Posted on 03/25/2017 8:45:52 AM PDT by M. Dodge Thomas
"Customers in healthcare ask a different question than customers in most markets. Whether hospitals (as customers of suppliers) or individuals needing an operation, healthcare customers mostly don’t ask, “Can we afford it?” Or even, “What’s the best value for the money?” They ask, “Is it covered? Can we get reimbursed for this?” And the reimbursement or coverage is set by complex non-market mechanisms that in most parts of the market are themselves opaque to the customer. So there is no real customer and no real price signal in most relationships throughout the market."
(Excerpt) Read more at healthcareinamerica.us ...
I don’t care how expensive it is, let the free market decide. Just stop robbing my wife and children to pay for other people.
This is a really good example of why it’s so difficult to control medical costs: many things that are “obviously” true about the system, aren’t.
While your proposal seems perfectly logical, when thinking about this you have to keep in mind the “paradox of aging” as regards insurance: the healthier your lifestyle, the longer you live, and the higher your lifetime medical costs.
For example, smokers on the average die early enough to have lower lifetime costs than the obese, and the obese die early enough to have lower costs than their leaner counterparts.
This may seem to defy common sense, but the reason is straightforward: as we age we are increasing likely to have untreatable conditions such as dementia and/or *combinations* of chronic diseases which are difficult and expensive to control.
So the next time you are standing in the checkout line next to a obese smoker, thank them for their altruistic behavior - they are saving the rest of us money, long term!
In general, your observations and suggestions all make sense, and the more “rational” the consumers of healthcare, the more since they make.
The problem of course is that consumers of healthcare are often irrational (for example in their perception of relative risks and benefits) and are also in a situation where it’s difficult to accurately assess the outcomes of various choices.
PSA testing is an excellent example of the latter problem: at the moment a man attempting to make a decision about whether to have a yearly PSA test is confronted with dueling experts: “There is little if any evidence that PSA testing reduces average life expectancy “ vs. The studies which show no increase in expectancy are ignoring the efficacy of the newest treatments”.
In this situation it’s pretty much impossible to make a “rational” decision to test or not, and this means it’s going to be highly controversial politically to make a decision about whether to pay for testing.
Anything that allows consumers (be they individuals or organizations) to more accurately understand the pricing of the medical services they are receiving is a good thing, as is anything that makes the nature of “cost shifting” more transparent.
This doesn’t address the underlying problem however: in a fee-for-service system the incentives are to maximize the services delivered, rather than optimize the cost/benefit ratio of the results achieved.
So while more transparent pricing and less cost shifting would certainly help to make the scale of the problem clearer, it doesn’t really get us much closer to reducing “the cost of healthcare” - just about everyone *already* knows that the current system is incredibly inefficient and wasteful - the problem is what to do about it.
IMO, these are all proposals that could be useful for controlling the cost of “routine” medical care, but they don’t effectively address the problem of “catastrophic medical cost”.
That doesn’t mean the ideas are unworkable or unsound, just that they are actually only one half of a practical health insurance system.
Of actual existing systems, New Zealand’s probably comes closest to a practical system based on the underlying philosophy you suggest,.
While this type of arrangement it would not be my first choice of solutions, but it would be a lot better than what we have now.
“But we also have the responsibility to control the expenses and look out for the group.”
Voluntary insurance pools face the same ultimate problem as any other insurance system : what happens as the membership ages? As I noted in a post above, healthier the lifestyle you live, on the average the higher your lifetime healthcare costs.
So a system that can work well if the majority of its membership is under 50 will be headed for financial difficulty as the age distribution shifts upwards, and the “responsibility to control the expenses and look out for the group” becomes increasingly pressing problem.
Conceivably the members of a voluntary association who shared very similar underlying principles and values might be able to have a more rational discussion of the financial realities and might be able to reach a greater degree of consensus on what that “responsibility” entailed; for example the individuals might be more willing to forgo the last few months of heroic treatment for cancer as an altruistic strategy for the greater good.
But humans being humans, I wouldn’t count on it.
“You can see how auto insurance operates similar to home insurance. You are more “the customer” and the only customer in the relationship with the repair outfit, NOT your insurer.”
As it happens, Joe Flower has used taking your car to the body shop as an example of how the market for health insurance is different:
“Do you have any support for your argument? Your statement that “no such system exists...or could” seems to have the kind of certainty often associated with bong based science. How do you know what “could” exist? Did you see it in your crystal ball?”
This is the problem with trying to discuss policy with libertarians, you are constantly in the position of “prove it’s impossible”.
This is the reason that “libertarians you will always have with you”.
Almost every other damn fool scheme for organizing society is at least practical enough to have been actually attempted, at least short-term:
Pure communism, brazen kleptocracy, organized theocracy, governance by ad hoc divine revelation, strong monarchy, various sorts of anarchism, “free love”, if humans can dream it up, it has been tried somewhere long enough to demonstrate it’s strengths and weaknesses.
Strong libertarianism however is so utterly impractical that its practitioners have never been able to sustain even a brief experimental attempted at scale to demonstrate its practicality.
It’s so impractical, it’s the only scheme that has never actually been tried!
And absent the attempt, libertarians will smugly ask (in the face of the pretty obvious answer) “prove that it’s impossible!”.
Some parts of the healthcare system are a lot easier to price transparently than others.
When we visit a primary care physician the “range of service” provided is pretty narrow: it comes down to treatment, recommendation for additional diagnostic tests, or referral to a specialist. It might be a 15 minute visit, it might be a half an hour, but it’s not going to require four hours, let alone four weeks.
And while the provider can’t exactly predict the ancillary costs of providing a given service, it’s unusual for there to be high unexpected costs.
So while we still have the problem of selecting a primary care provider (be that an individual or a group) both the consumer and the provider can expect to have a fairly accurate idea of the amount of service directly involved in a typical transaction.
The problem is the *indirect* cost to the consumer - depending on the accuracy of the diagnosis and any additional follow-up recommended, the consumer is faced with additional costs far in excess of initial visit, and often without any practical means of evaluating whether or not the recommendations resulting in additional costs were cost-effective.
This problem only gets worse as the complexity of treatment increases: the mythical “informed consumer” would likely have to make dozens if not hundreds of individual choices about optimum cost/benefit during the course of a hospitalization for the treatment of a complicated condition - in effect the consumer *has* no rational choice other than to delegate almost all that decision-making to someone else.
So while “price transparency” is theoretically helpful in making consumer choices, as a practical matter even an intelligent consumer with time to research and consider options is forced to delegate the majority of such decision-making to someone else, and the nature of the system becomes critical.
For example, given that what consumer is actually buying is a complicated package of goods and services customized on a minute by minute basis to their individual needs, fee-for-service pricing is about the worst possible option, and something like a fixed price for hip replacement is a much better alternative in terms of limiting their financial risk - always assuming that they’re able to compare outcomes as well as pricing when considering where to have the surgery performed.
Joe flower is pretty much an agnostic about which alternatives will work best, and stresses that different alternatives are probably appropriate in different situations, but his major point is that it’s *very* difficult to control costs - no matter how transparent - in a fee-for-service system.
Some parts of the healthcare system are a lot easier to price transparently than others.
When we visit a primary care physician the “range of service” provided is pretty narrow: it comes down to treatment, recommendation for additional diagnostic tests, or referral to a specialist. It might be a 15 minute visit, it might be a half an hour, but it’s not going to require four hours, let alone four weeks.
And while the provider can’t exactly predict the ancillary costs of providing a given service, it’s unusual for there to be high unexpected costs.
So while we still have the problem of selecting a primary care provider (be that an individual or a group) both the consumer and the provider can expect to have a fairly accurate idea of the amount of service directly involved in a typical transaction.
The problem is the *indirect* cost to the consumer - depending on the accuracy of the diagnosis and any additional follow-up recommended, the consumer is faced with additional costs far in excess of initial visit, and often without any practical means of evaluating whether or not the recommendations resulting in additional costs were cost-effective.
This problem only gets worse as the complexity of treatment increases: the mythical “informed consumer” would likely have to make dozens if not hundreds of individual choices about optimum cost/benefit during the course of a hospitalization for the treatment of a complicated condition - in effect the consumer *has* no rational choice other than to delegate almost all that decision-making to someone else.
So while “price transparency” is theoretically helpful in making consumer choices, as a practical matter even an intelligent consumer with time to research and consider options is forced to delegate the majority of such decision-making to someone else, and the nature of the system becomes critical.
For example, given that what consumer is actually buying is a complicated package of goods and services customized on a minute by minute basis to their individual needs, fee-for-service pricing is about the worst possible option, and something like a fixed price for hip replacement is a much better alternative in terms of limiting their financial risk - always assuming that they’re able to compare outcomes as well as pricing when considering where to have the surgery performed.
Joe flower is pretty much an agnostic about which alternatives will work best, and stresses that different alternatives are probably appropriate in different situations, but his major point is that it’s *very* difficult to control costs - no matter how transparent - in a fee-for-service system.
Just because the health insurance market is presently allowed by federal and state regulators to operate differently than other insurances, like home and autos, does not mean either that it should or that it has to. The driver to that question is not “markets” but the insurance regulations that have defined that market, allowing collusion of insurers and those you are to get your insured services from. It is collusion that house and auto insurers are not allowed to do.
“obviously true”
The questions are:
1) WHO DECIDES. Gov, insurance company, me, other?
2) WHO PAYS FOR IT. Gov , insurance, me, other?
No politician can say the truth. And many here won’t either.
It seems that people who are coming out strongly against this article didn’t bother to read it.
I think most people around here could agree with this point.
6) Seriously streamline the regulatory burden on healthcare providers, which has multiplied many times in recent years. The most rapidly-growing part of the hospital sector is the compliance department.
In emergency situations, yes, but for everyday healthcare, price matters. The government mandated that hospital emergency rooms had to take in everyone for everything, no questions asked, and some went bankrupt and closed.
Christian Healthcare Ministries the group my wife and I are members of was founded in 1981... and allowed people to share over a billion dollars in healthcare expenses. I would assume that in the 36 years that the organization has been in existence that the average age of the members stabilized long ago. I do not think that this is the explanation as to why the "premiums" are so much lower for the "coverage" received.
for example the individuals might be more willing to forgo the last few months of heroic treatment for cancer as an altruistic strategy for the greater good.
No one is being asked to forgo heroic treatments for any conditions that I am aware of. I am not sure that you have a great understanding of where the true waste is in our healthcare system. For whatever reason... health cost sharing ministries are able to offer far greater benefit for far less expense than traditional insurance. Maybe just maybe this should be explored further by our brilliant leadership?
Well, Libertarians threatened to steal an already functioning state with the Free State Project, but they couldn’t even do that. They’ll have to continue parasitizing the societies that already exist, while constantly whining about what’s wrong with them.
What do you think of hospitals selling insurance? They already provide HMO type service for indigents in some areas.
Christian Healthcare Ministries the group my wife and I are members of was founded in 1981...
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I’m curious as to whether you or anyone you know has had to use them for a major illness. I got the impression that for one of them, a person would receive checks from other members to pay for a major illness. That would be a tremendous burden for a seriously ill person to keep all of it straight.
A quick GOOGLE indicates the CHM requires participants 65 and older to Carry Medicare A & B, which would largely address my concerns about any possible upwards drift in the average age of participants - it would appear that for these members CHM is in effect similar to Medicare supplemental plans.
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CHM’s financials are available “on request”, but apparently are not routinely published on-line - and this would be the place to start in understanding the economics of the program.
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In the case of health care coverage, “The Devil is in the details”, for example it appears that coverage for birth defects and congenital conditions is limited to $25,000, and these are potentially some of the most expensive conditions to treat. Nothing wrong with this exclusion - as long as members are aware of it - but it is an example of an important type of coverage limitation allowed because this is not “insurance”.
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I wasn’t suggesting that any particular Insurance Plan would encourage members to choose palliative care over heroic EOL measures, rather that the the membership of *any* such mutual aid society might be more likely to “be on the same page” (whatever page that is) than a similar group of insured drawn from the public at large.
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