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Consumer-Driven Healthcare: Why It Will Fail

With the creation of consumer-driven health plans and health insurance policies with high deductibles linked to a savings option, more financial responsibility shouldered by patients and employees and less by employers was completely inevitable. The American public likes to have everything, whether consumer electronics or other services, as cheap as possible. With escalating healthcare expenses rising far more rapidly than wages or inflation, it’s not surprising employers needed a way to manage this increasingly-costly business expense.

In the past, companies faced a similar dilemma. It wasn’t about medical costs, but managing increasingly expensive retirement and pension plan obligations. Years ago, companies moved from these defined benefit plans to defined contribution plans like 401(k)s. After all, much like healthcare, the reasoning by many was that employees were best able to manage retirement planning because they would have far more financial incentive, responsibility, and self-motivation to make the right choices to ensure a successful outcome.   

How did that assumption turn out anyway? Disastrous, according to a recent Wall Street Journal article entitled “Retiring Boomers Find 401(k) Plans Fall Short.” An excerpt:

The median household headed by a person aged 60 to 62 with a 401(k) account has less than one-quarter of what is needed in that account to maintain its standard of living in retirement, according to data compiled by the Federal Reserve and analyzed by the Center for Retirement Research at Boston College for The Wall Street Journal. Even counting Social Security and any pensions or other savings, most 401(k) participants appear to have insufficient savings. Data from other sources also show big gaps between savings and what people need, and the financial crisis has made things worse.

In others words, a lot of people don’t have enough money to retire. The options they have are simply “postponing retirement, moving to cheaper housing, buying less-expensive food, cutting back on travel, taking bigger risks with their investments, and making other sacrifices they never imagined…In general, people facing problems today got too little advice, or bad advice.” Read more »

*This blog post was originally published at Saving Money and Surviving the Healthcare Crisis*

Your Health Insurance Plan: “You Can Keep It If You Want”

Forgive me for being a little late to the healthcare insurance reform discussion. I was busy, y’know, providing actual healthcare to sick people while that whole rigamarole was going on. But that one sentence, uttered over and over by everyone from the President on down, always stuck in my craw. At long last, I’m finally able to properly articulate my response.

Trying to pass sweeping health insurance reform legislation while telling people that, of course, they “can keep their current plans if they want” is like legislating tough new laws against wifebeating and assuring women that, of course, they can stay with their husbands if they like.

No one tries to force victims of domestic violence to leave their abusers, but they do try to help them understand that they have options, and that they don’t deserve to be treated so poorly. I firmly believe that people who like their current insurance plans probably have several things in common. Read more »

*This blog post was originally published at Musings of a Dinosaur*

How Your Health Insurance Can Save Your Life

The Sacramento Bee recently ran the following opinion piece of mine below. A couple of additional comments not published follow. Enjoy. 


Viewpoints: Choice of health plan can be a lifesaver

It’s that time of year when most of us pick a health insurance plan based simply on cost. It’s a belief that is often perpetuated by friends, family, and advice dispensed by many articles in magazines and newspapers. As a practicing primary care doctor, I can tell you that the advice is frankly wrong.

Health insurance isn’t a commodity like auto insurance. It’s not just about the price. They aren’t all equally good at keeping you healthy and well. The recent annual report by the National Committee of Quality Assurance, which has been evaluating health plans for twenty years, continues to report tangible differences among health insurance plans across the country as well as in California.

In a ranking of 227 HMO plans nationwide in important areas like immunization rates for children, appropriate use of antibiotics, blood pressure and cholesterol control, cancer screening in adults for breast cancer, cervical cancer, and colon cancer, only two of nine California HMO health insurance plans ranked in the top 15 percent. The remaining seven were in the bottom half. If all health plans across the country performed at the level of the top 10 percent, 186,000 Americans would be alive today. They would have consistently and routinely received the preventive care and medical interventions that have proven to save lives. Read more »

*This blog post was originally published at Saving Money and Surviving the Healthcare Crisis*

How To Pick Good Health Insurance

Unless your doctor is a policy expert, in healthcare administration, a researcher, an author or blogger, I seriously doubt he will be reviewing an important report card that helps you pick the best health insurance plan that keeps you healthy. Published annually by the National Committee for Quality Assurance (NCQA), this year’s report card ranks 227 health plans across the country on their ability to keep you healthy and well, treat you quickly, and how patients feel about their insurance coverage.

Because unlike banking or airlines where there is not much difference in ATM machines or planes, there is a big difference in whether a health insurance plan helps in keeping its enrollees healthy. Do children get their vaccinations? Do healthy mothers get screened for breast cancer or cervical cancer with mammograms and pap smears respectively? Do kids only get antibiotics appropriately for strep throat and not overtreated and unnecessarily when they have a viral illness or cold? Are adults over 50 screened for colon cancer (something Dr. Oz can relate to). Read more »

*This blog post was originally published at Saving Money and Surviving the Healthcare Crisis*

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*

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