Saturday, June 21, 2014
Cost
The article on page 8 of the May 5 issue of Modern
Healthcare was titled Spending jump
puzzles providers. The article on
facing page 9 was titled Insurers brace
for high-cost Sovaldi. Sovaldi is
the medicine that treats Hepatitis C at a cost of $84,000 per patient.
While we are understandably concerned about the high and
rising cost of care, we pay no attention to how we got into this situation.
For most of recorded history, healthcare was paid for by the
sick and injured. Patients paid for care
when they received it.
Then in the 1930’s, somebody in Dallas invented what became
Blue Cross. For a modest monthly
payment, school teachers who subscribed were guaranteed that when they needed
hospital care it would be paid for, within defined limits. So now hospital care was being paid for by
well people rather than by the sick and injured.
During World War II, the federal government, responding to
pressures to raise wages, decided that employers could provide health insurance
to employees without its value being considered taxable income to the
employee. Under that arrangement, health
care would be paid for by employers.
During all this time, health care for those unable to pay –
the so-called medically indigent – was largely the responsibility of local
governments and private charity. The
cost of care gradually grew beyond the capacity of these sources and in 1960,
the federal congress enacted the Kerr-Mills bill, which provided matching
grants to the states to be used to pay for health care for the medically
indigent aged. This added federal and
state treasuries to the sources of money that supported health care.
Kerr-Mills never worked very well and Medicare and Medicaid
were adopted in 1965. Medicaid was a
more workable federal and state program of funding health care for the
medically indigent. Medicare was for
seniors, and was financed by a national payroll tax – causing health care for
retired seniors to be paid for by the employed population.
Medicare as originally adopted did not cover prescription
drugs. That omission was rectified in
2003 with the enactment of Part D – which included a healthy federal subsidy.
Despite all these initiatives, a sizeable portion of the
population remained uninsured, an issue addressed directly by the Patient
Protection and Affordable Care Act (aka Obamacare) which was passed in 2010. It made health insurance mandatory, so that
much of the care for which providers had previously not been compensated would
now be paid for. The program also
greatly expanded the number of people eligible for Medicaid and provided
federally financed subsidies for those considered unable to pay the full cost
of health insurance.
And during all this time we have been encouraged by the tax
laws to donate money in support of health care.
So although we have long claimed to be worried about the high
cost of care, what we have done over the years is to tap every available source
of money to support it, with each measure increasing the amount of money funneled
to providers.
And we wonder why health care costs so much.
Friday, June 13, 2014
Planned vs Market Economy
We remain attracted to the idea that health care should be
organized as a planned economy rather than as a market, but we aren’t sure
about it.
The issue is nicely illustrated by a current situation in
Massachusetts. Partners Health Care,
formed some years ago by the merger of two health care giants – Massachusetts
General Hospital and Brigham and Women’s Hospital – has been enlarging its
network by acquiring hospitals and medical groups in eastern Massachusetts and
now seeks to acquire two hospitals in the North Shore area and one in the South
Shore, together with some 500 doctors.
Partners, with its two premier hospitals, is a powerhouse in
the Boston area healthcare market – sufficiently so that it is almost
impossible to sell a health insurance policy that does not include them. Taking advantage of that, Partners has forced
health insurance companies to pay them rates that exceed by considerable margin
what they pay anybody else.
In any other form of enterprise that would look very much
like a monopoly but apparently not so in health care. Martha Coakley, Massachusetts Attorney
General and Democratic candidate for governor, recently announced the general
terms of an agreement being negotiated with Partners, under which the
acquisitions would be permitted but Partners would be limited in how much it
could raise its rates during the next five to ten years.
If Partners was in the business of making ball bearings or
oatmeal, we would depend on the market to limit what it could charge. But General Coakley apparently thinks it
better if she does it.
Competing hospitals have in the past been rather subdued in
their complaints about Partners but apparently no longer. As reported in the June 11 issue of The
Boston Globe, they have submitted a letter of protest to the Attorney General,
claiming that the announced Partners deal would increase cost and perhaps cause
some hospitals to close.
My own view is that the Partners merger should never have
been allowed in the first place, that it has contributed significantly to the
cost of health care by exercising the power that resulted, and that the
proposed acquisitions would just make things worse.
We’ll see how it all comes out.
Tuesday, June 10, 2014
Choice
We have to get past this idea that free choice of physician
is some kind of inalienable right.
When we move to another town far away we change
physicians. When our physicians die or
retire, we change. If we are in an HMO
and our physician goes to work somewhere else, we change. When wife Marilyn got her second knee, the
surgeon who did the first one was no longer doing them and referred her to
another one. In none of those cases do
we complain.
But if an insurance company asks us to change, we cry
‘foul.’ And “choice” remains a favorite
word for inclusion in health insurance advertisements.
All of that was brought to mind by an article in the June 7
issue of The Boston Globe titled Mass.
Seniors lose choices on doctors. It
seems that UnitedHealthcare has announced its intention to remove up to 700 physicians
from the Massachusetts panel of 16,800 that it has offered to subscribers of
its Medicare Advantage health insurance plans.
The rather long article discussed various aspects of the
issue, but on the subject of why UnitedHealthcare would risk alienating a group
of its subscribers by making them change physicians, it only quoted the company
as saying it was doing it to reduce cost and, perhaps, improve quality.
One has to assume that the doctors being dropped were
practicing in a way that was unusually costly and, perhaps, not of the best
quality.
Maybe people ought to appreciate learning that the
physicians they have been using are not very good, but that is a lot to
ask. It would be better if they got the
information from some source other than their insurance companies, but at
present that seems to be the main one.
Friday, June 06, 2014
Medicine and Science
To the extent that medicine is a science, we don’t need
doctors.
If, when feeling ill, one could stick a finger in a machine
and learn with scientific certainty the diagnosis and best treatment, there
would be nothing for a doctor to do.
With biological science having grown greatly over the years,
it should therefor follow that the need for doctors would decrease.
Evidence of that appeared in an article appearing in the May
31 issue of The Boston Globe under the headline “A new source for the old house
call.” The article reported a plan by
EasCare LLC, a Dorchester, MA ambulance company, to make its Emergency Medical
Technicians (EMTs) available to provide in-home care for “patients with
infections, minor wounds, injuries from falls, and problems associated with
chronic diseases like diabetes and congestive heart failure.”
When you think about it, it makes a lot of sense. If we can rely on EMTs to care for us in life-threatening
events like heart attacks, strokes, and car accidents, surely it is reasonable
to look to them for treatment of more minor complaints.
Scientific progress has made it feasible, both by adding to
the certainty of diagnosis and best treatment and also by making information
more readily available for the use of both caregivers and those responsible to
supervise them.
