Monday, February 28, 2011

Medical Care Costs

This is not really a point of view about the new health care law, or attempts to roll it back. What I can share is how crazy our system is from the point of view about how insurance does or doesn't work. And then the more fundamental point which is about the overall rise in healthcare costs.

It's very interesting to look at our bills - which are really insurance statements - and see several things:
1. How much some of the scans and surgeries "cost" as stated by the hospital
2. How much the insurance company reimburses the provider for.

There is often quite a large difference between the two. So you cannot really self-insure - because you would be paying the exorbitant face rates the providers bill instead of the much lower rates the insurance companies pay. So I am grateful for insurance coverage, just to get the cheaper rate.

The bigger problem is if you change employers and you have a preexisting condition. This employer centered health care system is nuts, it ends up locking people into companies because they often cannot afford to leave them. If you move from one group plan to another, as long as you've been on the program for two years, you are ok. But you really cannot move from a group plan to private insurance, even if you could afford the premiums, because they would deny you for preexisting condition. If we really want to unlock entrepreneurialism, we need to enable people to be able to leave companies and get insurance regardless of pre-existing condition. You'd think the Republican's would be FOR this kind of incentive, wouldn't you? Instead we prevent thinkers, tinkerers, inventors and entrepreneurs from doing it, unless they take additional massive risk to self-insure.

One thing I learned recently is that roughly 5% of the people insured generate most of the health care costs, which drives premium rates and the overall cost of healthcare. There is all this talk about bending the health care cost curve, and making sure people have high enough co-pays and deductibles so that they can make smarter choices about the health care (i.e., cheaper choices). But based on the statistics, most people aren't incurring big bills and in a position to have to make those choices. They get regular preventative care and then get treated for the normal kind of events that pop up (broken arm, appendicitis, bacterial infection). They aren't going to look at a menu of choices and say, oh, I'll take the cheaper option. Even if they did it wouldn't affect the overall costs very much at all.

So what about those 5%, who drive the huge health care costs? Two sets of people. It's people at the end of their lives and the extraordinary measures done to extend life, at huge costs and likely not very much quality of life. It does make sense to encourage doctors to talk with their patients in advance of those treatments and ask them what they would want, based on costs and all the other issues. When this got raised by the Dems the charge of "death panels" came from the Right and the matter was dropped.  Shame, shame, shame. It is a discussion we need to have.

The second set are patients like Meagan who have a critical disease. Yup, we are responsible for one heck of a lot of medical costs in the last 9 months. Changing our deductible, or co-pay, or showing us a menu of choices and costs wouldn't have made a damn bit of difference. Whatever it takes, whatever the docs need to make a proper diagnosis and address the issues. I am sure everyone would have done the same in our shoes - and thus the problem. The costs will only be driven down by hospitals and insurance companies collaborating and figuring out bulk purchase arrangements, better information transfer and flow, preventative schemes, and the like. The first PET scan machine was darned expensive, it's cheaper now, but it could be way cheaper if the initial order had been in the thousands not tens.

Lastly, I think it's a given that health care costs are going to continue to go up, and people will be happy about consuming a larger part of their disposable income (through premiums and co-pays) in health care. I'd rather buy fewer things and have better health.

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