Health Care Reality

As the House and Senate race towards an elusive goal of finding a compromise that can get some kind of health care reform in place, I think we need a sense of reality about where this is going.

Whatever gets passed will be significantly altered over time.   Right now the goal is to get some kind of structure in place so that a new system is born.   Once in place it will be all but impossible to eliminate.  However, the kinds of compromises being made will create imbalances that will require change and generate political heat.

The current Medicare buy in plan will be a problem from the start.   Hospitals are already reimbursed far too little under Medicare, and expanding this will mean dramatic cuts to hospitals across the country.   Many small rural hospitals might face existential crises if this plan is passed, especially those in areas of relative poverty and high median ages.

Alas, both the Democrats and Republicans are afraid of the political consequences of acknowledging reality.

The Republicans are most off base when they assert that the system works well as it is, that we’re messing with a good thing, and try to make claims that others ‘flock to the US’ for quality care and that we are the “envy of the world.”   They are wrong on two counts: a) few come to the US, and those who do are almost wealthy because we have a system that gives the best care to those with the most money; and b) the system is in a state of implosion right now, with insurance premiums set to rise dramatically in coming years, often pricing businesses out of being able to offer insurance, or at the very least dramatically increasing employee contribution rates.   This means that more money will be sucked into the health care system even as people earn less and deal with an ongoing recession.  The problem gets worse as the boomers retire.

Meanwhile Medicare and Medicaid patients are receiving unbelievable amounts of prescription drug care, far beyond what is reasonable.   The power of pharmaceuticals in our economy can make even the Mexican drug cartels jealous.    Simply, we have a health care system in a state of severe crisis, the worst of which is yet to come.   If we do nothing, it won’t be like post-1994 when the failure of health care simply led to the status quo continuing and only those tens of millions who lack coverage (and usually don’t vote) truly hurting.   This time, within a few years, the clamor for change will grow as insurance costs skyrocket.  Our system cannot survive as it is.

The Democrats, on the other hand, are wrong in saying that we can change things in a painless manner.    Health care costs have to be brought down dramatically, and that means decreasing costs and making tough decisions about what to cover.   Does an overweight 75 year old really deserve an expensive hip replacement?   Right now health care is rationed by the market, meaning that if you have money you get better care than if you don’t.   Yet we see the signs of even that tattering.   People are getting claims denied for all sorts of trivial reasons, often things that won’t stand up if seriously challenged.   They know people can’t afford to fight, and often they can find technicalities to deny coverage.  This means even people who think they are covered are increasingly finding that the profit driven insurance industry doesn’t care about health care, they care about profits.   Innocent mistakes or bits of ignorance about arcane rules can lead to a ‘gotcha’ game of coverage denial.

The only way to cut costs is to decrease the number of procedures, stop covering ‘vanity’ procedures, cut the amount of prescriptions written, decrease hospital costs by reducing the level of service (four bed rooms or more, shared equipment, etc.), and reduce pay to physicians and hospitals, meaning a downsizing of the health care industry.

If the Democrats came out and said that, they’d have no chance of passing health care reform.

So, as is typical in our post-modern political system, the two parties ignore reality, compose their own narratives to support their positions, and push the real problems off.   The Democrats realize something has to be done so they are trying to get something passed, knowing that the current system is untenable.    You can always tweak or alter the system later.    The Republicans concerned with health care reform raise good points too.  Senator Snowe is right that the current bill would be devastating to many hospitals, and the moderates who question given plans often have good reason.

Yet many of the moderates and the opponents are either in denial of the reality that no matter what is done costs will skyrocket, or they are enmeshed with trivialities.   It is surreal to see people who insist the private sector does everything better now say that the private sector can’t compete with any public option.    But it’s absurd to think that a public option will magically reduce costs without people noticing any change in service.

Health care costs are rising at an unsustainable level.    The current system will not survive the next decade, no matter what is done.    The only way to reduce costs and make programs like Medicare sustainable in the long run is for a major restructuring in how care is provided and paid for.    Since this restructuring involves cutting costs, it will be unpopular, and will deny people a level of care they have been used to.   It will mean cutting physician pay (especially specialists), cutting overhead costs that now go to insurance companies (not just cutting insurance company profits, but the cost of administrating the system), cutting profits to pharmaceuticals and giving Americans more limited options.

Neither party will say this.  They’ll either deny the reality with platitudes like “we have the best health care” or point to “savings by ending fraud and inefficiency” as the way out of the mess.   A vast majority of the cost of health care is spent in the last ten years of life.   As the boomers age, the strain on the system will grow proportionally.   As we learned from the advent of this economic crisis,  reality ultimately cannot be denied.   The reality of health care in America is that something drastic will have to be done sooner or later — and the politicians on all sides of the debate aren’t giving us the full story.

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  1. #1 by classicliberal2 on December 11, 2009 - 20:54

    The proposed expansion of Medicare raises the reimbursement rates, which everyone acknowledges are too low. The problem is that the buy-in isn’t offered to those in the proper age range who already have health insurance. It will only cover (potentially) about 7 million people. It is, in other words, tokenism. They did address your concern with that issue, though.

    A robust public option was the cost-control mechanism in these proposals–one of the only genuine reform elements in what was, otherwise, a mostly misguided effort. Now that it’s been killed, it would be far better to let the whole effort die than to pass what’s on the table in its absence (because what’s left will make things much, much worse).

    Regular, non-rich people do not “flock to the U.S.” for care. In the real world, it’s Americans who are going abroad for health care in large numbers. Patients Beyond Borders reports that over 200,000 Americans per year travel outside of U.S. borders for health care, the most popular care sought abroad being “dental work, heart surgery, orthopedics, cosmetic surgery, neurosurgery, fertility treatments, LASIK eye repair, and oncology.” IMS Health reported, back in 2003 (the most recent numbers of which I’m aware), that U.S. citizens purchased $1.1 billion in prescription drugs from Canada. The number would probably be much higher by now, and Mexico does big business in this area, as well (and those are only the two nearest neighbors).

    The kinds of drastic reductions in current services you suggest are completely unnecessary. Eliminating or downsizing unnecessary procedures is a good thing, but there’s absolutely no reason to cut into necessary procedures, and it’s done only to maintain and increase profit margins. The for-profit structure is one of the biggest problems with health care delivery. The good news is that it’s so massive, it doesn’t even need to be eliminated–merely scaling it back a bit is all that’s necessary to provide care to everyone, and it can be done and still maintain a pretty healthy profit margin. There’s no will to do that, particularly not among politicians who are bought and paid for by the industry in question.

    The public-option-free version of “reform” is just another big right-wing handout to corporate America at the expense of everyone else. It forces people to buy health insurance–44 million new customers provided to the industry that’s a big part of the problem, at the point of the government gun. They’ll be able to charge anything they want, and, with pre-existing conditions and the other abhorrent practices they use to maintain their profits eliminated, rates already in the stratosphere will skyrocket, and services will plunge. This doesn’t provide a framework for future reform. It, in fact, makes future reform even more difficult–probably impossible–by shoveling new billions into the collapsed, dying private, for-profit industry. That won’t improve services at all or bring down costs a penny, but it will be a good, fat boon that can be used to buy even more politicians to make any real reform even more difficult.

  2. #2 by Mike Lovell on December 11, 2009 - 23:20

    “The kinds of drastic reductions in current services you suggest are completely unnecessary. Eliminating or downsizing unnecessary procedures is a good thing, but there’s absolutely no reason to cut into necessary procedures, and it’s done only to maintain and increase profit margins.”

    The problem I see here is that this will only work 100% in theory, not 100% in practice. You’re oversimplifying and not not giving the legal system enough credit.
    Let’s say a doctor does what he feels is necessary, in the procedural department. However one of those “unnecessary” procedures was not ran, and the doctor missed something important. At that point, the patient can say helo lawyer and hello a few million bucks. (obviously the lawyer will also be saying hello more than a few million bucks in the right cases) The doctor can argue til he’s blue in the face, passes out, or strokes himself into death about how he ran the necessary tests according to the symptoms shown, but without SOME sort of tort reform included here, he’s screwed.

    “The public-option-free version of “reform” is just another big right-wing handout to corporate America at the expense of everyone else. It forces people to buy health insurance–44 million new customers provided to the industry that’s a big part of the problem, at the point of the government gun”

    Any mandate that says I have to purchase some type of ‘qualifying plan’ or face massive fines or jail…well, lets just say I may call from a correctional facility from time to time, because this is absolutely a corrupt collusion of government and corporatism. I completely agree that any mandate like that is wrong and only empowers those already in power to further screw (I almost swore here) us over.

    In the end, should some tax be levied to pay for some form of national healthcare or another, I’ll do my duty (or rather the company’s accountant will) and watch more money come out of my already meager paycheck (which somehow never seems to satisfy the state of iowa..they always want more at filing time even though I am in a low income bracket)..but dont sit there and expect me to buy a program I have no intention of using (and when I say never..this is one of those times I truly mean it).

  3. #3 by classicliberal2 on December 12, 2009 - 02:09

    “Let’s say a doctor does what he feels is necessary, in the procedural department. However one of those ‘unnecessary’ procedures was not ran, and the doctor missed something important. At that point, the patient can say helo lawyer and hello a few million bucks. (obviously the lawyer will also be saying hello more than a few million bucks in the right cases) The doctor can argue til he’s blue in the face, passes out, or strokes himself into death about how he ran the necessary tests according to the symptoms shown, but without SOME sort of tort reform included here, he’s screwed.”

    That could happen right now, but it doesn’t. Those who would like to take away our ability to make the wealthy and powerful accountable would like you to think it does, but the data is public, and it simply isn’t there. You’ve been lied to by people with a vested interest who have peddled those sorts of fairy tales in the service of it–don’t take the bait. All malpractice–warranted, unwarranted, and everything in between–is a microscopic fraction of our total health care bill. Resultant “defensive medicine” is, as well.

    “Any mandate that says I have to purchase some type of ‘qualifying plan’ or face massive fines or jail…well, lets just say I may call from a correctional facility from time to time, because this is absolutely a corrupt collusion of government and corporatism. I completely agree that any mandate like that is wrong and only empowers those already in power to further screw (I almost swore here) us over.”

    You should swear. That one is worth all of us swearing about until we’re all blue in the face. It’s an outrage.

    (To keep it straight, though, the proposal offers a tax penalty for failure to carry insurance. The jail-time only kicks in if you dodge your taxes and are convicted, but that’s the case with any tax-dodging, though. Still, the principle is the same.)

    “In the end, should some tax be levied to pay for some form of national healthcare or another, I’ll do my duty (or rather the company’s accountant will) and watch more money come out of my already meager paycheck (which somehow never seems to satisfy the state of iowa..they always want more at filing time even though I am in a low income bracket)”

    If you have insurance through your employer (meaning you already pay obscene premiums), the amount you would pay under single payer would be significantly less than what you already pay. If, on the other hand, the current proposal becomes law, you’ll be paying a LOT more every year, because there’s no cost-control mechanism. You’re forced to buy, and they can charge whatever they like.

    • #4 by Mike Lovell on December 12, 2009 - 15:41

      “That could happen right now, but it doesn’t. Those who would like to take away our ability to make the wealthy and powerful accountable would like you to think it does, but the data is public, and it simply isn’t there.”
      and
      “All malpractice–warranted, unwarranted, and everything in between–is a microscopic fraction of our total health care bill. Resultant “defensive medicine” is, as well.”

      Maybe I’m reading this wrong, but doesn’t the second part ocntradict the first here? It does happen, obviously, or such high reward lawsuits wouldn’t exist (it isnt just on tv that these happen). I’m not saying that it is a large chunk of the cost issue overall (nor that frivolously large suits are the rule, but are the exception compared to legitimate ones), but it does add to the ncessary overhead of every doctor, which in addition to the way ‘managed care’ comes into play, which forces them to see more patients more quickly, just o cover their own bottom line. The hospital isn’t paying the doctors malpractice coverage, the doctor does. Sure the hospital has to cover liability coverage as well, but that doesn’t get credited towards teh doctor. ANYWAYS, while it may be a microscopic sliver of the overall healthcare industry, damn near anything broken down underneath say 1/4 trillion dollars would fall within that subjectivity. A lot of people say why bother with reducing the medicare/medicaid fraud because its ‘only’ 100 billion or whatever.

      I think that within reality, we need to look at all cost cutting measures to expenses that aren’t necessary. I don’t care if its 500 billion, 500 million, or merely 500,000…if its wasteful, eliminate it best as you can.

      Breaking the antitrust exemption health insurers have, and allowing interstate commrce to go into effect, whereas I can now buy my insurance from anyone, WILL drive costs of insurance down. Will it save a trillion dollars overall? Absolutely not, but when you look at individuals, or families it may easily save them a couple hundred bucks a month in the end, as each company competes for their business. And for most of us peons in the world a couple hundred bucks freed up is a HUGE deal, and can make a massive difference in the rest of our areas of life.

      “If you have insurance through your employer (meaning you already pay obscene premiums), the amount you would pay under single payer would be significantly less than what you already pay. If, on the other hand, the current proposal becomes law, you’ll be paying a LOT more every year, because there’s no cost-control mechanism. You’re forced to buy, and they can charge whatever they like.”

      Well, CL2, this is what I was talking about concerning NEVER participating in the system. I do not have coverage through my employer, in fact I am not covered at all (nor would I ever go to hospital voluntarily), but that is by choice, my only deductions are the fed/state/medicare/social security. My wife’s employer offers coverage, and she and the kids are covered by it, and she doesn’t pay much at all….couple hundred a month, so it’s not all that bad (and hard to reduce significantly in that case, without offsetting costs by increased payroll taxation), and coverage is pretty decent, so I guess we’ve been lucky in that respect.

      • #5 by classicliberal2 on December 12, 2009 - 18:59

        “Maybe I’m reading this wrong, but doesn’t the second part ocntradict the first here?”

        No. I suppose you are misreading it (though I’m having trouble understanding how).

        “It does happen, obviously, or such high reward lawsuits wouldn’t exist (it isnt just on tv that these happen). I’m not saying that it is a large chunk of the cost issue overall (nor that frivolously large suits are the rule, but are the exception compared to legitimate ones), but it does add to the ncessary overhead of every doctor”

        Not much, and what it does add is the price of living in a free country, rather than one in which a legally privileged overclass is officially shielded from any accountability for their actions (the real goal of “tort reform”). The courts do a pretty good job of weeding out the frivolous suits.

        “ANYWAYS, while it may be a microscopic sliver of the overall healthcare industry, damn near anything broken down underneath say 1/4 trillion dollars would fall within that subjectivity. A lot of people say why bother with reducing the medicare/medicaid fraud because its ‘only’ 100 billion or whatever. I think that within reality, we need to look at all cost cutting measures to expenses that aren’t necessary. I don’t care if its 500 billion, 500 million, or merely 500,000…if its wasteful, eliminate it best as you can.”

        The current numbers on the total “medical malpractice liability system,” as crunched by Public Citizen in July:

        “The cost of the medical malpractice liability system–if measured broadly by adding all malpractice insurance premiums–fell to less than 0.6 percent of the $2.1 trillion in total national health care costs in 2006, the most recent year for which the necessary data to make such comparisons are available. The cost of actual malpractice payments fell to 0.18 percent–one-fifth of 1 percent–of all health care costs in 2006. Annual malpractice payments have subsequently fallen from $3.9 billion in 2006 to $3.6 billion in 2008, but comparative data on total health care costs are not available.”

        PC notes that “more than 80%” of malpractice payments involve death or permanent debilitating injury. And, of course, only a tiny fraction of those with legitimate cause to sue ever do so.

        I focus on the total cost of the malpractice tort system to illustrate that it’s such a microscopic fraction of the total U.S. health care bill. Frivolous suits–whatever cut of this they may be–are clearly a microscopic fraction of that microscopic fraction.

        As I said before, these aren’t “unnecessary costs” in a free country, particularly one in which the medical profession so adamantly refuses to police itself. From 1990 to 2005, 57.8% of malpractice payments were made by only 5.9% of doctors. By contrast, 82% of all doctors in that time had never had a malpractice payment at all. That doesn’t mean they’re all clean, of course (because, again, few people with cause to sue ever do). It does, however, suggest that a handful of bad doctors are responsible for most of the abuse that leads to the suits. If one wanted to radically reduce malpractice payments, it would involve simply drumming a handful of consistently abusive physicians out of the profession. That’s never discussed, because the goal of “tort reform” is, again, to shield those with money from public accountability, not to deal with any real problem.

        “Breaking the antitrust exemption health insurers have, and allowing interstate commrce to go into effect, whereas I can now buy my insurance from anyone, WILL drive costs of insurance down. Will it save a trillion dollars overall? Absolutely not, but when you look at individuals, or families it may easily save them a couple hundred bucks a month in the end, as each company competes for their business.”

        I’m certainly all for tossing that anti-trust exemption, and when it comes to lowering prices, competition is certainly a hell of a lot better at it than the regional monopolies that now exist, but I’m doubtful much meaningful competition will ever take place as a consequence. I suspect it would have the same effect as media deregulation; you’d just have a handful of huge nationwide combos that would, in very short order, take over everything, and that would be the end of any competition. It will be like Wal Mart or one of the corporate video stores moving into an area–they just wipe out everyone else, and then you have to pay them whatever they want.

        That isn’t to say it’s not worth a try, but I don’t think it will have much of an impact.

        “Well, CL2, this is what I was talking about concerning NEVER participating in the system. I do not have coverage through my employer, in fact I am not covered at all (nor would I ever go to hospital voluntarily), but that is by choice, my only deductions are the fed/state/medicare/social security. My wife’s employer offers coverage, and she and the kids are covered by it, and she doesn’t pay much at all….couple hundred a month, so it’s not all that bad (and hard to reduce significantly in that case, without offsetting costs by increased payroll taxation), and coverage is pretty decent, so I guess we’ve been lucky in that respect.”

        Extremely lucky. Assuming you’re not wealthy, when you become ill or injured and are forced to seek medical care, the cost of treating you will be passed on to everyone else. That’s one of the arguments the industry makes for mandatory health coverage, and it’s a powerful one, even if their real interest is entirely self-serving (which it is). I’m sort of in the same boat myself; no coverage. It’s because I can’t afford it, and I’ve never had an employer that offered it anyway. And I have some threatening health conditions that WILL eventually force me to seek care, and are getting worse because I can’t afford to deal with it now, when it would be “cheaper.” It’s like sleeping beneath the sword of Damocles. As much as I loathed the health care “reform” proposals being kicked around the Capitol in the last few months, the “public option” would have, at least, allowed me to have some coverage. Now, it’s probably gone, in its place a scheme that will force me to buy insurance I can’t afford. Under it, I’d just end up paying the tax penalty, instead (because it’s cheaper), and passing my costs on to everyone else when things catch up to me. It’s completely irresponsible, but that’s the only path open to me at the moment, unless and until I can find work.

  4. #6 by renaissanceguy on December 12, 2009 - 15:27

    Scott, I think you are absolutely right in just about everything that you wrote. Although in the short term I do not want to see the “system” collapse, in the long run it could be good. Maybe it would lead to a free-market approach instead of the highly regulated approach that got us into this mess. The insurance companies do what they do because of the protection of the government. They do not compete with each other because only a few are permitted to operate in each region. That’s just one of the problems. People also need to be able to sue them for breach of contract when they deny coverage without huge out-of-pocket expenses and huge attorney fees. That’s just another of the many problems CAUSED by government interference.

    Classicalliberal,

    Why would the amount required under a single-payer system be less?

    It could only be less if some or all of these conditions are met:

    1. The bureaucracy created costs less than the profits made by insurance companies. It’s not likely that all those bureaucratic jobs and office buildings will cost less. Have you seen how many new agencies will be created by the House bill? It is in the 20s, and several of the appear to be redundant by their titles and descriptions.
    2. The government runs it at a deficit, which means that the economy will suffer more, and our descendants will still be paying on it way down the road.
    3. Health care providers agree to charge less. They are not likely to. If they wanted to, they would do so now.
    4. Health care providers are forced to charge less, in which case service and availability will be reduced. Many facilities will close, and many practitioners will retire early or do something else.
    5. The government reduces service to make ends meet. That’s a way to reduce carbon footprints by reducing the population!

    My friends in the UK who suffer from migraine have had to wait for several months and, in several cases, to drive far from their homes in order to see a specialist that most Americans can see within a couple of weeks and, very often, right in their own hometowns. Some have even been denied referrals to specialists, because the NHS apparently urges GP’s not to make too many referrals. To get treatment, some have had to resort to paying out of pocket on top of the money they already pay in taxes to fund the NHS. I do not want it to be that way in the United States.

  5. #7 by Scott Erb on December 12, 2009 - 20:21

    Mike — the uninsured pay far more than those insured, due to insurance company policies. If you are uninsured and need care, you will pay extra and subsidize those who are insured. It’s a crazy system.

    I do think the current reform as it stands really doesn’t address the major problems. I also tend to think the country and the health care system are in far worse shape than most people think, or than is admitted to by the leaders in each party. Obama seems to be trying to get anything passed — and all that is possible even with massive Democratic majorities seems to be something that benefits pharmaceuticals and insurance companies. That’s the real power in this country — not big government, but big business. And yeah, it’s not really market capitalism, it’s corporate socialism.

    • #8 by classicliberal2 on December 13, 2009 - 00:33

      “I also tend to think the country and the health care system are in far worse shape than most people think, or than is admitted to by the leaders in each party. Obama seems to be trying to get anything passed — and all that is possible even with massive Democratic majorities seems to be something that benefits pharmaceuticals and insurance companies. That’s the real power in this country — not big government, but big business. And yeah, it’s not really market capitalism, it’s corporate socialism.”

      Not really “socialism” of any kind. It’s just “corporatism.” Neo-mercantilism, if you prefer. Hamiltonianism. All sounds a lot nicer than fascism.

      I wrote a semi-long reply to renaissanceguy, only to see it destroyed by a computer crash (something that’s becoming a terminal problem with me lately).

      This:

      “The insurance companies do what they do because of the protection of the government.”

      …makes it sound as though government just came in and offered this to the industry. It didn’t. The industry paid handsomely to get its government protection, and pays handsomely to maintain it. That’s how things work in the U.S. That’s how a health care reform drive degenerated into just another handout to Big Business–because Big Business spent a fortune to make it that way. Obama has spent his entire career in public service in opposition to insurance mandates. The industry pumped a fortune into his coffers, and–what a surprise–he suddenly has an epiphany on the subject. Joe Lieberman’s constituents in his state support a public option by margins of 60-70%, but he’s against it. Why? Because his real “constituents” aren’t the people of Connecticut. It’s Aetna and the other insurance giants headquartered there.

      Right-wing advocates of “free markets” who oppose government intervention miss the point to a degree that is insanely comical: We have that intervention in the first place only because of the free market. It’s a free market in government. All you need do to secure these kinds of benefits is purchase enough members of congress to make it happen, and that will always be the case, because it’s always cheaper to do that than to compete.

  6. #9 by Mike Lovell on December 12, 2009 - 21:16

    CL2- Yeah, i’m not wealthy either…we make enough to not qualify for any assistance, but not much more than that. at fulltime I make a little under $20k/yr, my wife around 28…all before taxes and such, which somehow have me paying a pretty hefty portion!

    As for the microscopic portion of all those costs…its still a microscopic portion, and in essence of tort reform, I mean honest tort reform, not a shield, and not a $250k cap on payments…but somewhere in the middle of where it is now, and where some cheapskates have proposed it.

    Scott-
    “the uninsured pay far more than those insured, due to insurance company policies. If you are uninsured and need care, you will pay extra and subsidize those who are insured. It’s a crazy system.”

    I take my chances here at home…if I die, well..lets just say I’m still worth more dead than alive, so screw it. If I’m injured to teh point of hospitalization it will be while working, which means the company picks up the tab, or someone else’s insurance should they decide to take me out in the patrol car. If I’m injured at home, I know enough to take care of myself. If I’m sick, well, like I said, I’ll get over it one way or another.

    And as far as hospital costs go, I think hospitals should have things put up on a menu, like at a fast food place…one procedure, one cost, no matter who it is.

    In the end, I don’t want insurance companies, or big pharma in between a patient and doctor. But I dont want the government bureaucrat for my area between the patient and doctor either. Why oh why cant we just go back to the day of country doctors where somedays, it just meant a shot of whiskey (blech!) to take care of the cranky sick kid!

  7. #10 by notesalongthepath on December 14, 2009 - 04:19

    What if the stock market, or making decisions based on profits, was taken out of the system?

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