On Healthcare Reform
Two things on this subject:
(1) I believe healthcare is a fundamental human right and therefore it is immoral for anyone in the United States to be excluded from an affordable health insurance plan that can provide adequate healthcare to all people resident and working in this country, regardless of immigration status. Because I think healthcare is a fundamental human right, in the absence of an option for affordable healthcare in the free market, the government has an obligation to subsidize or provide for an affordable healthcare option for every single citizen.
(2) The current private market-based healthcare and health insurance system is broken and unsustainable. Health insurance provided through my employer has increased by more than 30% just about every year that I have had it. Needless to say, my income has not kept pace. Insurance companies are designed to avoid payouts if they can. Keeping the current privatized system in place is simply unacceptable, labyrinthine in its approval process, and costly for physicians and hospitals as well as for patients in the time it takes to file claims and fight for insurance company payouts.
Prediction: If there is no healthcare reform legislation passed by the end of this summer, whoever is perceived as being obstructionist will pay a heavy political price.
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Well, I think it is fair to point out that Republicans have submitted competing reform plans, but since they are in the minority party those plans just aren't going anywhere. If you engage in obstructionism without offering another way, I think the political consequences would be (justifiably) much worse.
Add to this the fact that Obama, in the campaign, grossly overestimated (or lied about) his ability to deliver his version of reform without enacting massive tax hikes or more deficit spending, and I think you have a case where Obama's forthcoming "readjustment" of his promise will play a lot worse to the American people than will the GOP's obstructionism.
My prediction is that Obama will pass a healthcare reform bill this year, but a public option won't be part of it. Probably the most dramatic change we'll see is that insurance companies will no longer be able to exclude pre-existing conditions (there seems to be bi-partisan support for this), which will quickly drive everyone's premiums up even faster, making wholesale reform an even larger issue in 2010 and 2012.
Personally, I don't think healthcare is a human right, but it is ultimately a service provided for a fee by one individual with special skills, to another individual in need of those skills, and to the degree that we can remove third parties between those two individuals (i.e. government, employers, insurance companies) I think a lot of efficiency and cost savings can be restored to the system. So I generally support government 'nudges' that would incentivize individuals going directly to healthcare providers to seek care. Also, if we are going to subsidize such care (and while I may not like it, it seems clear to me that we are going to do it), I'd like to see a system that subsidizes patients' costs rather than employers' costs, and encourages decoupling insurance from employment (a completely contrived and unecessary barrier between doctors and patients).
And here's a timely exmple! My wife is going in for an epidural steroid injection for some chronic back problems later this week. Because of the way our insurance is structured (High Deductible Health Saving Account), we shopped around for this facility, out of many available in OKC who do this procedure, and never once had to get our insurance company involved.
Our cost for the procedure will be $350, which we will pay out of our pocket. At one of the competing facilities (which, according to the medical profesisonals we know, is not as respecteed as the place we are going to) our "discounted rate" for being a member of our insurance group was $1600 for the same procedure, which we would also have had to pay out of our pocket. There are complex reasons why it is so much cheaper at one place than the other, but needless to say, I am much more interested and motivated to dive into that complexity in order to save money than is my insurance company.
Earlier this year, when she had to have an MRI on her back, we went to another provider at a different facilty, who charged us $600 for the MRI. The facility that is now actually performing the steroid injection for us wanted $1000 to do the MRI. Ironically, they are now using the less expensive MRI of their competitor to review the procedure.
If an insurance company was making these decisions, they would have gone with the more expensive place for the epidural procedure becasue it was 'in the network' and they had already agreed upon a rate with them (probably years before, in an agreement that may have never been reviewed since then). And they also would have likely demanded a more expensive MRI be performed by the same place because it would cut down on the administrative expense of dealing with two seperate claims. The higher price is not an issue to them, as they can arbitrarily raise our premium in order to absorb it. What WOULD be an issue for the insurance company would be to have to shop around for the best rate for every procudure done to their insured parties. That's not what they are in business to do. Ultimately, they just exist to pool money to take care of sick people, not to arrange for the care.
Eric - So what I'm hearing from you is basically an attack on the insurance companies. If I read you correctly, you are arguing for eliminating the middle-man (i.e. the insurance company) in negotiating care and suggest that this negotiation be done between patient and healthcare provider directly. Is that right?
I have two comments on this front. First, it seems that the Obama Administration's argument for healthcare reform over the month of August will be to frame it as the patient and his healthcare provider against the "evil" and inefficient insurance companies. I gather that if Obama successfully frames his plan in this way, it might resonate with more people who think the proper role of government in this whole debate is to take on the insurance companies in this way. Second, what do we do with those people who simply cannot afford the kind of process you advocate? And by not afford, I mean those who either do not earn enough to pay out of pocket for expensive procedures, or who do not have the time or ability to shop around like some of us might? Is the solution to send these people to very expensive emergency rooms, thus likely increasing the costs of out-of-pocket payers?
Your experience with finding a cheaper place for the steriod injection than what the insurance company's in-network place charges is contrary to my (and I think most people's) experience with the healthcare market. I find that doctors charge out-of-pocket payers more for their services because they represent an avenue for offsetting the less lucrative returns for such services that insurance companies negotiate. I'm not a big fan of insurance companies, but it does make some sense that the more customers a client can bring in to a provider, the more likely that provider is to be willing to offer discounted services for the guarantee of a large network of patients. I'd bet that if you were on a different plan, say one offered through the University of Oklahoma, the cost to you, even after adding premium payments into the equation, of getting that MRI for your wife would end up being much less than what you would pay out-of-pocket at even the cheapest place.
"you are arguing for eliminating the middle-man (i.e. the insurance company) in negotiating care and suggest that this negotiation be done between patient and healthcare provider directly."
I am just arguing that individuals have a more vested interest in seeking quality affordable healthcare for themselves than does any third party, whether it be an insurance company, a government bureaucracy, or their employer. The way our system work, most insured individuals never even speak to their physicians and surgeons about the cost of their healthcare, they cede that responsibility entirely to a third party, they pay the third party for handling it, and they often get taken advantage of as a result (sometimes by circumstance, sometimes by design).
When my car gets hail damage and I need to get it fixed, I go get the quotes, send the estimates in to the insurance company, arrange for the repairs, and the insurance company sends me a check which I use to pay for the service. I have a vested interest in finding the least expensive service (at a minimum quality level), because doing so helps to keep my premiums lower. I believe that if health insurance worked in the same way, the entire system would be much more efficient.
"it seems that the Obama Administration's argument for healthcare reform over the month of August will be to frame it as the patient and his healthcare provider against the "evil" and inefficient insurance companies."
Yes, but it also seems the CBO is in strong disagreement with Obama about the fiscal feasibility of the current plan, which will require the plan being scaled back or for taxes to be levied across a much wider swath of the population in order for Obama to meet his promise of a budget neutrality... either decision is sure to be contentious among supporters of the current reform plan, especially by the time the Rebublicans get their licks in.
"Second, what do we do with those people who simply cannot afford the kind of process you advocate?"
For the small percentage of people who can truly not afford healthcare or access to insurance (not the many who can afford it but chose not to get it), I would reluctantly support a government loan program to help them, after vigourous means testing, and perhaps increased incentives for private charities dedicated to helping the destitute defray healthcare costs, or tax incentives for hospitals that agree to do more pro-bono work. What I categorically don't believe is that just because you are poor and sick, you should then be relieved of the burden of considering the cost of your healthcare, or be guaranteed the same quality of care as somebody who can pay more for better service.
"Your experience with finding a cheaper place for the steriod injection than what the insurance company's in-network place charges is contrary to my (and I think most people's) experience with the healthcare market."
Just out of curiosity, do you know many people who do it the way I described? Most people with comprehensive insurance coverage never even know what the cost of their care is unless the hospital or doctor accidentally sends them the bill directly instead of sending it to their insurer. They pay their $150 copay (or whatever) for an outpatient procedure, and never give another thought to what the bottom line cost might be. And that's exactlty the problem. I know enough people on HSA plans who've had similar expereinces to ours to believe that this isn't just an anomoly. Yes, doctors and hospitals give discounted rates to insruance companies for bringing in groups of clients to have back procedures done, but that doesn't mean those rates are cheaper than, say, an out-of-network clinic that specializes in only a handful of back procedures procedures, and does them much cheaper as a result. The point is, when you are free to shiop around, and motivated to do so, you find avenues for savings that were not apparent before (and not pursued by your insurance company).
"I'd bet that if you were on a different plan, say one offered through the University of Oklahoma, the cost to you, even after adding premium payments into the equation, of getting that MRI for your wife would end up being much less than what you would pay out-of-pocket at even the cheapest place."
We were on such a plan (comprehensive, low deductible, $20 Dr Visits, cheap copays for outpatient procedures, etc...) for years through BlueCross, and the savings provided by doing it this way is precicesly why we left that plan. It is thousands of dollars cheaper for us on years where we are healthy (most years) and even this year with the outlays we've had, we'd still have to spend another $1500 or so before we broke even with the premium costs of our old plan (and that is using the BlueCross premium we were paying three years ago, which would almost certainly be a lot higher by now).
But your point does bring up one of the problems I see: you focused entirely on what the out of pocket expense to ME would be, and payed no attention to the cost of the MRI itself. As consumers, we can never drive prices down by behaving in such a manner.
Eric - Good points. For the moment, let me just address one of your questions -- about the actual costs of healthcare. I don't know about other insurance programs, but I participate in a plan through Tulane University with United Healthcare. I know what my premium contributions are and what kind of coverage I receive (including deductibles and co-pays). I also know what my employer's contributions are. So, I know to the penny what is being paid on my family's behalf to United Healthcare in insurance premiums. When anyone on my plan goes to the doctor and a claim for that service is filed with the insurance company, United Healthcare generates a claim receipt that gets mailed to me. On this receipt is (1) the usual and customary fee for service from the doctor or hospital billed to the insurance company, (2) the discounted fee based on the agreement negotiated with United Healthcare (and which United Healthcare pays to the doctor or hospital for the service), and (3) my co-pay and/or deductible payments that round out the difference. I can go online and get the same statements at the click of a button. So, unless United Healthcare is lying to me about what they are being charged by the doctor/hospital/clinic, I know exactly the market rate price for medical care is, what my insurance pays out by contractual agreement, and what I pay out of my own pocket in terms of co-pays/deductibles/premiums.
My family is, thankfully, pretty healthy. So it is probably true that, in this calendar year, the insurance company was paid more on our behalf than they forked out; and we (my family) probably paid out more in our share of the premium than we would have had we paid directly to healthcare providers. But that is worth it to me to have the security of knowing that if, God forbid, something tragic were to happen that would require very expensive care for anyone in my family, then getting such care wouldn't bankrupt us. For instance, one summer about 8 years ago, I was hospitalized with an excruciating headache. I had cat scans which ruled out an aneurysm, and I had a spinal tap to test for meningitis. The initial diagnosis looked like bacterial meningitis so they quarantined me in a hospital room and put me on heavy, powerful antibiotics immediately while the spinal tap culture developed. Thankfully, it wasn't bacterial meningitis, but viral meningitis -- painful, but not life threatening. I was kept in the hospital for 2 nights. I later saw the bill for that one episode and I almost had a heart attack and thanked God that I was fortunate enough to have health insurance that covered everything except a $150 emergency room co-pay. I got my money's worth for a few years premium payments in just that one moment.
As for the question of what the cost of an MRI is versus what it costs me, I fail to see how focusing on what the costs are to me is the problem. Isn't the cost of the MRI only relevant in so far as what I have to pay for it? More later, gotta run.
"So, unless United Healthcare is lying to me about what they are being charged by the doctor/hospital/clinic, I know exactly the market rate price for medical care is, what my insurance pays out by contractual agreement, and what I pay out of my own pocket in terms of co-pays/deductibles/premiums."
The fact that they aren't lying to you about what rate they're paying doesn't at all mean you are getting the best rate available to you for that service, or even the standard market rate for it, even if it is "discounted" by that particular provider. And unless you shop aroud for the best price, how would you ever know?
As far as your relief at your family being covered if anything catastrophic ever happens, well, yes, that is the point of insurance. I'm not arguing against health insurance, but against how it is typically administered, with little-to-no thought on behalf of the insured as to the actual cost of care. Which leads me to your final comment:
"As for the question of what the cost of an MRI is versus what it costs me, I fail to see how focusing on what the costs are to me is the problem. Isn't the cost of the MRI only relevant in so far as what I have to pay for it?"
If the only way for your insurance company to pay for that MRI was to negotioate a better rate from the doctor, you might have a point... but since there is another option available to them (i.e., raising yor premium), which may in fact be much easier and more profitable, the real costs of that MRI become very relevant to you. If your insurance company pays $1000 for an MRI when one of equal quality is available for $600 in the same market, then your premium is higher than it could be.
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