Another angle, powerful yet subtle. The competitiveness of a market isn't defined simply by how many competitors but by the information asymmetry and power imbalance between consumer and producer. This is one of the areas where the libertarians are hopelessly naive, btw. If I'm asked to compare two insurance plans, and one has a 65 page contract of terms and the other had a 70 page contract of different terms, there is 0% chance that I can make an informed price comparison even as a diligent consumer. The insurers are obscuring price behind all that fine print. But if, instead, a benevolent state insurance commission made all the insurers offer me a plan with the SAME fine print (contract terms) then as a consumer I can compare on price. The insurers with their analysts and actuaries can put a price to these terms in ways consumers can't. So somewhere in your plan needs to be specific tactics to ACTUALLY INCREASE COMPETITION. Competitive outcomes exist on a continuum, and the policy analyst needs to know how to push the system along that competitive continuum.
Direct care seems to cut out lots of middle men and unnecessary administrative bloat in our health care system. How have you experienced it? How have your patients responded?
Dentistry meets many of your recommendations, and dental patients have more skin in the game than medical patients.
Compliance is the problem when the patient's healthcare portion is too high. And dentistry has a significant compliance problem. Churning is the problem when it is too low.
Hawaii would be an excellent laboratory for this kind of common-sense experiment, since it is too small to do Medicare for All by itself.
Perhaps you could do another series by taking the best single payer system in the world and recommend modifications to use it in America.
Great stuff and many angles to play out. Here's one. Another reason to separate out catastrophic insurance is that the entire delivery system for "routine care" needs to be structurally divorced from the expensive acute care infrastructure. There is no risk pooling in basic annual maintenance. It's consumption. And it doesn't need ICUs and OR overheads. My annual checkup and routine diagnostic should be done on an entirely different and less costly platform. Think "health club with a doctor" or "primary care practice with a health club." On a reasonable subscription price. But putting routine care through the same insurance program as care for an illness or accident is like including gasoline and car washes in car insurance. In addition to horrible delivery economics, all the moral hazard is in the basic consumption. (I dated a municipal librarian...her health insurance included 50 massages a year...I know the optimal number of massages to consume on this plan. 52 and self pay twice.)
I am content with the idea that it may take a lifetime for them to pay back.
Of course, they could have chosen to insure differently or to have taken their chances. And this will still cost the taxpayers money...as some will not have the means to pay back, even over a lifetime, and others will die after treatment. Still, it sets incentives the right way, and the taxpayers are better off than with all alternatives other than YOYO.
It strikes me a lot of these things are already bring done. Without a doubt the young and healthy are subsidizing the old. Those who are healthy on state exchanges are doing the same. I don't like the govt mandating one have insurance of any type though I see the necessity. However it needs to be tied to cost control with solid metrics or who qualifies for what, price transparency and more. A lot I agree with. But in the end I worry we will just end up making people pay the same (ie payroll tax vs health insurance premiums) for a less protective product.
I have a intellectually disabled daughter who is on senior advantage Medicare and Medicaid as I am myself (except Medicaid). My wife is an HMO member and has an HSA. My 2 sons just graduated, and now have direct care for everyday care and an association health care plan for major medical. In all cases care has been excellent and the costs are quite reasonable. My wife (cancer) and I (widow maker heart attack) have had serious health issues that were completely covered with no hassles. I see our system as about as good as it gets under the current USA health care system.
When friends complain about the cost or accessibility of medical care, I share our family's system. The universal response has been negative. They seem to be afraid to try something they see as unconventional and maybe risky.
What do they see as so unconventional - that different family members have different plans? Or your sons' direct care -- does this imply a direct primary care plan with membership fees? In any case, I'd have to imagine that when you factor in the equivalent govt expenditure on your and your daughter's medicare and medicaid plans, this would be a very expensive monthly bill to pay for all these, no?
Unconventional = Direct care and association plan aren't 'real insurance'. Direct care = $110 monthly, association plan = $175 monthly. ($1000 Deductible) No government money supports this.
Wife Kaiser = $781, but will go to $0 when she turns 65 this summer. So lots of government money will support this , as well as my and my daughter who are now on Senior Advantage Medicare.
It strikes me that your family has found optimal niches within our system; but, yes, still very high (total) expenses, typical for the incredibly complicated "health insurance" landscape here.
What about "whole-life" health insurance? In addition to a catastrophic policy, if people had a policy they could borrow against that paid off the loan at death (whole life policy), they would then decides which "elective" procedures to undertake. Example at age 78 do I want a by-pass surgery to extend my life or leave that money to my kids and grandkids. It brings a free-market component into the consideration
That's a fascinating idea (although one that would stir up some heated debate!). We clearly need to spend less money on end of life care in this country - it costs a lot and tends to bring only suffering on people. While beyond the scope of my series to dig into, I think this is an important concept, although I would probably push everyone to have end-of-life wishes written out to receive medical care, rather than financially induce them to die sooner!
What about actually reducing the cost via scientific/technological progress, rather than just sharing it differently? Additionally, we have a real shortage of doctors and nurses that must be addressed. Mere payment schemes provide no healthcare.
Agree on both counts; I steered clear of the weeds in terms of QI and non-market ways to contain costs as then a post becomes a book! I think tech has some potential to save money, esp in elimination certain expensive specialists (ie derm and radiology) and in "talking" doctors through improved decision trees that can reduce unnecessary tests and procedures (esp if we ever get universal health records). There is potential, for sure. I think a system like this would encourage more providers to participate, but increasing the number of working MDs and ancillary staff is a big process; again, AI etc might help us trim health care providers away from they are not really needed.
I prefer a different way of dealing with the issue.
If we agree that in a rich country we don't want people to die on the curb outside the clinic because they can't afford healthcare, then there must be an alternative process. However, we know (yes, know) that if we don't engage market forces, the whole industry will be riddled with perverse incentives and inefficiency (like it is now).
So how to round the square?
How about if Citizen B needs healthcare and cannot afford it, he has the following options:
1. do nothing and take his chances
2. ask for charity wherever
3. accept a govt LOAN that is non-dischargeable sort of like educational debt
This LOAN is, in effect, your neighbors saying "we don't want to let you die, but you are still responsible for you." This loan should have a nominal interest rate linked to inflation, should be non-dischargeable, payable through wage garnishment or reduction in govt assistance payments if you receive them, and a prime creditor in the estate process.
This LOAN should not be designed to be people's first choice. It should be the last. It should not be designed to be economically efficient for the borrower, it should be a last recourse.
Payments should be made to providers directly, not disbursed to the borrower, and prices set like in Medicare, and of course, no provider is required to work with this program.
This should encourage people to be responsible citizens, helps them if they are not, BUT the wise ants that help the foolish grasshopper have at least some expectation of getting paid back by the grasshopper
I love this in theory... in reality, though, people sick enough to require emergent hospitalization are often looking at $50,000, or $200,000, or $500,000 hospital bills -- asking people who could not afford insurance in the first place to take out the $ equivalent of a home mortgage is not going to end well, I fear.
You have a lot of good points, especially when it comes to price transparency. One thing you are not considering is that price controls lead to shortages. The whole purpose of schemes such as what you describe is to make sure that truly indigent people receive healthcare regardless of their ability to pay. The government would pay their bills as per their income in the model you suggest. But once you allow the prices to be controlled by the government, the shortages will become a major problem.
Yes, you do say that your system would allow those who wanted to to pay beyond the government fee for services they think more appropriately fit their needs. By definition, the indigent don't have this option and so are stuck with providers willing to accept the price controlled amounts. Which leads to the system we have here in rural NY. Most people here qualify for medical subsidies, either via medicaid or off of the marketplace. Most of these people end up in one of a handful of managed plans. Of the practices and hospitals that are contracted with these plans, there are huge wait lists to be seen. So, in effect, people have this wonderful coverage for all these important things. But, when they go to use it, they find that they can't as there are no actual providers available to see them.
It is one thing to have medical insurance (or call it a medicare fund, if you like). It is quite another to find a provider who is not only willing to accept payment from this plan, but is also available to see their patients in a timely fashion and actually provide a minimal baseline of quality care. Health insurance or health coverage is not at all the same thing as actual health care. Just because one has coverage does not mean that one can actually access the healthcare system.
Great point - I had a little panic attack while writing this piece when I asked myself, "are these PRICE CONTROLS???" (For all the reasons you state). I decided they were not, though, in that providers can still set their own prices, and if close enough to the allowed limits, a lot of ppl would be able to/decide to pay the extra. If farther from the "max allowed price," fewer ppl would have that option. I *think* you'd see a few high end providers emphasize excellent service and go high, but most providers would stick near the allowed max, and some would go for volume and charge under esp for shoppable items (doctors, MRIs, labs, etc); we see this already in the Medicare world. I think what you reference largely correlates with Medicaid plans (or perhaps a very low-reimbursing private plan); yes, these become pariahs as no one wants to take them (I capped my practice at 10% medicaid when I took all insurance, as they paid 40% under medicare, and I barely was making it on medicare reimbursement). They don't pay enough for doctors/labs/etc to turn a profit. We can't set prices that low; it's not worth the savings.
Another angle, powerful yet subtle. The competitiveness of a market isn't defined simply by how many competitors but by the information asymmetry and power imbalance between consumer and producer. This is one of the areas where the libertarians are hopelessly naive, btw. If I'm asked to compare two insurance plans, and one has a 65 page contract of terms and the other had a 70 page contract of different terms, there is 0% chance that I can make an informed price comparison even as a diligent consumer. The insurers are obscuring price behind all that fine print. But if, instead, a benevolent state insurance commission made all the insurers offer me a plan with the SAME fine print (contract terms) then as a consumer I can compare on price. The insurers with their analysts and actuaries can put a price to these terms in ways consumers can't. So somewhere in your plan needs to be specific tactics to ACTUALLY INCREASE COMPETITION. Competitive outcomes exist on a continuum, and the policy analyst needs to know how to push the system along that competitive continuum.
Direct care seems to cut out lots of middle men and unnecessary administrative bloat in our health care system. How have you experienced it? How have your patients responded?
Are we obligated to be our brother's keeper? Given the cost of modern medicine, a lot of Americans would answer No.
Dentistry meets many of your recommendations, and dental patients have more skin in the game than medical patients.
Compliance is the problem when the patient's healthcare portion is too high. And dentistry has a significant compliance problem. Churning is the problem when it is too low.
Hawaii would be an excellent laboratory for this kind of common-sense experiment, since it is too small to do Medicare for All by itself.
Perhaps you could do another series by taking the best single payer system in the world and recommend modifications to use it in America.
Great stuff and many angles to play out. Here's one. Another reason to separate out catastrophic insurance is that the entire delivery system for "routine care" needs to be structurally divorced from the expensive acute care infrastructure. There is no risk pooling in basic annual maintenance. It's consumption. And it doesn't need ICUs and OR overheads. My annual checkup and routine diagnostic should be done on an entirely different and less costly platform. Think "health club with a doctor" or "primary care practice with a health club." On a reasonable subscription price. But putting routine care through the same insurance program as care for an illness or accident is like including gasoline and car washes in car insurance. In addition to horrible delivery economics, all the moral hazard is in the basic consumption. (I dated a municipal librarian...her health insurance included 50 massages a year...I know the optimal number of massages to consume on this plan. 52 and self pay twice.)
Agree totally!
I am content with the idea that it may take a lifetime for them to pay back.
Of course, they could have chosen to insure differently or to have taken their chances. And this will still cost the taxpayers money...as some will not have the means to pay back, even over a lifetime, and others will die after treatment. Still, it sets incentives the right way, and the taxpayers are better off than with all alternatives other than YOYO.
It strikes me a lot of these things are already bring done. Without a doubt the young and healthy are subsidizing the old. Those who are healthy on state exchanges are doing the same. I don't like the govt mandating one have insurance of any type though I see the necessity. However it needs to be tied to cost control with solid metrics or who qualifies for what, price transparency and more. A lot I agree with. But in the end I worry we will just end up making people pay the same (ie payroll tax vs health insurance premiums) for a less protective product.
Yes, it will be a fight. So what do we do now?
I have a intellectually disabled daughter who is on senior advantage Medicare and Medicaid as I am myself (except Medicaid). My wife is an HMO member and has an HSA. My 2 sons just graduated, and now have direct care for everyday care and an association health care plan for major medical. In all cases care has been excellent and the costs are quite reasonable. My wife (cancer) and I (widow maker heart attack) have had serious health issues that were completely covered with no hassles. I see our system as about as good as it gets under the current USA health care system.
When friends complain about the cost or accessibility of medical care, I share our family's system. The universal response has been negative. They seem to be afraid to try something they see as unconventional and maybe risky.
What do they see as so unconventional - that different family members have different plans? Or your sons' direct care -- does this imply a direct primary care plan with membership fees? In any case, I'd have to imagine that when you factor in the equivalent govt expenditure on your and your daughter's medicare and medicaid plans, this would be a very expensive monthly bill to pay for all these, no?
Unconventional = Direct care and association plan aren't 'real insurance'. Direct care = $110 monthly, association plan = $175 monthly. ($1000 Deductible) No government money supports this.
Wife Kaiser = $781, but will go to $0 when she turns 65 this summer. So lots of government money will support this , as well as my and my daughter who are now on Senior Advantage Medicare.
It strikes me that your family has found optimal niches within our system; but, yes, still very high (total) expenses, typical for the incredibly complicated "health insurance" landscape here.
What about "whole-life" health insurance? In addition to a catastrophic policy, if people had a policy they could borrow against that paid off the loan at death (whole life policy), they would then decides which "elective" procedures to undertake. Example at age 78 do I want a by-pass surgery to extend my life or leave that money to my kids and grandkids. It brings a free-market component into the consideration
That's a fascinating idea (although one that would stir up some heated debate!). We clearly need to spend less money on end of life care in this country - it costs a lot and tends to bring only suffering on people. While beyond the scope of my series to dig into, I think this is an important concept, although I would probably push everyone to have end-of-life wishes written out to receive medical care, rather than financially induce them to die sooner!
What about actually reducing the cost via scientific/technological progress, rather than just sharing it differently? Additionally, we have a real shortage of doctors and nurses that must be addressed. Mere payment schemes provide no healthcare.
Agree on both counts; I steered clear of the weeds in terms of QI and non-market ways to contain costs as then a post becomes a book! I think tech has some potential to save money, esp in elimination certain expensive specialists (ie derm and radiology) and in "talking" doctors through improved decision trees that can reduce unnecessary tests and procedures (esp if we ever get universal health records). There is potential, for sure. I think a system like this would encourage more providers to participate, but increasing the number of working MDs and ancillary staff is a big process; again, AI etc might help us trim health care providers away from they are not really needed.
I prefer a different way of dealing with the issue.
If we agree that in a rich country we don't want people to die on the curb outside the clinic because they can't afford healthcare, then there must be an alternative process. However, we know (yes, know) that if we don't engage market forces, the whole industry will be riddled with perverse incentives and inefficiency (like it is now).
So how to round the square?
How about if Citizen B needs healthcare and cannot afford it, he has the following options:
1. do nothing and take his chances
2. ask for charity wherever
3. accept a govt LOAN that is non-dischargeable sort of like educational debt
This LOAN is, in effect, your neighbors saying "we don't want to let you die, but you are still responsible for you." This loan should have a nominal interest rate linked to inflation, should be non-dischargeable, payable through wage garnishment or reduction in govt assistance payments if you receive them, and a prime creditor in the estate process.
This LOAN should not be designed to be people's first choice. It should be the last. It should not be designed to be economically efficient for the borrower, it should be a last recourse.
Payments should be made to providers directly, not disbursed to the borrower, and prices set like in Medicare, and of course, no provider is required to work with this program.
This should encourage people to be responsible citizens, helps them if they are not, BUT the wise ants that help the foolish grasshopper have at least some expectation of getting paid back by the grasshopper
I love this in theory... in reality, though, people sick enough to require emergent hospitalization are often looking at $50,000, or $200,000, or $500,000 hospital bills -- asking people who could not afford insurance in the first place to take out the $ equivalent of a home mortgage is not going to end well, I fear.
You have a lot of good points, especially when it comes to price transparency. One thing you are not considering is that price controls lead to shortages. The whole purpose of schemes such as what you describe is to make sure that truly indigent people receive healthcare regardless of their ability to pay. The government would pay their bills as per their income in the model you suggest. But once you allow the prices to be controlled by the government, the shortages will become a major problem.
Yes, you do say that your system would allow those who wanted to to pay beyond the government fee for services they think more appropriately fit their needs. By definition, the indigent don't have this option and so are stuck with providers willing to accept the price controlled amounts. Which leads to the system we have here in rural NY. Most people here qualify for medical subsidies, either via medicaid or off of the marketplace. Most of these people end up in one of a handful of managed plans. Of the practices and hospitals that are contracted with these plans, there are huge wait lists to be seen. So, in effect, people have this wonderful coverage for all these important things. But, when they go to use it, they find that they can't as there are no actual providers available to see them.
It is one thing to have medical insurance (or call it a medicare fund, if you like). It is quite another to find a provider who is not only willing to accept payment from this plan, but is also available to see their patients in a timely fashion and actually provide a minimal baseline of quality care. Health insurance or health coverage is not at all the same thing as actual health care. Just because one has coverage does not mean that one can actually access the healthcare system.
Great point - I had a little panic attack while writing this piece when I asked myself, "are these PRICE CONTROLS???" (For all the reasons you state). I decided they were not, though, in that providers can still set their own prices, and if close enough to the allowed limits, a lot of ppl would be able to/decide to pay the extra. If farther from the "max allowed price," fewer ppl would have that option. I *think* you'd see a few high end providers emphasize excellent service and go high, but most providers would stick near the allowed max, and some would go for volume and charge under esp for shoppable items (doctors, MRIs, labs, etc); we see this already in the Medicare world. I think what you reference largely correlates with Medicaid plans (or perhaps a very low-reimbursing private plan); yes, these become pariahs as no one wants to take them (I capped my practice at 10% medicaid when I took all insurance, as they paid 40% under medicare, and I barely was making it on medicare reimbursement). They don't pay enough for doctors/labs/etc to turn a profit. We can't set prices that low; it's not worth the savings.
Doc... you are so right. It will take a fight.