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July 25, 2007
How Do HSAs Ration?
Bob Galvin is a smart guy. So I was interested to read his interview with consumer-directed health care advocate Regina Herzlinger in the latest Health Affairs. But this is just crap:
Galvin: On the whole, wouldn't you say the jury is still out on whether a single-payer system can control quality better?
Herzlinger: No, no. The OECD and Commonwealth data showed that the U.S. had better preventive care, diabetes care, and childhood leukemia scores in addition to breast cancer. And measures of diseases like asthma and diabetes, which have significant genetic components, must be adjusted for the composition of the population before they begin to make sense.
Fundamentally, single payer controls costs by rationing care to the sick, while consumer-driven health care controls costs through innovations in the care of the sick.
Interviewers can't let their subjects get away with lying like that. Consumer-driven health care controls costs by pushing more spending onto the consumer so that they can afford less care. It rations by income. It's not even deceptive about this: That's literally what "skin in the game" means. When you're paying more for your care, your price sensitivity increases, which in turn makes you both less able and willing to pay for care, which in turn will make you more likely to purchase valuable care and discard bad care.
That, at least is what advocates hope will happen. Whether you believe them depends on whether you believe consumers can make smart care decisions, and whether you believe wasted care can be cut out by bluntly disincentivizing all care. But the cost controls here have nothing to do with innovation; they have everything to do with increasing financial exposure so we're less willing and capable to purchase medical services.
July 25, 2007 in Consumer-Directed Health Care | Permalink
Comments
Ezra,
Agreed on the general comment, consumer-directed health care is about who individuals (with their doctors) making cost-quality tradeoffs.
Whether you believe them depends on whether you believe consumers can make smart care decisions, and whether you believe wasted care can be cut out by bluntly disincentivizing all care.
A little nuance here. This doesn't have to be about "all" care. You've previously espoused views on targeted first-dollar cost sharing-- these targeted approaches could and should be implemented into a CDH plan.
As I've said before, the difference between single-payer and a consumer/private system approach is that the latter implements a single system, when we really don't know what is a good "targeted cost-sharing" method, while the latter allows experimentation and innovation to these methods.
Posted by: wisewon | Jul 25, 2007 11:11:31 AM
That should say the "former" not "latter"...
Posted by: wisewon | Jul 25, 2007 11:13:18 AM
The whole interview just reads like "choice is wonderful!" babble. There's no downside to choice, only upside. No discussion of whether the bulk of consumers will have enough information to make informed choice. The GM argument is totally specious ... GM cars have had better quality ratings than most European models for years.
Yuck.
Posted by: Nicholas Beaudrot | Jul 25, 2007 11:23:01 AM
Wisewon -- agreed on targeted cost-sharing. But that's not been part of the CDHC argument yet. When it is, I'll give them credit for it ;-)
Posted by: Ezra | Jul 25, 2007 11:25:26 AM
Does that mean you would support appropriately designed CDHPs over a single-payer system?
Posted by: wisewon | Jul 25, 2007 11:26:53 AM
Also, Ezra-- Herzlinger is close to saying targeted cost-sharing, because she mentions explicitly its equally important cousin, targeted benefits.
From the article:
But other innovations are possible. For example, why not reward those who go to the gym every day, don't smoke, and control their stress? Why don't those people get rewarded? Why aren't there insurance policies that say, if you stay healthy, I'm going to give you financial rewards?
Posted by: wisewon | Jul 25, 2007 11:41:29 AM
Actually, wiswon, I want health-directed health care. If I wanted to direct health care, I would have gone to med school.
And I already do, quite literally, have "skin in the game" when it comes to my health. And why I am, supposedly, so much more qualified to make the cost-benefit analyses about health care? My insurance company charges me a much higher co-pay for on-brand drugs than for generics. If my doctor suggests I use an on-brand drug that doesn't have many benefits over another drug that has a generic version, it's because he's giving me poor health advice.
"CDHC" is an amusing intellectual experiment. It's not actually going to help the problem of getting everyone covered.
Posted by: Tyro | Jul 25, 2007 11:44:18 AM
For example, why not reward those who go to the gym every day, don't smoke, and control their stress? Why don't those people get rewarded?
As someone who goes to the gym regularly, doesn't smoke, and has learned to tone down my stress level, I can tell you that I am rewarded every day-- in the form of having good health. People who think insurance companies should do this aren't trying to think about how to incentivize people to go to the gym more. They're thinking about, "gee, how can I pay less money so less of my insurance premiums end up going to pay to take care of sick people?"
Posted by: Tyro | Jul 25, 2007 11:50:11 AM
How much "unneeded" care do consumers actually get? I'm not talking about tests or procedures ordered by doctors; the consumer is merely following the advice of the professional they've contracted for the purpose of getting said advice.
I'm talking about completely unnecessary care initiated by consumers themselves. Sure, we've all laughed at the idea of someone going to the doctor's office with a laundry list of every prescription drug they've seen on TV the last week, but how often does that really happen? Also, should we count as "unnecessary" doctor's visits prompted by fever and some sort of pain but that don't result in medication? Beyond that, how many hospital admissions are caused by the consumer - again, admissions resulting from a fear of malpractice or other issues aren't the same type of thing. How many heart surgeries, hip replacements or rounds of chemotherapy take place because a consumer walked in and demanded them?
CDHC is just another application of the standard trope of "waste, fraud and abuse." I'm surprised at the number of people who assert that medicine is rigorously scientific while at the same time apparently believing that the entire industry is subject to the caprice of an ignorant, misinformed populace in love with receiving medical treatment.
If doctors routinely prescribe unnecessary care, the problem would then seem to be in the way we educate our doctors. The reality, of course, is that people already avoid necessary care until it reaches emergency status, at which point their care is orders of magnitude more expensive than it would have been, yet they are still unable to pay and costs are still transferred onto the rest of the system.
Making medical care less affordable for the people who can currently afford it is only going to exacerbate that problem. A wholesale conversion to CDHC will result in nothing but higher costs and a sicker population.
Posted by: Stephen | Jul 25, 2007 11:58:05 AM
If my doctor suggests I use an on-brand drug that doesn't have many benefits over another drug that has a generic version, it's because he's giving me poor health advice.
Read what you wrote again here. This is one of the key issues. You state that an on-brand drug may not have "many benefits" over another generic-- which implies that it does have some benefit over generics. In recommending this drug, he is not giving you bad HEALTH advice, because the on-brand drug has some benefit over generics (this is your example). Its the value of the incremental difference between the branded and generic that is the issue-- and that's something that doctors aren't equipped to address by themselves. Someone else needs to be included in the value assessment, either the patient or a third party (e.g. insurance company or government agency). Its just a question of who-- saying this is a medical decision is misguided.
Posted by: wisewon | Jul 25, 2007 12:01:30 PM
"Actually, wiswon, I want health-directed health care. If I wanted to direct health care, I would have gone to med school."
Exactly. This is a system based on the willingness of the average consumer to read EULA Agreements. Good luck.
You'd think the health of Americans were important enough to look to examples in other countries that work -- instead of ideological fixes pulled out of the air whose only effect is to head off the inevitable.
Remember, the "market solution" last time round was HMO's.
Is anyone surprised that a whole new raft of "solutions" is now being offered once again?
Enough is enough.
Posted by: leo | Jul 25, 2007 12:20:56 PM
I have people come into my office demanding a MRI every single day. If I don't do it they go somewhere else. The question is never how much it costs, the question is, "Is it covered?" i.e. will someone else be paying for it. I agree I would like to think most people would have better things to do, but knowing what care is consumer driven by secondary gain (Workers Compensation, etc.), defensive medicine or good care done for the right reasons is very hard to sort out.
Posted by: Dingo | Jul 25, 2007 12:33:16 PM
But Dingo, by the very fact that they ask 'Is it covered' says they are paying for it! If I pay for health insurance I damn well expect them to do what I am paying them for. This isn't an expectation of getting something for nothing, this is paying your hard earned dollars over time to a company that is supposed to make sure you aren't saddled with overwhelming medical bills all at once.
Posted by: Ricky | Jul 25, 2007 1:15:10 PM
I have people come into my office demanding a MRI every single day.
Aren't you an orthoopedic surgeon? Certainly if any one of my health issues escalated that high, I'd certainly raise the issue of an MRI myself. On the other hand, if a free MRI required a waiting period before you could get one, because the priority cases had to be handled first.... well, that might be a reasonable tradeoff in exchange for making sure that everyone had access to free MRIs in the event they were medically necessary.
wisewon, you do raise a good point. However, certainly some benefits are better in theory than in practice. Is Clarinex really that much better than Claritin? Maybe for some people, maybe not. We have enough "skin in the game" as it is. I'd prefer that the culture of medical care encourage doctors and patients to find the best solution. We have enough "skin in the game" as it is. What kind of tiny minority of people isn't already paying co-pays and fighting with their insurance company over generics vs. patented medications?
Posted by: Tyro | Jul 25, 2007 1:18:18 PM
No, because more often the people that demand the most regardless of your opinion are Medicaid and don't pay a dime anyway.
Posted by: Dingo | Jul 25, 2007 1:18:59 PM
Yes Tyro I am. I never let anyone talk me into a MRI. If I don't think its needed, then I won't order it and they can find someone else who will. However, I am in the vast minority that take this approach. When you are talking about MRIs of the extremty for noncancerous problems, how do you determine who is a priority? Its a slippery slope. Will it depend on who you know? I've never seen an extremity MRI that isn't elective which by definition means you can wait. The 40 year old will say his job depends on his legs. Should he go in front of the 18 year old with a torn ACL? Other tests you can prioritize, but not an extremity MRI.
Posted by: Dingo | Jul 25, 2007 1:28:03 PM
What kind of tiny minority of people isn't already paying co-pays and fighting with their insurance company over generics vs. patented medications?
Agreed-- and we've seen improvements in generic substitution rates over the last 5-10 years as a result-- i.e. consumer-directed health can work if designed appropriately. We need to extend this model, in a targeted way, to other parts of health care. Not just the $5-10 co-pay for a visit (I actually think this should be used less than it is) but co-pays for certain medical imaging, surgical procedures, etc. (non-emergent of course).
I agree there is enough "skin in the game"- but its the wrong skin. Rather than having you pay so much upfront in premiums, it'd make more sense to put more of these dollars in your pocket initially, but ask you to pay more in co-pays as above.
Posted by: wisewon | Jul 25, 2007 1:29:48 PM
Well, Dingo, you're the one saying that too many people are getting MRIs. At the same time, you don't want to "prioritize" the people from getting the MRIs that you don't think they should be getting.
Posted by: Tyro | Jul 25, 2007 1:34:10 PM
Feel free to prioritize. How exactly are you going to do it is my point? First come first serve? That not prioritizing thats a wait. I take care of people for a living and I can't think of a fair way that doesn't result in a doc stating his or her patient is a "priority" just because they can. Yes, I think we get too many MRIs. There are many reasons MRIs are ordered and overused. Secondary Gain, they heard "that's what a friend of mine got so that's what I need" and the doc relents to the pressure or maybe the doc isn't very skilled at physical diagnosis and he orders it as a crutch. Doctors end up treating the MRI, because not every positive could be a problem, the case drives up costs with marginal results. Rinse and repeat over and over again, every single day.
Posted by: Dingo | Jul 25, 2007 1:53:43 PM
No, because more often the people that demand the most regardless of your opinion are Medicaid and don't pay a dime anyway.
Are you saying that you know for a fact that your medicaid patients have never worked a day in their lives and have never paid a dime in taxes?
Feel free to prioritize. How exactly are you going to do it is my point? First come first serve? That not prioritizing thats a wait.
This really isn't terribly responsive. You can state with certainty that MRIs are overused but you have no objective criteria for determining what constitutes an unnecessary MRI? You know it when you see it? You just "know" that other Doctors, unlike yourself, are brow beaten into submission by demanding patients?
Granting your medical expertise, I still think that you need a bit more than professional intuition to generalize from. The way you've stated the problem makes it sound as though the only way to determine whether an MRI is necessary is if we ask you. Or are you basing all this on the assumption that MRI's for Medicaid patients are by definition unnecessary?
Posted by: WB Reeves | Jul 25, 2007 2:41:39 PM
knowing what care is consumer driven by secondary gain (Workers Compensation, etc.), defensive medicine or good care done for the right reasons is very hard to sort out.
Very true. And this actually argues against CDHC, since its main justification is that unnecessary care demanded by consumers is healthcare's primary cost driver.
Similarly, that a majority of your colleagues allow themselves to be browbeaten by ignorant consumers into prescribing unnecessary care is evidence of a problem with our nation's physicians, not consumers. Certainly doctors are not the only workers who deal with ignorant consumers demanding what they really shouldn't have.
CDHC is a solution to a problem that no one has proved really exists.
Posted by: Stephen | Jul 25, 2007 3:04:51 PM
What ever they pay in taxes is a pittance compared to what you and I pay. Third party payers do one thing very well they increase demand, whether it is the governent or private enterprise.
I gave 3 examples where MRIs are overused. The only thing determining the necessity of a MRI at this point is if whether an order placed for one, valid or not. They cannot all be necessary either.
Posted by: Dingo | Jul 25, 2007 3:07:46 PM
It's like everyone always says, Dingo, the biggest public health problem in America is that people have too much health care.
Look, on one hand, you were arguing not too long ago that we couldn't have universal health coverage because our doctors were already overworked and too busy. Now you're arguing that the work they're doing is unnecessary (conveniently, the work THEY are doing. Not the work YOU are doing, which I'm sure is only the medically most efficient and effective treatment).
Basically, you've convinced me of two things-- that we need a lot more doctors in this country and that waits for access to medical technology -- which all of us deal with already -- isn't a big deal because of the large number of people for whom they're not an immediate priority. In short: the benefits of universal coverage are going to far outweigh any costs, which I now realize are going to be very, very minor.
Posted by: Tyro | Jul 25, 2007 3:38:59 PM
What ever they pay in taxes is a pittance compared to what you and I pay. Third party payers do one thing very well they increase demand, whether it is the governent or private enterprise.
Your first point is doubtful if we are talking about percentage of income. More to the point, however, you claimed flatly that they didn't pay a dime. That wasn't entirely accurate, was it?
Your second point doesn't appear to be germane to anything I said. It does seem to indicate that you consider medicaid patients to be a problem though.
I gave 3 examples where MRIs are overused. The only thing determining the necessity of a MRI at this point is if whether an order placed for one, valid or not. They cannot all be necessary either.
I assume this is what you are referring to:
There are many reasons MRIs are ordered and overused. Secondary Gain, they heard "that's what a friend of mine got so that's what I need" and the doc relents to the pressure or maybe the doc isn't very skilled at physical diagnosis and he orders it as a crutch. Doctors end up treating the MRI, because not every positive could be a problem, the case drives up costs with marginal results.
Strictly speaking, these aren't examples of how MRIs are overused. They are examples of how they might be overused. You present no objective yardstick for determining whether your assessment of their significance is, or is not, valid. Just as you present no criteria for determining whether a MRI is mandated beyond your own Medical expertise. While this makes sense in terms of your own practice, it isn't a practical basis for discussions of policy. For that you need hard data meeting a general criteria.
Posted by: WB Reeves | Jul 25, 2007 4:04:19 PM
Who the hell seeks out unnecessary medical care? Because it's so pleasant hanging out in doctor's offices and hospitals -- You're never kept waiting, your records are always handy, the staff is always pleasant, you never have to give an identical medical history for the fourth or fifth time and the procedures a pleasant diversion? WTF?
Posted by: Klein's Tiny Left Nut | Jul 25, 2007 4:05:39 PM
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