Thursday, April 06, 2006

license to (be) ill

Anyone that bothers to take the time to explore the costs of medical or dental work to people without health insurance will come to one undeniable conclusion. Simply put, healthcare is completely unaffordable to anyone that does not have health or dental insurance. A six-month checkup at the dentist's office will cost well over $100; minor surgery, over $2,000. The cost for major surgery or the treatment of a long-term illness is unfathomable. Couple this with the fact that millions of Americans do not have health insurance. Private plans are expensive, not all employers provide benefits, and the requirements for Medicaid/Medicare are so strict that only the poorest sections of society qualify. This leaves millions of lower class (but not low enough) and middle class Americans without the financial means to cure themselves of illness.

While I haven't revealed any astonishing secrets here, I will say that I find it morally disgusting that a person should be forced to look at financial considerations when weighing their treatment options. A sick person's thoughts should be centered on how to get better - not whether they can afford to get better.

I am not going so far as to say that universal free healthcare is the answer. In a country of 300 million people this is not very practical. What I am suggesting is there should be upper limits on how much treatment - any treatment- will cost. These costs should also be heavily subsidized or free for the lower echelons of society, with anyone that cannot comfortably pay for their own insurance qualifying.

Massachusetts yesterday became the first state to require all its citizens to have health insurance. The advantage of this is obvious; everyone will have health insurance. However, the problems from before remain, as it still places the financial burden of health treatment on the individual, with no caps on how much treatment or insurance can cost. True, more companies are required to give their workers benefits. But this does not help those employed in small businesses, the self-employed, students, and the unemployed. And as General Motors shows us, corporations providing benefits to employees and retirees run the risk of bankruptcy.

In light of this, the Massacusetts law likely will not cure the problem of unaffordable health care. State legislators should be complimented on attempting to tackle a problem that President Bush and Congress seem incapable of doing. But the real problems of the American healthcare system have yet to be addressed, either at the federal or state level.


Blogger Mr. Lee said...

Rising health care costs is a problem my firm deals with every day; in fact, at current growth rates, Medicare, Medicaid and Social Security will crowd out ALL other government spending within fifty years. As in, there will be no other government functions.

The employer-based insurance system is a relic of World War II, when wage controls forced employers to offer benefits to entice workers. The problem is that skyrocketing costs have forced employers to reconsider those offerings - witness GM's recent buyout offers to its factory employees.

I agree that financial considerations for medical care are repugnant, but they are an unfortunate necessity in an era of unprecedented medical innovation and human longevity. We live longer and healthier lives nowadays in no small part because of the health care we receive in America today.

The problem with a cap on treatments of any kind is that it will stifle research and development. The reason that pharmaceutical and biotech companies sink billions into new cancer research, for example, is the reward associated with an effective and safe treatment, and removing that incentive will doom cancer patients. They haven't found a cure yet, but these companies are working on it.

The problem with the Massachusetts approach, too, is that it does not solve the fundamental flaw in the third-party payer healthcare system - namely, if someone else is paying for your health care, you have absolutely no incentive to regulate your consumption. Studies have repeatedly shown that Americans over-purchase and over-consume health care because they do not pay for it. If a $10 copay is the only cost to go see the doctor, patients will go, even if it is unnecessary. Forcing people to buy insurance will not change that, though it will likely alleviate some of the strain on Massachusetts' Medicaid program.

The solution will be a basic restructuring of our health care system. That, however, will be no small task.

6:59 AM  
Blogger Dr. Cook said...

Mr. Lee, your response is informed, insightful, and well-stated, but I have to ask the obvious question: what does a "basic restructuring of our health care system" truly entail?

8:10 AM  
Blogger Mr. Lee said...

One idea currently being bandied about is informing patients as to the actual costs of care.

If you were to go to the hospital or your doctor's office, no one there would be able to tell you offhand how much a given procedure will cost. They could ballpark it, but that would be it. This is because what these providers are actually paid for a given procedure depends on who is doing the paying - Medicare, Medicaid, one of the hundreds of private insurance companies around the country, or the patient. The price will be different for each of these - government uses different formulas to calculate reimbursement rates in different programs, insurance companies negotiate discounts on rates that vary across providers, and the highest prices are actually charged to those who pay cash because they don't get any discounting at all.

However, if a patient is only paying an incidental copay for services, they never see any of the actual costs, and spending someone else's money is much easier than spending one's own.

Americans are used to paying a given premium and being "covered." People dislike insurance companies because they must make their money by creating exceptions to that coverage, paying lower rates, requiring managed care, and using other forms of cost containment, but the simple fact is that we have been enjoying far more in the way of health care than we have paid for. Would a grocery store offer to let you pay a flat rate for a monthly supply of groceries, when you determine what constitutes a monthly supply (within certain reasonble constraints)? One could safely conclude that such an arrangement would lead to overpurchasing of groceries, and that is precisely what is happening in the health care system.

Giving patients cost information and encouraging them to shop for better prices is one way to encourage slower growth. One immediate response to that argument is that people want the best care, not the cheapest, but that ignores the costs, something we can no longer do. I cannot agree with foregoing care because one can't afford it, but one should certainly not be entitled to Mayo Clinic treatment if he or she can't pay for it.

So, if an insurance policy requires 20% coinsurance, and a patient has access to a website showing prices for an annual checkup at various doctors' offices, he or she can choose a doctor based on price. An $80 checkup as opposed to a $100 checkup saves the patient and the healthcare system money.

That's only one idea being circulated; there are others. But ignoring the costs associated with health care is no longer viable. We can't afford not to think about them anymore.

9:04 AM  

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