Health care costs rising out of sight! What the hell is going on? What can be done?

[DSeid]

Metacom,

My comments to your points:

“The suggestion that competition between hospitals has led to the over-purchase of expensive pieces of equipment, like MRI scanners and such.”

I think that it is true to no small degree. the difficulty is in defining “over-purchase” They are not laying fallow most of the time. Are they being used for purposes that cheaper technol;ogy could accomplish well enough? Probably. But her is the effect of medical mal in action: docs order the more expensive test for the very rare chance of missing something on the less sensitive CT scan that the MRI would’ve caught because to do otherwise is to give a lawyer something to work off of. True, in reality, it is very unlikely to show anything significant and may even be more likely to identify an “unidentified bright object” (an normal spot lighting up and resulting in a reading of an unidentifiable signal) that causes more testing, etc. - but they are covered.

“The idea that, as time goes on, more expensive, specialized procedures become available and are used.
A more specific version of the last: heroic lifesaving measures for very young children and the very elderly are both more common and more costly then they used to be.”

We are in love with technology. We feel for the specific case with a face. Especially if it is a face that “we” identify with. I cannot quote the figures but I recall that most expenditures are within the last month of life. Care for the barely viable premature can be in the hundreds of thousands … but once they are out there is little money to keep them healthy for many.

Oy!,

Please reread my suggestion. I agree that the safety net needs to be expanded to all who are poor enough that tax credits would be insufficient. It is for better minds than mine to decide where that point is.

As to retaining the for profit sector. Firstly, be pragmatic. Nothing will happen without getting the for profits to play ball too. Deal them out and it will be blocked. This keeps them in the game and all competing against each other on a level playing field. Secondly, I do not trust the government to do the job alone in an ideal, or efficient, or fair manner. I’ll illustrate with one very self-centered example. One payer means that they have all the power against me and I have no choice but to take it. Budget shortfall? Cut my payment or stretch out the payment cycle. No balance of power. Insurance companies have too much power now and I can survive saying goodbye to anyone of them. I like competition and choice.

[DoctorJ]

In some states (West VA), there are NO specialists in certain fields…if you need a neurologist, you will have to go out of stste!

I haven’t read the whole thread, but I had to stop to debunk this.

The AMA’s Doctor Finder page lists 63 neurologists in the state of West Virginia. New Mexico, which ranks just below WV in population, has 72; Nevada, just above, has 64.

In case you meant neurosurgeons, there are 27 in WV, 32 in NV, 23 in NM.

This is not to say that they aren’t underserved, or that there isn’t a problem, but this myth has to stop.

[jshore]

DSeid, thanks for providing a doctor’s perspective. It is interesting. I do have comments on this point though:

@DSeid

The claim that the stock market collapse drove malpractice rates up is also false. By law insurance companies are limited to how much they can have in the market. They were not hit too badly. If the stock market collapse was a driver then all states would be hit equally, not less of an increase in states that have cap limits. If the stock market collapse was a driver then other insurance products (life, car, home, etc.) would have a similar rate of increase as medical rates. Both are not so.

(1) Well, is there evidence that the claims the companies are paying out have skyrocketed nearly as much as the rates have? Here are some claims made by the group that I linked to before (that is admittedly biased but I can’t see what could be wrong with their statistics, unless they are lying or not counting settlements in “insurance payouts”…but if you go to the study itself [p. 6], it seems that they are counting settlements):

* Contrary to what the insurance and medical lobbies have alleged, the years 2002 and 2003 saw no “explosion” in medical malpractice insurer payouts to justify skyrocketing rate hikes.  In fact, rather than exploding, inflation-adjusted payouts per doctor have dropped for the last two years.  Payouts (in constant dollars) have been essentially flat or dropping since the mid-1980s. 

• Second, medical malpractice insurance premiums rose much faster in 2002 and 2003 than was justified by insurance payouts. These price hikes were not connected to actual payouts, jury verdicts or the legal system. Rather, they reflect dropping interest rates and losses experienced by the insurance industry’s market investments.

(2) I have actually heard mixed things regarding comparisons between states with and without cap limits.

(3) Well, I will admit that it is strange how some rates have been going up more than others. But, it is not only malpractice rates. It is also products like liability insurance for activity clubs…I was just at a board meeting of our orienteering club tonight and it turns out the rates have nearly quadrupled over the last few years. And, admittedly we didn’t have statistics…but noone had even heard of any orienteering club whose insurance company had to pay a claim of any sort.

[jshore]

By the way, as near as I can tell, what Americans for Insurance Reform are saying is not so much that the insurance company is gauging everyone but that the insurance market cycle is such that insurance rates are very unstable…So, when the stock market does well, rates will actually fall below the cost of claims as the insurance companies make a lot of money and competition becomes fierce. When the market does badly, the opposite happens and rates shoot up.

Whether this instability in rates is a lot worse than if they just went up more gradually with the rate of inflation is an interesting question. But, the point is that when they are in one of the big upward spikes, they blame it on payouts and argue for tort reform when in fact what is most at fault is this instability in the insurance market.

Of course, there is presumably another side to the story and maybe the other side has data that back it up and we can try to sort through it. However, so far in this thread at least (and in other presentations of the tort reform argument that I have heard), “the other side” doesn’t really seem to believe in using hard empirical evidence to back up their arguments which sort of makes me suspicious.

[jshore]

According to this AIR press release, the insurance industry and American Tort Reform Association have backed away from claiming that tort reform will necessarily lead to a drop in premiums.

[DoctorJ]

Fully half of the patients I see in my clinic have no health insurance whatsoever; they have neither money nor a good enough job to have private insurance, they are not old enough or disabled enough for Medicare, and they are not poor enough or sick enough for Medicaid. Probably half of the rest have Medicare alone, and 20% have Medicaid, leaving about 5% with some form of private insurance.

While the last few years have had their stressful moments, I am glad to have learned in this environment, because I have learned to practice clinical medicine on the cheap. Even in my well-insured patients, I find myself using the $20 lisinopril rather than the $100 Altace; numerous cardiologists have explained to me that Altace is better, and they might be right, but no one has convinced me that it’s worth the 500% markup.

An enormous recent study made it clear (to me, anyway) that the cheapest medicine I prescribe–hydrochlorothiazide, or HCTZ–is the best first agent to use for blood pressure. Still, I see people being started on the more expensive calcium channel blockers or angiotensin receptor blockers as first agents all the time.

I saw a 19-year-old girl today with vague abdominal symptoms (suggestive of irritable bowel syndrome–at least to me) for the last ten months; she has seen two general docs, a cardiologist, and a gynecologist so far, with no resolution. (I don’t know why she ended up with us.) In these countless hours and thousands of dollars worth of health care, no one had ever recommended daily fiber therapy or a trial of a lactose-free diet.

The point is that I am forced into the judicious use of expensive tests and medications. It’s a pain in the ass for me to get any of the $100 meds for my folks, or to get them in to see expensive specialists, so I have to think about whether those folks really need those things or not before pursuing them. (I would only need a few of the really expensive drugs–Lipitor (or any statin, but Lipitor kicked Zocor’s ass in a recent study), Actos or Avandia, Neurontin (I see a lot of diabetic neuropathy), Plavix, and the occasional odd antibiotic (though I don’t find myself scrounging for expensive antibiotics as often as I used to).)

We are not always encouraged to make cost-efficient choices. You could say that I am doing a disservice to my Medicaid patient by giving him lisinopril instead of Altace. The marginal benefit is minimal at best, and the cost difference is an order of magnitude, but the cost to the patient (the Medicaid co-pay) is about the same. Shouldn’t I be providing my patient with the best care available, and if the government is foolish enough to pay for it, that’s their own fault? (Note: this is not my view.)

It’s hard to get doctors to make cost-efficient choices. There was some furor years ago when an insurance company was giving bonuses to more cost-effective doctors; “They’re paying your doctor to not do that MRI!” they’d say. It’s true, in part; incentives to do less quickly become incentives to not do enough.

Can we leave it up to patients? As many have suggested, we could take health insurance back to a model where catastrophic illnesses and hospitalizations are covered, but routine care, meds, etc. are not. The problems there are twofold; for one thing, it is often that routine care that prevents the catastrophic costs, so the insurance companies can save money by providing at least some of it. For another, it often leaves patients with unacceptable levels of risk. A lot of my patients who were on Vioxx say that they got enough relief from their arthritis pain from the drug that they would be willing to accept the small increased risk of a heart attack, but this is clearly not a choice that Merck is willing to let them make with their product. (And with good reason.)

I’m rambling, and I apologize. I don’t have an easy solution. I think DSeid’s posts are right on the mark.

[Wesley_Clark]

Do you doctors strongly feel we should switch to simplified single payer system, because from what I saw I didn’t see either of the doctors talk about that? Do you as doctors spend alot of time haggling with insurers or do you have underlings to do that for you? Do you feel the haggling takes away valuable time you could spend with patients or is it a small part of your day?

[DoctorJ]

As for tort reform, I think that any effort at tort reform needs to be tied, legislatively, to the benefits that are supposed to be derived from it. If the bill’s authors and backers claim that their bill will result in a 22% decrease in the average malpractice premium, or that health care costs will reduce across the board by 5%, write the bill so that the law expires in a few years if these predictions don’t happen (with some allowance for error).

(I think a lot of laws should be written this way.)

[TeaElle]

@ralph124c

Tghose highly-successful cosmetic/plastic surgeons in Miami seem to have no trouble making money! AND, their services are NOT reimbursable by health insurance. Herein, we find the anser to the problem! Make health isnsurance cover BASIC care only…in other words, you will be treated for a life=threatening condition. But, should your insurance pay for tatto-removal? No way-you get to pick that one up!

What makes you think that anyone’s insurance, in 2004, is paying for tattoo removal? My insurance won’t even cover removal of an ingrown toenail, and that can be a legitimate medical issue. (No podiatric services are covered under my plan. I have no idea why.) Women can’t get contraceptives. A dear friend is paying more than $5,000 a year out of pocket because her (national, well-known) insurer refuses to pay for a very well-known, nationally advertised and widely prescribed medication for her 4 year old daughter. The medication they will cover for the child’s diagnosis is not only ineffective, it isn’t FDA approved for pediatric use. The insurer doesn’t care. Because of that $5,000 she has to pay each year to keep her child healthy, my friend lives in a trailer home rather than a house. Short of her husband finding another job, she has no way to get her coverage from another insurer, and having a child with a chronic health problem, she needs to keep that covereage.

As for legal malpractice vs. medical malpractice insurance rates, there’s a reason why doctors pay more. When doctors screw up, people lost limbs, lose organs, lose their ability to speak, walk, talk, work, learn or reproduce, are sick for the rest of their lives or flat out dead. When lawyers screw up, people go to jail or lose money. There’s a big difference between paralyzed and poor. A hell of a big difference. The two simply aren’t comparable.

You clearly have a thing about malpractice attorneys, but they exist because they are needed, because the court system – for better or for worse – is how we, in a nation of laws, find redress for our complaints against one another, and that includes the complaints that patients have against doctors. Some are unethical and moneygrubbing, but the majority are not. Some take on cases that play more to the emotions of jurors than to the facts, because they’re good for big, fast payouts. Many more carefully vett cases not only to weed out the frivolous money-seekers but even those who are legitimately injured but simply don’t have a provable claim. Not all lawyers deserve such enmity, just as all doctors do not deserve enmity because of the few who diirely and negligently screw up and cost people their health and wellbeing when they do.

@DSeid

Still, for its part what is required is: a reasonable cap on noneconomic damages;

That’s difficult. How much is your ability to walk worth? Not the cost of the wheelchair you’ll need, and the modifications to your home and a van to get you and your chair from place to place, but the ability to walk in and of itself. What’s it worth to you? How about your testicles? Your wife’s breasts? If your five year old child – who obviously made no money (so an award can’t be based on earnings potential) and whose treatment was fully covered by insurance – dies due to someone’s outrageous negligence, should you receive any cash damages whatsoever?

Point being, what’s “reasonable” to you might be outrageously low to me or outrageously high to ralph124c. We’ve always trusted that in the deliberations of a jury of 12 citizens, or the negotiations between parties’ attorneys, reasonable can be found. Personally, I’m not ready to abandon that trust; caps on damages strike me to be as inappropriate as sentencing guidelines which tie the hands of criminal jurists.

I have no problem with economies of scale; keep health insurance most affordable when it’s purchased by groups. Just expand what counts as a group, let churches offer the standard group rate to their parishoners. Let a family – a full extended family of 100+ people – buy together. Communities, social clubs, civic groups, bunches of friends even. The false notion that has been put forth that employers are the best way to distribute health care coverage must be squashed. Now, if an insurer in California wants to give a better rate to Boeing to be the sole coverage provider to more than 36,000 workers than it wants to give to the TeaElle Family Insurance Collective with 112 members, soon to be 113 because cousin Donna is pregnant again, fine. But they should not be able to say that the TeaElle Family Insurance Collective can’t buy insurance as a group at all.

[theR]

Well, there was just a thread that went nowhere about healthcare and Kerry’s plan for it, but my comment there will apply here.

First, ralph124c is offering no actual evidence aside from anecdotal or opinion when he is complaining about insurance. I don’t know what is causing the rise in malpractice insurance premiums, but I suspect it is greed by the insurance companies as opposed to a bunch of lawyers trying to milk the system.

Here is my comment from the other thread:

Frivolous lawsuits are a drop in the bucket in total healthcare costs, and when politicians push tort reform as a great way to lower healthcare costs they are either uninformed or pushing an agenda, knowing a lot of people will pile on when lawyers are blamed for something.

Administrative overhead is a much larger percentage of healthcare costs than the costs due to lawsuits. The Congressional Budget Office stated, “Malpractice costs amounted to an estimated $24 billion in 2002, but that figure represents less than 2 percent of overall health care spending.” (http://www.cbo.gov/showdoc.cfm?index=4968&sequence=0)

Now, that is definitely a lot of money, but when you look at it in comparison to the 30% or more of every healthcare dollar that is spent on administrative overhead, it is definitely the wrong place to start.

Also, who is to say whether a lawsuit is frivolous? Some of those $24 billion in malpractice costs were, get this, because malpractice actually occurred and the plaintiffs were fairly awarded the money!

I know it’s hard to believe, but not every lawsuit is frivolous. That is for a judge to decide, as far as I know. You don’t eliminate frivolous lawsuits by setting a limit on payments due to lawsuits. You limit everyone who files a lawsuit, frivolous or justified, from collecting any settlement above a certain amount. Limiting settlements across the board rather than based on the actual facts of a case seems like a bad idea to me, especially when the amount that lawsuits cost the healthcare system is not nearly as much as people think and there are much better and more efficient ways to bring down costs before getting anywhere near tort reform. (End comment from other thread.)

The first thing I would do is look at ways to reduce administrative overhead. Simpler and universal claim forms would be one obvious place to start. Another would be getting rid of things like referrals. I imagine the purpoted reason for something like referrals is to prevent fraud and keep costs down, but in reality it adds cost by making more administrative work. The health insurance industry loves to delay claim payouts as much as possible with whatever means they can use, simply because that means they hold on to the money for a longer period of time. One of the ways they can delay claims is by making it administratively more complicated.

I also agree with DSeid basically saying that preventitive care is much cheaper in the long run than being forced to treat someone that ends up at the emergency room.

Just as a frame of reference, I am very much in the corner of healthcare workers on this issue despite how it may seem because of my stance on tort reform. Both my parents are doctors and my wife is a nurse, and I’ve talked to all of them at length about this issue. I am not opposed completely to tort reform, but I do think it is a red herring thrown out there by the very companies that are the biggest reason for our skyrocketing healthcare costs (the insurance companies).

[ralph124c]

Suppose the US Federal Government decided to act as the insurer of physicians. Instead of private insurance, the government wouldi ndemnify private physicians, and a fund would be set up to pay claims resulting from malpractice?
This would probably be a more efficient system that insurance vis private carriers.
But back to my main point : others have complained that I provide no details. I don’t understand this…when a physician has to pay > $12,000/month for malpractice insurance, that money HAS to come from somewhere…since the tooth fairey doesn’ pay it, it has to come from the patients. The fact that many doctors are abandoning specialties (like OB-GYN) is proof that high premiums discourage people from taking up these specialties. I don’t know what could be any more clear than that.
The other example (plastic surgery) proves that a high-risk medical specialty CAN survive WITHOUT health insurance (ie. people are willing to pay for it!). This tells me that many doctors could have economically viable medical practices without insurance=people could actually pay for their services out-of-pocket, if these doctors were shielded ffrom these rapacious lawyers. James Sokolove is making a LOT of money (otherwisw he would not be plying his trade on TV).
QED

[hawthorne]

ralph124c
[…] it has to come from the patients. The fact that many doctors are abandoning specialties (like OB-GYN) is proof that high premiums discourage people from taking up these specialties.

These are two different things. If the cost was being passed on to patients (directly or by higher premiums) then doctors wouldn’t be abandoning specialties, because their earnings would be unaffected.

[jshore]

@ralph124c

But back to my main point : others have complained that I provide no details. I don’t understand this…when a physician has to pay > $12,000/month for malpractice insurance, that money HAS to come from somewhere…since the tooth fairey doesn’ pay it, it has to come from the patients. The fact that many doctors are abandoning specialties (like OB-GYN) is proof that high premiums discourage people from taking up these specialties. I don’t know what could be any more clear than that.

Well, three points here:

(1) First, you have provided no evidence for the claims made above. I am willing to believe that they might well be true but just stating them does not constitute evidence, let alone any indication of how widespread the problem is. [And, Doctor J has already pointed out that a statement made in this thread about the lack of neurologists in West Virginia appears to be fiction.]

(2) You have not shown that the rise in costs for this insurance are driven by a rise in payouts. In fact, the only evidence that has been presented (by me) is that they are not, along with evidence that the insurance industry and tort reform groups are very cagey about even claiming that tort reform will lead to lower premiums, let alone significantly lower premiums. Now, you can find evidence of your own that says differently. (I have admitted that my source is an umbrella of consumer groups that clearly has animosity toward the insurance industry.) But you can’t just continue to assume a connection that you haven’t presented any evidence for.

(3) Even if the rise in malpractice insurance rates is due to increased payouts and can be significantly reduced by tort reform, this is known to be a very small percentage of the total costs in the health care system. (I believe the number I saw was less than 1% of direct costs; there are then argued to be higher indirect costs due to the practice of “defensive medicine” but the CBO and GAO have disputed the Stanford study that gave the highest estimate for these costs…and even this likely-inflated estimate was not that high in terms of the percentage of overall medical costs. [I believe it amounts to the single digits in terms of percentage of overall health care costs…and even the lower single digits.])

[ralph124c]

I guess $150,000 is just pocket change! My dermatologist has increased his fees from $55.00/visit to $150.00/visit ,in three years. Well, I guess that might be insignificant to some people…

[Yeticus_Rex]

@even sven

Huh, thats funny, because I’m a full-on California citizen, and I am entilted to fuck all as health benefits. I somehow doubt that illegal immigrants live in a health-care paradise here. There is a county funded program that covers my reproductive health, but right now I’m pretty sure I’ve picked up a case of dysentary and I have no way to see a doctor about it. Of course, if the situation becomes life threatening, I can show up at the emergency room and they will treat me. But as long as I don’t have any money, I have no way to see a doctor to prevent the situation from becoming life threatening.

Right now a non-disabled adult has absolutely no government health benefits. Millions of poor people without insurance have no way to get the preventative care or timely treatement that will keep them out of the emergency rooms and out of unpayable debt. I believe health care is the number one cause of bankrupcy. The situation is unbelievable considering that so many nations spend less money on health care than us and still manage to provide decent care to all of their citizens. And yet we, as the richest nation on Earth, feel it’s okay to let our poor suffer easily treatable diseases and face unpayable debt when those diseases become critical.

I don’t feel “entitled” to anything, but I still think it’s kind of ridiculous that I live in this increadably rich nation and can’t get treatment for my stupid dysentary.

California Medi-Cal is your friend.

National Immigration Law Center

Illegals and US healthcare

Free Republic article

L.A. Hospital Emergency Room shutting down

Yes Virginia, this a medical health-care paradise for illegals, and obviously, it’s costing you as well.

[DSeid]

TeaElle,

You illustrate how we irration resources and why:

How much is your ability to walk worth? Not the cost of the wheelchair you’ll need, and the modifications to your home and a van to get you and your chair from place to place, but the ability to walk in and of itself. What’s it worth to you? How about your testicles? Your wife’s breasts?

Ah. The base appeal to emotionality. Well, on the one hand, no amount of money can replace certain things. That is the tactic of the malpractice lawyers - so try to imagine a number as close to infinity as you can think of. But on the other hand, there is not an endless supply of money and this does come from somewhere. The cost will be absorbed or people will be driven out the business. So how much do we value things as a society? We have numbers from cost-effictiveness studies. We are willing to spend $12,000 per year of lived saved (yls) with colorectal screening, but much more is labelled as not cost efficient. We are willing to spend $20,000 per yls with mammography but much more for lower risk groups causes controversy over cost effectiveness. We are unwilling to spend anywhere from $44 to 8,200/yls (depending on cost assumptions) to save lives by funding better enforcement current sales restriction on tobacco to minors.

So is my ability to walk worth, say ten years of other peoples lives? One? My testicles? I’m a married man, I hardly need them anymore.

Is pain and suffering in Cook county worth an average of $3.12 million while only worth a fraction of that in DuPage county next door? Is it worth @250% more now than it was 6 years ago?

What is the point? To replace the irreplaceable? Can’t be done. To exact vengence? To motivate better medical practice? It doesn’t accomplish that. It usually accomplishes the converse.

And yes, large swaths of geography are uncovered for certain specialties - not states but counties anyway. Talk to some people in downstate Illinois about OB and neurosurgical care.

Again, tort reform is required but not sufficient. We must address the absorbed costs of irrationed care.

[SteveG1]

@Yeticus Rex

Yes Virginia, this a medical health-care paradise for illegals, and obviously, it’s costing you as well.

Thanks for looking up the cites. I was not sure if I could find them - You know, find them once, make a pronouncement, then can’t find them again when I get called on it. By the way, so far, it is 4 trauma clinics shut down in the Valley alone, due to this. Kaiser Permanente has recently announced that they will no longer be giving help to illegals. On the other hand, the fight for drivers licenses, free college, food stamps, etc for illegals is still going on (among other things). So I guess it is a paradise here, but only if you don’t belong (undocumented and illegal). If you do belong here, your’re screwed.