seemed to cause more provider visits for management of diabetes “More Patients, Not Fewer, Turn To Health Clinics After Obamacare”. This is both good and bad.
The “good”: more attention to a patient’s condition is likely to result in better diabetic management, fewer complications, fewer hospitalizations and longer life.
The “bad”: since clinic visits can be billed to insurance, clinics make appointments and make money for each visit. The payment for visits rather than outcome is expensive and a known problem in US healthcare (fee for service). Diabetes can be managed over the phone in many, if not most cases — but there is no money for the provider in that approach. Phone care has a much higher value for the healthcare system and the patient; but, low-cost high-quality (high value) care is not getting the incentive.
The care of diabetics is further compromised by the pharmacy. A key piece of equipment for a diabetic is a glucose meter. The manufacturer almost gives away the meter so they can make huge profits by selling the disposable test sticks. The sticks are not interchangeable, not generic, sold in small lots, each lot sold with a co-pay, each lot requiring a visit to the pharmacy, and the use of gasoline to make the trip. If you don’t have much money the speed-bump turns into a mountain.
The solution: every few years mandate a generic test stick that manufacturers of glucose meters must support. “Uncouple” the meter maker form the test stick maker. And, sell the sticks in lots that last for at least 90 days, and that are sent to the patient by mail. Adjust the payment to providers so that they must contact diabetics by phone to adjust medications at least 2 times per month in order to bill for a medium or high level clinic visit. Also, each provider must obtain patient satisfaction data to prove the adequacy of service.
Addendum: Here is a link to an interesting court case about glucose meters
How much extra are you willing to pay to continue to see your current primary care provider? $100 per visit? $20 per visit, or $2 per visit? That’s an individual decision. But, insurance industry studies show an average person in a health plan would change primary care providers if they had to pay more than $2 extra.
This is one of those dichotomies where people rate choice of providers very highly but in practice are not willing to pay more than about $2 to pick one provider over another. Doctors uniformly place a much higher value on the doctor-patient relationship than patients themselves.
However, to paint the picture with a large brush leaves out details. Patients who have primary care providers that manage chronic illness like diabetes, asthma or migraine headaches are much more willing to pay higher co-pays to maintain that relationship. Sometimes the relationship with a specialist is worth more to patients, but not always, because of a prevailing notion specialists are more alike than primary care providers.
The $2 statistic also includes the huge number of people who do not see a health care provider regularly — they just go to a clinic when a problem arises. In fact, they just want to be seen quickly, the name of the provider is not important.
Over the past 10 years employers have changed insurance carriers on average every 3 years. A change in insurance often forces people to change providers in order to stay “in-panel” and avoid high out of pocket costs. Anna Wilde Mathews’ article “Health Plans Limit Choice of Doctors” appeared in the Wall Street Journal today (8/15/13). She suggests the Affordable Care Act causes patients to change health care providers, an assertion that has no relevance, since that’s how our current system works! Not to say this is good — in fact, forcing patients with chronic illnesses to change providers borders on unethical business behavior.
Conclusion: rather than whine about the Affordable Care Act we need reasonable legislation to improve US healthcare, NOT legislation to return to something worse. Businesses should not have to change health plans so frequently. We need more large high functioning health plans (like Kaiser Permanente and a few others) so businesses don’t feel the need to change insurance carriers so patients can keep the health care providers they like.
The New England Journal of Medicine published an editorial about the Affordable Care Act (ACA) by former Health and Human Services Secretary Gail R. Wilensky, Ph.D. on October 18, 2012. Dr. Wilensky is a knowledgeable source for comments but she is clearly a political player. Her description of problems for the ACA is reasonable although her conclusion a voucher system solves the problems does not follow logically (fully understandable in this political season). But it is worth summarizing her findings and adding a less political conclusion.
She states that US health care suffers from
- Millions of people go without insurance.
- Health care costs are rising at unaffordable rates.
- Quality of care is not what it should be.
Her criticism of the ACA (in summary form by this blogs author):
- The penalty for not purchasing insurance is too small
(she suggests a penalty like medicare that builds up every year if a person does not comply)
- A lack of organization to ensure effective, high quality and affordable care.
- No attack on the system of reimbursement of providers, based on number of services, rather than quality and cohesive delivery.
- Not enough resources are put into value-based purchasing and accountable care organizations (ACO). And, too little money is at risk for providers who fail to meet quality targets.
- Not enough regulatory framework to force physicians into large multispecialty groups and patients into primary care systems.
- No sense of urgency to make meaningful reforms take effect.
- Lack of clarity on how market forces will be harnessed.
- Allow a 2-tier system so those who can afford more health care coverage can purchase it.
- Reduce the cost of health care by government action (presumably health care vouchers as proposed by congressman Ryan)
Vouchers are one way to put a maximum on how much government will pay. But, without simultaneously attacking the other problems we just end up with low cost awful health care — not a happy outcome.