What's Up, Docs?
I think we are way too early into the experiment of "consumer-directed health care" (HSAs, etc.) to know whether the public, or substantial parts thereof, will embrace it. But one group that has been very enthusiastic about it for a while now is the medical profession. While I haven't seen any polling data or other such evidence, my impression based on conversations and reading is that doctors think the idea is just dandy. The reason, unsurprisingly, is that they think this is a way to get out from under the thumb of the managed care bureacrats that work for insurance companies.
Well, they may want to think twice about that. For one thing, even with HSAs, you have to carry a ...
...high-deductible, catastrophic insurance policy. And that policy will be some form of managed care, with networks of approved providers, procedures for pre-authorization, and tough bargaining over prices. So even with HSAs, docs will still be living in a largely managed care world.
Now, it's conceivable that if you're the kind of doctor who does a lot of routine, preventative medicine, you'd have a substantial number of patients paying you straight out of their deductibles -- so that you might be able to avoid dealing with some of the pre-treatment authorizations that happen now. (Or maybe not, since in general it's not the routine primary stuff that managed care tries to scrutinize; it's the more expensive, secondary tests and procedures.) But even if that's the case, in an HSA system doctors get stuck with a different hassle: collections.
While it's no fun arguing with an insurer that's finding excuses not to pay a check on time, trying to get money out of patients can be even less fun. It requires a lot more effort per collection and if you decide to subcontract the work out to, say, a collection agency, you'll have to get into the business of monitoring them to make sure they're not using unfair collection practices, a rather common problem as non-profit hospitals have found in these last few years.
Collections, of course, can be a problem under the current system. But with HSAs you have patients owing a lot more money out of pocket and collections become that much more difficult. At least, that's what's been happening in South Africa, as uber-healthcare blogger and TPM drug salon poster Matthew Holt points out today. Matt's post is about hospitals, but it works just as well for doctors.
Up through the 1960s, the medical profession was probably the single biggest, most effective obstacle to health care reform in this country. That stopped after the public began to turn on the AMA and as other interest groups (mainly, employers and insurers and later the drug industry) become more important. In fact, during the 90s, during the fights over managed care, the medical profession sounded more and more sympathetic to the cause of reform.
Lately, doctors' perceptions of consumer-directed care seems to be pulling them back in the other direction. But if such a system ever became as ubiquitous as its champions hope, my bet is that most doctors come to regret it.
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I'd imagine it depends on the doctor.
There are lots of cash-only doctors: cosmetic surgeons, Botox, detox, laser eye centers, veterinarians and others whose services aren't insurance-billable. They've found a way to earn a living by charging what people can afford to pay.
A family practice clinic which bills the insurance $100 might well charge $50 cash and break even after firing its billing department. But if that's the case, why aren't there more cash-only family practitioners? Are they unimaginative and risk-averse compared to plastic surgeons?
I think the first challenge, for a doctor struggling to break the chains of insurance, is to charge a price people can afford. I doubt many heart surgeons think they'd break even on $50 or even $500.
And that still leaves the larger problem of what about people who can't afford the treatment.
The "free market" is, among other things, a moral system where you only consume what you can pay for.
This arrangement makes perfect sense for BMW's, Botox, and boob jobs. But Republicans, whether they admit it or not, think regular healthcare belongs in the same category.
They are pushing the country towards a place where a quadruple bypass is the moral equivalent of a luxury sports car. You only get one if you can afford it. If not, tough.
I'd like to hear more Democrats speak in these terms: we believe in universal health care because your health is not a Beemer.
February 3, 2006 1:55 AM | Reply | Permalink
This is good for the self-employed. HSA's in lieu of insurance is just another rip off of the American workforce. Yeah, work longer hours, more jobs, lose your pension and your health care, make less money and then say thank you for the honor of being your low wage labor. And to make your mud hut even more likely, get ready for the next free trade package with Peru.
February 3, 2006 3:03 AM | Reply | Permalink
There is no free lunch on medical care. All the expensive and unnecessary care people get ultimately becomes a huge waste when society has to pay for it. Also, there is no such thing as safe unnecessary care. Every medical procedure has some risk, and it's a fact doctor's offices are one of the best places to get sick from germs.
The problem with our stupid American system is the lack of an impartial honest broker to inform people what care they really need. Profit driven insurance companies, doctors who don’t know or care about costs, and patients who are unable to receive unbiased information on what they really need. So costs are out of control, insurance premiums and profits are soaring, and it gets worse every year. It’s no accident every other country has national health care. They do to void exactly this medical cost inflation we’re experiencing.
Every national health care plan is far more efficient than our “competitive” system because there is no innovation in health insurance, just profits from rent, and redundant bureaucracy.
February 3, 2006 3:33 AM | Reply | Permalink
HSA are just another way for Big Insurance to remain the middleman and suck up those big profits. Wall Street makes billions on Big Insurance, directly from shares and profits (those rates keep rising) and also from collecting fees on your insurance money which is invested by Big Insurance while they hold it.
One reason everybody's rates went up after the market crash was all the bad investments insurers made. When insurers win in the market, they keep the winnings as profits. If a government agency was doing the investing, they’d pass it on to the consumer. See why Big Insurance and Wall Street generally hates the idea of national insurance?
However, when they lose in the market, they pass the loss onto the consumer through higher rates. Nice eh? Nice they're gambling with our insurance money and we can only lose. Gotta love how crooked the financials of that are, and how clueless most people are about it.
Natioanl Insurance is way easier and way more efficient. One billing agency instead of hundreds. Less paperwork. More standardized care. No rip offs from the stock market. No profits, and no massive expenditures on advertising instead of medical care. All of the things that make health care efficient in other countries.
February 3, 2006 3:48 AM | Reply | Permalink
The result could easily be doctors having to jump through insurance company hoops to get every procedure approved, then still having to chase after the patients to get paid.
Alternately, the insurance companies could let the doctors off the hook then challenge every single expense the patients paid for and not start providing coverage until the insurance companies agree that 'reasonable' (by their definitions) charges would have exceeded the deductibles. Just wait for the howls to start if they go that way.
February 3, 2006 5:14 AM | Reply | Permalink
The failure of this administration as an honest broker has become more obvious with the latest analysis of the Medicare prescription drug program. Knight Ridder reports this morning that profits will be soaring for some pharmaceutical giants because they are no longer required to pay rebates on drugs bought by the government for the poor. Estimates range from $2 billion this year to $40 billion over the next 10 years – quite a windfall . . . Meanwhile, Kaiser Family Foundation has concluded that 7.4 million seniors actually will see their out-of-pocket expenses rise as a result of the new Part D plan . . . . the good news, Part D may end up costing the government less this year . . . only one-third of those eligible have opted-in or been involuntarily assigned for the “benefits.”
February 3, 2006 6:00 AM | Reply | Permalink
HSA's to work depend on a certain economic model for people's behavior toward heathcare. The idea is people run to the doctor if they have insurance and that if they have to pay for the service themselves people will shop around for their doctor and care.
I am curious how many people who do have insurance go to the doctor for anything just because they do not have to pay for it? Secondly, I wonder if a doctor tells you that some sort of treatment is necessary how many people will challenge that diagonsis or look for a cheaper doctor?
February 3, 2006 6:49 AM | Reply | Permalink
I would have to think it is because things can escalate too rapidly. You can walk into your GP's office for a routine checkup and end up having a heart bypass on the examining room floor. It would only take one incident like that to bankrupt the practice, so the risk of taking cash customers with no backup insurance would be too high.
Here's my question: outside of Detroit (at least until the Big 2.5 finally cancel their health plans) and Silicon Valley (where the high techs have plans as good as Detroit's), does anyone know of any doctors who like working with our current insurance system? Every doctor I have dealt with in the last 5 years has had nothing but contempt for the whole thing. Anyone else have a different experience?
sPh
February 3, 2006 6:56 AM | Reply | Permalink
I must say that I get quite worried when conservatives, private sector providers, and the unions for such providers embrace market healthcare as the panacea to all their problems. It may well be the panacea to THEIR PROBLEMS short term on paper, but I think it is only the beginning of big,
big problems for many if not most patients. Down the road, I also think it is the end of medicine as a reliable profession, so if I am correct, providers and their unions just might want to think on this a bit!
Anyway, I want to throw a thought out there to the providers and provider union reps, but I do not wish any answers at this time because in their current market euphoria state, any answers are just not trustable at this stage. This is just food for thought.
When people go to providers under the current idea that the care is mostly paid for by the system, it really does increase the trust that the patient must have in the provider to use his knowledge and specific info for the benefit of the patient. However, when shopping for the lowest price is thrown into this mix, I just cannot help but wonder what kind of trusting relationships will or will not develop between patients and providers. To
me there is just something smelly about quality care, price of that care,
and access to what! If trust is lost or only equated to higher costs, the medical system will disintegrate in a sea of distrust and compromises that professionals know is wrong. But hey, you have got to make a buck!
Also, look at this link from the NYTIMES
February 3, 2006 7:21 AM | Reply | Permalink
One issue in HSAs that I haven't seen mentioned is how it plays with liability and malpractice.
So, I go into the doctor and he says things look fine, but there's another $200 test that I might want to take just to be sure.
Frugal consumer that I am, I pass -- but later it turns out that the test would have shown me that little growth in my pancreas that later killed me.
I'm sure the republicans would say it was a frivolous lawsuit my widow filed against the doctor because he didn't push me to get the test, but something tells me that it's going to be lot more complicated than that.
The idea that consumers have the wherewithall to effectively evaluate the costs/benefits of their own health care choices at anything more than a very general level is simply ludicrous.
Peter Schmitz
February 3, 2006 7:39 AM | Reply | Permalink
The only way to rein in escalating health care costs is to make a universal risk pool that encompasses both the young (and, presumably, mostly healthy) and the old, infirm and chronically ill. Otherwise, there will be adverse selection with the young and healthy opting for HSAs and the old, ill and poor facing ever escalating insurance premiums which will eventually have to be paid for by us taxpayers, anyway. Better to rationalize the process by spreading the financial risks to the young and old, healthy and ill, alike, and treat access to healthcare as a right that a civilized compassionate society provides to all of its citiizens rather than preferentially to those who can pay for it. I do not believe that it is a fungible commodity that can or should be subject to free market forces. . . and for those who don't think it is a right, they should consider that it is cheaper and more cost-effective to provide access to health care before people become chronically ill and rack up extraordinary expenses for end-of-life care
February 3, 2006 9:32 AM | Reply | Permalink
As an MD in NM, I agree with MD in MA that national health care, preferably a single payer system, is the way to go. But the initial post certainly seems to be based on a straw man argument- Mr. Cohn even admits he has nothing except anecdotal evidence that says doctors like HSAs. If he had looked at what various professional organizations' statements say, he could have found out that the primary care doctors- pediatricians, internists, family doctors, etc.- are mostly in favor of universal health care and some have come out in favor of a single payer system. The doctors who do procedures- surgeons, cardiologists, gastroenterologists, etc. are more up in the air- they tend to do much better under the present system so that's probably not surprising.
Mr. Cohn is correct that although 50 years ago doctors were a major stumbling block to Medicare, these days most see the need for reform- there's plenty of disagreement in the medical profession, as there is any every other group, as to how to achieve it.
February 3, 2006 12:41 PM | Reply | Permalink
I assume HSAs can only be regarded as a win-win situation for business. First, there are the windfall profits which will befall the banking industry -- larger than at any other time since the institution of ATM machines. Insurers won't suffer, since they will funnel all HSA holders into bare-bones policies while retainining cost controls. All other business stands to profit enormously when issued a "Get Out of Insuring Your Employees Free" card, while not enduring a loss of face for dumping their costs on the government (as some have with pension obligations) or putting themselves at odds with insurers.
What's not to like, if you're a business? Well, maybe plenty if you're a doctor, as others have pointed out here, or possibly a pharmacy. The real loser, of course and as always with any of this administration's "innovative solutions", is the consumer.
Back to my original query, though. Even if the HSA solution eliminates any potential conflict of interest between insurance and other industries, why did business not lobby aggressively for a single-payer system before this? Not only have I never seen an answer to this question, I have never even seen it posed. Is the answer so obvious that I'm the only one who's missed it?
February 3, 2006 10:49 PM | Reply | Permalink
Such behavior would require an implicit assumption that the role of business is to compete. Most businesses do not try to compete, but rather undermine and topple competitors by other means and then collect what are in effect monopoly rents.
Consider a large high-tech firm, with typical high-tech gross margins (75%). They typically provide top-o-the-line health benefits. Why? Well, partially so the guys at the top can get those knee transplants after their yearly trip to the Jackson Hole ski slopes (not a small factor - a friend of mine is "lucky" enough to have the same eye illness as the CEO of his high tech employer; his eye doctor actually started laughing when he looked at the list of authorized treatments in my friend's plan: everything up to and including experimental eyeball transplant was pre-approved).
But the primary reason the high techs have those plans is to instll fear in their employees: fear of changing jobs at their own choice. Fear of going to a small competitor. Fear of splitting off and forming a startup. Fear of asking for too much in salary or bonus, lest the health benefits be reduced. Fear of being forced onto Medicare.
Other businesses aren't quite so blatent as the high techs, but essentially the same thinking applies. The Big Three are complaining about health care costs now, but in all honesty they were quite content to use those benefits as a recruiting, retention, and salaried employee beating tool for 40 years. Now the burden is too great and they want relief, but that sure wasn't the case in 1975.
sPh
February 4, 2006 8:11 AM | Reply | Permalink