The Biggest Problem in Healthcare

I've said before that healthcare has the potential for changing retirement in a big way, but more than that, it's starting to greatly impact the current lives of many people. Politicians are waking up to this fact and the three potential presidential candidates all have plans at trying to fix the myriad of problems around the issue. But are they focusing on the right problems? If not, then there's no way they can come up with a workable solution. Here's a sentence from the end of a CNN article that expresses my thoughts exactly:

And Fronstin is concerned that all three campaigns place too much emphasis on the uninsured and not enough on the biggest problem in America's $2 trillion health care system: runaway costs.

If they don't get runaway costs under control, then we're simply going to have more and more people unable to afford healthcare. But how to do it? Ahhhh...that's the trillion-dollar question. Anyone have any ideas?

Comments

[AdamCO]

PBS i think it was sent a reporter to a bunch of western countries with national health care and compared and contrasted the differences. Check your listings it wasn't on that long ago.

Anyhow, any notion that national health care system equals socialized medicine is flat wrong. It is just a political gimmick to say that. I learned from the special that in countries like germany and switzerland, health care is handled by the private sector, there are simply government regulations that guarantee everyone has affordable access.

in germany for example, the government publishes a standardized price list for procedures. fixing a broken arm, for example, might cost 3000 euros. no hospital or doctor is permitted to charge more or less than that. this is a far cry from the confusing american system where insurance companies pay one thing and individuals another or where special privileges exist in one place or another.

so many countries have tried different methods, we don't need to reinvent the wheel. we just to examine what works and what doesn't and do our best to keep the health of our citizens out of politics.

[Matt]

FMF, I agree.

Here's my prescription: The single most important thing is to sever the link between employment and healthcare. Either ditch the tax breaks for employers to pay premiums or give individuals the same tax break.

John Stossel has a good 20/20 special about this issue. You can find it on YouTube.
http://www.youtube.com/watch?v=aEXFUbSbg1I

Then check this out:
http://article.nationalreview.com/?q=OWE0ZWJiMGY1OWFiNDk2NDRhNGQwMTM3MjExZjM3NWE=&w=MA==

AdamCO,

Price fixing is a terrible idea. To take your example, if someone is willing to fix a broken arm for 1000 Euros instead of 3000, why should the law stop them? On the other hand, if prices are set below market, it will lead to shortages. In fact, virtually all shortages are a direct and predictable consequence of price-fixing schemes.

[kitty]

This much I got from reading doctors' blogs - this is, by the way a great places for getting doctors' take on the mattrer.
1. Have a do not resuscitate (DNR) order on file if you don't want futile care. Have a living will to spell out your choices. A huge percentage of health care costs is end-of-life care. Most of us don't want to die if there is a chance of getting better. However, if there is no chance of getting better, if all the tubes only prolong the agony, and if the person himself/herself doesn't want such care, "do everything possible" may not be a good thing. So, if you have preferences for your own care, make them known to your relatives.
Ask your relatives what they want.

2. Say "no" to unnecessary tests. A lot of times doctors order tests for defensive purposes only i.e. to avoid lawsuit. Often the risk of such test - e.g. radiation-induced cancer from an unnecessary CT scan - is higher than the chance you even have the condition you are being tested for. Ask your doctor a simple question "is this test really necessary?", "what am I being tested for", "what is the probability I have this condition?", for screening tests - "is this test recommended for my age and risk factors". Also, don't assume that if you hear about some hot new test on TV, it is really a necessary test. Journalists, even so-called TV doctors are often wrong - they care more about ratings then science. I saw one of the doctors on a "housecall" show recommend a test that not only is not recommended, it actually has AGAINST recommendation because based on the evidence risks outweight the benefits. Learn which tests are recommended for your age and which are not. There was a study last year that showed over half of doctors do unnecessary, non-recommended tests on annual physicals - they looked at two tests - urine and cardiogramm (in cases when there is no risk factors or symptoms to justify either). Not only does it cost money, but such an activity is not risk-free for you. Tests aren't perfect. They have false positives. Over years of testing the probability of having at least one false positive is very high. False positives lead to more invasive tests. These invasive tests have serious risks of harm, even death.

A few words about prevention. Non-smoking and not being obese have impact on health care costs, but that impact may be ofset by higher mortality among obese and smokers. Still, if you are someone who smokes or is obese, you probably want to live longer and be healthier, so loose weight and don't smoke. At the same time, the effect of other preventive measures are much smaller than people realize. Some of the measures - preventive drugs, screenings, are actually quite expensive because a lot of people need to be treated for one person to benefit. I am not arguing against preventive care because most of us want to live longer and be healthier, but it is not such an effective cure for health care costs as most politicians say. Also, you often hear "this reduces risk of X by 30%", and people think "wow". The question to ask here is "30% of what?" What my absolute risk of getting X within next 10 years? Reducing risk from 10% to 7% may be large, but how about reducing it from 1% to .7%? The effect of prevention on cost is smaller than what people realize is specifically because people don't understand the difference between absolute risk and relative risk and the concept of number needed to treat.

[Kevin]

I think Massachusetts has a mandatory health insurance policy - I wonder how that is working out. I think if you earn enough you pay, but under a certain income threshold the state pays for the insurance. I only learned about it recently while doing a Massachusetts individual income tax return and noticed they had a special form to detail what type of coverage you have - otherwise you lose certain tax benefits. Anyone here from MA want to comment?

[G]

Take a look at the swiss healthcare system. With some modifications, it could work very well for the US.

[Lord]

These are two different issues, but both are really important because there is nothing like an incident to throw one from having healthcare to not having healthcare, one where while it can't be canceled, can never be afforded. Elizabeth Edwards pointed out how she would be uninsurable from now on. If you really want to lower costs, outlawing insurance would do it. We could all pay actual costs over time assuming survival.

There are many successful alternatives to what we have. The Swiss, French, Canadian, even Singaporean. One alternative Singapore has is government competition. They can control costs and offer a competitive service private providers have to compete with. Competition itself is no panacea though. In much of the country there simply is no competition, the scale of economy is against it.

It will be difficult to end up with a solution, not because there aren't ones out there, but because entrenched special interests profit so wildly from the system we have and go to any lengths to prevent change. The status quo is unsustainable, but don't expect those who profit not to fight for it.

[Compounding]

No system is going to be a panacea, whether it is government run or private, or somewhere in between. Bottom line, and this speaks to the comment on mandated coverage in MA, is that people need to be responsible for their own healthcare: they need to be responsible for leading as a healthy of a lifestyle as they are comfortable with, they need to take responsibility for the costs associated with their choice of lifestyle, and they need to be held accountable (to whatever degree) for the fees associated.

Healthcare is expensive, today, because people want to live an unhealthy life and still have free (or employer covered) healthcare. If people were lived healthier, then their costs would reflect that choice to a great degree. If they want to be unhealthy, then they need to cover that and not expect anyone else to deal with it. The MA plan (at least at the time it was implemented) mandated that people who can afford insurance must either have it, or be responsible for paying their bills. I don't have an issue with that. It has a component that provides insurance for those that cannot afford it... but that should become unnecessary if they are held responsible for their healthcare... if you are on a "state" covered plan, you either take certain steps to live a healthy life, or you don't get covered for resultant expenses. If you smoke... you don't get everyone else to pay for your lung cancer costs.

[Mohammad Syed]

I think the government can basically take charge of uninsured people by setting up a network of full fledged hospitals which are also equipped to deliver primary care to any incoming patients. These Hospitals can be set up by the Federal Govt in a partnership with the State Government. The system should be set up on basis of trust and good faith between the citizens and the Govenment. This would imply that any patients serviced by or admitted to these Hospitals should have to sign up a malpractice insurance waiver in return for the free/subsidized services. This would also ensure that Lawyers dont end up making a lot of money from the Healthcare profession. In my opinion this would also reduce a lot of administrative costs and eliminate unnecessary tests prescribed only to provide cover to the diagnosis. The Doctors serving in such Hospitals should be paid competent salaries but should similarly be protected from malpractice insurance claims. This will serve as an incentive to the joining Doctors. However there should be established an independent agency to monitor the proper working of such Hospitals and their staff. Such Hospitals would thus end up offering competent Health care for lower costs and would thus end up bringing health care costs. Maybe some of the enormous amounts we spend on unnecessary wars and destruction could be diverted for this useful and humanatarian purpose.

[Lord]

Some other healthcare circumstances are half of all healthcare is catastrophic meaning incentives are very weak at best, half of all healthcare is government funded meaning private is largely a meaningless term, and about half the country has no competition. The choice is not so much getting the incentives right or between public and private or competition but determining what is effective and worthwhile and controlling costs. Empowering the individual, the provider, the insurer, or government is meaningless without the information to back it up. The government is uniquely situated to require, gather, distribute, and use this information.

[Marilyn]

Do any of you actually know how much it costs to get gallbladder surgery? How about an INR test? Or a platlet count? I wouldn't even know how to easily access that information. How can people pay for their healthcare when they don't know the cost?

Have the AMA create a coding system similiar to what dentists use for insurance purposes. Then make a law requiring docs, dentists, and labs to post thier prices so patients can look them up.

Then patients (Consumers) can shop around for the best prices.

Ultimately this is awesome because it takes the price setting power away from the insurance company and puts it into the hands of patients.

[kitty]

@Compounding:"ealthcare is expensive, today, because people want to live an unhealthy life and still have free (or employer covered) healthcare. If people were lived healthier, then their costs would reflect that choice to a great degree"

Do you have any knowledge of epidemiology or medicine? Do you base your belief that "unhealthy" lifestyle is the only reason for healthcare costs on some real data? Or like many people you are overestimating the power of living "healthy lifestyle" or the effect of unhealthy lifestyle on cost? Because in fact, there is no data to show that this is the case. In fact, there was a study in Holland that showed just the opposite - because "healthier" people tend to live longer, we cost more over time. Nobody lives forever, even those who are healthy get sick when they are old - be it arthritis, alzheimer, heart desease, cancer or various auto-immune conditions.

Smoking increases the risk of lung cancer by 1000%. This is huge, but non-smokers still get lung cancer. Obesity significantly increases risk of heart desease, and type 2 diabetes; it increases risk of some cancers by lesser amount. But non-obese people still get heart desease, or type 2 diabetes. Other "unhealthy" choice may increase some risks by a very small amount, but the impact is pretty small. Many types of cancer, autoimmune conditions, type 1 diabetes, genetic conditions, etc., are not related to lifestyle at all but just bad luck. Just getting older increases risk of most of these conditions by a lot.

There are many reasons for the cost of health care - people live longer than they used to so they cost more over time and get more "old age" conditions, modern technology allows to keep sick people alive longer and costs more, new drugs cost more, more expensive tests are ordered routinely instead of when necessary, etc. It is an oversimplification to blame it all on lifestyle.

I do think that people need to be aware more of costs. I think this is happening already. My company, for example, cancelled most of fixed copayment HMO plans in favor of PPOs that have deductibles and require coinsurance in the amount of certain percentage of cost. I think this is the right approach. I don't think eliminating insurance is the right approach since many of us who are now insurance will not be able to afford healthcare if we get seriously ill. Similarly, destroying current system of employer insurance, would make most people over 50 uninsureable. Sure, with time the prices for doctor's visits and minor things may go down with competition. It may take too long for those of us who are approaching 50 or who are older. The cost of major procedures, surgery, treatment for deseases such as cancer will still be very high. Before health insurance came about, many people couldn't afford medical care; and that was before modern technology, surgery, expensive equipment and expensive drugs. Very few people can afford hundreds of thousands in bills nowadays.

[Nick D]

One thing that could help is regulating the insurance industy at the federal level instead of the state level. As it stands each state has its own laws on how to regulate insurers and all of them are different in some way or another. So a large insurance company that does business in each state has to employ teams of people that are knowledgeable with the rules and regs of each state. This is a very inefficient way of doing business and regulating the market. If the federal goverment regulated the insurers there would only be one set of regulations. And the insurers would have to spend less on deciphering the rules and regs. This savings in admin costs could be passed on to consumers. But this is only one of many changes needed to fix the system.

[CJ]

As a doctor, I agree with Kitty's points about excessive testing and futile treatment. There are vast amounts of healthcare dollars spent on futile care because family members either a) can't let go or b) are not aware of the patient's preferences. The excessive testing is an interesting point - I'm a big advocate of doing no more than is indicated, but I have patient after patient asking me to "check everything". They have no clue what kind of ridiculous workup that could start if there is a single abnormal result, and more often than not they regret having made that request.

Another point that I think deserves mentioning is that there is currently no incentive for a physician to work hard at preventive care. We do, because that's why we went into medicine, but Medicare is much more willing (and demonstrably so) to pay for your bypass surgery or leg amputation than for the preventive visits to control your diabetes in order to prevent such complications. Examples abound - don't take your health for granted.

[becky]

I'm on the same wavelength as Marilyn and Kitty.

I think that fixing our system will be difficult. One of the main issues, I believe, is that typically those people that have health insurance don't care how much a procedure costs because they are not footing the bill. People who have insurance want the BEST doctors, the NEWEST technological advances and drugs, the MOST EXPERIENCED doctors, along with the FASTEST time back to being healthy. No one can say that they don't want these things, but these things come at a significant cost.

To put this into perspective, when I want my home remodeled, I want all of the best things too, but I have to realize that I cannot afford all of the best things. I then have to figure out how to match my wants with what I can afford and make some decisions based on BOTH of those competing priorities. Right now, people with insurance typically only see the medical side of the issue and do not take into consideration the financial side of their decisions. Somehow we need to shift the system so that consumers have to see the financial side of the equation and maybe have to pay more out of their own pockets to get the best of everything.

[Jon]

It seems to me that the easiest way to decrease health care costs is to increase the supply of doctors. Our medical schools are way too small and doctors spend far too long in school due to the requirement of a 4-year undergraduate education. According to the Bureau of Labor Statistics it takes at least 11 years to become a doctor, and specialists could take an additional 5-8 years before they are fully trained. In England, India, and many other countries, doctors enter medical school right out of high school, saving a number of years (and $$$ on student loans).

Consumer Reports has an interesting breakdown of the costs of health care. The funny thing is the actual percentage of cost versus the percentages assumed by the population. You can see that politicians have done a great job of diverting attention to red herrings. (Oops, I tried to include an html link but it was rejected, so here's the url: http://www.consumerreports.org/health/doctors-hospitals/health-care-security/who-is-to-blame-for-high-costs/health-care-security-costs.htm )

[Jessica]

-allow individuals the same tax break on health insurance premiums as corporations
- make health insurance more like car insurance - in that the only time it can payout is for various levels of larger losses - for example one could have health insurance that chipped in only when costs exceeded $1000, $5000, etc, removing the insurance commpany from paying for every little check up and test would greatly decrease the cost of insurance (which is only there to cover large losses - think hurricanes, car crashes, cancer, major surgery) After 2-3 years I think that prices for routine medical care would find the market rate. I'm sure this wouldn't be cheap (like $10-$20) but I think it would settle on reasonable compensation for the time of a very educated person to figure out what is wrong with you.

[Dan]

Ahh, FMF. Having read your blog for years now, and rarely, if ever, commenting, I find myself wanting to comment on post that I didn't read until 4 days after it was published. Alas, I will comment anyway.

The problems with the spiraling costs are many layered and deep rooted in the system that has been built up since WWII.

1 - Why do 'health' care providers get paid for treating illnesses and not for keeping people healthy? This fundamental flaw in the design of the American health care system leads to constantly increasing costs. Providers have no incentive to keep people out of the hospital since they get paid when they are in the hospital. There is no "bonus" for someone who is super healthy, who quit smoking or lost weight or makes it to a requisite number of check-ups.

2 - In a related topic - why is the entire health system based on risk (insurance)? Many people compare health insurance to car insurance, but car insurance covers catastrophes, not maintenance. Car insurance doesn't cover new tires or oil changes or a dead battery. Health insurance covers preventive health maintenance, was well as catastrophic coverage. If health insurance worked like car insurance, could I subrogate the claim of my cold to my co-worker that coughed on my? Of course not, so comparisons like that don't make sense. The choices are separating catastrophic coverage and maintenance or ensuring that everyone has the same amount and level of coverage to effectively spread the risk.

3 - A previous commenter noted the lack of price transparency. Many of the health proposals of the late 90's/early 00's talking about giving the consumer power. But the consumer has no power if there is no way to make decisions based on price and quality. There could be a 50% satisfaction rate at the most expensive provider and a 90% satisfaction at the least expensive provider, but right now, no one knows that, and in many jurisdictions, that information is private or proprietary.

4 - A person's cost is not related to their health decisions. In my state, a 59 year old obese smoker with congestive heart failure pays the same as a 25 year old marathoner. Wow.

5 - Market forces differ for different provider types. If a doctor packs up and leaves town because insurance reimbursements are down or other costs of business are high, no one really complains. If a hospital reports that it is operating at a loss, the sky is falling and government officials scramble to save the hospital (bump reimbursements or bail them out) further encouraging the hospital to function at the same or higher expenditure level, not trimming expenses.

This is what I do (public policy) so I am a little passionate. If health care is an onion, this post didn't even get past the brown outer layers. I welcome other opinions!