Under-Informed Health Care Debate

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18 responses to “Under-Informed Health Care Debate”

1. 

   jasonthe

   2009-10-01

   Something no one seems to realize with the Shadegg Bill is that Rep. John Shadegg has been pushing if for nearly 7 years, and even under a Republican House and White House, couldn’t get anyone to sign on.

   The reason is that Shadegg’s solution has some intriguing short term ideas, but really does nothing about the long term. It would do little more than allow cross-state purchasing, lowering costs in some areas, and driving them up in others (as an example, what if everyone in Florida decides they want Utah insurance? What do you think then happens to the price of Utah insurance with more paying in, but also more claims from older, more health care dependent seniors?). Additionally, the Shadegg bill creates an incentive for insurance companies to offer insanely cheap insurance to the young and health, but does nothing to prevent the older and more medically demanding patrons from being dumped or denied coverage. So great, prices drop a lot for the young and health, things stay the same or get worse for the 50 to 60 crowd… so what happens when the young and healthy now become the old and in need of care 15/20 years from now?

   Turns out Shadegg has no idea what happens then, and it’s evident in his bill. It does nothing to reorient the market around consumer driven principles, just ads more dysfunction in the manner of short term solutions, and long term catastrophe’s waiting to happen.

   Isn’t that what we already have?

   Reply
   1. 

      David

      2009-10-01

      Are we talking about the same Shedagg bill? I’m talking about H.R.3218 which does not address the idea of purchasing across state lines. I know that is a favorite idea among Republicans, and I have nothing against the idea, although I don’t see it as any kind of panacea.

      I do have to agree with you that what we have now is “short term solutions, {with} long term catastrophe’s waiting to happen.”

      Reply
2. 

   Ronald D. Hunt

   2009-10-01

   David Goldhill does not have well thought out findings. Very high deductible insurance is a terrible idea, it will increase the bankruptcy rate shifting costs on to the banking industry(this basically increases the interest rates on everything.. hello stagflation), HSA’s to float the difference between 0$ and the deductible are a terrible investment for the individual merely due to the bad interest rate they pay(irregardless of tax freeness). and Medical Loans will NEVER WORK!, Loaning sick people money is a terrible investment the default rate will be well beyond what any private institution can handle, Further making peoples access to health care via loan depend on the quality of their credit history is a dubious affair at best.

   Comprehensive insurance works because the insurance company can invest the premiums they collect and get return rates in the range of 8%-20%, The HSA’s available at my bank America First Credit Union pay at a rate of 0.5% to 2.0% depending on how much is in the account. The difference between these return rates is astronomical.

   Its hard to comment on HR 3400 it’s not complete(atleast I hope their not calling it complete). But just for what I have read of it, to me it looks like their are just using tax dollars to cover the cost of health care rather then fixing the cost curve. The tort reform’s in the bill seem to be a bit overbearing(I’m not against tort reform), And lets be serious legal costs in health care are around 3% of the total cost. The bill also seems to be loaded with poison pills that would stop not just the left but most of the middle including some republicans from voting yes on it(repeals ARRA, allows doctors to refuse procedures they are religiously apposed to, prevents insurance company’s from covering certain reproductive services(abortion), etc). HR 3400 seems more like a political pop shot at the democrats then a serious bill.

   As to the purchasing across state lines, … I would have thought this would have set off the “federalist” alarm bells at this blog =p. I have nothing against this idea, but I don’t buy for a minute that this will actually lead to any cost savings(actually it might cost a bit..).

   I haven’t read HR 3218 maybe I will give that a peak tonight.

   Reply
3. 

   Scott Miller

   2009-10-01

   I agree there is significant rate of return differences, but that is not the purpose of an HSA. It is to create better and more transparent consurmerism in medical/health care delivery. If you remove any “return on investment” concept from the idea of HSA, they will have a significant positive impact on people being more vested in making medical care purchases. I implemented HSAs in one company–the people did not like it one bit because it made them responsible for making decisions. My answer was tough: I reduced the company’s and the individual premiums by almost 33%. It lowered cost.

   The questions on comprehensive insurance is whether that, in and of itself, is the best system. If it is determined that the current system–as flawed as it is–is the best system, then yes, have the insurance companies make the better investment decision, achieve the higher return on investment and pass that on to the consumer. If it is concluded that comprehensive insurance is not the best system, then the ROI concept needs to be pushed to a lower level of importance.

   I agree that loans will result in significant losses, so just call them what they are: handouts.

   Bankruptcy laws can be changed to not allow cancellation of medical debts if the petitioner had reasonable means and opportunity to purchase insurance–even high deductible insurance–and did not properly manage their resources. Introduce accountability into the equation. I do agree that an increase in bankruptcy will be passed on to the other consumers, but that is no different than any other industry.

   Just thoughts. We could still go with the Florida Democrat’s plan that he says Republicans are for: don’t get sick and if you get sick, die quickly.

   Reply
4. 

   Ronald D. Hunt

   2009-10-01

   I wouldn’t disagree that higher deductibles will decrease premium rates and save business’s money, And I have no issue with HSA’s for covering co-pays and deductibles, I don’t buy that it lowers the total cost of health care I see it as more of a cost shift(not saying that’s bad). I do see higher deductibles as causing problems for people needing continuing care, the first $6,000 to $20,000 dollars of income each year to cover the deductible from a person needing continuing care will push many people into dire straights.

   Bankruptcy laws can be changed all kinds of ways, Just because someone can’t get rid of a debt doesn’t mean their going to pay it or be able to pay it. The adjacent market collateral damage from medical bankruptcy’s effect to many other things to risk anything that would increase the bankruptcy rate. In addition to the court costs incurred to the government(payed by tax payers), The damage done to home prices, and interest rates is devastating. Also note that 78% of the 2 million per year medical bankruptcy’s are from people who where insured at the onset of their disease. This isn’t a problem related to “moral hazard”.

   Medical loans are only a handout if they are handed out in the first place, they won’t be, no bank is going to get into that business.

   As to that Florida democrat, *shrug* the republicans in congress have been saying the same thing about the democrat plans for health care reform for the last 9months. But this should worry the right for a different reason, We haven’t seen a liberal hardliner in decades their is a resurgence of these left liberal progressive hardliners that have found their voice. I think their was some intentional polititcking behind his “show” on the floor as well.

   Reply
5. 

   jasonthe

   2009-10-01

   David, we may be talking about different bills, but I think it may actually be a continuously evolving “same” bill. I’m referring specifically to the one Rob Bishop has been promoting for years. I’ll look into the specific bill number you supplied and see if it’s different than the one I’m reading.

   Ronald, I agree that on healthcare (and specifically exemplified by Alan Grayson most recently) you see liberals “finding their voice.” It’s over the top, and it’s headline grabbing and I’m not sure it’s good for the politics of the country overall, but for now I’m just excited to see a Democrat not backing down to the manufactured indignant purse clutching of outspoken GOP lawmakers.

   Remember the Moveon.org hand-slap few years back? Stupid, not because I agree or disagree (I’m a fan of Moveon.org, for the record) but because Congress frankly has much better things to be doing.

   One of the worst things Bush and Karl Rove did to this country, and one of the least mentioned, is instilling the “perpetual campaign” in our political narrative. And once it’s there, opponents have little choice but to respond in kind or never see a legislative or electoral win. But now that it’s here, how do we get rid of it? No idea as of yet.

   That’s why blogs like David’s (though I rarely agree with what I read) are refreshing.

   Reply
6. 

   David

   2009-10-01

   I would like to make one correction to what Ronald said. Very high deductible insurance, medical loans, and HSA’s are not the findings of David Goldhill – they are his recommendations. His findings are very well thought out – I don’t agree with all his recommendations nor do I believe that all health care proposals should follow them. What I have said, and continue to believe, is that all health care positions should address his conclusions (like the perverse incentives existing in the system).

   Jason, I will be interested to hear if we were talking about different bills and what you think of the one I referenced if so.

   Like you, I think that Rove (I think Bush was following Rove on this) did a massive disservice to the nation with the perpetual campaign mentality. Is it any wonder that the 2008 campaign started with officially announced candidates in December of 2006? I fully expect to see Republicans announcing their official campaigns in mid-November of 2010 despite the fact that Obama is not in the same kind of overt perpetual campaign mode as Bush always was.

   Reply
7. 

   Scott Miller

   2009-10-01

   I think the cost shifting through HSAs is a good step because my argument all along has been to put people back into the middle of the transaction. That said, there is a point that the insurance kicks in and maybe what we are finding here is the critical break points as to when insurance becomes necessary versus the people being more involved in the process. I think HSAs more appropriately deal with the moral hazard whereas long-term continuing care or a significant illness in a short period of time is not a moral hazard issue.

   I would agree that somewhere in the $5,000 – $20,000 range is where the comprehensive insurance needs to kick in–depending on each individual or individual family financial position.

   Good points on the bankruptcy and that is a real issue that needs to be addressed. My focus is getting people better involved in their health and medical care in order to keep the government out of our health and medical care. But as discussed before, there is some level of responsibility that people have in the bankruptcy because I do not believe all of the medical bankruptcies are the sole result of an illness but also involve poor financial management in all aspects of their lives and the medical issue may be the straw that breaks the proverbial camel’s back.

   Reply
8. 

   Jeff Andrews

   2009-10-02

   Where are you Rep. Chaffetz? Still writing nasty press releases about that TSA incident or what? Utah’s golden boy has been largely quiet on this issue besides a few vague comments. He took on the crowds in his town halls but that was just to bash plans by the Dems not to present his own alternative.

   Reply
9. 

   Ronald D. Hunt

   2009-10-02

   David,

   I am not sure that some of the perverse incentives can be removed without doing things that are politically impossible from within the confines of a completely market based approach. Breaking apart the vertical integration in health care not only would be a no go for republicans, but would cause problems for the few places in the country where health care costs haven’t gotten as out of control (Utah’s IHC for example).

   The amount of the market that can be reattached to consumer driven principals is limited to less then 10-15% of the system. you have the front end that is the insurance company, then assuming a high deductible plan the primary care doctor, and to some limited extent drugs. The amount of pressure that can be exerted by these consumer driven principals is limited in of it self due to the nature of disease(demand is a function of disease rates here not price or supply), availability of primary care doctors(this is in decline why make it worse?), drug patents(And don’t think that private industry or the government can fix this one). It’s very likely that disease detection rates would go down if the direct(to the consumer) cost of primary goes up and will end up costing the system more in the long run.

   Moderate deductibles for non-primary care services are fine, I think this is unfairly weighted against the middle class but is a reasonable compromise in the scheme of things.

   Scott,

   I do agree their are medical bankruptcy’s would fall into the straw the broke the camels back category. I have yet to see any study’s the on number of people that would fall into the category, That said I don’t think the number would be very large but that’s just speculation.

   Reply
   1. 

      David

      2009-10-02

      Ron,

      The accuracy of any response I can make will be limited until I understand what you define as primary care – I will try not to address that lest we be talking past each other by having incompatible understandings of what that refers to. I think that examples such as IHC demonstrate that vertical integration in and of itself is not the problem. It’s possible that the solutions to the real problem might discourage vertical integration but that need not be our primary goal.

      You question how much pressure the principle of a consumer driven market can exert on the system – that’s a fair question. You say that demand is a function of disease rates without being influenced by price or supply – I think that misrepresents the nature of demand. Demand is not strictly a function of volume but includes what and when various services are being demanded and the fact that there are multiple responses to almost any disease and the different responses have differing real costs consumers will have different values an exert pressure in different ways on the demand curve than insurance bureaucrats (either private or government). I agree that we have no reason to make the decline in primary care physicians worse than it already is but you have done nothing to prove that a consumer oriented system would do that. In fact I believe that our current system favors specialists over primary care providers while a consumer oriented system would likely give more weight to those general practitioners than the current system. Drug patents are an invention designed by government – government is precisely the appropriate venue to fix them. Like encouraging the decline of primary care doctors, you need to give some evidence to support the prediction that disease detection rates would go down if consumers paid more for primary care.

      Our current system, where more than 80% of people have some type of insurance coverage, has consumers paying 30 – 50% of the cost of initial visits (depending on the copay associated with their particular situation) where disease detection and preventive care generally take place. In contrast, the system has the vast majority of consumers bearing 20% or less of the cost of the more expensive restorative care – this discourages people from focusing on preventive care and early detection because they are not cost sensitive to more expensive treatments. (Just look at any normal insurance plan to see the truth of this.) The personal bankruptcies are more often caused by uninsured procedures but I believe that a big part of that is that people generally expect that their insurance covers all major expenses. If they began to believe that all major expenses would hit them more heavily (a $2500 deductible does that better than a $250 deductible) they would be more likely to address their health issues earlier.

      Reply
10. 

    Scott Miller

    2009-10-02

    Another thought to consider is a complete paradigm shift of the current employer-employee based health insurance dynamic. Individuals and insurance companies would offer individual policies to people outside of the current structure. This does some things: (1) moves to a more consumer-driven transaction; (2) removes any issues related to job losses and portability; (3) within the context of consumer-driven transactions, provide better up-front contractual identity for pre-existing conditions thus eliminating the insurance companies’ ability to deny coverage; and (4) lead to more competition for insurance providers. If this sounds more like buying car insurance then I think it is something to consider.

    This will no doubt cost more to individuals and families, but this can be addressed through increased wages to employees who are no longer suffering from downward wage pressure due to the cost health insurance benefits. I note here that I have not completely thought through the impact of taxes on this–either in the form of subsidized employer-provided plans due to tax deductibility or the impact of increased employee payroll taxes.

    Reply
    1. 

       David

       2009-10-02

       I completely agree with that paradigm shift. In fact I am convinced that this change would produce more market competition than selling across state lines. Insurance companies already sell policies to individuals although they are watered down and/or more expensive than what most employers offer (for those employers that still offer this benefit).

       The first thing that should happen to help this would be to make insurance premiums (at least up to some reasonable level) tax-deductible for individuals.

       In order to encourage the shift I would even consider taxing those benefits as corporate income by requiring companies to calculate taxable income before taking the cost of health benefits out of their gross income.

       While I am tempted by proposals to make it illegal for companies to deny coverage over pre-existing conditions I am even more confident in the idea of preventing insurance companies from altering their coverage on plans so long as the consumer does not default in paying their premiums. Changing coverage on existing plans is dishonest.

       Reply
11. 

    Ronald D. Hunt

    2009-10-03

    I would define primary care as any first visit to a general practitioner doctor for the purpose of identifying a possible illness. I don’t include ER care in this definition, but their are places where making an appointment with a general practitioner takes so long that the ER does on occasion fall into this first visit category. My parents family doctor on their insurance plan is scheduled 3 to 6 weeks out most of the time so waiting for an appointment isn’t reasonable in many cases.

    I have seen more then enough people put this first visit off due to the expense hoping that the problem will just “go away”, sometimes it does the rest of the time they end up spending(their insurance company) a lot more then they otherwise would have. Think of the general practitioner doctor as the salesperson(I loath this description but for the sake of argument), In what other business are you charged for access to the salesperson. If Sears charged you for access to their TV salesperson and your TV was broke(say white line in the middle of the screen) would that make you more or less likely to visit the store?

    I haven’t seen any studies on the effects of price pressure on primary care so ether way on this issue I suppose is entirely speculative.

    Drug patents can’t be removed or otherwise fixed without causing damage to the amount of research being done to produce new drugs. Their expensive but for what we get out of them it is more then justified.

    My mom went in for a colonoscopy recently her cost after the insurance payed was $1,200 dollars. Needless to say my parents can not afford that so nether will get any more colonoscopy’s in the future. It has nothing todo with sensitivity to the cost, it has everything todo with affordability of that preventative care.

    Scott,
    Yes I would love to see an end to the employer based insurance system. The free choice amendment got shot down(by the Republicans and 3 ConservaDems) and won’t make it into the Baucus bill today. This amendment will get another shot on the senate floor however. Free choice amendment I find the republican opposition to this amendment confusing.

    One other thing I suppose I will note is that we do have studies on the effects of debt in health care. UCLA Debt in Health Care Study, This is one of the reasons I am skeptical of high to very high deductibles.

    Reply
    1. 

       David

       2009-10-05

       Ron,

       Thanks for that very detailed response.

       I do think that the salesperson image of the doctor is a misrepresentation of what a doctor is supposed to be (although it probably applies to some doctors). A doctor is supposed to be more like a television repairman (do those even exist anymore in our buy-new culture?) – they are not trying to sell you a new television, they are there to repair the one you already have. Having to pay for a repairman to diagnose the problem seems perfectly reasonable – they can’t just decide to treat you for a cold and expect it to help when you are suffering an allergic reaction – they have to be able to determine the problem.

       I think your perspective on drug patents is indicative of the problem we are facing in the health care system. The idea that all new drugs that make it to market (meaning the ones approved by the FDA) are worth the cost of research etc means that we are not discerning about what things are worthy of our research dollars. Of course there are wonderful, lifesaving drugs that are worth copious amounts of research money, but the patent laws provide so much protection that the drug companies can afford to spend huge amounts of research money on drugs that have only marginal value at best. Take one look at the range of drugs available to treat mental illness and you would be able to see what I mean. The bulk of all mental health drugs are functionally identical (SSRI’s all of them) with only minor differences – enough to get a new patent and give psychiatrists another drug to prescribe, but not providing a real difference. Worse than that, I am not aware of any mental health drugs that are effective for significantly more than 1/3 of the cases they are prescribed for. Some other branches of pharmaceutical research seem to provide a much better rate of return and provide real value for the research money the require, but they have much less research money available because of what is being spent for new studies on yet another SSRI or heartburn medication that is not actually changing anything about the diseases they are purported to treat (admittedly, I suspect that the heartburn medications probably work most of the time).

       I absolutely believe that there are changes we could make in patent law to protect new drugs that really change the game for the maladies they are meant to treat while not protecting each new SSRI that comes out with a COH bond replacing an OCH bond from an existing drug while not making any noticeable difference in any mental health problem it can be prescribed to treat. That would encourage drug companies to be more discerning in where they spend their research funds.

       On the Free Choice Amendment to the Baucus bill – having not read the amendment I can’t respond to any specifics, but I definitely like the principles and the basic idea that Wyden is promoting – I don’t know why Republicans would not get behind such an amendment.

       Reply
12. 

    Jared

    2009-10-05

    The UCLA health debt study is interesting as a data point, but it is difficult to draw conclusions from it directly. It is unclear whether those who have medical debt have it because of poor health care or poor financial habits (or both, as seems likely). If one is in debt or living paycheck-to-paycheck for other reasons and then has a health event, then they will end up in “medical” debt basically regardless of their medical insurance. The only possible exception to this is if their medical insurance covers 100% with no deductible. Wouldn’t that be nice.

    So it’s hard to draw conclusions from the study.

    Reply
13. 

    Ronald D. Hunt

    2009-10-05

    Jared,

    I completely agree, Correlation is not causation. We need to use the sum of many studies, statistics, and idea’s to figure what exactly the problem is.

    David,

    The way you paint the drug issue sounds almost like some of these drug patents should be stopped because they would be obvious to someone in that field of study. Software Patents, Business Patents, and Patents in general have had a real problem with that lately maybe this issue would be better approached by general patent reform and enforcement of existing rules.

    Reply
    1. 

       David

       2009-10-05

       I agree – pharmaceuticals are not the only places where patent law is being abused. I’m not even sure the pharmaceutical industry is the worst as far as patent abuse is concerned. The whole system needs a large dose of common sense.

       Reply