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New health-care law: 'Totally transformative' or just a way to increase Mass. General's market share?
By adamg on Tue, 08/07/2012 - 8:22am
WBUR's CommonHealth rounds up the conventional wisdom on the law Gov. Patrick signed yesterday to control health-care costs. Josh Archambault, director of healthcare policy at the Pioneer Institute, is more dour, and refers to a system already dominated by Partners Healthcare (MGH and the Brigham):
The government will impose caps in healthcare cost increases, which will lead to further consolidation in the market--exacerbating one of the causes of the predicament we are in today. The law will also lock in place current inequalities of provider reimbursement levels, as everyone will grow at the same rate, but not everyone is starting from the same place. Then just to add salt to the wound, the government is ensuring that healthcare will cost us all a lot more, by adding hundreds of millions of dollars to the system through new surcharges, fees, and penalties. Make no mistake about it, these costs will be passed onto consumers.
Paul Levy, formerly of Beth Israel Deaconess, agrees:
By the time this is evident, the current governor and many current legislators will no longer be around to help dig the state out of its new hole.
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Comments
Price controls always have
Price controls always have unintended consequences. We'd be better off allowing more insurance companies to compete in the state and developing more medical schools to increase the supply of doctors. But those are both things which require more effort than the hollow stroke of a pen.
Really?
It is the lack of profit controls that seems to be why we pay so much more for so much less compared to Canada and the UK.
The failure isn't "enough competition" - the failure with healthcare is forcing what should be an entitlement into a capitalist model. Pretty damn clear if you bother to look at the data internationally.
'Free' professional labor
'Free' professional labor from someone else is not a right.
Yes but...
It's also the most successful way to contain health care costs.
Health care isn't a normal market. It's basically impossible for consumers to shop around and pick the best value. In an emergency, you have no choice. And even in a non-emergency, you have very incomplete information.
Providers will and do try to rip you off. Ever taken a look at an emergency room bill? This is why it's helpful to have powerful entities that can negotiate prices on your behalf.
State by state
This is why it's helpful to have powerful entities that can negotiate prices on your behalf.
Isn't that what the insurance companies are supposed to do?
This won't come out of this process -but one thing we need is national (note - not nationalized) health insurance so you have people with clout and information that crosses state lines.
This state by state stuff is crazy and if we had national carriers that had tremendous clout and influence things would probably be very different.
But you are right - the consumer is at a tremendous disadvantage and has no way to make an informed decision on many of the situations that arise - and even there cases can vary signficantly. The other thing is that insurance isn't really insurance like other types of insurance - it's more of a collective payment system in part because the consumer has so little influence in what is actually paid - especially for more basic services.
One thing that would probably work much better would be to have consumers more involved in the routine stuff with larger annual deductibles. It costs me $25 in copay to get a physical. But if I had a $5000 deductible to meet first and I had a choice between a GP charging me $500 at MGH and a doctor down the street in an office doing it for $250 - for a basic physical - I know where I'd probably be. But for $25 - hell - let the insurance company figure out what a fair price is.
If I needed $75k worth of brain surgery (and some of you might argue I do need a lobotomy :-)) That's when I need the help of the insurance company with the expertise to negotiate a fair rate for a competent professional.
Insurance companies
Yes, they are supposed to negotiate prices. They do, in fact, get much better prices. But then they turn around and try to rip you off for their own benefit, playing games with "pre-existing conditions" and other nonsense. That's why the healthcare system in this country was so broken. The ACA is attempting to fix it within the current framework, by creating markets in a context where consumers will have the opportunity to compare and contrast. We'll see how it goes.
Now one point I would like to make about your example of a basic physical -- you could have a situation where the patient decides to spend $250 instead of $500 for routine care in a competitive market. But more likely, the patient is just going to skip this routine care and pocket the $250. Unfortunately, this just leads to another market failure, which increases costs later on when it turns out that the patient had a medical condition that would have been cheap to treat early, but is now very expensive to cure.
So arguably, it is in the interest of the insurance company to offer cheap, flat-rate preventative care if it will save them from potentially big costs in the future.
Not if you do it right
First - the health insurance business is not particularly profitable - yes there is a middleman - but their margins are very, very small when compared with most other businesses- fortunately for them costs tend to be very predictable as well so it's not a super complicated type of insurance to operate if you have reasonable statistics. They make money based on scale - not margins. If it were so profitable you'd see lots of people opening up new health insurance companies but you don't see people banging down the door to get into that business.
Second - you put in a clause that says of you don't take certain actions (like getting your annual physical), you don't get coverage from the insurance company - you are on the hook for the cost. This won't be a problem for the indigent because they will get their insurance/care for free anyway. However, those who have something - perhaps a lot -to lose - won't likely skimp on a $250 physical if they could lose thousands of dollars for not abiding by the terms of their insurance.
It's about putting the incentives in the right place - and you can't have one size fits all. As it is nobody has any incentive to economize where they can. There's no easy solution - but sadly, like in this legislation, we reach for the simple solution because it's easy - of course until it blows up in your face which this will eventually.
Please Explain
How any of your schemes will reduce the "pushing paper tax" that eats a ridiculous percentage of our healthcare dollar? I'm talking about the enormous amount of time and money spent on billing - shit like Mount Auburn Hospital sending us a separate bill for each and every little lab test, and not being able to consolodate bills across a month or a single insurance number? Shit like every doctor's office having to have a full time person just to sort out the billing?
Oh, I get it
Make them get a physical so you can pull the "preexisting condition" trip.
Got it!
Actually swirly
I never said anything about pre-existing conditions -and that's one part of Obamacare that I support (and I believe now we have that in Mass too as part of Romneycare). However, we all have to recognize that this does drive up costs for the insurer - although I think that's a price we should pay for portability of insurance.
As for the billing - you are right - that's a nightmare (and part of Anondeuce's complaint below). Again - this is ENORMOUSLY complicated and if there were an easy fix I'm sure insurance companies and providers would put it in. I'm also sure there's absolutely no way government makes it better. I'm not sure if this is a problem with the insurance companies or the providers - probably something that falls in between which is why it never gets fixed.
Maybe by a combination of software and outsourcing trained billing staff you could fix this. Sounds like there's a business opportunity there - why don't you get some investors and get right on that?
The costs would go up if we
The costs would go up if we just enforced a ban on exclusions for pre-existing conditions. But it's balanced by the mandate, so that patients cannot cheat the system (supposedly). Can't have one without the other. If you support that part of Obamacare then you have to support the individual mandate in order to be consistent.
Keeping the billing complicated is to the benefit of insurance companies and providers. They can try to game each other. Single-payer (like say, Medicare) would go a long way to making this simpler.
Nonsense
Stevil, we love your pragmatic libertarian ass!
I always get amused that purchasing insurance over state lines is being touted as a fix to our cost problems. My work place did this for a time, purchasing blue cross blue shield of Georgia, and I can tell you they were about as inept as anything I've ever dealt with. They ain't BCBS of MA.
They'd never say so but their policy was to bill you 80% and hope you paid their invoice. Every single doctors visit I had while under them I needed to call into their southern office and speak with a woman with a long drawl to get fixed. Every single time without fail.
As far as I'm concerned that's fraud, and they shouldn't be allowed to misrepresent invoices. Allowing private and local business purchases over state lines is only going to make things worse, as shell games are played out.
So
If they suck (and they did) the company finds a new provider (and they did). I work with Cigna out of CA - and they are fine.
Health insurance is a very low margin business (about 2-4% profit after tax) that needs scale to operate most efficiently. Setting up 50 different systems in a business like this is bound to lead to substantial inefficiencies that can partly be cured by having one set of national rules for everyone. It's not a fix - just an improvement to make the business more efficient.
It will take years to manifest, but longer term this will lead to doctors leaving the state for greener pastures. Places like NC are probably licking their chops to get our best and brightest doctors to move to the new university hospitals they are building down there and these kinds of laws will only accelerate the migration.
Actually
The company went to a cheaper provider. Service had little impact on that decision. And while service was better, the benefits were actually worse.
"state by state"
Every time you hear some insurance company shill talking about how great it would be if insurers were allowed to sell health insurance across state lines, you need to understand that what he or she is really saying is this:
"Wouldn't it be great if we could completely bypass state government regulations. Then we could put our company in the state whose government does the least to protect consumers, and sell policies into other states, whose consumer-friendly insurance commissions would be powerless against us"
"Free" market hogwash
And allowing unchecked businesses to set their own rules in the marketplace *doesn't* have unintended consequences?
Well, I guess you're right - those aren't "unintended" at all.
If there ain't no such thing as a "free lunch", then how is it there's such a thing as a "free market"? (that is both rhetorical and an intentional invalid comparison, don't bother trying to correct me)
The fact that the multi-billion dollar
Massachusetts health-care "industry" is so vociferously against this makes me support it wholeheartedly.
I don't think you read the article or even the blog entry
The very first line is, "Hundreds of health care leaders joined Patrick Monday to endorse the law."