Slowly, the docs begin to fight back. I share the frustration. What you hear from the media, the pundits and the politicians has nothing to do with how healthcare is actually practiced.

Look, I’m not going to say the US healthcare system doesn’t need fixing. But this makes one of the stupidest points I’ve ever read.

Americans spend around one in every six dollars on healthcare. But, in aggregate, they’re not getting much bang for their buck. People in the United States are as likely to die from diseases like lung cancer as citizens in all OECD countries – which, on average, spend less than half as much per capita.

Lung cancer is one of the deadliest cancers out there, with a five-year survival rate of about 15%. Patients typically have less than two years to go when its diagnosed, partially because it’s difficult to detect early. The US does have a better lung cancer survival rate in Europe, but the improvement is small, a few percentage points. But that’s because of the deadliness of the cancer, not an inadequacy of the system. You could have the best healthcare system in the world and the survival rate would still be minimal. Using lung cancer survival rates as proxy for healthcare quality is like using the survival rate for suicide by bazooka.

In the meantime, US heart attack, cancer and stroke survival rates — treatable conditions — lead the world by quite a bit.

Nice try, Foreign Policy. Go back to square one.

Update: Just to show I’m bipartisan in my bashing, the WSJ points out that our huge healthcare system employs a lot of people and generates a lot of income. That’s true; but it’s a Broken Window Fallacy. You could just as well argue that we should stimulate the economy by giving everyone cancer. The worth of the healthcare system is not how much money it spends but how much it improves peoples lives. A more efficient system would create just as much health improvement while freeing up resources to find alternative energy, develop better iPods or create a summer movie that doesn’t suck.

Update: More on healthcare from Paglia.

My note below on HSAs, negotiation and CPTs was put, in a somewhat different form, on Sully’s blog. It provoked quite a bit of criticism, some of which was because I was typing on emotion and didn’t make myself clear. A few retorts:

1) There is a massive incentive for insurance companies to streamline the insurance process, which is just as costly and expensive for them as it for providers. There has just not been the will. The insurance companies spend most of their time dealing with politics and trying to screw providers. Customer service is just not in their vocabulary. Breaking down barriers to interstate competition would help.

The government system, by contrast, simply vomits out money without confirmation, which is why it is riddled with fraud. That’s not an improvement over the current byzantine billing system.

2) The risk manager’s rejection of HSAs as a way to “rig the system” misses the point entirely. The point is that when people are paying the first few thousand dollars of their healthcare bill, they will have a reason to forgo unnecessary procedures. The idea is to cut costs. When people have to pay the first few thousand of their healthcare expenses, they will much smarter about spending that money — just the way they are smart in spending money on TVs, cars and groceries.

That’s not just wishful thinking either. Read here for a recent study that showed that consumer-based plans cut costs and control cost increases without sacrificing quality of care. Contrary to common belief, people are more likely to engage in preventative care and less likely to spend their money on woo like aromatherapy (which has an insurance mandate in a few states) when it’s their dollar at stake.

I’m aware that HSAs have problems. But they are also only five years old. If conservatives wanted to cut some left-wing program after five years of complete failure, let alone mixed success, they would be pilloried.

3) I’m well aware that most practices make billing opaque and that any procedure has multiple providers. As an example, the hospital gave us an estimate of $4500 for my daughter’s birth. The actual bill was $22,000 because her birth ended up being complicated (inducement, epidural, C-section) and they could not provide fees for other providers. I asked for and got an itemized bill, which was very long and difficult to follow even with my background.

Of course, attempts to simplify hospital bills have run into a firewall from the insurance companies who see streamlining the process as a way to cut provider fees. The reason hospitals bill the insurance companies for every aspirin is because they have no choice. It’s a war to get the companies to pay what they’re supposed to.

The fundamental problem is that the patient is not the customer in our healthcare system, the insurance company is. None of the current reforms, apart from HSAs, change that. And creating a single payer system will make the government the customer, which is even worse.

——————–

In the end, the more I read about this debate, the more depressed I get. It just seems like everyone’s focus is “I want all the healthcare I need but someone else has to pay for it.” The people who are bitching today about the cost and opacity of healthcare will, tomorrow, be complaining about wait lists and rationing.

These people completely fail to understand what health insurance is about. It is not some magical black box that gives you free goodies. It’s a way of defusing large costs over many years of premiums. It’s a way of sharing risk so that you aren’t bankrupted by a catastrophe. In the end, even a “public plan” — if it’s honest — has to take in as much money as it spends. There is no magic involved.

(I’ll never forget, when I was in grad school, the befuddlement some students had when told that having an option on their insurance to pay for birth control pills would increase their insurance rates precisely the amount that the pills cost. Where did they think the money for a planned, controlled expense would come from? The common refrain was, “Well, I’m saving them money by not having babies!” which was even more ignorant. (1) Insurance companies make money when they get to insure more people, especially children; (2) a baby is not going to cost the insurance company nearly as much as it will cost you. You have more incentive toward birth control than the insurance company does.)

I simply have no common ground with the people who want magical money. I have never bought into the endless sense of entitlement people have when it comes to medicine.

PS – Good counter-programming here. There is one intolerable piece of ignorance, however. Doctors do not order unnecessary tests and procedures for their financial benefit. Those services are usually performed by other providers and financial kickbacks are illegal. The problem is not greed doctors but patients who have no incentive to decline a test of marginal utility. Also, the 100,000 dead from medical error figures is probably ten times too larger.

Other than, it’s really really good.

Sullivan’s blog continues to wallow in ignorance and sob stories — which has become de rigueur for how healthcare is debated these days.

To respond:

The complicated CPT codes were created by the AMA to standardize medical billing. If we did not have them, then insurance companies (and Medicare) would not be able to create fee schedules. To complain about them is asinine. Most practices I worked in could give you an estimate of expected medical costs (at least from their end) because the computers bring up the price immediately when you punch in the code (although not necessarily your insurer’s fees).

No one in their right mind would use a prose procedural description to bill as it would result in six thousand mails between insurer and provider clarifying exactly what was done. The CPT codes allow the insurance company to know precisely what was done and to bill accordingly. It’s never as simple as “we delivered a baby” or “we took out his appendix”. Every procedure has variants that need to be clarified. CPT allows this.

Also, the point in that post — and others — that insurance companies can reduce doctor’s fees by huge fractions while the uninsured can’t? Pure unadulterated bullshit. I’ve personally written off massive amounts of healthcare bills and have negotiated — from both ends — medical prices. One of the beauties of HSA’s is that they have given patients the incentive to negotiate directly with medical providers to reduce fees. It is frequently very easy to get a provider to knock off a significant percentage of a bill if you ask before the service is done. Or even after. They’d rather get paid something than turn you over to collections. The only people I ever turned over to collection were the people who would not respond to the letter and calls asking them to set up a payment plan — any payment plan. Even then, we occasionally took a collection claim back when someone paid us.

(That last point does color my perception of this debate and the letters Sully is printing. I read them and they sound very similar to the deadbeats from whom we would not hear until they complained that we’d turned them over to a collection agency. I don’t know what it is about healthcare; but no one wants to pay for it. No one has any perspective. People who will gladly pay $400 for a Blu-Ray player think $100 is unreasonable to get a check-up. People who will pay $50,000 for a car think $10,000 is too much to save their life. Working in the profession tends to drain your sympathy. I try to guard against it but I’m not sure I’m 100% successful.)

I am also sick to death of hearing people rave about how great their “free” healthcare is. Your healthcare is being paid by other people. Now maybe that’s a swell idea — I don’t oppose helping people in need. But don’t ask me to be surprised that you love it when somebody else pays your bills. And don’t pretend that it’s a sustainable model for running the country (or perhaps you’ve missed the trillions of dollars in Medicare debt?).

There are also two letters from HIV-positive people who are chained to their employers and their insurance. I’m not sure what this has to do with anything. The only alternative is to put HIV-positive people on the public dole — or do it by proxy by forcing insurance companies to cover them and bill everyone else for it. The one thing that would help people — eliminating the employer tax deduction to make insurance more mobile — is opposed by most in Congress and most in the punditsphere.

That’s two letters to Sullivan this week:

Continue reading Yet Another →

I just fired off an e-mail to Andrew Sullivan in response to his column on healthcare. Full text below the break.

I do see an eerie reprise of his attitude toward Bush. Sullivan was almost worshipful of Bush early on but turned on him when Bush turned out to be an incompetent nincompoop who betrayed every aspect of conservatism. I think he’s once again become entranced by a President who’s a decent guy.

Look, I like Obama. It infuriates me when people describe him as evil or a socialist or, God forbid, not born in this country. I’m opposed to most of his policies and all of the domestic ones. But he’s the opponent, not the enemy. With a Republican Congress — correction, a sane Republican Congress, not one comprised of the current looney-tunes — I think he’d be like Clinton II, only with his pants zipped. I could live with that.

I agree with Sully that sometimes Obama seems like the only adult in Washington. But that doesn’t make him right. Sometimes the childish ignorant lunatics (i.e., the current GOP) are right. And this is about policy, not bedfellows.

Continue reading Sully On Healthcare →

The AMA has fucked us again. The AMA has to be the most worthless lobbying organization in America. Every bad idea in healthcare for the last thirty years has come with the whole-hearted endorsement of the AMA. My dad quit them 15 years ago after they completely sold doctors out to get a few pats on the head from politicians.

Look at the lineup supporting healthcare reform: the AMA, Walmart, politicians, some insurance companies. Does this alliance not seem unholy to you? If they were endorsing some Bush policy, would you not run in terror?

Update: Michael Cannon has more on the back-door dealings that are getting industry to embrace Obama’s healthcare plan. Read and weep. Again — remember when government and industry going into cahoots was a bad thing?

The Myth: Medicare is much more efficient than private sector insurance, spending only a fraction of what private companies do on administration.

Bad Policy Based on the Myth: A large justification for a single-payer system comes from this myth. Proponents argue that an efficient government system would squeeze the fat out of the system.

The Truth: This one should fail the smell test spectacularly. No one who is even vaguely familiar with the functioning of government would argue that it’s efficient. A priori assumptions are never a good basis for policy of course. But if your conclusions are so at variance with common sense and experience, you might want to double-check.

And indeed, we find that this is untrue.

First, Medicare does not administer Medicare. That job is outsourced to private insurance companies. This saves Medicare money directly — they get to use non-union private employees instead of unionized government employees. But it also saves them money indirectly — they do not have to invest money in infrastructure. They don’t have to build and maintain a vast sprawling organization all on their own.

Medicare also gets help from other agencies within the federal government. Including this would double the estimate of Medicare’s administrative costs (see link below).

Second, Medicare saves money because they have, arguably, too little administration. Decisions about what to pay for are handed down from the bureaucrats. I know — I’ve worked for years to get a hearing with an Administrative Law Judge on whether or not Medicare was going to pay for something. But if the Medicare rulers have decreed that something will or will not be paid for, there is usually no argument. And Medicare often cuts checks with little regard to whether those checks are going to actual services that have actually been rendered. If you’re an honest doctor, you get screwed by low Medicare fees. If you’re a crooked doctor, you can do fine.

But don’t believe me. I wouldn’t. Believe the CBO (PDF), which noted that Medicare has very few cost controls. Believe Obama, who has claimed Medicare is subject to $60 billion a year in fraud (a number I find unbelievable, frankly). Believe recent testimony that Medicare needs to increase the money spent on claims review by a factor of 10-20 to cut fraud.

Finally, Medicare has a very different task from private insurance companies. And that distorts the numbers.

Medicare patients are by definition elderly, disabled, or patients with end-stage renal disease, and as such have higher average patient care costs, so expressing administrative costs as a percentage of total costs gives a misleading picture of relative efficiency. Administrative costs are incurred primarily on a fixed or per-beneficiary basis; this approach spreads Medicare’s costs over a larger base of patient care cost.

Even if Medicare and private insurance had identical levels of administrative efficiency, Medicare would appear to be more efficient merely because of an artifact of the arithmetic of percentages–Medicare’s identical administrative costs per person would be divided by a larger number for patient care costs.

…

When administrative costs are compared on a per-person basis, the picture changes. In 2005, Medicare’s administrative costs were $509 per primary beneficiary, compared to private-sector administrative costs of $453. In the years from 2000 to 2005, Medicare’s administrative costs per beneficiary were consistently higher than that for private insurance, ranging from 5 to 48 percent higher, depending on the year (see Table 1). This is despite the fact that private-sector “administrative” costs include state health insurance premium taxes of up to 4 percent (averaging around 2 percent, depending on the state)–an expense from which Medicare is exempt–as well as the cost of non-claim health care expenses, such as disease management and on-call nurse consultation services.

In summary, Medicare is a program that does little more than cut big checks (although not big enough — if you’re an honest provider). Of course they can keep administrative costs down. I could keep costs down too if I didn’t care how much money I spent and had expensive customers.

But that’s not a model we can apply to the rest of the nation. It’s not even a model that’s being applied well to the elderly and infirm.

I’m no fan of insurance companies. But what we see in Medicare is even worse. We see a lumbering behemoth that has greater per patient administrative costs and more fraud and waste than the private sector. We see an agency that hides its administrative costs by piggy-backing on other agencies and private insurers. And, unlike private insurers, it doesn’t compete for customers, it doesn’t turn profits for investors and it doesn’t innovate to save money.

Why would you want more of that? For the simple reason that the supporters of government healthcare have already decided what they want. They don’t care about data — they care about socialized medicine. And whatever laughable distortions they have to create to make Medicare appear “efficient” are justified.

After all, it’s for the greater good, right?

You can argue for single-payer healthcare because you think people have a “right” to healthcare. I disagree — you can not have a right to someone else’s labor — but at least it’s an argument. You can argue for single-payer healthcare because you want greater equality — if we can’t all get heart transplants, no one should. I disagree — innovation has to start somewhere — but at least it’s an argument.

But you can not argue that socialized medicine is going to make healthcare more efficient. Because that’s just at variance with the facts.

One last note — there’s an undercurrent to the debate that distorts the nomenclature. Even if the private sector spends less money on administration than the public sector, I don’t think this would meet most single-payer supporters’ definition of “efficient”. Because what they mean by “efficient” is orderly. What they mean is controlled.

The free market is chaotic. Costs and benefits vary wildly from company to company. People get medical procedures without even checking with the politicians if it’s OK. Under a single-payer system, that all vanishes. We all have the same benefits, the same costs, the same size shoe. We are all told what to do and when and here. Great masses of humanity can move together at a single stroke of an executive pen. That vision of a uniform healthcare system is the basis for creating a health board that would review the effectiveness of healthcare treatments — to make sure no one is getting healthcare they don’t deserve.

So in that sense, perhaps Medicare is more efficient. But it’s not an efficiency I particularly care for.

Update: Paul Krugman attacked the study I reference above because it’s from the Heritage Foundation. The author responds and, in the process, humiliates the usually less hysterical Krugman.

I have written an article about healthcare myths for some time — mostly because other people are doing it for me. Check out Sally Pipes, George Newman, Maggie’s Farm. Also, Dalmia points out the myths about Obama’s specific proposals.