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April 09, 2007

A Picture's Worth a Thousand Words

The "complexity" of reform proposals is often used to diminish their chances of survival. But, aside from not being so complicated (everything's complicated if you drill sufficiently deep into it), they're mainly tough to absorb because we're taking in all the facets of the health care system at once. At the moment, we don't do that. So it's interesting to see the OECD give it a shot with our current system. The OECD collects data on the health structures of every member country, and here's their graphical representation of how financing works in ours. It's almost comical looking:

Healthfinancing

Simple, no?

April 9, 2007 in Health of Nations | Permalink

Comments

Actually, the diagram is much simplified. It isn't reality.

Examples:

- Medicare recipients have their fees for Part B deducted from current Social Security retirement payments, but Part A comes from the SS trust fund (which isn't shown). Part D for drugs is a very complex mess of patient-direct payment for drugs, employer-retirement drug coverage, direct insurance to the patient for Part D, and HMO coverage which may include drugs.

- The complexities of dual coverage for retirees from Medicare and private insurance companies, in two forms: Medicare add-ons paid by the patients, and Medicare back-ups paid from employer retirement plans.

- Federal and State health plans for children

- State plans which replace or supplement Medicaid.

- Private or employer-paid insurance for dental, long-term care, and vision are not hinted at.

- The government subsidies of private insurers directly (drug companies and medicare HMO providers) isn't indicated.

The major problem of the diagram is lumping all the 'health plans' into one box. That WAY oversimplies the reality. It doesn't distinguish direct government plans (like Medicare Part A and B) from private health insurance companies, in mind-bending alternative complexity.

I'm sure there are many others, but my point is that the real world, as seen by patients and family is even worse than the diagram indicates.

The Hillary-Care proposal was shot down, in part, by the diagream presented by the Republicans showing the number of entities involved in her proposal, which was presented by Mitch McConnell in all his CSPAN glory on the Senate floor. A fully descriptive diagram of our current situation would be gruesome to look at, but the complexity is there, and living with it isn't easy.

Posted by: JimPortlandOR | Apr 9, 2007 5:03:01 PM

LOL, Jim, I had the same first thought.

Mine was what about individuals buying insurance? And "what about APDRGs?" And charity care payments, and GME funding. And PBMs. And pharmaceutical payments to physicians. Also devices. Mental health care. And wraparound payments to charity care providers like community health centers.

It's a ridiculous "system."

Posted by: anonymous | Apr 9, 2007 5:22:23 PM

"It's a ridiculous "system."

It's actually a quite rational and efficient system, precisely due to its Byzantine nature, for delivering as much profit to possible to the various corporations and guilds involved in delivering health care.

Posted by: Petey | Apr 9, 2007 6:02:53 PM

Shouldn't "tax-subsidized premiums" be "partially tax-subsidized premiums"?

Posted by: Chris Beck | Apr 9, 2007 6:08:11 PM

And it omits the public sector payors of last resort, county and city governments as well as hospital districts. These can overlap. For example, here in Texas you can have a city health department, county health department, a hospital district and a state funded county MHMR all serving an overlapping clientele, each with it own eligibility policies and procedures implemented by their own staff. Participation in these systems is based on financial rules similar to those of Medicaid.

(FYI, a hospital district is a taxing entity that supports a public sector health care system that might include one or more public hospitals and clinics. Typically they are coincident with a county but can include multiple counties.)

Local systems provide the majority of primary care for our undocumented populations, as well as adult citizens who are not typically eligible for any other coverage in this great state of Texas.

Posted by: Nat | Apr 9, 2007 6:29:46 PM

To fix this broken system we are going to have to all work together to regulate every aspect of it. Thousands of bureaucrats are going to be needed to scrutinize every medical transaction in order to stop the insurance companies, pharmaceutical corporations and rich doctors from gaming the system.

Posted by: FoolsMate | Apr 9, 2007 6:34:53 PM

Hummmmm That health care pie looks soooo good. Can I have a slice or two?

What was the comedy movie where the teen guy gets caught by his dad putting his 'member' in the cherry pie at home? That is US health care in one image.

Posted by: JimPortlandOR | Apr 9, 2007 6:36:07 PM

On the basis of all the cheerleaders for the status quo I expected The Invisible Hand, and got the Gordian Knot.

Which waited how many centuries for Alexander and his sword?

Posted by: Davis. X. Machina | Apr 9, 2007 8:32:47 PM

Ezra, while I totally agree that the US health system sucks, you've used this picture pretty disingenuously. It's not as though the other OECD countries have very simple pictures (check out New Zealand's http://www.ecosante.org/OCDEENG/718.html or Italy's http://www.ecosante.org/OCDEENG/713.html). The problem isn't the number of moving parts but what a bad, expensive job those parts do of moving.

Posted by: Ben Webster | Apr 9, 2007 10:13:52 PM

As a conservative Foolsmate, I have to disagree with you. The best way to lower health costs would be to increase compensation for CEOs so that they will have more incentive to do a better job lowering prices. I think this is a position that all honest conservatives should be able to coalesce around because it is rational and will benefit rich and poor alike.

Posted by: Sam L. | Apr 9, 2007 11:20:57 PM

(everything's complicated if you drill sufficiently deep into it),

I believe one GWBush provides the exception that proves the rule.

Posted by: craigie | Apr 9, 2007 11:53:59 PM

Petey,

While I like the spirit of your statement, I'm not sure that this is actually true. After all, many health care providers - whether we think of these as institutions like hosptials or nursing homes or as occupations such as nurses - are significantly underpaid, and/or confront highly uncertain revenue stream. Obviously other institutions and occupations (big city teaching hospitals, specialists) reap the benefits of this system, but its far from clear that even they would choose this design if they had to creat a system from scratch (eg: managed care has cut specialist income where it has been able to).

On the topic of what's been left out, I'd add in pharmacies, whose role in negotiating drug prices grows as the industry consolidates, Health Purchasing Organizations, which play a huge role in keeping the medical devices market uncompetitive, and state-funded home care for the elderly (which covers millions of people, keeping them out of nursing homes).

Posted by: Rich C | Apr 10, 2007 9:25:39 AM

Again, there is no mention of the root cause and that is the actual ecalation of healthcare costs, only how to pay for doctors' and hospitals' self-dealing and bloated overhead.

It's very disappointing to see liberals protect the same behavior that most other professionals are prohibited from engaging in for obvious reasons.

Posted by: Fred Jones | Apr 10, 2007 10:29:49 AM

Two things. First, in reforming any system, such as the medical system, you can’t ignore initial conditions. Any system we adopt will be an adaptation of the current system, and not the perfect system designed by rational bureaucrats. Second, drawing a flow diagram of just about any even remotely complex system will yield a hideously complex picture. Pointing out that the picture is complex doesn’t say anything.

Posted by: ostap | Apr 10, 2007 10:32:53 AM

You could add a whole bunch more boxes on this org chart by adding the whole medical savings account spectrum -- HSAs, HRAs, FSAs, Sec. 105s, MSAs. Then you would have to include banks and Wall Street brokerage houses between the patients, health plans, and the entire provider group of boxes.

Man, what a freakin' mess.

The key point, though, is if you had to design a healthcare services reimbursement system from scratch, would you design it like this? Anyone? Anyone? Just as I thought. Crickets.

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