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A Couple of Suggestions, Off The Usual Topic

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Okay, I know that a lot of you reading this are not from the  US and are not much interested in  US politics, but this might be an interesting philsophical exercise anyway.  And I’m being driven slowly crazy by the whole thing, so I’m going to talk.

There is, as most of you know, an enormous debate going on about “health care” in the United States.

I put “health care” in quotes, for the very good reason that the debate is not actually about health care.   It’s about health care funding.

The distinction is important.  If it were actually the case that people who are poor, or who don’t have health insurance, couldn’t get health care in the US, there would be an enormous problem, and one considerably different–and with different deamnds–than the one we’ve got.

As a matter of fact, if you get sick in the United States, you will get treated, whether or not you’re able to pay, and whether or not you have health insurance. Scare stories–like Mab’s “conventional wisdom” in  Russia–notwithstanding, federal law says that if you’re brought into an emergency room, that emergency room must treat you until you are able to be moved elsewhere or you’re better.  If no elesewhere exists, the hospital takes you on and swallows the expense.

What’s more, Americans get even relatively expensive treatment without regard to ability to pay–I know, because my husband was uninsured for four of the most expensive months of his cancer.  He got everything his doctors wanted him to have, right away without waiting.  And after we were nsured and our insurance company refused to pay for a l iver transplant, he went right on the transplant list anyway. 

Bill’s mother, a registered nurse all her life, called us, frantic, having thought she’d heard that Bill had been turned down as a transplant candidate.   When she found out it was just the insurance company refusing to pay, her reaction was, “oh, is that all?”

With the exception of one hospital–that we stopped using as soon as we could–we never heard a word about money while Bill was ill.

What happened afterward was something else.

And it’s the what happens afterward that is the real issue in the US health care debate.

Which makes me nuts that it’s not what anybody is talking about.

One of the reasons why nobody is talking about it is that we’ve all stopped talking about insurance.   We use the word “insurance,” but we’re not actually talking about it.  

What we are talking about instead is health plans, which are not the same thing.

Insurance is a game of statistics–there are some things that can happen to us that are enormously expensive, too expensive for any one person to pay, unless he’s Bill Gates.  Tht’s the bad news.

The good news is that these things happen to very few people.   That means that a lot of us can band together, pay relatively small amounts into a pool, and then the pool can pay the expenses of the few who get hit with the unual occurences.

That’s insurance.

Insurance is not “the company/government/whoever pays for anything health related that you have to have done.”

It’s that second thing that we’re all actually talking about in the US these days, and the second thing that most European governments provide, and if you think about it for a bit, it’s not surprising that everybody’s either going broke or going into rationiing.

Insurance can be run on a for-profit basis, or a co-op basis, or even a government basis, without too much trouble.   A comprehensive health care payment system cannot, not for long.

It’s bad as a business model, but it’s bad as a government payment model for the same reasonThere is simply no amount of money that can be contributed into the common pool that will cover everything everybody wants, because the pool does not exist to cover unusual events but everyday ones. 

In the end, there isn’t enough money in the world to do this, and in the end, everybody comes to the same conclusion–the only way to make the everyday stuff possible for most people is to limit the catastrophic stuff for the truly ill.

So let me make a couple of suggestions.

First, we’re not talking about “health care” or about “health insurance,” but about three separate problems with separate requirements that need separate solutions.

As long as we lump al these things toggether, call them all “health care,” and try to solve them as if they were one thing, we’ll be cutting our throats.

The first issue is routine care–your yearly check-up with the recommended tests at each stage of life, the vaccinations, the visits for colds and the flu and strep and all the rest of the day to day.

Do you know what we ought to do about all that stuff?  We ought to remove it from the health insurance system entirely.  Make it pay as you go, fee for service, pretty much the way it was in, say, 1950.  Hospitals would run clinics.  Not for profit organizations like the Visiting Nurses would provide care for people who needed it.  The rest of us would write a check when we had to or make a deal with the doctor to pay over time, but this sort of thing  does not belong under the heading of “insurance” and all that happens when you try to cover it under “insurance,” or any third party payer system, is that the price of all of it goes through the roof.

The second issue is catastrophic care.  This is properly addressed by insurance, because it’s those unusual situations I was talking about above.  Insurance pools will work for this as well as for second and third level testing for catastrophic conditions, because catastrophic conditions are rare.

To the extent that the US need “reform” in health care insurance in this area, it needs it because corporations are like tiges-you can’t blame them from behaving the way they do, it’s just their nature, but you want to keep the gazelles from being hunted into extinction.

What needs to be reformed here is a set of practices that skirt close to fraud–one of them is the practice of calculating the profit and loss (and therefore the premiums) of each individual or group as if he/it existed in a vaccuum.  If Huge Insurance Corp has 10 million people covered under its Health Options policy, then the profitability of the Health Options policy is the benefits paid out to all those ten million people subtracted from the premiums paid in–it is not 400 separate calculations makes Company A less prifitable than Company B because  Company A happens to have more people this year who got cancer. 

One of the other things that needs to be reformed is the way in which HMOs, PPOs and other health insurance plans can change their benefits and thei policies at will.  You sign on to plan A because it promises benefits B, C, and  D, and then at the end of the year you get a notice that Plan A will no longer cover those things.  There’s a “contract” only on one side–yours.  The company can chane the terms it has to meet any time it feels like it.

Then there’s the dumping.  Here’s the dirty little secret of American health insurance copanies–they’re fairly sure (and they’re right) that they can collect premiums for you for years and then dump you when you get sick, or soon thereafter.  Individual policy holders can be dumped at will–declared “no longer insurable” and purged from the rolls as soon as they get sick.  Members of roup policies take a little longer to get rid of, but nearly eerybody with a catastrophic illness will end up being paid for by Medicaid  (the federal-state partnership benefits program for the poor) eventually.  People with catastrophic illnesses become unable to work.   They leave their employment, and they may or may not be able to afford the premiums for a COBRA plan, but those last only eighteen months.  After that, all the health insurance company has to do is jack up the premiums to a point where they know the patient can’t pay, and they’re off the hook.

So, yes, we need health insurance reform here, but I don’t think we need a government program.  At least, I don’t think so yet.  What we need is law that requires insurance companies to adhere to their own contracts. 

The third issue is chronic illness–parapleia, quadraplegia, cystic fibrosis, and the myriad other genetic and accidental messes the human body can get itself into.  We can do a lot for people with these kinds of conditions these days, but it’s expensive, and it’s unlikely to be fungible into a workable business plan. 

Here’s where I think we do need a public option.  We in the United Stattes tend to think that it’s a necessary thing to care for people who cannot care for themselves, and these people honestly cannot care for themselves.

I think that would more or less do it, without bankrupting the country or turning the government into an unsuable only option.

And I know it doesn’t solve all the problems–one of the things I wish we’d talk about is the way in which government price controls on pharmaceuticals in Europe, et al, translate to much higher prices for drugs in the US, and those higher prices become the only incentive those companies have to go on doing very expensive research into new treatments and cures–and what happens if the US also institutes price contorls, and there’s no more incentive to find new treatments and cures.

But that’s another day, and it’s late for me this morning.

Written by janeh

August 22nd, 2009 at 10:04 am

Posted in Uncategorized

7 Responses to 'A Couple of Suggestions, Off The Usual Topic'

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  1. I have been reading a lot about this from abroad, and mostly screaming at the screen when I read the daily crop of op ed pieces. I largely agree with you, Jane. Although I didn’t get the bit about your calculations (insurance companies). Everyone’s situation is unique, I suppose. My father had GE insurance, which was like living in Europe. When he was in the hospital for 6 days at the end of his life, the bill was 12 pages and totalled $54K (without lab and doc fees). That cost was huge because he was paying — no, GE was paying — for all the folks who couldn’t pay but got treated. But at the end of the 12 pages was our payable — $1.89. It was amazing.

    I, on the other hand, am a self-employed expat who has switched insurance companies. Every time you switch, you fill out a detailed form listing every illness you’ve ever had. A lot becomes “a pre-existing condition,” and even if that costs $5 a year to handle, it doesn’t get covered. Because I wanted one company I could keep even after moving back to the US, and because I need evacuation insurance (medical care is all over the block in Russia, from perfectly fine to, well — they swaddle infants), it’s incredibly expensive. So I’m doing essentially what you suggest — I have a huge deductible ($1600) for regular ambulatory care (check ups, etc) and pay through the nose for what I think of as the Bad Things, ie Catastrophic Care.

    I agree that it should all be separated out. I also agree that insurance companies should be better regulated. Years ago I submitted some receipts for reimbursement and instead got my premium back; the company “claimed” that I had a “pre-existing condition” I’d concealed on the intake form. By luck, the wife of a friend was a lawyer who handled this kind of case. She said they were essentially accusing me of fraud, and that if I took the check, I’d be admitting it and would never get insurance. It was really just a scam. I think better and tougher regulation of insurance companies would solve a lot of problems. Over the years I have paid probably $100K in insurance premiums. I don’t really mind; I figure that, life being life, someday I’ll get my return on that. But I want to be sure I will.


    22 Aug 09 at 1:32 pm

  2. Largely in agreement. A few stray points: The “transferability” problem really is a serious one. Sterling Insurance Co. can have a really good policy for Piffle Plague, but they offered it based on Piffle Plague being relatively rare. If people can catch the Plague and THEN sign on with Sterling, either Sterling won’t last long, or the really nice coverage will go away.
    But if insurance coverage comes–as it mostly does in the US–through employers–this means anyone with Piffle Plague in the family can’t change employers. (I used to know a LOT of guys in the Army because they had an “uninsurable” family member.) It’s a drag on economic efficiency, because the locked in person can’t move to a job he might like better, or be better at.
    (Politics locks this in, by the way: if the company buys a group policy, not only do they get a better rate, but it’s a business expense. It comes out before the company calculates corporate income tax. If the company pays me a larger salary and tells me to buy my own insurance, first I pay taxes on total income, THEN I pay the insurance premiums.)
    My hat’s off to whoever solves that one.
    The other problem is rising insurance costs. If insurance were as (relatively) cheap as food and shelter–or at least going down like them as a percentage of income–the problem would be much more manageable. But people keep “helping.”
    The treated uninsured in a hospital are covered by charging the uninsured more–which is reflected in premiums.
    Trial lawyers are a major industry addicted to junk science, and the consequent malpractice insurance payments are also part of the rising cost of health care, as are “pre-emptive treatments” designed to forestall lawsuits.
    And of course, if a doctor is paid according to the number of procedures–well, let’s just say he won’t be inclined to skimp. Nor is it unheard of to prescribe the expensive new drug instead of the cheap generic because Brand New Drug Corp gives out cookies. (Honest! There are doctors who never even consider cost/benefit–and anyway, they’re not the ones paying. Thank Heaven car repairs aren’t done this way.)
    Most states have very long lists of things a health insurance policy must cover, and prohibit out of state insurers. So there isn’t a lot of competition, and it’s often not legal to buy just catastrophic care coverage.
    There are ways to approach all those problems which would substantially lower medical and insurance costs, and almost all of them involve politicians saying “no” either to activist voters with an agenda or to well-heeled “campaign contributors.” Such measures are not currently being much discussed, and I don’t expect them to be.
    And please note almost everything I’ve listed as a problem was instituted at some point as an improvement to the system. After a time, you’d like to think the tinkerers would grow more cautious.


    22 Aug 09 at 4:08 pm

  3. I have been carefully NOT reading anything about this except when it came up in RAM where the usual suspects are screaming about the evil Republicans and greedy insurance companies.

    Australia has both free public hospitals (with waiting lists) and private hospitals. The health insurance companies are required to accept any one who applies for insurance and can not base rates on medical history.

    They do have waiting periods such as:
    12 months for preexisting conditions
    12 months for maternity benefits
    12 months for major dental (Crowns, bridges etc)
    3 years for a hearing aid

    So you can’t break a leg, buy insurance and then claim for the leg!


    22 Aug 09 at 5:51 pm

  4. I remember back when insurance companies started covering routine care. Before that, if you went to the doctor for a routine checkup, or some small problem, you paid. And so a lot of people postponed going to the doctor because they couldn’t afford it, and small problems turned into big ones. By the time you finally saw the doctor, whatever it was would cost far more to treat than it would have cost if it had been caught early. The theory behind covering routine care was that small problems would be caught early, and could be treated easily & cheaply, before they grew into big problems.

    I have never seen any studies which tried to find out if this theory worked.

    One more problem to go with the insurance companies’ habit of dumping sick people. If they can’t dump you, have fun trying to claim any large bills, even for things which they clearly cover. I dealt with a major insurance company when my parents were sick; both of them had multiple chronic illnesses. I had to threaten the insurance company with a lawyer before they stopped “losing” all my claims & receipts. They even challenged my mother’s need for care, despite the fact that she was quadriplegic by then. From talking to other people, I’ve learned this is common.

    I am not normally in favor of expanding the role of government, but they can’t possibly do a worse job of assuring health care than the private companies are doing now. Of course, the private companies’ main focus is on the money, not the care. Which is natural in a for-profit business, but which has serious consequences in people’s lives.

    There’s another consideration, too. Health care is what they described in Econ 101 as a “social good”, like education. Good health not only benefits the healthy person, it also benefits society. A healthy person can contribute far more to society than someone who is sick, so it is of benefit to society as a whole that as many people as is reasonably possible are in good health.

    Lee B

    22 Aug 09 at 9:05 pm

  5. Perhaps I’ve just been lucky, but I think of my experience as typical. We have a “group” health policy through our corporation. It’s a group of two, but they roll it in with a bunch of other small corporations to get a larger pool.

    The cost is high, over $1111 per month for me, my husband and my step-daughter. And it’s an extremely high deductible/out of pocket policy. In other words, just what Jane describes. We pay ourselves for routine doctor care and testing, at insured rates (not the uninsured), until we hit $7000 per year. The reason I picked this policy is that after the $7K, we pay nothing. No 20% of infinite numbers.

    And for 3 years in a row, I had a health catastrophe. A heart attack and a bypass the first year. Then 2 hospitalizations for blood clots. Then 2 surgeries for massive bleeding from uterine polyps. Every year I maxed out, and the insurance was on the hook for between $90,000 and $25,000. They paid a fraction of that, of course, but they paid, with no problems. Even though I never cleared my emergencies with them first.

    In addition, they haven’t raised our premiums, and they haven’t threatened to dump us. My goal this year is to not be hospitalized. So far so good.

    But insurance *does* work for the vast majority of people.


    22 Aug 09 at 11:26 pm

  6. I was going to keep out of this because I’ve said anything I have to say many times and anyway, it’s an American problem; the Americans have to solve it.

    Oh, well. A few comments anyway.

    My parents had excellent insurance and excellent treatment when they lived in the US. Treatment was a bit less efficient for my brother (who had cerebral palsy) because the various professionals he had to see were scattered around and not all in one place presumably communicating better with each other, but he got care. My mother had a cap – when she was treated for an aggressive cancer (successfully, as it turned out), she was told that if it recurred, as seemed likely at the time, her treatment wouldn’t be covered since she’d used up almost all the money her plan provided. And I really think that the money saved to the system by a single-payer method with the subsequent reduction in forms that have to be completed, processed, and then, when payment is issued, re-checked and problems appealed, would pay for a lot of health care.

    I haven’t read any primary sources on prevention, but I’ve read some secondary ones, and the big answer is, of course, ‘it depends’. Hence the doubt of many doctors about whole-body screening, population screening for colon cancer, prostate cancer and even routine mammograms. Some tests and some vaccinations do indeed prevent a lot of later, much more expensive, care. Others tend to be pretty useless – their falses positive or false negative rates are too high, or they show up all kinds of lesions that won’t cause problems but will inspire even more expensive, invasive and risky interventions to prove that they aren’t malignant, or are, but are so slow-growing that the patient will die of something else before they cause any problems. OTOH, an American doctor advised a patient that the screening for prostate cancer at the time did not give useful information about the presence or absence of cancer. He was right scientifically – but when the patient developed an aggressive form of prostate cancer, he sued.

    And finally, I just read an article in an old New Yorker about that small town in Texas with the outrageous medical costs. The author thinks that having doctors own medical and medical testing facilities tends to encourage high cost medical care without increased benefits to the patient.

    Thank God (and Tommy Douglas) for the Canadian system.


    23 Aug 09 at 5:36 am

  7. “…nearly eerybody with a catastrophic illness will end up being paid for by Medicaid…”

    The problem with Medicaid is that it only kicks in once the individuals assets are practically gone. Own a house free and clear? You’ll have to sell it first. Any stocks? You’ll have to liquidate them. Any savings? That has to be spent also. Once you’re effectively living in penury, then Medicaid will kick in.

    If you want to protect any assets for your children by placing them in a trust, you have to have done so *years* before the medical condition manifested or you have to liquidate that also, and even risk being prosecuted by the Feds for fraud.


    28 Aug 09 at 1:30 pm

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