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Should Personal Responsibility Be Rewarded With Lower Insurance Premiums?

September 7th, 2009 by Happy Hospitalist in Better Health Network, Health Policy
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The time has come to change the rules. As you know the current insurance market is unsustainable. Whether you’re talking about The Medicare National Bank or your Blue Cross, they are all doomed for failure. Why? Because they treat everyone (group plans) the same . And as a result, the incentive towards health has been lost.

What if it wasn’t like that? What if your cost of insurance was 1/10 as much? What if you only paid $1000 a year in insurance, and carried an income based high deductible health policy? What if you were required to take care of the oil changes while your insurance, an affordable insurance, was there to protect you from disaster. An insurance you bought in the open market.

Is all this possible in the current insurance market? Not even close. If you are lucky enough to be employed by a big corporation, you are lucky enough to have deep premium discounts and a large population to spread the risk. If you work for a small business or are a small businessman, you are just one major illness away from catastrophic premium increases. Should you or one of your employees get sick, you’re all screwed.

If three of Happy’s hospitalists suddenly became gravely ill with H1N1 and were left on the ventilator for weeks and accrued hundreds of thousands, perhaps millions of dollars of health care bills, the cost of my premiums would rise dramatically, as a consequence of the large risk in a small pool of people, Happy’s private hospitalist group. While big business is able to spread that risk over hundreds, sometimes thousands of employees, they too are finding that they can’t keep up with the cost of health care inflation.

Why? Why does it have to be so difficult? When people are put in control of their health care dollars, they have a skin in the game that can’t be appreciated by the third party insurance model. Few people realize that the $12,000 in premiums their employer is paying, on their behalf, is $12,000 that is coming out of their pocket.

Many liberals want to claim that middle class wages were stagnant during the Bush years. Hardly, when you account for the health care premiums their employers paid on their behalf, the numbers don’t look so bad. These are stealth wages, wages which might as well be cash in your pocket.

Unfortunately, the current rules of the land have created a completely irrational playing field. Why should my choices be limited to what my employer offers or what my state says is right for me? Why should I be straddled with massive rises in insurance premiums because three of Happy’s partners had an unlucky run in with a virus? It shouldn’t have to be that way.

If you do these four lifestyle actions, your odds of falling ill with one of these top four life changing or life ending diseases is slashed by 80%. That is an amazing fact. To a major degree you have the ability to decide your destiny of health by the actions you choose.

That’s the insurance pool I want to be a part of. Read more »

*This blog post was originally published at A Happy Hospitalist*

Employer Programs Are Reducing Healthcare Costs

September 3rd, 2009 by EvanFalchukJD in Better Health Network, Health Policy
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Bad news in the paper today: health care costs are expected to rise another 10.5% next year. It’s a serious problem that affects businesses and families across the country.

But the headlines miss something important: the rate of increase has been steadily slowing.

Are we already bending the health care cost curve?

Here is a chart of the rate of increase in health premiums for a PPO plan beneficiary from 2002-2009 (all data are from today’s Aon press release):

The data for other plan types are similar.  What’s happening?

Aon’s Chief Medical Officer Paul Berger says it’s because of the variety of measures employers have taken over the last several years to implement programs to improve their employees’ health.  He emphasizes there is still much more to be done.

He has a point. It’s something we have seen in our survey of major employers, and in the work that leading employers like EMC and Genzyme are doing.  It’s what my company does, too.  Employers are getting increasingly sophisticated at understanding what drives their health care expenses and are developing increasingly effective ways at addressing them.

So, yes, of course, we need reform of our health care system, and of course rising health care costs are a serious concern.  But American employers are doing something about these problems all on their own.

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

Medicare & Private Health Insurance: Monkey See, Monkey Do

September 3rd, 2009 by Shadowfax in Better Health Network, Health Policy, True Stories, Uncategorized
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File this under utterly predictable:

Aetna tightens payment policies on hospital errors – Modern Healthcare (sub req)

Aetna has established new, tighter policies dictating when it will and will not reimburse for medical care related to errors made by providers.

Under the policies, Aetna has broken errors into two categories: “never events”—three events involving surgery: wrong patient, wrong site and wrong procedure—and 25 serious reportable events as defined by the National Quality Forum. Providers will not be reimbursed for a case involving one of the three never events, under the new payment policy. Of the 25 events, eight will be reviewed by Aetna to determine whether reimbursement should be withheld. The rest of the events will also be reviewed under Aetna’s new policy, but they will not be considered eligible for adjustments to reimbursement, the spokeswoman said.

This of course follows on the heels of Medicare’s decision not to pay for such events. The good news is that, as far as I can tell, Aetna has not extended the policy as far as Medicare has. Medicare, you may recall, also decided not to pay for certain (arguably) preventable conditions, such as foley-catheter-associated urinary tract infections, and surgical wound infections. Aetna, at least for the moment, is limiting its policy to the more black-and-white “never events” as defined by the National Quality Forum: items such as wrong-patient surgery or death due to contaminated medications.

I mention this not to rail against these standards or against the notion of incentivizing hospitals financially to avoid errors, but to highlight how rapidly and directly Medicare policies are aped by private insurers to the point that they become industry standards.

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

The Problem With Health Insurance

August 26th, 2009 by DrRob in Better Health Network, Opinion
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Something touched a nerve yesterday.  I kind of lost my composure when someone tried to defend the insurance industry and responded out of emotion – perhaps putting aside some reason in the process.

I used to get mad at myself or embarrassed when this happened, but now I stand back and try to analyze my reaction.  What is it that touched a nerve in me?  Why did I feel so strongly?  We don’t feel things without reason, and my reaction doesn’t necessarily betray weakness on my part, it shows the depths of my emotion.  That passion usually comes from something – most of the time it is personal experience; and my personal experience says that insurance companies are causing my patients harm.  That makes me angry.

I don’t think the people in the insurance industry are bad people.  I think vilifying people is the easy way out.  The people there feel like they are doing the right thing, and are no less moral than me.  But I do not think the way to fix our system is through letting them do their business as usual in the name of “free market.”  Defending the current system of insurance ignores some obvious problems in our system:

1.  They are financially motivated to withhold services

If you hire a contractor to work on your house, how wise is it to pay them 100% in advance?  You have just given them financial incentive to do as little work as possible, as it will maximize their profits to do so.  The insurance industry is in such a situation; despite any good intention, they are put in a position to decide between profits and level of service.  It is much better to pay more for better service, not worse; but that is what we have done with health insurance companies.

2.  They have been given the ability to withhold services

If all United Health Care (for example) did was to provide insurance, they would not be vilified as they are.  But since the only data available for medical care was the claims data they hold, they were put in a position to control cost.  This was sensible initially, as they had both the data and the means (denying unnecessary care) of cutting cost.  It’s OK that women aren’t kept in the hospital for a week after having a baby.  It’s OK that I can’t prescribe expensive brand-name drugs when there is a reasonable generic alternative.  There was a whole lot of fat to cut, and they did a good job cutting that fat.

The problem came when all the fat was gone and they were used to big profit-margins.  Once there was not any more unnecessary care to cut, they had two ways to keep their profit-margins: increasing premiums or cutting services.  They did both.  Both of these have hurt my patients.

• Patients have had premiums increased or have been dropped because they were diagnosed with medical problems.  I have had patients beg me “don’t put that in my record,” as they know a diagnosis of diabetes or heart disease will be disastrous.  I am then caught between the pleas of my patients and the demands of honestly practicing and documenting my care.
• I do what I can to follow evidence-based standards, but there are times when people fall out of the norms.  Medicine is not science, it is applied science.  This means that I am trying to take an individual and somehow match them with the scientific data.  Sometimes it works, but everyone is different.  If something is true 90% of the time, 10% of the people will be exceptions to the rule.  I have repeatedly been told by “gnomes” (people with minimal medical education who sit in front of a computer screen with a protocol for care) what “good medicine” looks like.  They see things as black and white when it is just not that way.  This has caused people to be unnecessarily hospitalized, it has required them to get unnecessary tests to follow their rules.  There is no arguing with people in front of computers.

3.  They covertly ration

Dr. Rich Fogoros (whom I recently met) has coined this phrase to explain what happens in our system.  Because it doesn’t look good to deny necessary care, insurance companies (including government-run ones) resort to making things exceedingly complex.  This makes it look like care is being offered, but not taken advantage of.    What does this mean?

• The burden of proof is put on the provider to show the tests ordered are necessary.  The assumption is that a test will be denied unless the doc can prove otherwise.
• Tests are sometimes inappropriately denied.  They then can be appealed, but the appeal process is even more difficult than the initial approval process, and so some people give up.  Every time someone gives up, less is paid out by the insurance company and their profits go up.
• The rules for coding and billing are so complex, that it is very easy to make mistakes.  This means that an appropriate test ordered by a doctor that is not perfectly coded doesn’t get paid for.  The patient gets the bill and must get the doctor to appeal the denial.  This appeal process, again, is difficult.

Because of this, I have to hire staff whose sole task is to learn all of the rules of the different insurance carriers (including public ones) and then play the game properly with them so that we get as few denials as possible.  I probably spend $70-80 thousand per year to deal with the frustratingly complex system we have.

————

I have health insurance.  I do understand why it needs to exist, but I also see how harmful the current state can be to my patients.  I get frustrated with Medicare and Medicaid as well, but that is not my point.  Just because government run insurance has problems doesn’t do anything to change the problems with private insurance.  The fact that you can be killed by firing squad doesn’t make the gallows any better.

The cost of care has gone up dramatically over the past 10 years while my reimbursement has dropped.  Where is that extra money?

But the system is very broken right now.  It needs to be fixed.  Things need to be changed in both the private and public sector.  When I was in DC I made the point that our ship is sinking and we are arguing about who will be the captain.  The problems in our system are not simply who is writing the checks.

Honestly, I don’t really care who writes the checks.  All I want is for the system to reward good care and to stop hurting my patients.  Those who deny the reality of either of these problems will invariably draw my ire.

*This blog post was originally published at Musings of a Distractible Mind*

Government Insurance & Running Naked Through Storm Risks

August 24th, 2009 by EvanFalchukJD in Better Health Network, Health Policy
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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*