Heathcare

by Jonah

I’ve been criticized lately for my views on the healthcare debate, but I think I’ve shared them fully with only two people.  I guess I have the option to public them.

Medicare pays 85 cents on the dollar. Medicaid 65. A lot of doctors won’t even accept Medicaid because they lose so much on patients with it. So doctors and hospitals raise the price for everyone else to try to make up for it. And then, of course, there are all the completely uninsured who show up at emergency rooms and have to be treated for absolutely free, by law.

So far government has been the cause of raising healthcare costs, not lowering them.

So what should we do?

That’s the question, isn’t it? What should we do? I’ve been thinking about this a lot lately, and I don’t know what the answer is. I do know what a lot of the problems are, and I don’t want us to make some of the same mistakes we already have.

I also know that the US creates the greatest drugs and medical devices the world has ever had. In fact, we are subsidizing healthcare in the rest of the world because other countries get to use our technology without developing their own. They also either rip off our drugs without respect to patents or else tell our drug companies they’ll give them X amount of money for their drugs, take it or leave it (which is why drugs are cheaper in Canada).

Our current system results in amazing drugs like Imitrex (which makes my life livable some days). But it also results in my husband and me having to shell out $90 a month for health insurance that only kicks in after we’ve spent $10k (annually) and no drug benefits. So those magic Imitrex cost me $18 each.

It’s a trade-off, I know. The best medical care in the world or mediocre/poor medical care for everyone? I don’t think we can have both.

What I really want is a return to the family doctor who makes house calls and doesn’t have to spend so much time filling out paperwork, filing insurance claims, dealing with bureaucracy (both with the government and with insurance companies), or fighting frivolous lawsuits. I want the doctor to figure out how he’ll charge, who might accept a side of bacon, a bushel of turnip greens, or his car repainted or his lawn mowed if someone can’t afford to pay him in cash. But I’m afraid those days are gone.

I also want a return of charity, of neighbors pitching in to help when one of them gets sick. We don’t see much of that anymore, because people assume it’s the government’s job to take care of the sick and old.

In the meantime, as much as I hate to say it, I think we need more regulation of insurance companies. When a corporation only cares about the bottom line, the people who have been diligently paying into the system get screwed.

I know the way insurance is supposed to work: pool the risk and everybody shares the pain. But I don’t like the idea of a single payer system where everyone pays the same, regardless of what kind of risky or unhealthy lifestyles they lead. I don’t think someone who makes sure to exercise and eat right should have to subsidize someone who smokes, uses illegal drugs or engages in very risky sexual behavior. That’s why you have to answer all those invasive questions when you apply for health insurance; they charge you more if you do things like use tobacco.

It’s true that we have to do SOMETHING about our current healthcare system. But I’m worried about doing the WRONG thing.

All of this is to say that I’m not anti-reform.  I just want don’t want to make things even worse.

Here’s a piece that I thought offered some pretty interesting thoughts on the issue at Planet Money.

9 Responses to “Heathcare”

  1. Syd Says:

    This actually mostly accurate.

    A few points:

    – While Medicaid does not pay enough to support physicians (or at least, a rate they’re willing to accept), that’s just not true of Medicare. Many physicians see all or a vast majority of patients on Medicare without seeing any other patients. They still make money. Moreover, most insurance companies set reimbursement rates based on Medicare–and many of them set the rates lower! Many reimburse at 95% of Medicare or even less! So it just isn’t true that private insurance is subsidizing Medicare. That’s just plain bullocks, Jonah, and that 85% of the dollar stuff is crap too–Medicare rates aren’t set like that, and you know it. Nor is it possible to really explicate rates of reimbursement in that way. I mean, what dollar is that that Medicare pays 85 cents on? The dollar that every doctor would *like* to have in an ideal world?

    – You’re right about America currently subsidizing technological invention for the rest of the world. This is a serious problem that a lot of liberals don’t seem to want to acknowledge. That said, I don’t think the choice is between everyone having mediocre health care and some people having great health care. For starters, the development that we’re subsidizing is going to all the wrong things–new and improved Viagras, for example–it’s mostly not going towards the things we really need, like new antibiotics, cures to basic diseases that infect much of the world outside of the US, cures to life-ending diseases. If we switched to socialized health care right now–in the theoretically, overnight sense–I think we’d in the new generation or so save a lot more lives from people having access to health care than we’d lose from people not having the very small amount of truly life-changing drugs that might not be developed in the next 20 years. So yes, we need to talk about this. But it’s not an either/or type thing. We can come up with new ways to encourage development, that don’t involve us letting pharmas spend more on advertising than R&D. While the government has never been that great on applied research, they are responsible for the bulk of basic science research that enables pharmas to eventually create new drugs. While there may not be as large of profit margins under a health care for all type plan, there’s still a place for pharmas to profit. We can work on new ways of encouraging the development of drugs that are the most valuable for the human race.

    – I also have a hard time believing that in the good old days, people chipped in to provide for their down-on-the-luck neighbors. People were poorer and sicker in the past, in the days of charity. Maybe that was true for some small segment of the population, but I think most of that stuff about helping each other back in the good old days is pure nostalgic bullshit. (I’m willing to admit that people were more likely to know their neighbors and were more likely to help one or two people out. I don’t think this in any way compensates for the vast bulk of people who died without any assistance from any “neighbors” whatsoever.)

    – I’m not opposed to incentivizing healthy behavior, but I have a hard time believing that it will do much good. People *aren’t* rational beings, who respond appropriately to market forces, PARTICULARLY when it comes to addictive behaviors like cigarettes, drugs, and, hey, to some extent, sexual activity. There’s a reason these problems are concentrated among the poorest people, and charging them more for health care won’t fix anything. You might do better for giving people tax credits or something for healthy behavior, but that seems awfully paternalistic to me. Why don’t we instead work on the roots of the very intricate societal problems?

  2. Jonah Says:

    Wow. You really think I’d make up numbers?

  3. Jonah Says:

    “Right now, Medicaid is paying 65 cents on the dollar; for Medicare, it pays 85 cents on the dollar. The way the Medicare and Medicaid programs are sustained, because they underpay physicians and hospitals, is those physicians and hospitals charge the private sector more.” — Karen Ignagni, president and CEO of America’s Health Insurance Plans, a lobbying group for the nation’s health insurance companies
    http://www.npr.org/templates/story/story.php?storyId=111997876

    “I work with medical billing software, and have had hands-on experience working with business offices in several dozen hospitals and clinics across the country. Medicare and Medicaid are not “enough.” Whenever those are the two major payers, the facility almost unequivocally posts a loss year to year. The only ones breaking even have at least 40% of their revenue coming from private insurance. If the community doesn’t have a high enough percentage of patients with commercial insurance, the hospital has to be financially supplemented by the county, or owned by a corporation (the growing trend among hospitals). Either that or they have to have high revenue specialty services, such as a long term acute care center, or yes, even plastic surgery…Medicare and Medicaid do pay considerably less than comparable commercial insurances; but what really makes the difference is the fact that commercial insurances pay nearly the full amount for inpatient stays, whereas Medicare pays a drastically reduced per diem rate, meaning that hospitals are lucky to get 30%-50% of what the total charges were in the first place. Medicaid, on the other hand, will typically pay 20%-40% of the total charges for the stay. Do you know any other business that can stay operating when they are forced to write off well over half of their accounts receivable?” — Cale Chambers
    http://www.facebook.com/home.php?ref=logo#/posted.php?id=631100342&share_id=161125855984&comments=1#div_story_161125855984_161125855984

  4. Todd Says:

    Read the article from the New Yorker I posted the other day on Facebook.

  5. Jonah Says:

    Already have.

  6. Syd Says:

    – Yes, let’s please take AHIP’s word as golden on this issue. Could you possibly pick a more biased source than the lobbyist for the insurance companies? (Actually, one of my good friends works at AHIP). I’m guessing what she means is that of every dollar that a physician “charges,” Medicare pays 85 cents. That means exactly nothing. What a physician charges is basically irrelevant in today’s world. The only people who pay that rate are the uninsured, and frequently even they don’t pay that rate. It’s a bullshit rate, pulled out of nowhere. Medicare doesn’t set its rates based on what physicians charge (anymore), and so the stat is entirely meaningless. Hospitals are paid based on DRGs, and physicians are paid based on pre-set rates for particular codes.

    – Okay, this comment has various bits of truth in it, but conflates several different issues. First, it talks about Medicare and Medicaid together, which is a major fallacy. The rates are vastly different, are calculated in different ways, and are paid by different people! (And different states calculate rates differently!) Putting them together in any comment seems to be code for trying to insult public health insurance by grouping Medicaid and Medicare together, when they are so beyond different that it’s not even funny. The programs share nothing in common except (1) they were created at the same time (sort of–Medicaid sort of evolved from a preexisting program) and (2) their names. So, people should seriously stop talking about them together. So, yeah, any hospital that’s doing any significant share of Medicaid patients is probably having trouble making ends meet. (Not just b/c of Medicaid, but also because these hospitals also tend to have large numbers of uninsured b/c of where they’re located, and all the other problems that go with being located in the poor part of town.)

    – Second, this comment is focused on hospitals. That’s fine, but let’s be clear about this point. Hospitals and physicians are now reimbursed under entirely different methodologies with entirely different results. I’d say that doctors on the whole are much happier than physicians with Medicare. Saying that Medicare pays 50% per diem for a hospital stay is also misleading. The way Medicare reimburses for hospital stays is with Diagnostic Statistical Groups (DSGs). In other words, through some fancy math, they figure out how much it should cost the hospital to care for a patient admitted with a given diagnosis. What percentage of the per diem cost (or charge) of the hospital that is will vary depending on what happens with that particular patient, etc. Uh, yeah, that’s right, this was created by some crazy smart libertarian economists to try to provide incentives to hospitals to treat patients efficiently. In other words, they have to pay for their own mistakes and will profit from treating patients quickly. Unfortunately, this is the same reason you read about people booted out of hospitals so quickly. There’s a lot of good that’s come out of this system (it’s saved the American public billions and billions of dollars since implemented), but it’s pretty mucked up and complicated to. Because, instead of just paying those amounts and trying to adjust them appropriately, the government then adjusts each hospital’s amounts at the end of the year based on things like the proportion of uninsured patients they have (disproportionate share–DSH) or whether they’re a teaching hospital or whether they’ve done various good things the government has asked them to do this year. I point this out because all of this end-of-year adjusting means that looking at the “billing” for a particular patient is rather meaningless in the grand scheme of how the hospital survives, profits, etc.

    – For the record, I think hospitals are taken over by corporations because they see an ability to profit, not because they’re hopelessly failing.

    That’s probably enough health care mumbo jumbo for now. I seriously think the conclusion of anyone looking at this should be that the American public should get the hell out of the health care fixing debate, because they no idea what the hell they’re talking about. Liberals, conservatives, libertarians–they all have ill-conceived ideas about our current health care system. Just let some health policy experts devise something up in a closed room ;) (Like that will ever happen. Oh, wait, that’s actually basically how Medicare came about. Too bad the good old days of Wilbur Mills are gone.)

  7. Jonah Says:

    23% of doctors refuse to treat new Medicare patients (primarily because of the hassles of dealing with Medicare and because it doesn’t pay much) — Association of American Physicians and Surgeons, Inc.
    http://www.aapsonline.org/medicare/medrep.htm

    If Medicare pays so well, why are so many doctors refusing to take it?

  8. syd Says:

    Yeah, because some right-wing, anti-government physicians’ group that i’ve never heard of (and i’ve heard of most of the legit associations) say so, it MUST be true. I’ll continue arguing about this when you start citing stats that don’t come from biased sources. Seriously, Jonah, you used to be an academic. Can’t you find some legitimate sources?

  9. Jonah Says:

    Okay, how about the liberally biased, pro-government New York Times? Is that legitimate enough for you?
    http://www.nytimes.com/2009/04/02/business/retirementspecial/02health.html

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