Sickbed Redux

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.

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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.

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