Get Your Grand Rounds at Treatmentonline
Grand Rounds Vol. 3, No. 12 is up at treatmentonline.com. Jon must have spent several hours putting together a detailed explanation of each article, and there are a lot of them. The only health insurance related article is by Bob at InsureBlog with a critique of the universal health care idea.
The critique is mainly based on the rising cost of Medicare (the “almost” universal health care coverage) and a reduction in Medicare spending (meaning lower reimbursement for Medicare providers). This logic won’t make any sense if you’re a resident of Colorado and you’re seeing your health insurance premiums skyrocket every year. And you’re also seeing the number of uninsured increasing every year, leaving them with a difficult task of obtaining medical care.
But the rest of the country must be having steady or decreasing health insurance premiums every year, affording health care access to anyone in need. So ”if it ain’t broke, don’t fix it”.
“if you’re a resident of Colorado and you’re seeing your health insurance premiums skyrocket every year”
Everyone sees their premiums go up, nothing special about Colorado.
What very many do not see is that health insurance premiums go up because the cost of health care goes up. If the cost of health care were not increasing, the cost of health insurance would not be increasing. If the cost of health care were not outrageously expensive, the cost of health insurance would not be outrageously expensive. This is true for private insurance and for government insurance such as Medicare. The deeper problem that affects all insurance is the cost of health care. The cost of health insurance is a symptom of the deeper problem.
BTW, it’s often observed that in e.g. Western Europe, health care is the virtual equal to the U.S. at half the cost. How does Western Europe achieve half the cost for equivalent services. Do you know?
“And you’re also seeing the number of uninsured increasing every year, leaving them with a difficult task of obtaining medical care.”
Some kind of interim financial help for people who have no insurance is needed particularly in the short-term. But providing ever more “insurance” cannot succeed in the long term, so long as our health care system remains organized as it is. It’s high time to face the fact that the stresses in the health care system are happening to everyone because of the high cost of health care. Paying more to insure everyone will just pour more money into a health care system that arguably is not interested, and perhaps not able, to control its costs. That is unsustainable.
BTW, I think you might be surprised how many millions the State and other Colorado municipalities spend on health care for the “uninsured”.
Thanks John, you make a good point about the actual problem being the cost of health care, rather than the cost of health insurance. Obviously, the increase in the cost of health care is driving the increases in health insurance premiums. So in order to tackle the problem, we need to start with health care. In Western Europe, there is no advertising for pharmaceuticals or medical services. There is no widespread private insurance, and medical care is generally a non-profit enterprise. The situation here is the exact opposite. The health care industry is overwhelmingly for profit in the US, health care is primarily paid for by private insurers, and pharmaceutical advertising is everywhere.
Yes, MediCare pays providers less than private insurance carriers. But maybe the providers are charging too much in the first place? My father is on dialysis, and has received care at several dialysis centers around the US. The billed amounts have ranged from $2800 to $18,000 for one month of dialysis. All dialysis patients are converted to Medicare after 18 months of treatment, regardless of age or their private insurance status before needing dialysis. So MediCare is paying for the vast majority of dialysis treatment in the US. And they pay $2800/month. So why are some hospitals billing $18,000 while others are billing $2800? The treatment has been virtually the same in all the places he has had dialysis. But is the dialysis center that’s billing $18,000 actually counting that entire amount as a “cost of healthcare”?
You mentioned that with MediCare reducing the amount they will pay providers, fewer providers will see MediCare patients. I think that one of the issues we have to deal with in the US is the idea that “I want what I want, and I want it now.” If you don’t have a life- or limb-threatening illness or injury, you can wait for treatment. New Zealand has a very robust universal health care system in place. A good friend of mine who lives there was diagnosed with ovarian cancer two years ago, and was in surgery the same day the cancer was found. She received top notch treatment immediately, and again when the cancer recurred. Her mother, also a New Zealand resident, had a leg pain around the same time. It was examined and found to be something that would require surgery, but was not an emergency. Her choices were to pay for surgery if she wanted it right away, or to wait in line with everyone else who needed surgery for non-emergency cases, and have the national health service pay for it. This idea is very foreign to most Americans, who don’t like the idea of waiting for health care.
“The health care industry is overwhelmingly for profit”
The other factors you mention contribute but I don’t think being for profit is per se any significant part of the problem. The US oil industry is for profit and the US enjoys cheap gasoline and other petroleum products.
“maybe the providers are charging too much in the first place? ”
Maybe? But who’s gonna bell that cat? Some years ago Lee Iacocca was interviewed about health care costs in the New York Times when he was CEO at Chrysler. He pointed out that Chrysler paid more for health care than for steel. The reporter asked him if he thought doctors were ripping Chrysler off. He responded “I can’t answer that – I sell cars to doctors.”
“why are some hospitals billing $18,000 while others are billing $2800?”
Good question. When insurance companies raise this question they tend to be shouted down as profiteers. But who in this situation would you suspect is the profiteer?
“You mentioned that with MediCare reducing the amount they will pay providers, fewer providers will see MediCare patients.”
I think that’s true – mainly because most doctors say that it’s true. But I did not mention it.
BTW, sorry about your father’s need for dialysis. I suppose this is small comfort – that in England he may not have been approved for dialysis at all.
Sorry, I misquoted you, you actually said: “Lower reimbursement means doctors will generally agree to see fewer Medicare patients making access even more difficult than it is now.” which is a different scenario, although the end result is still that people will have to wait longer for non-emergency care, and not have as many providers from which to choose. I do not consider this a bad thing, rather a necessity for health care to be sustainable.
According to a British House of Commons website,
no one is denied access to dialysis in England based on age, which is what I assume you were referring to. Countries that have universal health care have to strike a balance between providing for the medical needs of their society, and not going broke. People have to accept that some of the care that they take for granted might not be available – but that emergency and preventive care would be available to everyone.
Gasoline costs more in Europe than it does here because the European governments have long understood that taxing gasoline is a great source of revenue and encourages people to walk, bike, or take mass transit rather than use their cars. We should have figured that one out a long time ago too.
Universal health care works. It’s working – and has been for quite some time – in virtually every other developed country in the world, except the US. So why do people keep thinking that they must reinvent the wheel and figure out some other system? The only reason I can think of is money. Private insurance carriers, pharmaceutical companies, and medical providers all stand to lose money if the US adopts any form of universal health care. I am a health insurance agent. I realize that the availability of universal health care would mean that I would need to find another job. But if the current trends continue, I can’t see many of our clients still able to afford private insurance 10 years from now anyway. And I would consider universal health care an improvement for the common good, and would therefore be willing to find some other way of making a living. I have to wonder if everyone else in the health care industry is being this objective.
“you actually said: “Lower reimbursement means doctors will generally agree to see fewer Medicare patients making access even more difficult than it is now.””
I said that? (I agree with the statement but where did I say it?)
“Gasoline costs more in Europe than it does here because the European governments have long understood that taxing gasoline is a great source of revenue”
You’re suggesting the US government has failed to recognize a gasoline tax opportunity. What’s the phrase – “sneak a sunrise past a rooster”? – but that’s not the point I raise. Historically the profit incentive among competitive businesses has resulted, more often than not, in more products, better services, and lower prices than produced by not-for-profit entities without competitors – especially if those entities are government agencies. If US oil companies don’t grab you as a good example, look at consumer electronics, or the grocery business, or clothing stores, or autos, or even housing. [BTW, taxes on a gallon of gasoline in New York are about $0.50 per gallon. These taxes are greater than the oil company profits which normally run between $0.20 and $0.30 per gallon. Oil company profits are simply not a significant component of the pump price, and do not explain this year’s increase in pump price from roughly $2.00 per gallon to near $3.00.]
So I doubt that being for profit, per se, causes a significant part of the health care cost problem. After factoring out the costs associated with population aging, technology growth and salary inflation for health care workers, I think a good part of the remaining costs arise from perverse incentives that exist within the system. Are providers and suppliers competing on patient care or on other things? – e.g., hospitals compete for doctors and must have the latest techno gizmos. Does the public really want insurance, or to be completely insulated from any cost? – e.g., do benefit plans over-insure and thereby induce higher costs? I think the present health delivery & payment system is conducive to continued high growth in costs. We’re living out a sort of Tragedy of the Commons. I don’t have bright ideas about what to do, but I think it’s a mistake to believe that a universal insurance plan can successfully be placed on top of the system we have.
If I believed that some kind of national single-payer system could cover an additional 45 million people, preserve or improve quality, and save money overall I’d advocate changing to it in a New York minute – but I don’t believe achieving all three things is remotely possible as US health care presently functions. I believe that if we get some kind of universal “insurance” for everyone – in the absence of fundamental changes to the present health care system and to the public’s expectations of “insurance” – costs will continue to rise and the new national insurance plan will simply end up obliging half of our population (the half that still pays taxes) to pay for it.
“According to a British House of Commons website,
no one is denied access to dialysis in England based on age”
That’s what they say. You might want to check this out too, it provides a different perspective.
Painful Prescription: Rationing Hospital Care
by Henry J. Aaron, William B. Schwartz (Brookings Institution publication).
BTW, I’m also a licensed agent (New York) but I make my living managing employee benefits. My company has about 12,000 employees and our annual health care bill is well above $100 million. It goes up 10% every year. We gotta sell a lot of widgets just to pay for the yearly increases in cost, never mind the entire bill. (None of which is insurance premiums. We’re self-funded.)