SINGLE PAYER–OUR MEDICAL CARE COSTS CRISIS SALVATION?

Multi-million dollar salaries, taxpayer subsidized spanking new facilities, patrons numbering in the millions……..Nah, not talking about professional sports but the state of health care in the United States of America. More specifically this is about the COST of that care, cost that is extremely high and that greatly exceeds the costs of similar and equally if not more effective care in other advanced nations.

Here I wrote about a comparison of our health care spending with these other nations such that about 18% of our GDP goes to health care while that portion is about 12% elsewhere. Many of these other nations have older populations than us who utilize health care providers more frequently, contrary to what conventional wisdom would have you believe.  https://umoc193.wordpress.com/2012/05/04/our-insane-health-care-costs/

Now along comes a cover story from Time by one Steven Brill titled Bitter Pill: Why Medical Bills Are Killing Us that explores these costs in detail through tracing the experiences of several different patients and their families. Their insurance coverage was either non-existent or was through private insurers or Medicare. http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/2/

In just about all these instances Brill’s probing put him up against the Chargemaster. Not Master Charge, the predecessor of Master Card, but Chargemaster. This somewhat secretive and possibly arcane entity is what is essentially a hospital’s list of billing rates for each and every service and item it provides patients.

Stamford Hospital’s chargemaster assigns prices to everything, including Janice S.’s blood tests. It would seem to be an important document. However, I quickly found that although every hospital has a chargemaster, officials treat it as if it were an eccentric uncle living in the attic. Whenever I asked, they deflected all conversation away from it. They even argued that it is irrelevant. I soon found that they have good reason to hope that outsiders pay no attention to the chargemaster or the process that produces it. For there seems to be no process, no rationale, behind the core document that is the basis for hundreds of billions of dollars in health care bills.

What is unique about this price list within the context of billing patients is that virtually no one pays list price. It is not like the MSRP on the side window of the Hupmobile at your local Megasized auto dealer which is nearly always a mere starting point for negotiation. And neither does the hospital then try to add on for undercoating (though if they read this they may begin doing so.) But there is plenty of padding for the hospital equivalent of “dealer prep” that any sane person would think was or at least should be included in the room charges for a hospital stay.

Instead Brill found numerous and absurd examples of charges such as $24 for a niacin pill that sells for a nickel each at Walgreens or $30 for a blanket that could be purchased for much less outside the hospital but which will also be re-used with the next patient being charged the same amount for it.

How does one escape these charges? Well uninsured individuals, those most often with the least resources (we’re not talking millionaires here) are usually charged full price for these services and meds and, of course, for the replacement hips or spinal stimulators implanted in them.

But what is not automatically told to these patients is that the hospital is perfectly willing to negotiate a lower price and will that be cash check or money order? Patients, or their vigilant family members, have to initiate the process and, in fairness to hospitals, they usually can reduce the final bill substantially. However, that substantial reduction may be say, $100,000 from a $400,000 bill.

Private insurers frequently have the power to negotiate much lower charges for what their coverage buys. In those cases the patient deductible or co-pay is the same no matter what so the patient herself may not even know, let alone care, how much was overcharged in the first place.

Now comes the interesting part. The same government inclined to buying $900 toilet seats and $600 hammers is pretty damned watchful of taxpayer dollars when it comes time for Medicare reimbursments.

Brill covers the specifics in his article but let’s say a service would be billed in the amount of $179.74. Medicare pays only $13.92 for it. Medicare pays lower room rates, lower rates for physicians for surgeries, for pills, for nearly everything in the way of treatment for patients covered under this program.

Medicare has negotiated these prices under guidlines in its regulations and the prices may be pegged to cost for the hospital. An example of this might be that a certain cancer treatment drug is determined to have an average cost to hospitals of $3000. Medicare will pay a percentage on top of that.

Ah, you say, but hospitals probably lose money on Medicare patients and provide these services as their share of public interest or due to laws requiring them to do so. No, Colonoscopy Breath, neither is true.

Hospitals treat Medicare patients because they still make money from them, and nearly all hospitals elect (their option) to treat Medicare patients. After all, there are over 50,000,000 Medicare enrollees and one does not lightly dismiss such a huge base of potential customers.

In fact, many hospitals do quite well financially and that is true whether they are non-profit or for profit facilities. 

A common misconception is that Medicare is just another bureaucracy ass deep in red tape. In reality, as Brill finds:

The process is fast, accurate, customer-friendly and impressively high-tech. And it’s all done quietly by a team of nonpolitical civil servants in close partnership with the private sector. In fact, despite calls to privatize Medicare by creating a voucher system under which the Medicare population would get money from the government to buy insurance from private companies, the current Medicare system is staffed with more people employed by private contractors (8,500) than government workers (700).

The efficiency of Medicare payment processing, the much lower price paid for services and devices, and the simple fact that Medicare is nearly fifty years old and every wage earner is already eligible for services upon attaining the right age, suggests to me that the ideal would be to extend Medicare eligibility to all who have payroll taxes deducted for it.

Yes, that sounds like single payer. So what?

I see two main advantages of using Medicare as a basis for health insurance coverage of all Americans.

First of all the reduction in spending on health care (remember the U.S. spends $2000-$3000 more per capita for health care with no better outcomes) would be tremendous.

Second the premiums citizens would pay for coverage would be substantially lower than what they are currently charged and what they are likely to pay when the Affordable Care Act (ACA) becomes fully effective in 2014.

Now the structure of this single payer system will differ to a large degree from what exists at present. For instance premiums may need to be higher for younger enrollees though still less than what they are billed through private insurers either via their employers or by meeting the mandate under the ACA. But that is an actuarial concern, not a reason to not adopt such a system.

Of course the single payer system may not need to be placed under Medicare. And most assuredly this new system would not be a panacea, but then neither the ACA or our private insurer system…especially the latter…are panaceas at present.

The notion that a single payer system might work better than what we have is not anathema even to some of the folks in the current system who would seem at first glance to have antipathy to it.

“If you could figure out a way to pay doctors better and separately fund research … adequately, I could see where a single-payer approach would be the most logical solution,” says Gunn, Sloan-Kettering’s chief operating officer. “It would certainly be a lot more efficient than hospitals like ours having hundreds of people sitting around filling out dozens of different kinds of bills for dozens of insurance companies.”

Brill acknowledges that any such change is fraught with difficulties.

Maybe, but the prospect of overhauling our system this way, displacing all the private insurers and other infrastructure after all these decades, isn’t likely. For there would be one group of losers — and these losers have lots of clout. They’re the health care providers like hospitals and CT-scan-equipment makers whose profits — embedded in the bills we have examined — would be sacrificed. They would suffer because of the lower prices Medicare would pay them when the patient is 64, compared with what they are able to charge when that patient is either covered by private insurance or has no insurance at all.

That clout is not only with the hospitals and doctors but with our politicians. Whatever the practical and financial advantages of single payer they may not offset the advantage to politicians from the largesse cast upon them by the health care/industrial complex.

No matter how convinced I am that single payer is the direction we should be heading, I have no illusions about it being implemented in my lifetime. After all, the push for  health care reform that eventuated in the passage of the Affordable Care Act took close to forty years to develop.

At this stage of the political nonsense season much blather abounds that Medicare is overburdening the public fisc and drastic cuts are called for. What is ignored is that our entire system of health care payments is overburdening our economy as well as the public fisc and is simply not sustainable for the nation’s financial health.

The sooner we eliminate the pie in the sky idea that we have the best system in the world the sooner we can travel the road to a meaningful system that serves the vast majority of Americans.

Single payer would be a singular accomplishment.

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Comments

  • Little_Minx  On February 25, 2013 at 3:03 PM

    “Multi-million dollar salaries, taxpayer subsidized spanking new facilities, patrons numbering in the millions…” Why, you must be writing about Jeffrey Romoff and UPMC, right here River City!

    • umoc193  On February 25, 2013 at 4:06 PM

      Reading the Brill piece and writng my take on it often conjured up images of the UPMC-Highmark battles, or just UPMC.

      Brill just barely touched on doctors’ pay but Matthew Yglesias does so here. http://www.slate.com/articles/business/moneybox/2013/02/american_doctors_are_overpaid_medicare_is_cheaper_than_private_insurance.html

      In a way that aspect is much more charged with emotion. It is easy for most of us to knowck the high pay of hospital CEO’s beccasue we usually don’t encounter them while our doctors care for us personally and often are…if not beloved…certainly well-liked by their patients.

      My own family doctor is a case in point. I have great rapport with him and believe he does everything he can to monitor my health. He was even in favor of the ACA. I have no idea of his income but gather that it is sufficient enough that he has substantial investments. (He once invited me into his office to see how he was tracking them on his computer.)

      I have friends who are doctors, too, and don’t with financial calamity on them. But it well could be that these folks do earn what some would consider to be excessive incomes.

      However, I have a feeling that if we can rein in other costs many doctors might be willing to join the parade.

  • Devildog  On February 26, 2013 at 4:28 PM

    Some may consider it as such but there’s no such thing as “excessive income”, except perhaps in some cases for which the problem is how the income was gotten rather than how much was gotten. Okay, let’s hear the opposition to what I have just said.

    • umoc193  On February 27, 2013 at 10:18 AM

      Well excessive is a relative term. The income of American doctors is certainly excessive if examined in the context of what doctors are paid in the rest of the world based on levels of training, competency, skills, and patient outcomes.

      Now American doctors are often burdened with high debt for education but that is a product of many factors unconnected with practicing medicine. However, that debt is often used as justification for high compensation. But are other professions paid according to the debt of their practitioners or according to the vales of the services they provide.

      Now don’t argue that of course doctors are more valuable because they save lives. Well, how does that gibe with your view of free markets and does that mean that the compensation of Wall Street bankers, who have no value to society, should be less than doctors, even at current physician pay levels.

      Then again doctors’ pay was not the focus of either the main article I reported on or my take on the facts therein.

      • Devildog  On February 27, 2013 at 11:14 AM

        I know that “excessive income” was an aside to the point of your article and it was an “aside” from me as well. It’s just my gut reaction to words and phrases as “excessive income”, “excessive profits” and “fair” and ” fair share” and “fair pay or equal pay for equivalent jobs.

        It’s not up to me nor more important the government to determine whether one job is more important to society than another-and, thereby, deserves more pay (or are equivalent and deserve equal pay). See teachers vs. garbage collectors.

        It’s the free market! And don’t compare incomes here with those around the world. It’s irrelevant.

        Hope you’re doing well.

        • umoc193  On February 27, 2013 at 5:33 PM

          Actually there is relevance to doctor’s incomes around the world. Why are doctors paid so little in other nations compared to American counterparts when the care is as good if not better and national average incomes are not far apart?

          However, this is mere diversion for you as you have not addressesd the Brill article at all. Nor have you presented a cogent argument against single payer.

          • Devildog  On February 27, 2013 at 6:24 PM

            Just my initial comment on the article; I’ll have to read it closer and give it some thought. It may surprise you that I hope everyone has insurance. It’s just that I don’t believe doing something is necessarily better than doing nothing. I don’t know what the answer is to this very complicated issue but I think (that’s think not know) that Obamacare is not a step in the right direction. I think we probably will have some sort of hybrid single payer system in the future in a form I’m not smart enough to predict.

            As for the matter of doctor income here vs. elsewhere, it’s for the same reason that the same could be said for every other profession including lawyers and financial people-and that has nothing to do with the healthcare system.

            • umoc193  On February 28, 2013 at 4:36 PM

              Actually the Affordable Care ACt is a HUGE step in the right direction, despite any of its flaws.

              Remember it provides a path for many people to be able to procure health care coverage and that also addresses the conservative fears of lack of individual responsibility in response to the Emergency Medical Treatment and Active labor Act (EMTALA) of 1986.

              There is absolutely no valid reason that per capita health care costs in the U.S. are more than $2000 in excess of ALL other advanced countries. Brill’s article deals with the hospital side of the equation in depth with both strong anecdotal evidence from actual patients as well as a thorough look at the Chargemaster which often appears to be a fantastical concoction devised by Roald Dahl.

              • Devildog  On February 28, 2013 at 5:32 PM

                Is your first paragraph a fact or an opinion? Is is not difficult for you to make that statement when neither you nor anyone else can say with any degree of certainty the unintended consequences that will come out of this unread, ununderstood act for which so many regulations need to be drawn up and implemented by the Feds and accepted by the States.

                Why is it that I write that I think… and emphasize I don’t know but you write with such certainty including “Huge”-other, of course than that you are so much more intelligent and knowledgable than am I. But, on the other hand, that is enough reason.

                • umoc193  On March 1, 2013 at 6:26 AM

                  No, the fact that the ACA is a huge step forward is pretty much a given, by almost any standard. That it has flaws is also a given. We may disagree on what those are but I fail to see how anyone who is reasonable and claims they favor insurance for all, as you do, cannot accept that this goal is fairly well met by the law. Again, the key part, the individual mandate was, after all, a creation of conservative thought.

                  Funny though, every time I mention this no, that is NO conservative I know is willing to own up to this fact.

                  Now please, quit trying to make the case that I am ego-driven due to my superior intellect. I have my strong, near unvarying positions and you have yours. That’s all.

                  • Devildog  On March 1, 2013 at 11:22 AM

                    UMOC, as RR would have said,”there you go again”. It’s a fact that the ACA is a huge step forward and that’s pretty much a given by almost any standard? You need to get a hold of yourself! Whether you are correct or not is not the issue-your certainty about everything is.

  • Little_Minx  On March 1, 2013 at 11:53 AM

    It’s a huge step in the literal sense that it’s a big change simply in terms of magnitude, regardless of whether one agrees or disagrees with it.

    But based on Obama’s reelection in 2012 — because opposition to Obamacare was one of the major GOP planks — as well as the Democrats’ increase of their majority in the Senate and narrowing of the Republicans’ majority in the House, it’s a reasonable inference that there’s significant, indeed increasing, support for the ACA.

    • Devildog  On March 1, 2013 at 12:03 PM

      Minx, respectfully, what is this huge step means simply big change simply in terms of magnitude? Don’t you know UMOC well enough by now to know what he means by, ” ACA is a huge step forward”. I won’t swear on it but I would bet he’s not saying it’s big but might not be so good.

      Support, increasing or otherwise, is not a predictor of future success.

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