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Old 05-29-2011, 08:54 AM   #61
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Large corporations (who have increasingly bought our government and institutions, IMO) may complain about health care and the dysfunctional nature of our system, but in reality it favors them. They can negotiate with insurers in ways small businesses can only dream of, making it easier to offer health insurance to employees and giving them a big advantage in recruiting and retention.

Yet another reason, IMO, to separate health insurance from employers.
Agree 100%. The present system is a government gift to employers, allowing them to obtain quality workers more cheaply than they otherwise could.
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Old 05-29-2011, 08:54 AM   #62
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Large corporations (who have increasingly bought our government and institutions, IMO) may complain about health care and the dysfunctional nature of our system, but in reality it favors them. They can negotiate with insurers in ways small businesses can only dream of, making it easier to offer health insurance to employees and giving them a big advantage in recruiting and retention.
Gee, if large businesses have advantages in negotiation over small businesses who often can't afford to offer health insurance. And if even large businesses can't keep health care costs down, just imagine how individuals with a voucher will fare.
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Old 05-29-2011, 08:56 AM   #63
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And, as a bonus, with Medicare you get poorer access to physicians, since fewer and fewer are seeing new Medicare patients. The proposed fix to this is lowering reimbursement rates. Yep, that should work well.
This is something that needs to be remembered when people talk about Medicare being more "cost effective" and such. That's at least in part because of the cost shifting involved. Yes, with other insurance there is also cost shifting but with Medicare it's pretty dramatic because the reimbursement rates are quite a bit lower than most other insurance. When Medicare rates are so low, one of two things happen: either providers stop accepting new Medicare patients or everyone else pays more for services to subsidize the lower rates they get from Medicare.

Frankly I'd like to see the practice of charging different rates for the same procedure abolished. I just don't think something that costs $500 for someone on Medicare should cost $800 for someone with other insurance and $2000 for someone who is uninsured.
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Old 05-29-2011, 08:56 AM   #64
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And we are. When we look at the total cost of care (paid by the insurer plus Medigap policies, plus out-of-pocket costs the patient pays), Medicare is doing a poorer job of controlling costs than private insurers are doing. (Ref).
I'm not even going to bother reading Heritage 'research.' If you have a legitimate source, please feel free to post.

Edit to add: I broke down and looked at. And as I suspected, even a cursory read reveals unbridled nonsense:

"Medicare's per-beneficiary patient care costs appear to grow more slowly than costs in the private sector only if one ignores the fact that Medicare is paying a rapidly shrinking share of its beneficiaries' total health care costs"

Same too with private insurance - except Medicare isn't able to shed high-priced pools altogether the way private insurance routinely does.

"The illusion that Medicare's administrative costs are lower comes from expressing administrative costs as a percentage of total costs, including patient care. Medicare's average patient care costs are naturally higher because its beneficiaries are by definition elderly, disabled, or end-stage renal disease patients, so its per-person administrative costs are spread over a larger base of health care costs."

No adjustment for the fact that the elderly actually use the system more. Of course per-person administration is going to be more expensive for someone who goes to the doctor every week compared with someone who goes every couple of years. And yet the cost difference is just 12% ($509 per medicare recipient vs. $453 per privately insured individual). I'd say Grandma and the disabled use medical services at least 50% more frequently than the significantly healthier population covered by private insurance.

Does Heritage really expect this stuff to be taken seriously?
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Old 05-29-2011, 08:58 AM   #65
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Gee, if large businesses have advantages in negotiation over small businesses who often can afford to offer health insurance. And if even large businesses can't keep health care costs down, just imagine how individuals with a voucher will fare.
I never said the alternative should be everyone thrown out into the individual health insurance market, and I hope your remarks aren't insinuating that I implied it.
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Old 05-29-2011, 09:06 AM   #66
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I never said the alternative should be everyone thrown out into the individual health insurance market, and I hope your remarks aren't insinuating that I implied it.
No, my remarks are designed to illustrate how 'competition' for insurance isn't going to impact health care costs at all.
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Old 05-29-2011, 09:10 AM   #67
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No, my remarks are designed to illustrate how 'competition' for insurance isn't going to impact health care costs at all.
I'm not sure I completely buy that. The real problem with "competition" in the insurance market is that it leads to cost shifting. I for one would welcome competition based on reducing the cost of fraud and paper pushing, but I don't think it should lead to different prices for the same procedure. I mean, should someone who has Megacorp "food insurance" (and a Megacorp job) be able to pay $2.50 for a gallon of milk while an "unemployed" shopper with no "food insurance" pays $6 for the same thing? It just feels rotten to me and perhaps even a little "regressive".
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Old 05-29-2011, 09:33 AM   #68
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Edit to add: I broke down and looked at. And as I suspected, even a cursory read reveals unbridled nonsense:

"Medicare's per-beneficiary patient care costs appear to grow more slowly than costs in the private sector only if one ignores the fact that Medicare is paying a rapidly shrinking share of its beneficiaries' total health care costs"

Same too with private insurance - except Medicare isn't able to shed high-priced pools altogether the way private insurance routinely does.
I think you'll do better if you decide to either a) not read the article at all or b) read enough to understand it.

The article (and underlying sources, including the CBO) works with total costs in both cases (private insurers and Medicare). Total costs= all costs regardless of who pays. Since we're talking about rising medical costs (not who pays them) this is important. Total costs have risen less rapidly under private insurance than under Medicare.
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"The illusion that Medicare's administrative costs are lower comes from expressing administrative costs as a percentage of total costs, including patient care. Medicare's average patient care costs are naturally higher because its beneficiaries are by definition elderly, disabled, or end-stage renal disease patients, so its per-person administrative costs are spread over a larger base of health care costs."

No adjustment for the fact that the elderly actually use the system more. Of course per-person administration is going to be more expensive for someone who goes to the doctor every week compared with someone who goes every couple of years.
Yes. Read the article and you'll see that your point is the one they are making. Now, this is just about administrative costs, and Medicare proponents point out that, as a percentage of total payments, Medicare (admin) costs are lower than private insurance. The article points out that this is because Medicare patients are sicker, and their care is longer-term. Private insurers (in general) treat patients for shorter periods. 75 yo Ms Quigly shows up twice per week for her very expensive dialysis. She does it regularly, and the admin costs can be low (expressed as a percentage of the bill). For the same amount of billing, a private insurer might need to see 10 different patients with sniffles, a broken arm, a difficult-to-diagnose sore back needing several referrals and paperwork, etc. Which do you suppose will have higher admin costs expressed as a percentage of the total bill?
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Old 05-29-2011, 09:39 AM   #69
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Yes. Read the article and you'll see that your point is the one they are making. Now, this is just about administrative costs, and Medicare proponents point out that, as a percentage of total payments, Medicare costs are lower than private insurance. The article points out that this is because Medicare patients are sicker, and their care is longer-term.
There are other factors as well. Fraud prevention, for example, is an administrative expense. If a "low administrative costs" facilitates rampant fraud, is it necessarily a positive and is it going to necessarily result in a lower cost product? I mean, we're not talking about index funds here where lower administrative expense is always better.
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Old 05-29-2011, 10:05 AM   #70
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There are other factors as well. Fraud prevention, for example, is an administrative expense. If a "low administrative costs" facilitates rampant fraud, is it necessarily a positive and is it going to necessarily result in a lower cost product? I mean, we're not talking about index funds here where lower administrative expense is always better.
Agreed. If cutting admin costs results in higher overall costs, then it's no bargain. And the definition of "admin costs" is notoriously slippery. The Medicare "admin costs" usually don't include all the costs incurred by doctors/providers to do the billing/rebilling of Medicare, for example. They just include the costs Medicare pays to write checks to the providers. Obviously, that's only the tip of the admin cost iceberg.

If we want to know which system is best controlling medical costs, then look at the total costs under each system type.
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Old 05-29-2011, 10:29 AM   #71
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If we want to know which system is best controlling medical costs, then look at the total costs under each system type.
Or we could simply compare our hybrid system to any of the dozen or so national systems that achieve per-capita health care spending levels of roughly half what we spend.
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Old 05-29-2011, 10:37 AM   #72
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The Heritage Foundation Now there's a real non-political organization !

SamClem. You seem to oppose any health care proposal whether it be Obama's plan or now the Ryan Plan.

I am curious. What would you propose to these problems. I hear what you think is wrong, but what do you think would be right? How do you think we should handle this medicare problem?
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Old 05-29-2011, 10:46 AM   #73
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Total costs= all costs regardless of who pays. Since we're talking about rising medical costs (not who pays them) this is important. Total costs have risen less rapidly under private insurance than under Medicare.
That's easy to accomplish by dropping coverage of expensive patients.

You have noticed that the number of uninsured (i.e. those dropped by private insurance) is growing right?

As far as I can tell, he makes a lot of adjustments in his favor, but doesn't take in to account obvious stuff like the growing ranks of the uninsured. And as I read it, he makes no attempt to control for different populations (over age 65 for medicare, under age 65 for private).

This isn't 'dynamic' analysis. It's not even analysis. It's propaganda.
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Old 05-29-2011, 10:51 AM   #74
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Or we could simply compare our hybrid system to any of the dozen or so national systems that achieve per-capita health care spending levels of roughly half what we spend.
I think we'd agree that even calling what we have a "system" is a bit of a stretch. We have an "extant construct" (most of it publicly funded) that surely needs improvement.
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Old 05-29-2011, 11:08 AM   #75
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IMHO, Medicare's problems are reflections of the problems of our overall healthcare delivery system.

1) We pay providers on a piece rate basis. If you built a house and paid a carpenter by the number of nails driven, the wood wouldn't be able to handle the load.

2) We allow Drs. to own the labs and cat scanners to which they then send patients. This is a fundamental conflict-of-interest. It is no wonder that costs are higher in areas where this is the dominant modality of operation.

3) In some areas single providers control the bulk of the facilities. In the Bay Area, Sutter has most. This makes it difficult for employers to negotiate costs.

4) Primary care drs. are underpaid, leading to an over supply of many specialists and resulting excess and unnecessary procedures.

5) Despite lots of evidence, Drs. are allowed to follow treatment regimes that are less than optimum.

6) Because Drs. are not effectively policed, errors and resulting lawsuits abound. Hospital errors kill thousands each year. We need a different process to handle these issues other than lawsuits.

7) Under the current system competition cannot work. It is effectively impossible for consumers to determine the costs/risks involved in a course of treatment. No one will give you an estimate in advance. You can't call around and price your bypass operation.

8) The poor are herded into emergency rooms where the cost of their problems is much higher than if they were treated on some other basis. This also produces very crowded emergency rooms and impacts people who really need urgent care.

9) We currently ration healthcare away from the poor and underemployed. Rationing is necessary in some form. Someone has to decide if $50,000 for an extra four months of life for a cancer patient is worth it. Left to themselves patients will always go for any chance of longer life.

10) If the population wants a system where every person can get knee replacements, hip replacements, lap band surgery, powered chairs, etc. etc. etc. then the cost of care as a percentage of GDP is going to keep going up, and taxes must also go up.
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Old 05-29-2011, 11:18 AM   #76
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I am curious. What would you propose to these problems. I hear what you think is wrong, but what do you think would be right? How do you think we should handle this medicare problem?
I like much of what I've read about Congressman Ryan's plan, but I don't know the details (e.g. how will the "premium support" payments be calculated for those with medical issues, etc). The details are important, and I don't think they are known yet.

If we're going to have a rational medical care system in this country, it's not clear that the delivery system should be radically different once one turns 65. Maybe the funding changes (since we've made these promises and built up this Medicare "fund"), but if we design a system that controls costs for those under 65 and offers good care, there seems no good reason not to use it for those over 65.

I've typed a word or two about how I think we could cover everyone with affordable medical care, I'd like to see that implemented and the Medicare funds used to help offset premiums for those of qualifying age.

I don't think we'll agree on the proper approach.

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In a nutshell. Modification: Given the Constitutional issues, we might need to avoid an individual mandate. I think there are ways to avoid/significantly reduce adverse selection without a government individual mandate, though it's a little messy.

5 steps to fixing our healthcare system

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Old 05-29-2011, 11:21 AM   #77
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Or we could simply compare our hybrid system to any of the dozen or so national systems that achieve per-capita health care spending levels of roughly half what we spend.
Yes, there are good models out there from which we could learn a lot.
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Old 05-29-2011, 11:57 AM   #78
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And, no, computer systems don't just magically fix that.
Why not? Or, if the complicated billing procedure does actually generate more paper or hand work by humans, then fix it by streamlining the procedure so no extra paper has to be generated, and the computer systems can talk directly to each other to settle things amongst them.
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Old 05-29-2011, 12:05 PM   #79
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I don't think there is any solution to the problem of cost control, because I don't think rising medical costs are due to inefficiencies or some other systemic artifact. We're older and richer, so we need more health care, and we can pay for more. Costs have risen rationally because the value of the thing has increased, and they will just keep going up -- there's no way to stop it.
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Old 05-29-2011, 12:15 PM   #80
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Costs have risen rationally because the value of the thing has increased, . . .
What determines "the value of the thing"? In 99% of cases in our society, the value of a good or service is decided only by the buyer and the seller by mutual agreement. What's the "value" of a car, of a loaf of bread, of an apartment? With health care we have a more complex situation--the receiver of the service wants the service very much, but in most cases he/she is not the customer (the one who pays for the service). The insurer pays. In most cases the recipient of the services isn't even the entity who pays the insurer. In this light, it's easy to see that the means we determine "value" for everything else (mutual agreement between the seller and the recipient) isn't going to work with medical care as the system is now set up. It shouldn't surprise us that costs keep going up. But, there are ways to restore a balance.
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