Thursday, May 18, 2017

Wild health care proposal

I found a lovely post on health care full of wild ideas at market-ticker.org. You may not agree with all the proposals -- wild even by my standards.  But it is full of interesting detail on what's wrong with the microeconomics of health care delivery, as opposed to the usual focus on health insurance, and who pays, ignoring the vast dysfunction of the underlying market. 

A few choice quotes to whet your appetite
All providers must post, in their offices and on a public web site without any requirement to sign in or otherwise identify oneself to access it, a full and complete price list which shall apply to every person....  
All customers must be billed for actual charges at the same price on a direct basis at the time the service or product is rendered to them.  This immediately and permanently decouples "insurance" from the provision of care.  The current system of an "explanation of benefits" that often features a "negotiated discount" of some 90% is nothing other than an extortion racket and is arguably felonious...  All medical records are the property of, and shall be delivered to, the customer at the time of service in human readable form (a PDF provided on common consumer computer media such as a "flash stick" shall comply with this requirement.)  Any coding or other symbols on said chart must include a key to same in English delivered at the same time....  
All surgical providers of any sort must publish de-identified procedure counts and account for all complications and outcomes, updated no less often than monthly. Consumers must be able to shop not only on price, but also on outcome... 
Auxiliary services (e.g. medical or dental Xrays, lab testing, etc) may not be required to be purchased at the point of use.  If you wish to buy your tests from the lab down the street (which also must post a price) that's up to you.... 
Any test or diagnostic that carries no exposure to drugs or radiation, nor is invasive beyond a blood draw, may be purchased without doctor order or prescription... 
No government funded program or government billed invoice will be paid for medical treatment where a lifestyle change will provide a substantially equivalent or superior benefit that the customer refuses to implement.  The poster child for this is Type II diabetes, where cessation of eating carbohydrates and PUFA oils, with the exception of moderate amounts of whole green vegetables (such as broccoli) will immediately, in nearly all sufferers, return their blood sugar to near normal or normal levels.  The government currently spends about 25% of Medicare and Medicaid dollars on this one condition alone and virtually all of it is spent on people who can make this lifestyle change with that outcome but refuse... 
Health insurance companies must sell true insurance to sell any health-related policy at all.  A true insurance policy is defined as one that (1) does not cover any condition you have received treatment for over the last 24 months...
And so on. For my tastes it suffers from the usual vagueness about the subject of all these sentences. Is transparent pricing, for example, a new set of regulations? Why don't hospitals already post prices, unlike airlines which do so voluntarily? Which regulations are stopping hospitals from competing on price, and maybe we should get rid of those rather than pass new regulations? But apart from the question whether this is new rules or just a vision of how things should be, it's an interesting and refreshing and totally out of the box view.

16 comments:

  1. why is it so difficult to repeal the McCarron act?

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  2. I saw this too. A great number of his suggestions make sense but he doesn't seem to realize how many of them would be automatically provided in a market that is allowed to function in a normal, consumer-driven way. The undertow of the entire blog piece is that these rules need to be legislated.

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  3. The diabetes one seems quite extreme, maybe have some out of pocket spending for type 2 diabetes drugs?

    As for most of this, it feels like what you already have here in a lot of European countries. And of course, you need the penalty for not buying insurance to avoid adverse selection. Its what everybody hates but is necessary. If you're too poor to get insurance then you should get it subsidized. Still market system, and as long as it is progressively decreased as you get richer, there's no huge incentive to stay poor.

    And these are the most controversial issues, the penalty and subsidies, but in my view required. In practice its hard to avoid adverse selection, and people tend to discount the future too much, making them optimistic about their health outcomes, so a steep penalty while theoretically not the best way to go about it, in practice I believe it to be the most effective way.

    As for subsidies, its mostly about not being a d***.

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  4. I think this:

    https://market-ticker.org/akcs-www?post=231959

    addresses some of your final paragraph questions.

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  5. Lots not to like.

    1) This seems to outlaw price discrimination. But price discrimination is essential for any business that has high fixed and low marginal costs. (Which is obviously the health care business.)
    2) Do we really think that if we reduce incentives for drug innovation, we’ll get more innovation?
    3) Is putting tax liens on people who can’t pay their bills going to reduce Medicaid expenses? Even if you like the policy—which, let’s be honest here, amounts to raising taxes on poor, sick people—how much cash do you think that will generate?
    4) Making a distinction between poor, sick people who are legal residents and poor, sick people who aren’t is…um…morally questionable. And as a practical matter, even if some woman comes across the border to, as was said, “poop out a baby”, are we really going to refuse to give the baby care?

    True story: I just got back from Japan where I heard a and Friend-of-Abe give a talk in which he brutally described the many infirmities of Japanese labor markets—sclerotic, inefficient and over-regulated. He then explained how Abe was going to solve the problem by passing more laws.

    Isn’t that what’s going on here?

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    1. To your point - the medicaid tax liens aren't the mechanism that reduces expenses. Price transparency and consumers' perceptions that they may have to pay for the care are the mechanisms that may reduce the costs (in addition to not paying for things that are treatable with lifestyle changes).

      4) Why make the distinction between Americans and non-Americans? On a utilitarian basis, it probably makes more sense to provide vaccines / mosquito nets to people in poor countries with bad diseases than it does to provide chemo to the elderly with stage 4 pancreatic cancer. Yet, many people die of preventable diseases at young ages and some Americans get millions of dollars in care to prolong their life for weeks.

      I think America is at an impasse. We either have to treat healthcare as a right and find better ways of providing it or we have to say it's not a right and accept people in America dying of preventable things - the system of saying that people have the right to high quality emergency care but not much else isn't great for anyone except for health care providers and people who can't afford the prices that health care providers charge which is increasingly more people.

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  6. More than entertaining,..... startling. The savings alone on treatment of diabetes is mind boggling.

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  7. Liberals think health care is a free good. Conservatives think health care follows all the rules of other goods. They're both wrong. Consider price transparency. You've got a better chance of negotiating the price of a coffin and funeral with a funeral home than you have of negotiating (and understanding) the costs of, say kidney stone removal, both of which are painful but could be put off for a few days.

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    1. Why negotiate with a single provider? Do you call up a plumber, get a quote, and then haggle? Or do you call another plumber if you think the first quote was too high?

      The point of price transparency is that you can shop around and hopefully find a good price, and that sellers know that people will shop around on price.

      I had to see a doctor recently and neither my insurance company nor any doctor's offices I called could provide me with a quote for seeing the doctor.

      Imagine if your car mechanic worked that way?! "Yeah bring it into my shop when you're able but oh by the way you have an unlimited liability"

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    2. Actually, posted prices for medical procedures aren't that difficult. Today's health insurance companies negotiate fixed contract prices for standard procedures today, including kidney stone treatments. I've received estimated bills ahead of time for surgeries and other procedures.

      Posted prices exist today for cosmetic surgery. They are often a range but a fixed estimate is then provided to the patient once the details of the procedure have been worked out.

      There are obviously exceptions -- emergency rooms, complex or unique procedures. This doesn't mean price transparency can't exist in medicine, rather some medical procedures must be handled on a case by case basis.

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  8. "All surgical providers of any sort must publish de-identified procedure counts and account for all complications and outcomes, updated no less often than monthly. Consumers must be able to shop not only on price, but also on outcome... "

    This will have the unintended consequence of doctors refusing to perform surgery on patients with a low chance of survival or other complications, to juice their quality metrics upwards. Anyone can be a good doctor if you only work on the most "healthy" unhealthy people. You're just moving the poor quality "off the books" as these people will die from their maladies without receiving medical treatment. There has to be some incentive for a doctor to take a risk on a low-chance-of-survival surgery.

    I do like the lifestyle disease one. Though taking it to its logical end there are a lot of other situations to be addressed: drunk driving, etc. "Sorry you were driving drunk we're just gonna let you die in your car." The best case would be to allow consumers to exclude certain conditions from their basket of treatment when buying a policy. I would happily sign up for health insurance that didn't cover Type II diabetes treatment. It just has to be voluntary, not forced, which gets tricky when talking about what government will or won't cover...

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  9. This is very interesting and not ‘SO WILD.’

    Fifteen years ago or so, I bought my oldest son health insurance while he was in graduate school on ehealthinsurance.com. It was roughly $120 a month or less. You did not need an account or give more than your gender, age, smoker or non-smoker and zip code to get a quote and view the plans. I liked it.

    It still exists and you can purchase temporary insurance through them, which is not a bad idea if you are young and don’t want to pay the high or higher prices through the ACA.

    Also, I have been getting my blood work done whenever I want for many years through Life Extension (lef.org). It is very reasonable priced. You can complete the form online, pay with a credit card, and they will send the request to your closest Quest or LabCorp Lab. where you go to have your blood drawn. Results are sent to you by email.

    About 7 years ago when I had a high deductible medical plan in Florida, my doctor told me that a needed CT Scan could cost around $1000 or more. I had him give me a prescription and found one for $350 without contrast.

    As for the recommendation concerning diabetes, I find that a problem.

    I view healthcare reform intertwined with welfare reform. There are around 56 million Americans receiving Medicaid and if you include CHIP, it’s around 74 million. There is roughly 60 billion dollars a year in Social Security/Medicaid/Medicare fraud. There has been a significant increase in folks claiming disabilities since around 2008.

    It will not be so easy to change the lifestyle of an obese woman driving her electric grocery cart around Wal-Mart while on Medicaid.

    There are millions of Americans who feel that they are entitled to just about everything for free. The unwed mother expects Medicaid, food stamps, housing subsidies, free breakfast and lunch for her kid(s). Our welfare system encourages bad behavior.

    Until you get more of these folks working and having some skin in the game, real health care reform may be out of reach.

    My view is that too many adults in the US are dysfunctional and until you get adults behaving like adults we can not have significant healthcare reform. And I am unable to believe that we have a government that can make difficult decisions.


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  10. The stupid - it burns us!

    Complete ignorance of how the system works. If you call my office we can tell you what we charge but it won't be what you pay.

    I do list my cash pay prices publicly at directpaypain.com, but if you use your insurance those numbers are meaningless. I might advertise a price of $100 but my contracted rate with your insurer might be $110 or $90. If you haven't met your deductible then that fee goes straight to you. If you've met your deductible but have a co-pay then part of the cost will go to you. If you've met your deductible and have no co-pay then your out of pocket is zero. How the hell is anyone supposed to make this "transparent" by listing prices?

    Prior to scheduling any procedure we check benefits: what's covered, what is the deductible, how much of the deductible has been met, what co-pays are there, our contracted rate with their insurer, etc. This is put on a form and given to the patient as an estimate of we think their out of pocket cost will be. This is a cost burden that I bear on behalf of my patients; I'm paying people to look up this information and run the numbers. Even then, it's only what I will cost. You still have the facility fee, anesthesia, radiology, etc. The only facility I know of that provides a similar service is Houston Physicians Hospital. HPH is 85% physician-owned (I'm a shareholder) and we made a decision to implement this program so our patients wouldn't be blindsided. HPH also lists all-inclusive cash prices for procedures. And guess what? It's illegal now to build a physician owned hospital and has been for years.

    In this totally FUBAR system you could go get an MRI and use your insurance with a contracted rate of $1,000 and if your deductible is $2,000 you'll take a $1,000 hit. Or you can ask for the cash price and maybe pay $500.

    In summary it's a wild proposal only in the sense that it's based on wild ignorance, placing stupid and misguided burdens on those who don't control what patients pay.

    Do what I do: get the lowest price policy you can with a high deductible and always ask for the cash price. I saved $5,000 last year on premiums and paid out about $1700 in cash.

    I live, eat, and breathe in this slow motion train wreck and idiotic ill-informed pieces like this really chafe my rash.

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  11. Regarding lifestyle-related diseases: How will you enforce this? Candy Police raiding houses to see if the diabetics are compliant? Exercise Police sitting outside your house to see if you go jogging?

    Incredibly, the government wants to place the burden on the doctors. If your diabetics aren't doing as well as the other doctors' diabetics you get punished with lower fees - as if you can go to a patient's house and confiscate their cookies. This is called "pay for performance" and you can see where it leads: diabetics who are noncompliant or very brittle in terms of blood sugar control will be medical pariahs. No one will take them as a patient.

    It also leads to "teaching to the test". The government wants something that's measureable so they'll pick some type of data that can be quantitated, whether it's a true reflection of quality or not.

    Years ago Blue Cross tried to do this. I had a bad rating. I demanded to see the patient data they used. A patient with Complex Regional Pain Syndrome who required a $20,000 spinal cord stimulator for pain control was listed as "ankle pain". A refill of an intrathecal pump was classified as a "wellness visit". Of 20 charts reviewed, 19 were misclassified.

    Medicare now posts how much we do and what we're paid online. My #1 line item was for knee injections with Synvisc. Synvisc is billed in units. A single syringe of Synvisc One is 96 units. I have no idea how they came up with this. The reason this procedure is #1 on my list is that (1) Medicare counts each unit as a separate treatment, so if I do 100/year Medicare reports it as 9600 and (2) A syringe of this stuff costs more than $500 so it looks like I'm making a small fortune on it when actually they are just reimbursing my cost.

    The same thing happened with my #2 line item, which took me a while to figure out. It was something about durable medical equipment. It turns out these were the bills for filling intrathecal pumps, and it reflected what Medicare reimbursed me for the medication. I don't get to mark up the medication. I copy them on my bill and they reimburse the cost.

    So my top two line items were merely cost reimbursements​.

    GIGO.

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  12. Evidently the US healthcare system spends another huge amount (even larger than diabetes) on care in the last days of life for terminally ill and elderly.

    However, sensible discussions about euthanasia are nearly impossible.

    I say turn health care over to a Czar, and give him/her 10% of GDP. You get care for free, but give up litigation rights (binding arbitration okay), or can buy your own.

    Up to you.

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  13. OT to John Cochrane:

    http://marginalrevolution.com/marginalrevolution/2017/05/new-hsieh-moretti-paper-land-use-restrictions-economic-growth.html#comment-159634567

    Egads, GDP 50% smaller than it could be due to restrictive property zoning?

    Who knows, but obviously, property zoning is the under-discussed issue of the day.

    On any day there are sanctimonious sermonettes on the minimum wage, the virtues of trade deficits or how cruddy solar power is.

    The topic of ubiquitous (and evidently very repressive) property zoning?

    Why do the libertarian-right-wing-free-marketeers go mute on property zoning?

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