Controlling rising health care costs

[Fishteacher73]

Perhaps it is as simple is that the technology has out grown our economy. Health care at todays level is simply just not fiscally viable for many.

[Biochemist]

Originally Posted by bumab

This is a great point, although as someone who must pay for their own insurance (and it's pricey), I'm still strugglin'

Insurance costs are irrelevant in the global sense. Insurers make 1-2% of the premium as margin. That 2% is not the cost problem. It is the 98% that is the issue. Of that 98%, about 85% is provider care costs (including some provider administraiton) The other 13% (ish) is administration at the health plan.

Costs are high for individuals becasue health plans rate you. It is not because their margin is higher. Individuals are rated higher because they are usually riskier.

We could easily solve this problem by requiring all health plans to community rate. That means that all insurance in a particular geography (county or state) would be priced the same for any individual. Probably you would allow insurers to rate based on age and gender, but nothing else.

(This would be a regulatory change, but it is not required to get conusmers to move the provider market.)

This would mean that there would be no reason for employers to provide insurance anymore (because there would be no group rate differential) and consumers could pick any insurer in the geography, not just the ones at their employer.

Imagine that.

[bumab]

Originally Posted by Biochemist

We could easily solve this problem by requiring all health plans to community rate. That means that all insurance in a particular geography (county or state) would be priced the same for any individual. Probably you would allow insurers to rate based on age and gender, but nothing else.

Doesn't this eliminate your "invisible hand" controlling the pricing? I suppose competition would control the benefits, but what about people who want more benefits, and could afford to pay more? If that was allowed, we'd be right where we are now. If it wasn't, there would be screams of socialism.

You're presenting (what seems to me as) some sort of quasi-socialized capitalistic scheme. I am very interested...

[Biochemist]

Originally Posted by bumab

Me either, although the message that "it's lower quality, thus you will all suffer" has been drummed into the collective conciousness pretty hard.

Most non-US systems are cheaper because they force folks (somehow) to queue for service. This decreases utilization for lot of services. US consumers don't like this solution. Since a significant fraction of utilization has no effect on outcomes, decreased elective utilization does not decrease objective quality. Ergo, many foreign health systems are as "good" as the US, but their queueing at the provider is worse.

There are more MRI scanners in metropolitian Pittsburg than there are in Canada (the whole country). Guess who gets an MRI faster. And the capital cost per MRI in Pittsburg is far higher than Canada, since the machines are newer on average.

[C1ay]

I think there is another significant factor, our litigated society. In some areas malpractice insurance premiums threaten to put doctor's out of business. Unfortunately the insurance company has to do something to cover the cost of the awards juries have been giving. The drives up health costs which in turn drive up individual health care insurance rates to keep up. It's a vicious cycle.

One thing I would propose is annuitized awards. If a claimant wins a $5 million malpractice award let the insurance company set up an annuity that will pay it out over a reasonable amount of time. The payout realized by the insurance company would be a fraction of the award. The claimant probably doesn't need or deserve a lump sum and it's us that are going to end up paying it anyhow through higher insurance premiums. As long as we're the one's strapped with the burden I think we should be able control how it's paid.

[Biochemist]

Originally Posted by bumab

What about the cost of devloping new treatments?

Providers would price (in advance) the service they give. They might offer more than one. Most car dealers sell more than one car, too. New treatments would be delivered to compete with older ones on cost and quality. Like new cars. Imagine that.

If the doctor always knew exactly what was wrong, this system would be great.

Some examples do not work as well as others, but most work pretty well. Pricing a diagnosis would often be reasonable (think of the stereo repair guy that will diagnose your stereo for a fixed price).

Good analogy, however you could arrive at the same point with universal health care.

Universal health care does nothing to drive down price. All western countires have the same price inflator that we do. They are just running at 1/2 to 3/4 the total cost. I have nothing against socialized medicine. It just does not address the core problem. It saves some administration costs, but that ain't the issue.

[bumab]

Originally Posted by Biochemist

Providers would price (in advance) the service they give. They might offer more than one. Most car dealers sell more than one car, too. New treatments would be delivered to compete with older ones on cost and quality. Like new cars.

I fail to see how this does not reflect, at heart, the fundamental problem- unequal access to care because of economic issues. People don't think unequal access to Bentley's is a problem, however unequal access to both preventative and life saving care is usually perceived as a problem. There's nothing stopping the health care providers from providing lesser coverage to those less able to pay, which is basically what's going on now.

I agree- it's a good step. I just don't think it goes far enough, unless I'm missing a point.

[Biochemist]

Originally Posted by bumab

Doesn't this eliminate your "invisible hand" controlling the pricing? I suppose competition would control the benefits, but what about people who want more benefits, and could afford to pay more? If that was allowed, we'd be right where we are now.

No. Insurers could still compete with insurers. They just could not adverse select agianst patients with pre-existing conditions.

Patients could buy whatever package they think makes sense. Any two insurers would have different packages and different prices, but the any single insurer would have the same price for a given gender and age.

[Biochemist]

Originally Posted by Fishteacher73

Perhaps it is as simple is that the technology has out grown our economy. Health care at todays level is simply just not fiscally viable for many.

Maybe. But high-deductible packages are really inexpensive, and are designed to reward non-utilizers, and yet still provide catastrophic coverage. My family premium (me and 3 kids) is $177 per month.

[Biochemist]

Originally Posted by C1ay

I think there is another significant factor, our litigated society. In some areas malpractice insurance premiums threaten to put doctor's out of business.

This is a real cost, but it is not a major driver. I think in the US, malpractice is about 4% of the total health expenditures. Frankly, this is a HUGE dollar amount, but it is not a significant overall driver. The larger issue is that it makes providers do more work to cover themselves. Some have estimated that the incremental cost for self protection is another 4-8% of care costs. Legislation to standardize awards does a lot to minimize the lottery-oriented behavior of contingency fee attorneys.

Individual malpractice premiums are a different and more pressing problem. I suspect for most specialties, the fixed-compensation schedule solution would work to resolve this as well.