Thursday, March 29, 2012

Why Burial Insurance is not the same as Health Insurance

The right wing of the Supreme Court tried to make the case that a mandate for health insurance is no more necessary than a mandate for burial insurance.  There are a lot of ways of tackling that claim, but a key issue I haven't seen acknowledged is the skewed cost distribution of health care.  With health care the most expensive 5% of individuals account for almost 50% of total spending.  What would happen if burials had the same cost distribution?

As of 2007 the average death cost $6,310 in funeral expenses*. If the same distribution that we see in health care applied to burials we'd have 5% of the population getting $63,000 funerals while everyone else's cost $3,300.  And neither you, your next of kin nor the state would have any say in who got which funeral, it would be as random and arbitrary as people's health needs.  Think about how that would impact families, think about how it would screw up government budgets as they had to fund funerals for the poor or uninsured.

In effect burial spending is nothing like health care spending, and if it was alike we'd have the same conversations about how to pay for it.

*Total revenue for Funeral Services (NAICS Code 8122) divided by number of deaths.

Saturday, March 24, 2012

Hip Implants on NPR

via Maggie Mahar's twitter feed, an NPR story covering the consequences of metal on metal hip implants in grisly detail. We're going to spend billions in direct medical costs putting these implants into people and then taking them out after they've shredded their insides, and probably billions more in legal costs as the manufacturer, surgeons, and hospitals try to stick each other with the blame.  All that money for this:
The first implant also became loose. "At one point, the doctor said, 'OK, I'll hold your hands ... now stand on that leg.' And I stood and it went kuh-CHINK, like that, and he said, 'What the hell was that?' "
I think the story of how this product came to the market and why surgeons chose to use it will say a lot about health care in America.  I look forward to someone writing it.

Saturday, March 17, 2012

The cost of scapegoating

A good quote from "Since Yesterday" (emphasis mine),
A good deal of the bitter anti-Roosevelt talk could not, of course, be taken at its face value.  Often it was a form of conscious self-indulgence in the emotional satisfaction of blaming a personal scapegoat for everything that went wrong.  When, as in a New Yorker cartoon, a group of ladies and gentlemen sallied forth to the trans-lux theatre "to hiss Roosevelt," they enjoyed the sort of release that many liberals had enjoyed when they blamed all the ills of the economic system on the personal wickedness of bankers, or that Nazis enjoyed when they blamed all the ills of Germany on the Jews.  To find a scapegoat is to be spared, for the moment, any necessity for further examination of the facts or for further thought.

Yet to the extent that it stopped factual inquiry and thought, the Roosevelt-hating was costly, not only to the recovery, but to the haters themselves.  Because as a group (there were many exceptions) the well-to-do regarded the presence of Roosevelt in the White House as a sufficient explanation for all that was amiss and as sufficient excuse for not taking a more active part in new investment, they inevitably lost prestige among the less fortunate.  For the rich and powerful could maintain their prestige only by giving the general public what it wanted.  It wanted prosperity, economic expansion.  It had always been ready to forgive all manner of deficiencies in the Henry Fords who actually produced the goods, whether or not they made millions in the process.  But it was not disposed to sympathize unduly with people who failed to produce goods, no matter how heart-rending their explanations for their failure.  Roosevelt-hating thrust the owners and managers of business into inaction--into trying to resist the tide of affairs, to set back the clock.  It made them conservatives in the sense that they were trying to hold on to old things, whereas before 1929 they had been, in their own way, innovators, bringers of new things.  It made them, as a group, sterile.  And they were soon to learn that sterility does not stir public applause.
I think this says a lot about right wing politics today...  especially the word "sterile."

Saturday, March 10, 2012

Practical Health Care Reforms from NY

Via Kaiser, the State of New York's Department of Financial Services issued a report on 'surprise' medical bills affecting people who have insurance.  The consequences of such bills can be profound.  There is too much good material in the DFS study to pass on through quotes so I urge you to read it yourself.

 What struck me about the study is that it's the first one I've seen that tries to get into the nitty gritty interactions between patients, insurers, and providers that actually determine what people pay.  The description of doctor "run-ins", where an out of network physician gets involved in a procedure without the patient's knowledge or consent really hit home, in a personal, "hey I got f$@#$! by a doctor just like that!" kind of way.  The same goes for the inadequate notice on what providers are in or out of network.  For my family and I suspect lots of people, seeing an out of network physician amounts to going uninsured.  We try pretty hard to avoid that, but neither providers nor insurers make it easy. 

Health care reformers tend to blow past this stuff because it doesn't offer that much in savings in the big picture, and it is a problem for people with insurance who by virtue of that alone are already a lot better off than those without.  But addressing these problems, problems that people will recognize and react to, is a great way to build political support for reform.  I hope those working on the state exchanges are paying attention because I think this will be a pass/fail test.  Address problems that bother people and you get the laurels, ignore them and all the rocks people now throw at insurance are going to be heading your way.

Tuesday, March 6, 2012

Putting numbers on Provider Price Increases

I thought this story out of Boston was pretty striking:  A state house leader putting a number on what the average provider price increase should be.  It is impossible to imagine an Oregon politician (much less one in a leadership position) making such a statement today.  Heck, I can't even see a mainstream reform advocate saying that out loud.  And yeah, prices matter.
It shows that while Oregon in some ways is ahead of the game in promoting health care reform it still has a long, long way to go.

Sunday, March 4, 2012

Maine vs. Anthem Decision

The Maine Supreme Court released its decision in the Anthem case last week, where the insurer had challenged the adequacy of the Superintendent of Insurance's approved rate.  I'm glad the court found in favor of the Superintendent, states should have flexibility in regulating and a judicially imposed profit load would just be a mess.  But I'm a little amused at the court's dismissal of the subsidization argument, where Anthem argued that the low profitability of the individual and small group lines would drive up large group pricing.

Here is the key section addressing this on page 18, emphasis mine.
There is no evidence in the record to suggest that the approved rate increases will inexorably result in higher rates being charged to Anthem’s unregulated group insurance consumers. To say that Anthem might occasionally need to use its substantial company-wide surplus, which we agree is funded in large part by the financial success of its unregulated group insurance products, to pay for intermittent losses sustained by the individual lines, is both in form and substance a different statement than saying that its group consumers are in fact being charged higher rates in order to subsidize the regulated lines. Without some discernable proof that cross-subsidization is occurring as a result of the rate approved by the Superintendent that included a 1% risk and profit margin, Anthem’s argument falls short of persuading us that the Superintendent overstepped the bounds of her statutory authority by using her concept of the “inadequate” standard as a vehicle to consider the financial health of the company as a whole.
The judges acknowledge that the surplus is largely derived from the unregulated lines, and that regulated lines will occasionally take money from that surplus.  They don't say it explicitly, but clearly they understand that the lower the margin on the regulated lines the more it will take from surplus and the less it will contribute back to it.  So where is the money supposed to come from?  How is this not requiring subsidization?

 What the judges are really saying is that to make this claim stick you need clear evidence of subsidization, such as attaching a "you are now subsidizing the regulated lines" fee onto all the unregulated business.  That works for utilities, just look at all the line items broken out on your bills.  Utilities can throw whatever they want on there without consequence because customers have no choice, it's a monopoly.  That isn't the case with large group health insurance.  Businesses have plenty of options if they don't want to effectively help out all the employees of companies that don't bother offering health coverage.  I think that kind of subsidization is unsustainable even when it is under the table, eventually people would figure out that insurers that didn't write any regulated business would be cheaper than those who did.  But how much quicker will that happen when you slap businesses in the face with an overt penalty fee?  The judges made a lot out of the lack of evidence submitted by Anthem, but what could Anthem say without sabotaging the lines where they actually make money?

Grist for the mill for those thinking about how to effectively regulate health insurance.

Saturday, March 3, 2012

Judgment and Technology

Via Health Care Renewal, an interesting quote on the interaction between human skill and technology.  The quote comes from a paper on nursing, but I think it applies much more broadly:
Skill is the ability, drawn from education and experience, to do something expertly. It can also be defined as the effective exercise of professional judgment in non-routine situations.

Following prescribed rules, as a machine would, makes an employee competent to perform tasks, but it doesn’t make the employee skilled. They can do their job as long as there are no surprises. But when something unexpected happens, the rules break down, and caring for patients means facing the unexpected every day. Only skilled health professionals can cope with the unexpected. To know what to do, they have to rely on their own judgment. The exercise of judgment is the essence of skill.
The realm of the unexpected isn't limited to health care!