Ran across a very nice article in the New Yorker, which goes over some of the reasons for medical inflation in America, which is serious problem that hinders pretty much any proposed health care reform.
I've felt some of the anger towards insurance companies as the sole culprit in our health care problems can be misplaced at times.
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Insurance companies are the only entity many of us monetarily deal with in our health care system. Whether through employer deductions for premiums, deductibles, co-pays or co-insurance, the insurance companies tend to get the focus of people's anger, because they are the layer in our health care system who we deal with financially. Some people feel that doing away with insurance companies will solve all or most of our problems.
I think that view over simplifies the problems we have in health care. I think many people have a "burn the witch" mob mentality towards the causes of problems in our health care system. This isn't just people clammering to abolish health insurance companies, but the mob mentality sweeps up doctors, pharmaceutical companies and everyone else because if everyone's doing it or wanting it done, it must be O.K.
One of the major things we need to do, which isn't being discussed right now is to rein in the mob mentality, which may end up infecting and destroying our health care system.
The New Yorker article article exams the causes of high medical costs in McAllen, Texas.
It is spring in McAllen, Texas. The morning sun is warm. The streets are lined with palm trees and pickup trucks. McAllen is in Hidalgo County, which has the lowest household income in the country, but it’s a border town, and a thriving foreign-trade zone has kept the unemployment rate below ten per cent. McAllen calls itself the Square Dance Capital of the World. "Lonesome Dove" was set around here.
McAllen has another distinction, too: it is one of the most expensive health-care markets in the country. Only Miami—which has much higher labor and living costs—spends more per person on health care. In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average. The income per capita is twelve thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average person earns.
The explosive trend in American medical costs seems to have occurred here in an especially intense form. Our country’s health care is by far the most expensive in the world. In Washington, the aim of health-care reform is not just to extend medical coverage to everybody but also to bring costs under control. Spending on doctors, hospitals, drugs, and the like now consumes more than one of every six dollars we earn. The financial burden has damaged the global competitiveness of American businesses and bankrupted millions of families, even those with insurance. It’s also devouring our government. "The greatest threat to America’s fiscal health is not Social Security," President Barack Obama said in a March speech at the White House. "It’s not the investments that we’ve made to rescue our economy during this crisis. By a wide margin, the biggest threat to our nation’s balance sheet is the skyrocketing cost of health care. It’s not even close."
The question we’re now frantically grappling with is how this came to be, and what can be done about it. McAllen, Texas, the most expensive town in the most expensive country for health care in the world, seemed a good place to look for some answers.
The article is very detailed and worth reading in full. In examining the causes of high medical costs in McAllen, Texas the writer reaches and shows some very interesting problems faced in our health care system:
The Medicare payment data provided the most detail. Between 2001 and 2005, critically ill Medicare patients received almost fifty per cent more specialist visits in McAllen than in El Paso, and were two-thirds more likely to see ten or more specialists in a six-month period. In 2005 and 2006, patients in McAllen received twenty per cent more abdominal ultrasounds, thirty per cent more bone-density studies, sixty per cent more stress tests with echocardiography, two hundred per cent more nerve-conduction studies to diagnose carpal-tunnel syndrome, and five hundred and fifty per cent more urine-flow studies to diagnose prostate troubles. They received one-fifth to two-thirds more gallbladder operations, knee replacements, breast biopsies, and bladder scopes. They also received two to three times as many pacemakers, implantable defibrillators, cardiac-bypass operations, carotid endarterectomies, and coronary-artery stents. And Medicare paid for five times as many home-nurse visits. The primary cause of McAllen’s extreme costs was, very simply, the across-the-board overuse of medicine.
Why would doctors over prescribe medical procedures?
No one teaches you how to think about money in medical school or residency. Yet, from the moment you start practicing, you must think about it. You must consider what is covered for a patient and what is not. You must pay attention to insurance rejections and government-reimbursement rules. You must think about having enough money for the secretary and the nurse and the rent and the malpractice insurance.
Beyond the basics, however, many physicians are remarkably oblivious to the financial implications of their decisions. They see their patients. They make their recommendations. They send out the bills. And, as long as the numbers come out all right at the end of each month, they put the money out of their minds.
Others think of the money as a means of improving what they do. They think about how to use the insurance money to maybe install electronic health records with colleagues, or provide easier phone and e-mail access, or offer expanded hours. They hire an extra nurse to monitor diabetic patients more closely, and to make sure that patients don’t miss their mammograms and pap smears and colonoscopies.
Then there are the physicians who see their practice primarily as a revenue stream. They instruct their secretary to have patients who call with follow-up questions schedule an appointment, because insurers don’t pay for phone calls, only office visits. They consider providing Botox injections for cash. They take a Doppler ultrasound course, buy a machine, and start doing their patients’ scans themselves, so that the insurance payments go to them rather than to the hospital. They figure out ways to increase their high-margin work and decrease their low-margin work. This is a business, after all.
In every community, you’ll find a mixture of these views among physicians, but one or another tends to predominate. McAllen seems simply to be the community at one extreme.
From what I've read the problems dogging the U.S. health care system, in terms of cost, stem in large part from hospitals and doctors trying to increase their earnings without taking other considerations into account. In the 1970's, after Medicare was enacted, and employers decided to fully fund employee health care coverage, insurers used a simple indemnity reimbursement system. Hospitals charged insurers and the insurers paid the bill, without asking too many questions. This led to a massive escalation in health care costs and the rise of HMO's in the 1980's to try and manage costs.
HMO's had some success in curbing medical inflation, but in the late 1990's they felt pressure, for various reasons, and raised their premiums.
The problem with our health care system are deeper than just the insurance companies. They are in some ways stuck in a flawed system, having to reimburse providers, who knowingly or unknowingly start recommending patients for unnecessary procedures in the hopes of making money.
From The New Yorker article:
we are witnessing a battle for the soul of American medicine. Somewhere in the United States at this moment, a patient with chest pain, or a tumor, or a cough is seeing a doctor. And the damning question we have to ask is whether the doctor is set up to meet the needs of the patient, first and foremost, or to maximize revenue.
There is no insurance system that will make the two aims match perfectly. But having a system that does so much to misalign them has proved disastrous. As economists have often pointed out, we pay doctors for quantity, not quality. As they point out less often, we also pay them as individuals, rather than as members of a team working together for their patients. Both practices have made for serious problems.
Providing health care is like building a house. The task requires experts, expensive equipment and materials, and a huge amount of coördination. Imagine that, instead of paying a contractor to pull a team together and keep them on track, you paid an electrician for every outlet he recommends, a plumber for every faucet, and a carpenter for every cabinet. Would you be surprised if you got a house with a thousand outlets, faucets, and cabinets, at three times the cost you expected, and the whole thing fell apart a couple of years later? Getting the country’s best electrician on the job (he trained at Harvard, somebody tells you) isn’t going to solve this problem. Nor will changing the person who writes him the check.
This last point is vital. Activists and policymakers spend an inordinate amount of time arguing about whether the solution to high medical costs is to have government or private insurance companies write the checks. Here’s how this whole debate goes. Advocates of a public option say government financing would save the most money by having leaner administrative costs and forcing doctors and hospitals to take lower payments than they get from private insurance. Opponents say doctors would skimp, quit, or game the system, and make us wait in line for our care; they maintain that private insurers are better at policing doctors. No, the skeptics say: all insurance companies do is reject applicants who need health care and stall on paying their bills. Then we have the economists who say that the people who should pay the doctors are the ones who use them. Have consumers pay with their own dollars, make sure that they have some "skin in the game," and then they’ll get the care they deserve. These arguments miss the main issue. When it comes to making care better and cheaper, changing who pays the doctor will make no more difference than changing who pays the electrician. The lesson of the high-quality, low-cost communities is that someone has to be accountable for the totality of care. Otherwise, you get a system that has no brakes. You get McAllen.
If we are going to fix our health care system, we need to move to figure out ways to make sure we can ensure doctors use best practices to treat their patients. As much research that has been done on care and cost, in the U.S., we know what providers deliver quality care at reasonable costs and which providers do not.
I talked to Denis Cortese, the C.E.O. of the Mayo Clinic, which is among the highest-quality, lowest-cost health-care systems in the country.
SNIP
decades ago Mayo recognized that the first thing it needed to do was eliminate the financial barriers. It pooled all the money the doctors and the hospital system received and began paying everyone a salary, so that the doctors’ goal in patient care couldn’t be increasing their income. Mayo promoted leaders who focussed first on what was best for patients, and then on how to make this financially possible.
No one there actually intends to do fewer expensive scans and procedures than is done elsewhere in the country. The aim is to raise quality and to help doctors and other staff members work as a team. But, almost by happenstance, the result has been lower costs.
As long as our medical system is geared towards fee for service, you will have people trying to push the system to make as much money for themselves as possible first, and worry about patient care later.
Single payer or any other means to achieve universal coverage won't change what's ailing us, unless we go deeper into the problems of our health care system and one of the major problems we have is medical inflation caused by over usage of procedures.
Creating a guideline of best practices is essential to get our health care system under control, because leaving it to human nature - greed versus serving the public good - I rarely see the public good coming out on top without intervention.
Businessman, and at some level doctors are businessman, also get into a mob mentality. If someone stirs the group up to "burn the witch" or in our case start recommending more procedures, others will follow suit because it has now become the "norm" of the day.
Any health care reform we undertake has to be comprehensive and delve deeper into our system than just achieving universal coverage, which is a worthy first step but is still a long way from the end of our goal to overhaul our health care system.