Even the stuff to help you pay for it is too expensive.

I promised a piece on healthcare, and here it is. A couple more bits of reading before we really get started: Ezra Klein brings us commentary on consumer driven health plans (you remember, the kind that the Ownership Society, free markets crowd, and libertarians think will magically bring costs into line) that boils down to “So employees aren’t signing up, they don’t like the plans when they do sign up, and they don’t use them correctly when they’re enrolled.” Jill from Brilliant at Breakfast pointed me to this New York Times article on early symptoms of ovarian cancer have been identified, and new guidelines will hopefully save lives . The article specifically points out that “There are so many horror stories of doctors who have told women to ignore these symptoms or have even belittled them on top of that.” Jill quotes large swaths of the article for those who hate signing in at the NYT, and comments that “Tucked away in this article, so subtle that you can hardly notice it, is the spectre of cost considerations.” Yes, maybe we can save your life, assuming your doctor doesn’t tell you it’s all in your head or otherwise misdiagnose it, assuming we find it early enough, but it will cost you. We also have a Freakonomics review of an article on whether or not there really is an Autism epidemic. Some of the factors involved include “better reporting/diagnosing” (which, like ovarian cancer screening, costs money) and “more funds available for treatment….” Further down my browser tabs, we have what amounts to a frequent flier plan for healthcare: members “earn points that can be redeemed to pay for any health service, prescription, elective procedure, gym membership, wellness product, contribution to Health Savings Accounts (HSA) and many more products and services. Points can even be applied toward health insurance premiums in certain states. The rewards program can also be set up as a health points community, similar to other social networking models where all members can collectively earn points on each purchase.” Apparently there is a credit card involved. And last but not least, Maya’s Granny alerts us to an AMA plan to screen all kids for obesity and agressively treat them. Ok, yes there’s an obesity problem in this country, but this is not the answer.

Alright then. I think most of us can agree that we have a healthcare problem in this nation, namely that many people can’t afford healthcare, and many others can’t afford (or question spending lots of money on) the insurance that is supposed to help people pay for healthcare. It has gotten to the point where pretty much everyone agrees that healthcare is a major issue of the 2008 elections (kindly disregard the calendar, which foolishly points out that we’re 6 months away from 2008), and all the major candidates have a Plan that is supposed to make sure everyone has healthcare insurance, even though none of them will actually work (except Kucinich, who has for a long time insisted that we need true, single payer Universal Health). I have addressed these plans as they came up, including Mitt Romney and the Massachusetts model. This is a very complicated issue, and before we consider the solutions, we should really define the problems more clearly than “it costs too darn much!” In the interests of simplicity, I am breaking these issues into three main categories: issues faced by doctors, issues faced by patients and consumers of health insurance policies, and issues faced by insurance companies themselves.

Insurance Companies: Early on, I argued that insurance makes things cost more. Even if an insurance company is a non-profit or a mutual — and very few are anymore — they have bills to pay like rent and electricity, they have employees who deserve a living wage, they have advertising to buy, they have paperwork to process. That means they cannot put your entire premium into paying for your healthcare, and that was one of several problems that HSAs were supposed to fix (more on that later). Of course a for-profit insurance company has as its first goal “making money,” regardless of what their mission statement reads. That is not an indictment, just a fact; it’s part of what corporations are designed to do.

Because insurance is regulated at the state level, any real reform has to occur at the state level. On one hand this is great, because it gives us up to 50 tries to find something that really works. On the other hand, can you name your state insurance commissioner? Yeah, I thought not. Being state officials, they are relatively poorly paid, and they often come out of the insurance industry they are supposed to regulate. Both these problems makes them subject to certain, um, biases.

Insurance works on the principal that “bad things can’t happen to everybody all at once.” Actuaries figure out how likely bad things are to happen, and how much money the company has to charge to cover it. The goal is to get enough money from the people to whom nothing bad happens to pay for the guy that does end up with the bad thing. If there is extra money at the end, it gets invested. However, somewhere along the line insurance companies found they could save money (either boosting profits or allowing them to reduce premiums) by choosing not to insure people statistically likely to cost them money, choosing not to cover already known bad things (“pre-existing conditions”), or charging a lot more money for people apt to need lots of care. The people holding the short end of this stick are the people who would most benefit from having health insurance that covered their problem, and they are the people who will pay the most for the least coverage, assuming they can get a policy at all (again, more on that later).

Another important breakthrough for cost-containment at insurance companies are negotiated payouts. This is a fancy way of saying “Look, I know your superbill says procedure X costs $100, but we are going to pay you $52 plus the patient’s co-pay. In return, we are going to put you in our directory of official approved doctors, which should theoretically bring you more business and put you ahead. Furthermore, we actually promise to pay you within 30 days, instead of the ‘within 90’ you would get without this deal.” If one or two insurance companies control enough of a local market, they can dictate the price of healthcare down to the penny. Needless to say, this has a huge impact on doctors, which I shall address later.

Yet another cost containment strategy is the “gatekeeper” model and its cousin, “run these steps in order.” Not surprisingly, the gatekeeper model means that you have to get permission from your regular health care provider to see a specialist. They don’t call it permission, of course, they call it a “referral.” It means the same thing and it makes patients mad when they realize it is happening. Maybe that surgeon your doctor recommends is his choice because they know each other and he trusts the guy to do a good job; maybe he’s just the surgeon who can see you on the approved insurance list. You’ll never know. Particularly if you are in the emergency room. “Run these steps” probably has a fancy name, and it has a noble purpose, namely making sure everyone gets quality care and the obvious is not overlooked. It’s “When you hear hoofbeats, think horses before zebras” brought to its illogical conclusion. Basically, a cheap test for the simple thing is required before the insurance company will authorize a more expensive test for a more complicated thing. X-Ray before MRI, that sort of thing. It’s probably a good idea in a teaching hospital where there are lots of interns and residents. However, experienced doctors — particularly the ones that tend to be “zebra magnets” — tend to hate “run these steps” because they already have the diagnostic acumen to tell horse hooves from zebra hooves without some bureaucrat telling him to see if it has a solid coat before looking for stripes. All he wants is the one test that confirms his suspicions, and he sees the cheap test as a waste of time and money telling him what he already new.

Patients and consumers of healthcare plans: I have already mentioned some of the problems, such as the inability of people who really need coverage to get it. But the biggest single problem that both patients and the people who buy insurance face is that it costs a lot of money. I mention these separately because usually they are different people. The overwhelming majority of people who are insured in this country have policies purchased by their employers. Because the employer’s priorities are necessarily not the same as the patient’s priorities, there is something of a disconnect. I used to think that taking the employer out of the picture and making people responsible for their own coverage (with certain changes in the tax code and the types of insurance available) would solve the problem and bring prices down as consumers voted with their wallets. While this may have been true 10 years ago or even 5 years ago, I do not believe it is true now. Nevertheless, the argument that “people overuse healthcare because they don’t see the true cost” is practically a conservative mantra, and it resulted in the Health Savings Account (HSA). The idea is you put money into this account, buy an insurance policy that doesn’t cover very much, and use the funds in the account to pay for healthcare. The problem is that most of us don’t have thousands of dollars to set aside; if we did we wouldn’t need health insurance. Oh, and anybody who has actually tried to purchase an individual health insurance account, whether through an insurance agency or via COBRA knows exactly what insurance costs. Trust me on this. COBRA in particular is a bad joke, allowing people who have lost their job (and thus their income) to pay the complete cost of their coverage plus a handling fee.

I also consider the “people overuse healthcare because they don’t see the true cost” argument disingenuous because very few people see the doctor just for fun. They visit a doctor because they have a health issue they want fixed, whether that issue is as simple as acne or as serious as chest pain. When you have crushing chest pain, you are not in a position to go hunting for the best price on a hospital bed (besides as we have already seen the insurance company negotiates that for you).

The other issue that must be addressed concerning employer-purchased insurance plans is that not everyone has an employer. As I have said before, this is the problem with the various “reform” and “universal” plans being floated currently; they depend on employers buying insurance. Companies have tax advantages buying insurance that consumers do not. For example, Joe Average can’t deduct premiums at all (in some states he has to have a notarized letter saying he isn’t eligible for employer-based coverage), and the self-employed can only deduct health insurance premiums if their spouse is not eligible for an employer based plan. For a country that claims to value the entrepreneurial spirit, we have a funny way of showing it in our tax code! We will never know how many companies failed or were never started of health insurance.

As little as 30 years ago, there was a solution for the problem of people who just plain could not afford vital medical care. It was called the sliding scale, and it meant that poor patients did not pay as much as wealthy ones. Unfortunately, this bit of philanthropy was killed by the negotiated payments I mentioned earlier. The contract that the doctor signs with the insurance company (which he does because he figures some money is better than no money) forbids him charging a lower fee to other patients — never mind that the insurance company is actually paying far less than the posted price it demands the doctor charge others. That is how we end up with items like this USA Today story about hospital bills being a whole lot higher for the uninsured.

People who can’t afford medical care may sound like somebody else’s personal problem, but in fact it is a public health issue. Imagine if Andrew Speaker had never seen the doctor and never had his tuberculosis diagnosed. Sure, maybe if he were poor and uninsured he wouldn’t have gone on those overseas flights. Instead, he would merely have spread his germs around his neighborhood and workplace, perhaps infecting hundreds of people in a similar socio-economic position before somebody figured it out. This focus on pain and suffering completely ignores the lost productivity of people suffering symptoms, and the loss to society (as a worker, volunteer, care-giver, etc.) should the disease be fatal. Don’t forget the added expense of treating all the people who were unnecessarily exposed.

Any discussion of consumer pressures on healthcare spending would be incomplete without mentioning the extremely healthy elephant in the room: there are very simply more things to spend our healthcare money on. Now we have tests to find lots of diseases, and new treatments when we find them. We have ways to cure conditions that a few decades ago would have been a death sentence. We have hundreds of new drugs every year. We have a battery of vaccines that prevent a host of deadly ailments. We have more preventative care; a routine physical now includes a half dozen screening tests, some of which didn’t exist 30 years ago. State laws mandating that insurance cover things like preventative care and birth control pills are a double-edged sword when it comes to cost control. While it may indeed be cheaper to treat problems early, the cost of millions of tests may well outweigh the cost-benefit over hundreds of patients. I am aware that this view completely discounts quality of life issues; it is only intended in a financial context.

In addition to the healthy elephant in the living room, we have a somewhat unhealthy gorilla in the kitchen. Obesity has been on a steady rise for the last 30 years; the current rate is about 33%, and those people are at a higher risk for such expensive to treat conditions as diabetes, dyslipidemia, hypertension, heart disease, stroke, osteoarthritis, respiratory problems, and some cancers. Do not forget that there are almost as many merely overweight people as there are obese people, and they too have more health problems than people of “normal” weight. It’s hard to call it normal when about 2/3 of the population is abnormal.

Oh yeah, and there’s the fact that the baby boomers are getting older, and suffering all the common afflictions of getting older.

Doctors: It’s easy to blame the doctors. They’re the ones that charge money to the end customer, or “patient.” But they have issues of their own. First, a new doctor graduates medical school with a median student loan debt of $115,000 (in 2003, and the numbers are not getting better). At this point he only has a provisional license; to become fully licensed he must do an internship with lousy hours and lousy pay. He is at a point in his life where there are family pressures to do things like have kids and buy a house (“After all, you’re out of school, you’re a doctor now!”) And due to changes to the student loan program during the Bush 41 Administration, his loans have already started to accrue interest. Sure, there are loan forgiveness programs, working in underserved areas, but these programs are “oversubscribed” and usually involve moving to a remote area. That’s why it’s “underserved.” Oh, and politically correct language notwithstanding, most doctors are male, which is why I use male pronouns.

He has insurance problems too. In addition to things like general liability insurance, he has to buy malpractice insurance every year. If you think your health insurance premiums have gone up too darn much, you may not want to know what his is doing. For the last several years, depending on the state of course, median increases have been 15-73% to rates of as little as $10,000 or as much as $100,000. Any business student can see you can’t have increases of that magnitude without the ability to pass on the expense. At least, not if you want to stay in business.

Oh wait. Remember those negotiated fees with the insurance company? Those are often as little as 40 cents on the dollar. He has almost no power to renegotiate these agreements unless he is a member of a huge medical group so large that the insurance company can’t afford to not be accepted there. Even if he does, the agreement usually says that the insurance company can change things at any time.

The doctor has employees too, and he has to pay them a fair wage because nursing in particular is a very competitive field. Once you account for his staff — and paying for their health insurance — he probably needs to see 3 patients every hour before he can even think about paying rent on his office.

In closing: Follow-up, more states Just Say No to Real ID; if the economy is so great, how come food prices have spiked and foreclosures have almost doubled; a nice item on poverty, the media, and John Edwards; Neo-con rhetorical baby steps on civil liberties and public schools; on a related note, see the actual issues survey sent by the Republican party, and note the alarmist and biased way it is written; DINOsaurs vs. Dean-ocrats (related news, the President and a Nixon-era “hatchet man” spoke to a Baptist convention where they later broadened their political agenda to include the environment); the attorney firing scandal may yet trace back to Karl Rove, and subpoenas are in play; and finally Barbara Ehrenreich once more misses the point. She thinks “Undocumented workers shouldn’t be fined; they should get a hefty bonus!” and goes on to argue that once these people are here, they don’t do anything bad and we could only do without them if “offices clean themselves at night and salad greens spring straight from the soil onto one’s plate.” A new spin on “jobs Americans won’t do,” dear? Well here’s the thing, Barbara. Without them, the “unscrupulous employers” that you admit underpay their illegal workers and fail to provide for their safety would have to pay a decent wage to workers who can legally do the job, and who will furthermore insist upon doing things in a manner that keeps them safe. And you know what else? Sure, the majority of illegal immigrants just want a decent life, but there is a minority who are genuine Bad Guys. Because they are — how do you say — “undocumented”, we have no way of knowing which of them might be drug dealers, slave mongers, pimps, members of organized crime groups, members of terrorist groups. Lou Dobbs might be wrong about the leprosy thing, but he is right that border security is national security.

Follow-up: the ArchCrone asks Why are none of the front-runners advocating real health care for all; Forbes tells us “A new study finds large disparities in how different states perform in reference to quality of health care, with some states outdoing others by a factor of two or even three”; and Shakesville’s newest contributor gives us a different viewpoint on weight and health. Of course, she considers me “literally a freak of nature.” Read it to find out why!