Great political minds think alike

[IJ]

I won't try to defend the idea of single payer. I'm not for it and it's not politically feasible anyway. But I'll get into some of your link later. For now, this apparently unwise thinking:

"[Doing too many procedures] is a problem in systems that reimburse physicians on a fee-for-service basis. In today's health system, another problem is physicians doing too little for patients. So the real question is, "how do we discourage both overcare and undercare"? One approach is to compare physicians' use of tests and procedures to their peers with similar patients. A physician who is "off the curve" will stand out. Another way is to set spending targets for each specialty. This encourages doctors to be prudent stewards and to make sure their colleagues are as well, because any doctor doing unnecessary procedures will be taking money away from other physicians in the same specialty."

Is actually true. And it has nothing to do with single payer. I get a report on my billing each quarter with my peers and my billing on it. Kaiser and most insurances follow prescribing patterns and attack outliers. And some of the most amazing, effective, cost saving, life saving quality assurance projects in healthcare work this way too. The nail that stands up gets hammered down--with good reason. You still have one of those magic TV doctors who divines a magically maximally effective yet unique plan for each individual patient s/he gets and doesn't need the evidence based guidelines to summarize the quadrillion research papers that come out early? Sweet. Awake citizens need their doctors monitored and guided, because we're just people.

[Bill Glasheen]

I've been a part of that measurement process on many levels, Ian. I've creatged risk adjustment software people use to level the playing field, have created efficiency and quality reports by MD and for hospitals by specialty, and have benchmarked process quality software. It's all good.

But bad actors remain. Unless you can hurt them in the pocket, many outliers will flip the bird at the world. As in all communities, a handful of sociopaths cause the most damage.

As for taxing insurance policies, it doesn't work to hold utilization down, Ian. The only reason to tax health insurance policies is to redistribute wealth - PERIOD. If your really want to know what works to motivate people to use their benefits wisely, you need go no further than the RAND Health Insurance Experiment. That series of studies is almost 3 decades old, and yet people who try to devine what works keep reinventing the wheel.

Bottom line... you need to remove delays in the feedback loop for both MD and for patient. And you need to make the cost hurt in the here and now. And just so folks know... that which causes people to spend their health benefits wisely *may* at times also cause people who NEED care (for chronic conditions) not to get that care. There are no perfect solutions, but there are a lot of good ones ready and on the shelf.

- Bill

[IJ]

Yes, taxing insurance benefits (policies???) is "redistributing wealth" in the sense that ANY tax does that. Benefits are just compensation. We've made the health care ones tax deductible, which everyone is fond of and is unlikely to change. However, this has created the perception that wages are stagnant, when in fact, total compensation has gone up because health care costs have increased. People perceive the stagnant direct pay and fail to grasp the larger issue: health care costs have reduced their takehome pay. This is worth correcting. If people FELT the money leaving for healthcare--even if it were deducted from their ban accounts after receiving total payments from employers--perhaps they'd start to get it. And vote and change their behavior.

We know from a variety of studies that people do not always make wise choices with health care dollars. In particular, people are not very wise at paying for screening such as mammography, and so editorials have advised not having cost sharing for those services. People evidently do not perceive the benefit down stream. No surprise, given the length of time to diagnosis and relative rarity. Meanwhile, they shell out astronomical sums for totally unsupported therapies like Airborne or homeopathy or excess vitamins and other BS, and doctors employ unsupported therapies all the time like unneeded screening labs, preoperative tests, and so on, while missing indicated therapies.

A robust electronic health record system would help in making sure doctors deliver needed care and can trim unneeded care and testing as well.

Beyond that, people are largely insulated from a need to use care wisely. ER costs are huge, but copays relatively low; thus, we see people coming to the ER for bug bites, minor headaches, colds, chronic joint pain, and all sorts of other BS. Incentives should be crafted that avoid penalizing people for true emergencies but encourage them to use clinics (or common sense and staying home) instead of ER care.

Another example is between-system comparisons. The volume and results at BIDMC for cardiac cath are BETTER than those at Partners (MGH) in Boston. It also turns out the costs are lower at BIDMC. Thats because MGH has brand name recognition and when insurance companies tried to preferentially promote BIDMC care, Partners threatened to pull out and the patients would have come with. Here we have several problems including 1) patient insulation from quality information / irrational decisions and 2) patient insulation from cost. If insurance can't force Partners to drop their rates, they COULD conceivably offer a cash incentive with reminder about the quality information for patients to go to BIDMC--split the savings. But things like this almost never happen, and too often, people just end up where ever is closest, or where the ambulance goes, or whatever.

Agreed that until real markets exist to improve quality, and utilization, things will ******. Just think about lasik. This stuff has come down in price and gone up in quality--I believe BECAUSE it is not covered by insurance, therefore, markets exist.

[IJ]

Brief Response to the Myths Link:

Myth No. 1: Everyone has access to health care a single-payer system. ... When people perceive that someone else is paying for something, they tend to over-use it.

--Overuse from sheltering from costs, and access problems, both occur in single payer and multiple payer situations. Just having insurance leads to rationing in the same way. Kaiser is a single payer system as far is its clients are concerned. Rationing occurs. Lists occur. Has nothing to do with single payer.

Myth No. 2: Claims of rationing are exaggerated. ... A study in the Canadian Medical Association Journal found that 50 people died while on a wait list for cardiac catheterization in Ontario. A study of Swedish patients on a wait list for heart surgery found that the "risk of death increases significantly with waiting time."

Complex issue. People wait in the states too. I take care of em. This includes cancer becoming inoperable while waiting, people dying waiting for procedures, people not getting needed care, eg shuttled in and out of ERs with osteomyelitis from huge holes in the feet never getting adequate care. Often, they come to us after having been kicked out of several ERs, then we take em for weeks to fix em, eating the cost (no funding). As for the cath study, we know that CATH DOES NOT IMPROVE CORONARY ARTERY DISEASE SURVIVAL compared to medical care, so perhaps those delays were JUSTIFIED to reduce invasive, ineffective care. We need to compare access between the systems, not just indicate Canada etc is imperfect. This will be hard due to underlying differences in the cultures and patients. Also, there's a fairness issue (eg, why should paying citizens wait longer than they would have with private insurance--although this makes me think perhaps a base insurance should be universal and private can cover other issues).

Myth No. 3: A single-payer system would save money on administrative costs.

--The truth is supposedly that some costs are hidden in government care. The fact is that admin costs in bickering insurance companies and pushing paper around is tremendous. If the comparisons are imperfect, they are still right. The author indicates that admin costs aren't the biggest feature of the problem, essentially admitting that our admin costs are very high, and they are. This myth is a truth.

Myth No. 4: Single-payer will provide fair and quality care for everyone.

--The author points out that care is better in urban centers in UK than rural areas, or that celebrities jump lists. Ok. I don't look to reform to settle those issues (academic medical centers are still going to operate in cities not cow fields one way or another), although lessons are present for how the system could be designed (eg, penalties for line jumping, or just admit that in the US, you can pay for service and that's not always bad). Don't view this as a major feature of single payer vs not.

Myth No. 5: A single-payer system will leave medical decisions to a patients and his or her doctor.

--I dunno what people claim or want, but as I mentioned above, leaving things to doctors and patients is a terrible, terrible idea. It is correctly pointed out that the single most expensive piece of medical equipment is a doctor's pen, especially when one considers the vast array of considerations in single medical decisions, which are being made by biased, subjective, limited human minds. Decision support and guidelines should largely rule, with doctors around to identify rare exceptions.

More Later

[Bill Glasheen]

Couple of comments...

1) My health insurance is paid for in after-tax dollars. But I repeat myself. Either do it for everyone, or do it for nobody. Fair is fair.

2) I am aware of situations where the working poor go to the ER for medical care because they CAN'T get primary care. Why? No health benefits at work, and unpaid bills at the place they used to go. So... like rational people, they go to the ER where they can't be refused - even for primary care. And then they're made to be responsible for charges - something that an insurance company would consider fantasy.

I'm happy that there is this "last resort" health care. But damn... We sure can come up with some fuked-up solutions to obvious problems. And I'm not convinced Obamacare was any better. Thankfully the residents of Massachusetts agreed with me. Go Scott Brown!

- Bill

[IJ]

You can stop repeating yourself; no one's in favor of unfair tax breaks for only workplace health insurance (at least here). As for the ER, sure, working poor, but also nonworking poor, insured, and uninsured all use the emergency room as a convenient clinic room (as inconvenient as that is). The ER is a TERRIBLE place to get primary care (especially preventive care--pap smear? lipids checked? har har) and it's terribly inefficient as well. People should be actively discouraged from wasting ER resources like they are for 911 abuse, with safe guards in place (could be tough).

Clarify for me though--why is it "fantasy" for them to pay charges for services? Unless healthcare is a right? Which means the government has to provide it? Or are you just saying the charges that are billed are nuts? That's true, in degrees.

[Bill Glasheen]

Clarify for me though--why is it "fantasy" for them to pay charges for services? Unless healthcare is a right? Which means the government has to provide it? Or are you just saying the charges that are billed are nuts? That's true, in degrees.

Ian

In my world of predictive modeling, I do not use charges as the dependent variable; I use "allowed amount." This is the amount that insurance companies negotiate as the total amount to be paid to the provider of health care services (MDs, hospitals, ancillary care, pharmacies, etc.). To give you an example... In the pharmacy world there is something called "Average Wholesale Price" for a drug, a.k.a. AWP. Insurers jokingly refer to AWP as Ain't What's Paid. You get the idea.

THE biggest reason to have a big, bad insurance company on your side is that - as an 800-pound gorilla bearing volume that definitely will pay their bills - they negotiate really good prices for services. Any network doctors, hospitals, pharmacies, and ancillary care providers in turn agree to the negotiated amount (allowed amount), and agree not to "balance bill" the patient. At that point, the insurer then figures out the benefit design, and decides what part the patient is responsible for and what part the insurer is responsible for. The before/after amounts for the insurer part are commonly referred to as "before benefit design" and "after benefit design."

Here's the kicker, Ian. If you have no insurance and you walk into an ER or a doctor's office, you are responsible for these inflated charges. You don't get the negotiated amount, which sometimes can be as little as a tenth of the charges. So those without insurance get screwed BIG time. They not only can't afford the care they get from being insured, they then get insult added to injury by having to pay a much higher unit price for the services they receive.

Comprende?

- Bill

[Glenn]

Here's the kicker, Ian. If you have no insurance and you walk into an ER or a doctor's office, you are responsible for these inflated charges. You don't get the negotiated amount, which sometimes can be as little as a tenth of the charges. So those without insurance get screwed BIG time. They not only can't afford the care they get from being insured, they then get insult added to injury by having to pay a much higher unit price for the services they receive.

Careful Bill, I think you just made an argument for universal health care!

[Valkenar]

Careful Bill, I think you just made an argument for universal health care!

I thought this was his argument for universal health care:

"an 800-pound gorilla bearing volume that definitely will pay their bills - they negotiate really good prices for services."

[Bill Glasheen]

Nice try.

• Government typically is nowhere near as efficient as free enterprise. Just check with the UK and what happened when they nationalized their auto companies. You'd think they could be a lean-mean operation, capable of negotiating great deals from their suppliers. Problem was, they couldn't produce a dependable car that the public would buy.
• A monopoly has no motivation to compete for the best deals, or to run the most efficient operation. Several large competing entities in a free market however will compete in cut-throat fashion to produce value for their customers while maximizing profit for their shareholders. If a communist design worked better, we'd probably all be speaking Russian by now.
• Speaking of Russia and single-payer systems... I visited Russia and toured many aspects of their health-care system in 1993 as a representative of the biomedical engineering society. Want to know what government did to their MDs? Average salary was $35 a month. Most doctors were women because of that, and many needed second jobs driving taxi cabs. Many were forced to live in dormitories where they shared a single bathroom on a floor. Do you think they got the best and brightest to go to medical school? Think again. Hospitals couldn't afford air conditioning, so they left windows open in surgical intensive care units where flies would feast on wounds. As one visiting professor (from Russia) told me before I went there, "Don't get sick!"
  
  There's such a thing as fair competition. If I had my way, doctors would be paid more, and trial attorneys would get paid $35 a month. That way the very best and brightest would be tending to my care rather than seeking to steal from my wallet.
• At best, Medicare covers costs for doctors and hospitals. They do that because they can. Most doctors and hospitals rely on the customers of commercial insurance companies to stay in the black. Want to know why the effort to lower eligibility of Medicare down to age 55 failed? Had it succeeded, there would have been a major revolt in the U.S. health-care system. While many MDs do very well, not all do - particularly primary care MDs in rural areas.
• The one (perhaps unfair) advantage of single-payer systems outside the U.S. is that they get to compete as a very large entity for great drug prices. This is why some are arguing for importing drugs that pharmaceutical companies sell much cheaper abroad. Enough of this counter activity will level the playing field again. In the mean time, we U.S. consumers are subsidizing the cost of drugs for many foreign governments.

- Bill

[Valkenar]

[*] A monopoly has no motivation to compete for the best deals, or to run the most efficient operation.
...
[*] The one (perhaps unfair) advantage of single-payer systems outside the U.S. is that they get to compete as a very large entity for great drug prices.

Say what? So if our government has a monopoly on health care financing it won't bother competing for the best deals, but we're suffering because other countries' governments are competing too hard with us?

Government typically is nowhere near as efficient as free enterprise.

Absolutely true. However, how efficient would it have to be in order to come out more expensive than an industry that is paying a lot of people for things the government wouldn't have to (like advertising) and paying others gobs of money that it wouldn't have to (ceos, etc). For consumer goods of all kinds, even necessities like food and clothing, it's a million times better to have a competitive marketplace. For something like insurance I'm not seeing the benefits. It's basically an unnecessary middleman.

Maybe you have the numbers offhand, though I don't, but what is the insurance industry bringing in these days for profits? How much are they paying in salaries that the government wouldn't? If you take those two numbers out of the system, suddenly there's a lot of room for inefficiency and still coming out ahead. In my mind, the insurance industry itself is a form of inefficiency.

That said, this is probably not the right economic moment to throw another many-thousand people out of work.

[Bill Glasheen]

So if our government has a monopoly on health care financing it won't bother competing for the best deals, but we're suffering because other countries' governments are competing too hard with us?

You make no sense.

Competition begats efficiency. In a competitive marketplace, those who can't operate efficiently AND produce upper-tier products and services lose out and fail. The poster child of this is GM. Alas we're saving an institution that really should be gutted. Between bloated UAW benefits (which the competition doesn't pay) and making cars that consumers don't want, they really should lose out. As much as I like the home team to win, I'd rather buy a Ford from this point forward. (I actually own 2 Mercury Villager vans with Nissan engines, and the wife owns a Subie and a Honda).

A single-payer government system isn't as responsive to the wishes of the customer. Witness queues, long lines everywhere, and poor service in single payer systems. Meanwhile if the MDs in my health plan aren't responsive, I know about it via HEDIS results. So does any employer, which will consider such results before signing on to a health plan. Government? You get what you get, and you're going to like it. (NOT!!!)

Maybe you have the numbers offhand, though I don't, but what is the insurance industry bringing in these days for profits?

To start with, most insurance companies are nonprofit, not-for-profit, or mutual insurance companies (owned by the policyholders). So profit is put aside in reserves - something that the state BOIs require by law. The government? They quite literally operate a Ponzi scheme. Taxpayers pay the bills of the retired. All the money that the retired put in over the years is GONE. Works OK until all the boomers retire. Then you don't have enough taxpayers to pay the bills of the retired. Oops!!!

How much are they paying in salaries that the government wouldn't?

Here you have to add in benefits, as government workers typically have VERY rich benefits. I know, because I've seen the cost of covering state workers. They ALWAYS cost more. Everywhere. It's as predictable as the sun rising in the east. (I know when I used to go to BCBS Association meetings, where people would compare numbers.)

Industry tends to use fewer people to do the same job, because they attract the better employees.

At the end of the day, administrative costs in industry tend to be lower than that in government.

In for-profit plans, profit is generally a couple of percent. It isn't a lot different than the slim margin you get for grocery stores.

FWIW, commercial insurance companies also make quite a bit by investing their reserves. So in down years, they still may make a profit via their investment portfolios. Government doesn't do that because government isn't required to set policyholder dollars aside for future use. It's that Ponzi scheme thing.

Is my bias beginning to show?

In every aspect of our lives, we pay others to do what they do better than us. I pay my lawyer to do my dirty legal work. I pay my auto insurance company to set money aside for accidents, and negotiate good deals with repair places. I pay my builder to run the 3-ring circus of getting contractors to build a house for a reasonable price. (I've tried doing that on my own with limited success.) Build or buy is always a choice.

- Bill

[Valkenar]

You make no sense.

That's you who's making no sense there, Bill. You claimed that monopolies (e.g. the government) aren't motivated to compete and in the same post you said that other governments have a competitive advantage. Which is it?

Anyhow, I agree that government is typically less efficient than private industry. And there are certainly serious downsides to government control of any industry. Despite that, it still looks to me like we would realize cost benefits and practical use benefits. Now if you go ahead and assume that everything stays just like it is, but in the government's hands, then yeah, that's not going to be an improvement.

What would you suggest doing about the healthcare system? And idly suggesting that companies choose to do things in XYZ way doesn't help, because clearly that's not profitable. That's how a free market works, right? What works, wins? So how can we change the context so that what works is also good for people?

[Bill Glasheen]

You make no sense.

That's you who's making no sense there, Bill. You claimed that monopolies (e.g. the government) aren't motivated to compete and in the same post you said that other governments have a competitive advantage. Which is it?

Just because you aren't motivated to compete doesn't mean you don't bargain for a good price. However that doesn't mean you compete to the extent that you deliver excellence in every measurable dimension - including service to their customers.

What I talked about also isn't an "open" market. If it was, then we should be able to import the drugs that our pharmaceutical companies sell cheaply elsewhere. Again... that would level the playing field. But we don't for various reasons.

Screwy things happen. Ever thought about why China - our biggest loan officer - wants us to pay them money via the AGW hoax because they're allegedly a 3rd world country in need of money? Talk about a Mafia-style shakedown... Whenever we get anywhere near "world government" entities, we're always asked to pay others. They can run inefficient systems, and we're asked to subsidize their inefficiencies. Just like the semi-annual North Korean no-nukes shakedown. Different deal; same story.

- Bill

[Bill Glasheen]

What would you suggest doing about the healthcare system? And idly suggesting that companies choose to do things in XYZ way doesn't help, because clearly that's not profitable. That's how a free market works, right? What works, wins? So how can we change the context so that what works is also good for people?

IF I was czar... These are the things I would ask for.

• Tort reform.
• See above...
• Tax benefit to all.
• Minimize insurance mandates so that more "bare-boned" policies could be made available.
• Fund (force, strong-arm) the graduation of more primary care physicians. No universal health care system will work (by any means) without increasing the supply of this group.
• Standardize electronic health records so that health information can be exchanged more freely between entities. This would make real-time feedback possible - something sorely lacking in today's health-care system.
• With such EHRs must also come protection for individuals. One's personal information should be protected at all cost.
• Create purchasing cooperatives so that individuals can be shielded from underwriting disadvantages. Such entities were proposed decades ago by Enthoven. There's no excuse for government not stepping in to facilitate that. This would protect sick people from unfavorable underwriting, and bring back the concept of shared risk. It also gives individuals (particularly the self-employed) more bargaining power in the insurance market.
• Most health-care should cost the individual something. However some types of care (e.g. immunizations or chronic care services) should be highly subsidized. This is in everyone's best interest.
• Poor lifestyle choices should cost you. This would include smoking, recreational drug/alcohol use, allowing yourself to get obese, etc. Freedom to choose what you want to do? Fine so long as you have some skin in the game here.

Those are just a few ideas.

Once such things are well on their way to being executed, then we can talk about incentives to approach the ideal of universal health-care in a free-choice system.

- Bill