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The Elderly Versus Healthcare Reform

One of the storylines in the health reform debate is how the Medicare population is fighting the current reform efforts.

It’s ironic, in a way, since if the status quo continues, fiscally sustaining current Medicare benefits will be a near-impossibility.

In his regular column, The New York Times’ Ross Douthat provides some insight as to the mindset of the Medicare recipient. He says, rightly, that, “At present, Medicare gives its recipients all the benefits of socialized medicine, with few of the drawbacks. Once you hit 65, the system pays and pays, without regard for efficiency or cost-effectiveness.”

When reformers talk about savings, it “sound[s] a lot like ‘cuts’” to the elderly, and hence, their apprehension. Arguments that many of the tests and treatments can be reduced without sacrificing quality of care will not resonate. With the prevailing mentality equating better care with more care, any attempt to introduce serious cost-saving measures will meet a determined resistance from the American public.

*This blog post was originally published at KevinMD.com*

Larry King Researches Healthcare Reform At Better Health

I was glad to see that my recent interview with Tommy Thompson was referenced by Larry King in his opening remarks on healthcare reform with Elizabeth Edwards. My friend Eric Kuhn at CNN kindly offered me the video to embed here on my blog… The Better Health reference is at minute 1:08. I was also asked to submit a blog post to Larry King’s blog, so stay tuned for that! As I have always maintained – medblogs are upstream of mainstream!

High Blood Pressure & Eye Damage

Ever wonder what the doctor is looking for when she shines the light into your eyes, up close and personal?
This is what she sees if the patient has severe hypertension. The retina shows blurring of the optic disc (in the middle left) and the white areas are called “cotton wool spots”. The blurry part at the bottom is a partial retinal detachment. The patient’s blood pressure was 220/150.

*This blog post was originally published at EverythingHealth*

Who’s Taking A Swipe At Physicians Now? AHIP

AHIP, the trade group representing the nation’s health insurers, released a study decrying excessive physician charges.  There’s some amazing stuff in there: office visits being billed at $6200, a lap chole being billed at $9,000 (just for the physician’s portion).  Truly egregious, if true — and that’s the qualifier.

The methodology of this “survey” is not really honest.  They cherry-picked an insurance database looking for the highest billed charges for various CPT codes.  Supposedly they “excluded high charge outliers that may reflect billing or coding errors.”   Really?  How on earth, one wonders, could they have concluded that an office visit billed at 5,000% the medicare rate was not an error?  Were there more outrageous charges that were excluded?  Sounds fishy.

Moreover, the survey is promoted as exposing the outrageous fees that doctors charge, when in no way are these fees representative of physician fees.  Physician fees, as any other group of data points, fall into a more-or-less normal distribution.  There’s a median point around which most practices cluster, and the further out you get the fewer physicians that are charging those fees, high or low.  The cited fees are certainly in the 3+ standard deviation tail of this graph, but you wouldn’t know it from the AHIP press release.

They present these outrageous charges as if they are accurate and as if they represented a widespread abuse of consumers by greedy doctors.

The annoying thing about this is that there is a valid argument to be made that the uninsured do face higher fees than the insured.  This is of course more of a factor with the much-higher hospital costs, but physician fees are also higher for the uninsured.  The reason for this is that insurers demand a discount off the standard fee in order to contract with physicians.  This gives physicians an incentive to crank up their fee schedule as high as they can get away with.

So if UnitedHealth comes to me and offers to pay me 75% of billed charges (I wish!), I need to make sure that my fee schedule puts that figure at a level that is going to return a reasonable per-patient compensation.   This is less of an issue nowadays, since most insurers prefer to settle on a conversion factor and contract by the RVU, or as a percentage of the standard medicare rates (110-150% most commonly).  That’s easier for their billing systems to manage.  So there is less incentive for us to keep charges high.  But still, a few insurance plans like to do the old way, and there are occasional patients who are insured but we don’t have a contract with their insurer.  In those cases, we expect compensation in full, and the insurer usually pays some arbitrary sum that they feel is reasonable, with the patient responsible for the balance.

Does this screw the folks without insurance?  Yes, to a degree.  Most of the uninsured don’t pay a dime.  They just throw out the doctor’s bill, along with the much-bigger hospital bill, and we wind up writing it off as bad debt.  Most hospitals, and our practice, will also write it off as charity if the patient asks for it and can show some hardship.  So the uninsured will get a huge bill, but they very very rarely have to pay a huge bill.

The ultimate solution for this “problem” of the uninsured being “overcharged” is not, as AHIP implies, to somehow regulate physician charges, but to eliminate the uninsured.  Get everybody covered under some sort of insurance plan, and this problem goes away.

*This blog post was originally published at Movin' Meat*

Government Insurance & Running Naked Through Storm Risks

There has been a lot of talk about the way in which a public health insurer would compete against private ones.  As the President put it recently:

People say, well, how can a private company compete against the government?  And my answer is that if the private insurance companies are providing a good bargain, and if the public option has to be self-sustaining — meaning taxpayers aren’t subsidizing it, but it has to run on charging premiums and providing good services and a good network of doctors, just like any other private insurer would do — then I think private insurers should be able to compete.  They do it all the time.

He makes a good point.  But we don’t have to talk about this in theory – we can look at existing state insurance programs to see how they operate.

In states prone to natural disasters like hurricanes, the market for private insurance has become increasingly uncompetitive.  Several state governments have responded by setting up public insurance programs to sell coverage to property owners in their states.  They operate something like private insurance companies – collecting premiums, maintaining reserves, and, importantly, buying reinsurance in the event of a catastrophe that exceeds what they can pay for themselves.

The New York Times reports that a number of the state insurers are thinking of doing something that a private insurer would likely never do: dropping their reinsurance coverage.  It could save hundreds of millions of dollars a year.  But it would expose them to billions of dollars in risk – that they likely would be unable to pay.  The Times calls it “running naked through storm risks.”

Why can they do this?

I suspect that in the event of a bad hurricane that depleted their reserves, these insurers believe they can turn to the state or federal government to cover their losses.  They are acting as if they already have a sort of “free” reinsurance from the government.  Or, to use a modern expression, they are assuming they will get a bail out if something bad happens.

What it means is that these companies aren’t running anything like a private insurer.  By not accounting for the cost of a catastrophe, they aren’t dealing with the real insurance risk they are taking.  As long as a disaster doesn’t happen they save money.  But when (not if) a major hurricane hits, they will be swept away in the storm, leaving the state and federal government – and the rest of us – with the bill.

“It’s typical of governments today to not be willing to make the hard decisions that are necessary to face up to the true risks and the true costs of the policies that they’ve undertaken,” said Robert Hartwig, president of the Insurance Information Institute, an industry group.

The Times says there are some efforts underway to formalize this sort of “implicit guarantee” from the government.  That might be a step in the right direction if it forces everyone to grapple with the extent of this risk.

But what we see with these kinds of insurers is one of the important ways in which public insurers really aren’t the same as private ones.

*This blog post was originally published at See First Blog*

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