Why medical bills are killing us.

[Gatordoc50]

I get your point...

Not sure of the number, but isn't healthcare spending over $2Trillion

Now, if you could provided the same level of service and save $1Trillion.... isn't that a good thing

I don't think we should be paying twice as much for something just to keep jobs... (and I wished I knew where that savings would be coming from so we could attack it)...

I know it doesn't make sense on the surface, but neither does complaining about costs while "printing" 80 billion dollars per month to prevent deflation.

 

[Gatordoc50]

Interesting link...

You can drill down and see that the retirement is $779B SS and $128B federal employee...

It is an interesting link. I think I'll read it. lol

 

[Midpack]

Good point. Healthcare at present is service dominated which is expensive. Technology has increased costs thus far but there will probably be a shift where it leads to efficiency and cost reduction.

It has to happen IMO.

FWIW, it appears doctors salaries (which I think you mentioned in an earlier post) while somewhat higher than other countries, aren't the biggest $ discrepancy with the 30+ OECD countries offering some form of universal care at much lower cost than the US. It appears there are more obvious areas for efficiency and cost reduction. Many of us have acknowledged same before. Thanks...

 

[Meadbh]

wow, why is a ventilator that expensive? Probably because of the length of hospital stay?

Patients who require mechanical ventilation are always sicker and usually more unstable than other patients. They often need multiple IV infusions, always need monitoring of respiratory status, vital signs, etc. Tubes in tracheae can fall out and need to be replaced quickly (code blue, ICU!). These patients require intensive care and often that means the full attention of a highly trained ICU Nurse. As well, they need the care of a Respiratory Therapist. Interestingly, in Europe, there are no RRTs; the nurses and doctors look after the ventilation. About 70% of hospital budgets are labor costs and nursing makes up most of that.

 

[kevink]

I posted a link to an excellent one-page review of the Brill article in Slate a few pages back now and wanted to bring up a few of the author's key points because they get us back to the original question of why medical bills are killing us and what needs to be done. Here are a couple of excerpts:


In addition to providing insurance services, a key service that a proper health insurance company provides is bargaining with hospitals so you get screwed less. No insurer worth anything would actually pay the crazy-high rates hospitals charge to individuals...The best bargainer of all is Medicare, which is huge and can force hospitals to accept something much closer to marginal cost pricing, although even this is undermined in key areas (prescription drugs, for example) by interest group lobbying.

I can see two reasonable policy conclusions to draw from this, neither of which Brill embraces. One is that Medicare should cover everyone, just as Canadian Medicare does. Taxes would be higher, but overall health care spending would be much lower since universal Medicare could push the unit cost of services way down. The other would be to adopt all-payer rate setting rules—aka price controls—keeping the insurance market largely private, but simply pushing the prices down. Most European countries aren't single-payer, but do use price controls. Even Singapore, which is often touted by U.S. conservatives as a market-oriented forced-savings alternative to a universal health insurance system, relies heavily on price controls to keep costs down.

For reasons I do not understand after having read the conclusion twice, Brill rejects both of these ideas in favor of meaningless tinkering around the edges. He wants to alter medical malpractice law, tax hospital operating profits, and try to mandate extra price transparency. That's all fine, but it's odd. His article could not be more clear about this—health care prices are high in America because, by law, we typically allow them to be high.

Complete article here: http://www.slate.com/blogs/moneybox/2013/02/22/brill_on_health_care_steven_brill_s_opus_on_hospital_prices.html

 

[Meadbh]

RE: bargaining with hospitals...

In the UK they have a career called "health care commissioning", whose purpose is to do exactly that. I know two such people. One of them does the big picture bargaining, e.g. I'll give you an extra $1m and you'll do 500 more hip operations next year.... OK, let's agree that you'll do 450. The other person does the bargaining about individual patients, e.g. The ER needs a secure mental health bed for a crazy person who is being "committed" at 3 am, there is none in the public hospital system, so she contacts a private hospital and does a deal because the patient will be there for a minimum of 28 days and they will only have to change the sheets twice a week.

In Canada it works differently. Since essentially all hospitals are public, a bed manager (or a physician) searches for the bed or service that meets the patient's needs, and the patient is admitted to it. Ministries of Health determine the payment the hospital receives on an annual basis. There is no negotiation about cost at the point of care.

 

[Gatordoc50]

I posted a link to an excellent one-page review of the Brill article in Slate a few pages back now and wanted to bring up a few of the author's key points because they get us back to the original question of why medical bills are killing us and what needs to be done. Here are a couple of excerpts:

In addition to providing insurance services, a key service that a proper health insurance company provides is bargaining with hospitals so you get screwed less. No insurer worth anything would actually pay the crazy-high rates hospitals charge to individuals...The best bargainer of all is Medicare, which is huge and can force hospitals to accept something much closer to marginal cost pricing, although even this is undermined in key areas (prescription drugs, for example) by interest group lobbying.

I can see two reasonable policy conclusions to draw from this, neither of which Brill embraces. One is that Medicare should cover everyone, just as Canadian Medicare does. Taxes would be higher, but overall health care spending would be much lower since universal Medicare could push the unit cost of services way down. The other would be to adopt all-payer rate setting rules—aka price controls—keeping the insurance market largely private, but simply pushing the prices down. Most European countries aren't single-payer, but do use price controls. Even Singapore, which is often touted by U.S. conservatives as a market-oriented forced-savings alternative to a universal health insurance system, relies heavily on price controls to keep costs down.

For reasons I do not understand after having read the conclusion twice, Brill rejects both of these ideas in favor of meaningless tinkering around the edges. He wants to alter medical malpractice law, tax hospital operating profits, and try to mandate extra price transparency. That's all fine, but it's odd. His article could not be more clear about this—health care prices are high in America because, by law, we typically allow them to be high.

Complete article here: http://www.slate.com/blogs/moneybox/2013/02/22/brill_on_health_care_steven_brill_s_opus_on_hospital_prices.html

Universal coverage is key. Extending Medicare for all would be a sound strategy and prices could be negotiated from there. As of yet, there are still 50 million uninsured. I don't believe that will change much under the ACA. We got a jump from the addition of young adults to their parents policies and we will probably add people under high risk pools but that's about it, IMO. Unfortunately, many think that the ACA is like Medicare. There are going to be a lot of surprised people in 2014. Right around the next elections.

 

[Texas Proud]

Some here have pointed at that cost is twice here than other places... and we have skirted on the cost of this and that, but I have not see an apples to apples breakdown of the costs...

IOW, for every dollar spent, XX% goes to staff, (which could be broken down even further)... YY% to hospital, test, drugs etc. etc... so we can see, at least on a percentage basis, where we have our problem...

Can any of you good searchers find this

 

[Katsmeow]

I posted a link to an excellent one-page review of the Brill article in Slate a few pages back now and wanted to bring up a few of the author's key points because they get us back to the original question of why medical bills are killing us and what needs to be done. Here are a couple of excerpts:
http://www.slate.com/blogs/moneybox...e_steven_brill_s_opus_on_hospital_prices.html

It is indeed a very good article....which is why I first posted the link to it in post 48 of this thread.

http://www.early-retirement.org/forums/f38/why-medical-bills-are-killing-us-65257-2.html#post1287999

In any event, I do think the Slate article makes very good points.

 

[clifp]

I just took the time to read the long article, the Slate summary (not bad) and the thread..

My brain hurts with all the information. I have to say that this is one of those problems, where I am sure there are simple solutions, and there are good solutions, but I am sure there are no good simple solutions.

I am curious why PPO and HMO's like Kaiser where they basically agree to keep you well for $XXX/month isn't a reasonable solution?

 

[Katsmeow]

I am curious why PPO and HMO's like Kaiser where they basically agree to keep you well for $XXX/month isn't a reasonable solution?

You have to worry about unintended consequences. We all know that one of the problems with the current fee for service system is that if providers are paid for each procedure they do then they have an incentive to do a lot of procedures. And that has some pretty negative results.

On the other hand, when you have someone getting a set fee for you each month - whether they do anything for you or not - then you have a systems where providers make the most money by doing fewer procedures. On the surface that may sound good -- avoid overtreatment for example. And, that is good. The problem is that sometimes people actually do need treatment and may need a lot of it and/or may need treatment that is expensive.

If I pay you $XXX a month for a patient then you don't have much incentive to give that patient the best treatment - just the cheapest. And if the patient is one who really requires expensive treatment then you have an incentive to try to find some way - any way - to get rid of that patient.

In theory tying the $XXX to outcomes may solve some of the problems. But then you end up with providers who only want the easy cases.

 

[Midpack]

Universal coverage is key. Extending Medicare for all would be a sound strategy and prices could be negotiated from there. As of yet, there are still 50 million uninsured. I don't believe that will change much under the ACA. We got a jump from the addition of young adults to their parents policies and we will probably add people under high risk pools but that's about it, IMO. Unfortunately, many think that the ACA is like Medicare. There are going to be a lot of surprised people in 2014. Right around the next elections.

I agree there are still going to be a lot of surprised people, but if ACA doesn't substantially reduce the numbers of uninsured, what's the point? Most studies say it is not going to reduce costs, some say costs will go up...

 

[bUU]

Are there really that many studies that have concluded that the total cost of all health care nationwide will go up faster than the rate of inflation? Generally, the studies I've seen talking about costs going up have smaller scopes, that either exclude folks who will save money from their computations, underestimate the reduction in costs due to reduction in costs associated with EMTALA compliance, or ignore the impact of inflation on everything besides health care, such that the study shows the opposite result.

 

[samclem]

In theory tying the $XXX to outcomes may solve some of the problems. But then you end up with providers who only want the easy cases.

But they wouldn't get to choose/cherrypick. Once we eliminate medical underwriting then this concern goes away.
But self-selection will reamin a problem as long as people are allowed to choose from different plans with different prices: Sick people will go for low-deductible, broad coverage while healthier people will buy something as close to HDHPs as possible. Insurers will just have to build that into the price, which is probably a good thing for reducing overall healthcare costs as a nation.

 

[Gatordoc50]

I agree there are still going to be a lot of surprised people, but if ACA doesn't substantially reduce the numbers of uninsured, what's the point? Most studies say it is not going to reduce costs, some say costs will go up...

The CBO estimates show a decrease in the rate of increase of costs going forward. But that is for federal spending on healthcare. I don't know if the savings are from cost shifting from government to individuals, negotiated fee reduction, or Medicaid savings but they haven't predicted lower out of pocket costs for individuals. Hopefully that will happen. The ACA guarantees that everyone will be able to get health insurance if they choose regardless of health. That is the most important aspect in my opinion. Other than that, it's a disaster. I don't see uninsured people coughing up 8 to 12 grand to buy insurance on their own. Most of the 50 million uninsured could do that now if they wanted to.

 

[Katsmeow]

But they wouldn't get to choose/cherrypick. Once we eliminate medical underwriting then this concern goes away.
But self-selection will reamin a problem as long as people are allowed to choose from different plans with different prices: Sick people will go for low-deductible, broad coverage while healthier people will buy something as close to HDHPs as possible. Insurers will just have to build that into the price, which is probably a good thing for reducing overall healthcare costs as a nation.

I agree that if they had no choice in who they chose and no way to influence the choice made by consumers then that concern of cherry picking wouldn't be an issue. However, they would still have the incentive to undertreat.

 

[samclem]

I agree that if they had no choice in who they chose and no way to influence the choice made by consumers then that concern of cherry picking wouldn't be an issue. However, they would still have the incentive to undertreat.

I'll offer two approaches to combat that:
1) Production of easily understood (govt or third-party) metrics on the wait times, customer satisfaction, and health outcomes for use by purchasers of plans. A provider that undertreats patients will not look good and will get fewer patients. The patient is empowered to use his $$ and any govt subsidy with another provider.
2) Direct govt performance pay to providers based on patient health (weighted to take into account the relative health of the patients when they signed on with the provider).

And let's remember that the holder of the voucher can still choose to go to a fee-for-service provider rather than his present HMO/Accountable Care Organization, etc.

It surprises my when people (not necessarily you) cite this "incentive to undertreat" reason for opposing private ACOs, but say they prefer a govt single payer option. Talk about an incentive to undertreat (!)--but there the patient truly has no other options.

 

[MichaelB]

The CBO estimates show a decrease in the rate of increase of costs going forward. But that is for federal spending on healthcare. I don't know if the savings are from cost shifting from government to individuals, negotiated fee reduction, or Medicaid savings but they haven't predicted lower out of pocket costs for individuals. Hopefully that will happen. The ACA guarantees that everyone will be able to get health insurance if they choose regardless of health. That is the most important aspect in my opinion. Other than that, it's a disaster. I don't see uninsured people coughing up 8 to 12 grand to buy insurance on their own. Most of the 50 million uninsured could do that now if they wanted to.

From the CBO, the primary reason is actual costs running below projections. CBO | How Have CBO

CBO has reduced its 10-year projections of outlays for Medicare by $143 billion (or about 2 percent) mostly for technical reasons—in particular because of data on actual spending for 2012, the third consecutive year in which spending was significantly lower than CBO had projected. In past baselines, CBO had begun to reflect the slowing growth in spending for Medicare’s Part A (Hospital Insurance) and Part B (Medical Insurance); the largest downward revision in the current baseline is for spending for Medicare’s Part D (prescription drugs).

 

[bondi688]

It's Time for a Fair Medical Billing Act - Yahoo! Finance

Legislation is being introduced to prevent failure to pay up medical bills from ruining a person's credit worthiness. This is only dealing with one aspect of the problems, essentially a thoughtful overhaul of how medical care is provided and how the system can afford the cost of those care still need to happen.

 

[rbmrtn]

This article points to the rise of the megacorp hospital monopoly as part of the problem.

Expert: Hospitals’ ‘Humongous Monopoly’ Drives Prices High – Capsules - The KHN Blog

It makes some sense. I remember years ago we had a system of county hospitals that received public support. Anyone could get service there. The hospital megacorps managed to get in and take over.

 

[Gatordoc50]

This article points to the rise of the megacorp hospital monopoly as part of the problem.

Expert: Hospitals’ ‘Humongous Monopoly’ Drives Prices High – Capsules - The KHN Blog

It makes some sense. I remember years ago we had a system of county hospitals that received public support. Anyone could get service there. The hospital megacorps managed to get in and take over.

As a society, we have enacted legislation that shifts the lions share of risk to employers and healthcare providers. Whenever an individual or collection of individuals transfer risk, there is a premium associated with that transfer. Additionally, we lose price controls via consumerism. We shrug our shoulders about the massive costs of charity care, letting the healthcare providers and hospitals deal with it. Well, it's no wonder the " premiums" we pay for transferring risk are getting out of hand. We applaud laws that require employers and insurers to provide routine care like birth control, because we would rather have those costs removed from our paychecks rather than write a check for it ourselves. Personally, I don't have the need for birth control and I'd rather not pay for others. But I got outvoted.

 

[MichaelB]

What risk has been transferred to employers, and based on what legislation? The only thing some do is offer healthcare insurance coverage, and this is entirely voluntary.

 

[EvrClrx311]

We see the discrepancy in charges first hand with our daughter (17 months) who has spent a good deal of her first year in and out of Children's National Hospital in Washington DC for a complex heart defect. She's getting amazing care and the doctors there are unbelievable. She wouldn't be alive today without them.

Over the year (2012) we learned a lot about how the medical charges happen. We have an HMO, a really good one! Thank goodness! Our total bill for the year outside of my portion I pay through work was the $3,500 in-network out of pocket max. Out of network we got hit with about $5,000, for things she really needed but weren't covered (we usually paid 20-50% of those costs).

What was interesting was looking at what was considered in and out of network. Our insurance deals with all of this, but we get to see the paper trail. Whenever something is in network, the insurance is charged up to the max of whatever it will pay. If a night in the ICU is capped at $4,000... that is what the hospital charges. Whenever anything enters the realm of out of network, suddenly it costs 80-95% less than what it would if it were in network (a night in the ICU for something that wasn't covered in network suddenly only costs us $500). That is because we, the patient, are responsible for a large portion of it. It became clear to me that whenever the patient is left out of the equation... the charges became astronomical. We all pay for it through our rates (those are skyrocketing)... but when we were on the hook for 20-50% of it, the cost dropped significantly.

Makes sense to do it that way when you are the hospital. Maximize your revenue. Not an attempt to demonize them, because with Children's Hospital in particular they end up doing A LOT of care for uninsured who have no ability to pay. Many of the Children's Hospitals struggle to stay a float financially from what I've heard - because of their no turning anyone away policy.

In 2012 our insurance was charged $1,872,000 for her medical care. That included 7 operations and about 4 months in the ICU. BTW, she is thriving, doing great and at home now. Just got the hang of standing, should be walking soon. She'll need one more major operation around the end of 2014, and from that point on her medical care will be pretty comparable to any other child her age (at least that is the hope/projection)

 

[Meadbh]

Wow, great story! Delighted to hear your little girl is doing so well. I hope she will have a long and healthy life.

 

[Gatordoc50]

What risk has been transferred to employers, and based on what legislation? The only thing some do is offer healthcare insurance coverage, and this is entirely voluntary.

Employers pay the majority of the insurance premium for the employee. It would be wiser to attract employees with higher wages and let them purchase health insurance on their own. Like they do for life, auto, etc. In 1986, congress passed legislation that requires hospitals to provide care regardless of ability to pay. The ACA requires coverage of basic routine care and removes the ceiling for coverage. These are risk transfers.