« Economic impacts of the Japanese disaster | Main | Your comfort food open thread »

March 25, 2011

Comments

I like the MA system, but enforcement needs to be improved. For a few months of unemployment in 2010, my spouse and I were on the cheapest exchange based plan. Our experience was that it was something of a scam. They assigned me a primary care doctor so I called and tried to make an appointment. The doctor called me back, acting put out, and said that he wasn't accepting new patients from that insurance provider. So I went to their website and tried to find a new doctor. The web site claimed that there were no primary care doctors within 15 miles of my home accepting new patients. Now, I live in a major city. I can walk to three different teaching hospitals. There's a low cost clinic less than 300 yards from my home.

Finally, I call a clinic that says that they accept ALL insurance carriers. I show up, they're just great, but then (of course) there are issues with the bill. In the end, the insurance company does pay and I don't have to pay much out of pocket, but the whole episode was just ridiculous. I'm not talking about getting major surgery or dialysis or chemotherapy. All I wanted was a regular checkup.

Then my wife discovered that she was pregnant. Again, the website claims that there are ZERO ob/gyns in their program within 15 miles of our home. She calls them to confirm. They politely explain that she'll just have to do without prenatal care. My wife, for perhaps the first time in her life, was struck speechless. What do you say in the face of such madness?

I know people who have gotten the higher cost (silver or gold) plans and their experiences were much better. And I gather that regulatory enforcement and compliance have been an ongoing issue that the state is working on. In our case, the anti-free-rider provisions made it impossible to switch to a different grade of plan without waiting a year (I think) and since there was only one provider certified at the level we were in at the time, we were stuck with them.

"the website claims that there are ZERO ob/gyns in their program within 15 miles of our home."

Do you mean that you suspect they were lying about the number of ob/gyns within that radius, or do you mean that such a scarcity of covered ob/gyns is terrible?

I don't mean to doubt you, just want to make sure I understand the fault here.

Do you mean that you suspect they were lying about the number of ob/gyns within that radius, or do you mean that such a scarcity of covered ob/gyns is terrible?

(1) There are many many ob/gyns in the area.
(2) I don't think the insurance company cut deals with any of them because they're offering such awful terms that no doctor in the area is willing to contract with them.

The issue I'm groping toward is that if you as an insurance company cannot or will not secure agreements with doctors to treat your customers, then you're defrauding them. Now if I lived in an incredibly isolated area where there simply were no doctors or if I was looking for an incredibly obscure specialist, that critique wouldn't apply....

The issue I'm groping toward is that if you as an insurance company cannot or will not secure agreements with doctors to treat your customers, then you're defrauding them.

"Defrauding" is probably a stronger characterization than I'd go with personally. "Not delivering an acceptable level of service" is not.

The problem is that, if you treat health care as a consumer good, whose pricing and availability is to be determined purely through market dynamics, "acceptable level of service" is defined as the intersection of "whatever level of service you can afford and want to pay for" and "whatever level of service the provider wants to make available for that price".

If that means no OB/GYN, then that's what you get. Not fraud really, just very very crappy.

As will surprise no-one, IMO the basic problem is treating health care as a consumer good in the first place.

Russell -- you and the Boston Globe both buried the lede:

"Massachusetts still has one of the lowest percentages of residents enrolled in these [high-deductible] plans in the nation, with only about 2 percent of those with health insurance selecting a high-deductible one in 2010, according to America’s Health Insurance Plans, a national trade association. But the total enrollment in these plans increased from about 50,000 in 2009 to about 93,000 individuals last year." [I assume that's the MA number, not the national number.]

It really does look like HDHPs lead to lower utilization. Now -- the big question is whether that reduced level of utilization leads in turn to poorer health outcomes. Remember that overutilization has been part of the cost narrative (although I don't know the data as to whether it's actually part of the cost equation -- I suspect it is, though.)

What I took away from this was something more like the MA program works as advertised. Poor people now have access to affordable coverage. A few people are opting for HDHPs, and among those few there seems to be lower utilization. I'm still hearing a lot of anecdotes about crappy networks, though.

This isn't at all my area of expertise, but I'm definitely interested in it. I don't think the MA experiment is going all that badly.

russell: This happens even when deductibles are waived for preventive care, because most people don't read the fine print on their insurance policies

Also because what is covered is pretty meager and because determining what preventive care is needed might require an expensive doctor's office visit.

I have a high-deductible plan at work, which is not entirely worthless but basically amounts to catastrophic-care insurance. I'm not entirely opposed to some cost-sharing (if it actually came with compensating salary increases) but 100% patient responsibility is too much for most people's budget to absorb. Our family deductible is $4,000 a year, max out of pocket per year of $8,000, which is tricky but manageable for us, but would be very difficult if you were making less than, say, $50k.

The health savings account is just insult on top of injury for lower-income workers, because if you don't have the disposable income to put in it you don't get any benefit from it. But if you're rich enough you can get a nice $6,000 a year tax deduction from it. Basically it's an end-run around the requirement that all employees be offered the same health plan, while still giving the higher earners the tax benefits of a company health plan.

All that said: catastrophic care is better than nothing, and having more people enrolled in any sort of a plan will help with cost-sharing. Yes, people wind up paying for a plan that does nothing for their day-to-day costs, but at least they are contributing to the costs of insuring against major accidents and they are actually covered (and not through ER visits) when those things arise.

"Defrauding" is probably a stronger characterization than I'd go with personally. "Not delivering an acceptable level of service" is not.

I think it depends. Keep in mind, the company in question makes a big show about how important preventative care is to them, how annual checkups are free. When we signed up, they not only pre-assigned us a primary care doctor, but they offered to give us $200 if we got checkups in the next two months. And since the widget on their website that shows you which doctors are part of the plan wasn't available to us until after we subscribed, it was hard for us to determine that all that stuff about preventative care was just a lie. You can explain away any one piece of this with incompetence, but when all the mistakes just happen to favor the company....

Beyond that, there was at least one clinic in the city that was accepting new patients for them. I went there. But it didn't show up in their provider directory. Probably just an oversight though.

This happens even when deductibles are waived for preventive care, because most people don't read the fine print on their insurance policies.

This looks, to my innocent eye, like a great marketing opportunity for someone.

As an insurance company, you want people to get preventative care because it reduces your overall costs. (Unless you figure that they will go somewhere else once they actually need treatment for something that could have been prevented.) So, if you are going to exempt preventative care from the deductable, why not hype that? Heaven knows insurance companies hype all sorts of less valid things.

As I say, looks like a great marketing opportunity, if someone wants to seize it.

Turb says (btw, congrats on the baby, hope all is well):

I don't think the insurance company cut deals with any of them because they're offering such awful terms that no doctor in the area is willing to contract with them.

Russell says:

As will surprise no-one, IMO the basic problem is treating health care as a consumer good in the first place.

Well, give it whatever name you want, it's still a service, one that requires years of training and a talented individual to begin with, to produce quality treatment.

People like that want to make a substantially above average living, having deferred gratification from high school on, studying extra hours, assuming huge debt, busting butt in not-so-easy courses (says the history major).

The idea that market forces don't apply to these services is simply wrong, as people in MA are learning/have learned and soon elsewhere will find out. Anyone who thinks doctors and surgeons are fungible is in for a nasty surprise.

Russell wrote on another topic that he would not take a 1/3 cut in pay for "for cause termination". I'll bet a lot of doctors have a similar view of how they'd like to be compensated.

congrats on the baby, hope all is well

That's very kind of you McTex, but there was a miscarriage a few months later.

Well, give it whatever name you want, it's still a service, one that requires years of training and a talented individual to begin with, to produce quality treatment.

Meh, the same could be said of military professionals. I trust that the problems inherent in a completely privatized military are obvious to all?

busting butt in not-so-easy courses (says the history major)

I often wonder how much this is true. Right now, we don't have a free market in medical education. Doctors are a cartel and they legally limit the number of medical school openings each year. So there are lots more applicants that can ever hope to get in, which means the standards for getting in have to keep rising, whether or not they have anything at all to do with sound medicine.

For example, I know of at least one chemistry professor who is horrified at the number of premeds he has to teach organic chemistry. The premeds are very bad at it, have no interest in the subject, but they consume huge amounts of instructional resources. The knowledge is useless to them: they can't apply it in practice. But you can't get into med school without taking two semesters of organic chemistry, so all the premeds dutifully trudge away at a useless set of skills.

Some of my relatives are physicians and one piece of advice they very consistently give is that finding a doctor who stops and listens to you is a lot more important than where they went to school, what certifications they got, etc.

The idea that market forces don't apply to these services is simply wrong, as people in MA are learning/have learned and soon elsewhere will find out.

I don't think anyone in MA thought that market forces don't apply. The whole idea was to harness market forces, to do everything possible to keep the market effective and honest. If anything, the thinking reflected an almost naive faith in the power of markets.

Basically OT, but I once had knee pain which was diagnosed as chonromalacia patella (I don't remember after what kind of scan). I went to the Hospital for Special Surgery, which I was told was totally rad and saw a pretty fancy surgeon who, of course, suggested surgery. Besides the fact that I was afraid of surgery, the reason I decided to ignore his recommendation is that he refused to shut up. He could not stop telling me about how fit he was, how he was still doing karate in his early sixties (he was pretty buff), etc. etc.

I did some cursory research and decided that I likely had a muscular imbalance in my legs from not squatting properly and not doing hamstring exercises. I changed my routines and pain went away.

In short, &*$# any doctor who won't listen to you.

As an insurance company, you want people to get preventative care because it reduces your overall costs. (Unless you figure that they will go somewhere else once they actually need treatment for something that could have been prevented.
You seem to have answered the question for yourself. We switch jobs and circumstances often enough that this is a pretty safe bet for the insurer to make: it's not worth paying for preventative care now to save money for some other insurance company in the future.

Well, give it whatever name you want, it's still a service, one that requires years of training and a talented individual to begin with, to produce quality treatment.

Likewise, frex, judges, air traffic controllers, and public health epidemiologists.

But we do not rely on the laws of supply and demand to make sure judging, air traffic controlling, and public health research are available.

And for the record, I'm not arguing for public health providers to be made into public employees. The topic of the article is not health care, but health insurance.

A common conservative idea is that we should do more to allow cost and pricing to determine what health services people consume.

If the results in MA are indicative, the result will be that people don't simply forgo medical luxuries, but also basic, preventive care like vaccinations and cancer screening.

The idea that market forces don't apply to these services is simply wrong
The idea that market failures don't apply is also wrong.

Justme,

We switch jobs and circumstances often enough that this is a pretty safe bet for the insurer to make: it's not worth paying for preventative care now to save money for some other insurance company in the future.

Yes. And this is one example of how market forces lead to bad outcomes - in the pure economic sense as well as otherwise - in this area.

As will surprise no-one, IMO the basic problem is treating health care as a consumer good in the first place.

This. A million times over.

I've said it before here and elsewhere, but it's worth repeating: profit has no legitimate, defensible place in the provision of primary care. None at all. The moral hazards, twisted incentives and outright tragedies this creates are a matter of record.

Conservatives and insurance company executives--but then, I'm repeating myself--have been warning for a long time now that progressives want to destroy the for-profit insurance industry and put them out of business. Good. They should be scared. We should be aiming to eradicate that industry. It's nothing but a parasite that feeds on human suffering and exists to provide as little health care as possible for as much profit as possible.

Basic, essential health care services should be a public good, like emergency first responders--and paid for the same way, with taxes. I am unsympathetic to those who don't want their tax dollars to pay for the health care of strangers--there are plenty of things I don't want my taxes paying for, but it's not an a la carte menu. It's civilization.

People need basic primary health care, and the last time I checked "life" was one of the fundamental rights the government is supposed to exist to safeguard.

What Amezuki said on March 25, 2011 at 08:58 PM.

We should be aiming to eradicate that industry.

I can relate to the anger, but eradicating the industry is not even necessary.

We have public schools, but if you have the money and the inclination you can send your kids to private school.

We have cops, but if you have the money and the inclination you can live in a gated community with 24/7 private security.

There's always an opportunity for value-added goods and services that address the needs and desires of folks who want more than whatever reasonable baseline the public sector provides.

Live it up, make a million bucks, have fun.

But a situation where basic stuff like checkups and vaccinations are avoided because folks either can't afford them or think they can't afford them is broken. It's not getting the essential job done.

Does it cost money to provide stuff like that outside of purely free market dynamics? Yes. But when I look at some of the happy horsesh*t we spend money on, I find it hard to believe it's beyond our reach.

It's a choice.

That's very kind of you McTex, but there was a miscarriage a few months later.

I am very sorry to hear this. I hope you and your wife are ok.

Meh, the same could be said of military professionals. I trust that the problems inherent in a completely privatized military are obvious to all?

Not really. Pilots come closest in terms of what is required training-wise, but even that mainly is math competence and reflexes/reaction time. A high end ortho takes 8-10 years to produce.

Some of my relatives are physicians and one piece of advice they very consistently give is that finding a doctor who stops and listens to you is a lot more important than where they went to school, what certifications they got, etc.

This is true up to a point. But, a GP or internist isn't going to be able to crack your chest, tweak some obscure muscle and sew you back up. Ob-gyns, neurologists, thoracic surgeons, orthopedic surgeons, etc. are skill sets that require years of training.

Likewise, frex, judges, air traffic controllers, and public health epidemiologists.

Not really. None of these require the length of education and training that produces a qualified medical specialist.

People need basic primary health care, and the last time I checked "life" was one of the fundamental rights the government is supposed to exist to safeguard.

No, gov't can't take your life without due process. There is no gov't obligation to generally safeguard anyone's life, as in to feed, clothe, shelter or provide medical services. Crime prevention, national defense, yes. The rest of it is, respectfully, fantasy. Your "right" to medical services means either all of us have to chip in to pay for it or that a doctor is forced to treat you whether he/she wants to or not.

Not to mention, if healthcare is a right, why does gov't, or anyone else, get to decide how much or how little of that 'right' people get?

Russell,

I can't help but ask if the outcome you cite is related to the current dismal job market.

Tex: Is there a "right" to public safety? National Defense? If you answer "yes" then I'd throw that question right back at you.

I'm as liberal as the next guy, but I don't take "not reading the fine print" as a problem with the health care, it's a problem with the citizens who are getting it.
Sure, make the details better known and the fine print bigger, but in the end this comes down to individual responsibility.

Not to mention, if healthcare is a right, why does gov't, or anyone else, get to decide how much or how little of that 'right' people get?

Personally, I don't think of healthcare as a right. It's just an extremely good thing to have.

Potable water, roads, waste management, schools, police, public inspection of food and buildings for basic safety. None of them rights. They're just things we do to generally keep the wheels on.

I also don't think government should automatically be the provider of health insurance. I think for this country, now, it would make a great deal of sense for government to be the provider of a baseline level of health insurance. The reason I think that is because the private insurance industry is not getting the job done at a reasonable level of service, for a reasonable level of cost, and IMO the government would do a better job.

Basically, it seems to me that it is, straight up, uneconomic for private companies to provide basic health insurance at a price point that will make it available to everybody that wants it. If it was economic, they'd do it.

A lot of that is driven by increases in the actual cost of care. That tells me that the place we should be focusing our efforts is on finding ways to reduce the cost of care. Not the cost of insurance, the cost of care.

But we're not doing much along those lines either, as far as I can tell.

I'm not looking to demonize private providers. They *are not* going to do things that are not economically sensible.

I am interested in creating a situation where people can go to the damned doctor when they're sick, or even (or maybe especially) when they're *not* sick, without running the risk of bankruptcy.

Full stop.

Sure, make the details better known and the fine print bigger, but in the end this comes down to individual responsibility.

It comes down to a lot of factors, including individual responsibility. And any plan for dealing with anything of public interest is going to have to recognize and account for the fact that the population as a whole doesn't always act with perfect insight and good judgement.

That's not coddling, it's just being sensible.

If what you're doing doesn't achieve the end you're trying to achieve, then you need to change what you're doing. That's basically all I'm saying.

I actually like the MA plan. Among other things, the mix of private provider plus public carrots and sticks to get people to participate in the private market is something that Americans will actually accept, because it's marginally less "socialistic", however that's construed.

But one consequence of using public carrots and sticks to get people to play in the private market is that folks avoid things that they think are going to cost them money.

The MA plan is better than nothing, and it's probably about as much as anybody is going to accept.

But now that the experiment has been going on for five years, one thing we are noticing is that a lot of people still not getting their kids vaccinated, and still not getting basic preventive care.

It's an important result, and worth making note of.

Not really. None of these require the length of education and training that produces a qualified medical specialist.

Just to clarify a couple of things along this line of argument.

First, I'm not sure anyone is arguing for making doctors public employees. I'm not.

Second, medical specialists are not required to vaccinate kids and give people basic preventive screening tests. A nurse practicioner can do it. Hell, an RN, a phlebotomist, and a lab tech can do it.

Last but not least, the question on the table is the effectiveness of a public effort to intervene in the private health insurance market. Not public provision of health care, not limits on doctor's salaries.

The state of MA is trying to expand coverage by requiring people to buy insurance. That has increased the number of folks who have insurance, which is a good thing, but for a lot of folks, it is still not creating the desired outcome. They're still not actually *getting the basic services*.

To the degree that the MA plan resembles Obamacare, it's reasonable to expect that we'll see a similar outcome at the national level.

@JustMe We switch jobs and circumstances often enough that this is a pretty safe bet for the insurer to make: it's not worth paying for preventative care now to save money for some other insurance company in the future.

Which would seem to be a good argument for decoupling health insurance from employment, no? Since, it would appear, that connection is responsible for this particular market failure.

I would, however, note that many of the people I know (me included) routinely select the same insurance provider after changing jobs. There are, after all, only a handful of option generallyon offer -- and they virtually always include (in California)
1) Kaiser
2) Blue Cross

The up side for the insured is that, if you stick with the same insurance company, you are assured that you will be able to remain with the same doctor(s) without getting into hassles about whether they accept your particular insurance plan.

Turbulence:

That's very kind of you McTex, but there was a miscarriage a few months later.
I'm very sorry to hear that. That must have been very hard to go through.

I can't imagine that the health insurance/clinic situation/problems remotely helped with any of it.

On other fronts, I'm glad to hear that some make $50k or more. I once had a year where I made $20K.

Generally it's ranged from, legally, a max otherwise of $12k to zero (bunches of years), with non-reportable gifts/donations of varying amounts, none over $12k, some in the $4k to $6k, and it's interesting how differently people live, isn't it? And yet we all meet, and can write with varying degrees of ability at different times.

But we all need to be as healthy as possible, and if that isn't part of "life, liberty, and the pursuit of happiness," what is?

"We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."

Is health not part of "promot[ing] the general Welfare"?

And isn't it interesting that "welfare" became a dirty word in the Nixon era, thanks to Republicans and Nixon and his successors, particularly Governor and then President Reagan?

Why did they hate America and the Constitution?

McKinneyTexas, would you be kind enough to send me an email address to gary underscore farber at yahoo dot com, please? I know I should have one, but am having trouble locating it easily; it's nothing unpleasant I wish to ask you, I assure you. Thanks, if so.

russell, the article states that only 2 % of MA residents chose the high deductible plan in 2010, and of that number, the child vaccination rate dropped 8.5%. It's unclear how many children that translates into since most of the people choosing the high deductible plan were healthy young people - no clue as to whether they were parents or not.

Obviously those would be people of child-bearing age, but it would also include people who otherwise might not think that they need insurance at all (such as many of the healthy graduate students that I know). It might be that these people just don't go to the doctor much.

As to the number of parents there are, I think the personal responsibility issue is huge, and I'm not sure how you would suggest addressing it. Federal programs make vaccinations free for most children. Most women have babies in a hospital or with some medical intervention, where they learn about things like vaccinations and the need for infant medical check-ups. It's very hard for me to believe that this tiny group of parents would be avoiding vaccinations just in the mistaken belief that they are unaffordable. There's a certain number of people who have an aversion to going to the doctor, who are afraid of vaccinating their children, etc. I'm thinking that these would also be part of the group that chooses high deductible insurance.

That's not to say that we shouldn't be find ways to get children vaccinated and provide them with preventive care. I'm just not sure that the MA health care system can be blamed. (I would be in favor of having nurse practitioners pay home visits to infants and their mothers during a child's first year, but I don't see that happening under any circumstances.)

Also, see Immunization Rates Around the Word, (sorry, you have to click a link) which shows, surprisingly, higher immunization rates in the US than the UK.

russell: I can relate to the anger, but eradicating the industry is not even necessary. [...] There's always an opportunity for value-added goods and services that address the needs and desires of folks who want more than whatever reasonable baseline the public sector provides.

Perhaps I was unclear. That is exactly what I'm getting at.

I think that there is a certain bare minimum of care that no one--for any reason--should have to do without simply because they cannot afford it. No one should face financial ruin simply because it is the only way to stay alive, or keep their child or spouse alive.

I have no problem with anyone deciding that they want more and paying for it. None at all. Indeed, the presence of that kind of secondary market would be a necessary economic driver for innovation. A person with disposable income should be able to say, "I'm willing to pay for this renowned out-of-state specialist, the most expensive brand-name medications, and a live-in care provider at my home even though the latter isn't strictly necessary, just more comfortable and convenient."

But the person who can't afford that should still have access to a specialist that their primary care physician says they need to see; they should have access to the essential meds that keep them alive or allow them to function in a day job instead of being someone's crippled dependent, and if they are unable to care for themselves and have no one to care for them, they should have access to inpatient treatment that their primary physician says is necessary. They should have access to these things regardless of whether or not they can afford them, paid for by a tax regime into which all citizens pay for the purpose of ensuring that no one who needs that kind of essential care has to go without.

That goes a lot further than just covering things like wellness checkups and vaccinations. I think we should start there, because that kind of basic preventative care tends to head off a lot of the more expensive stuff long before it gets to the point where it becomes life-threatening and expensive. But the end-game, in my mind, is what I described above.

The eradication of the for-profit insurance industry, as it exists today, would simply be a side effect of a properly-implemented single-payer system. They could still exist to provide premium plans, strictly regulated left right and sideways, and probably make a ton of money off of rich people with money to burn. But right now they are nothing but parasites living off of the suffering of people who have nowhere else to go. That cannot stand.

Does it cost money to provide stuff like that outside of purely free market dynamics? Yes. But when I look at some of the happy horsesh*t we spend money on, I find it hard to believe it's beyond our reach.

Bingo.

Can one have a trifecta for Bingo? Because I'm with the Russell and the Amezuki.

"Last but not least, the question on the table is the effectiveness of a public effort to intervene in the private health insurance market. Not public provision of health care, not limits on doctor's salaries."

But, all this other lengthy horse puckey discussion aside, unless you address this health care will continue to cost more in the US. So all of the "solutions" that are offered are window dressing for the fact that doctors, nurses, medical labs, pharmaceutical companies, pharmacies, etc. all charge more in the US.

Do you read the statements from your insurance company? Doctor charges $410, in network payment was $165, because you were in network they can't bill the rest savings = difference.

Medicare gets to pay 20% less than that, still more than rest of world.

So solve the problem that is in front of us today, that is potentially solvable.

80% of the people are fine with what they have. So instead of trying to force single payer down their throats, put the uninsured on baseline means tested Medicare.

Instead of "weakening" Medicare it strengthens it, seniors feel more secure and everyone else is effected only by the payroll tax increase to cover it. Heck, 500B of it is in Medicare waste that we can redirect inside Medicare.

Then try to solve the cost problem.

"I've said it before here and elsewhere, but it's worth repeating: profit has no legitimate, defensible place in the provision of primary care."

Great rhetoric, but what does it mean? I don't mean to pour cold water on all the cheering, but what exactly do you mean by 'primary care', how do you propose to incentivize people bothering to spend an enormous part of their adult life becoming doctors if "profit has no legitimate, defensible place", and how do you think costs will be controlled?

Sebastian: what exactly do you mean by 'primary care'

First: I am not a doctor. Of any sort. So I am really not qualified to get detailed about what specific services fall into that bucket, a question which (among others) should definitely be worked out by people who do have that expertise.

At a minimum, I am talking about basic care such as wellness checkups, cancer screenings, or seeing your physician to find out if that twinge in your arm is the beginning of tennis elbow or just acute soreness. These are the sorts of things that everyone needs at one point or another. Getting them done sooner tends to prevent or mitigate conditions that get worse (and more expensive to treat) later, which--yes--brings costs down. And they are the things that people who don't have disposable income are most likely to avoid or put off because they cost a lot of money unless you have good insurance.

how do you propose to incentivize people bothering to spend an enormous part of their adult life becoming doctors if "profit has no legitimate, defensible place"

I probably could have written that sentence more clearly. What I mean is that profit has no place in the process of determining whether or not a person has access to that kind of care. For-profit health insurance puts the well-being of the customer and the bottom line of the insurance company that ultimately has to approve their medical treatments directly at odds. The insurance company not only has every incentive to find reasons not to pay for treatment, it has a fiduciary responsibility to do so. It is an intolerable moral hazard, and the tragic outcomes it delivers are plain as day for anyone who spends thirty seconds googling for examples.

That's not at all to say that doctors, nurses and pharmacists shouldn't make a living. But at the end of the day, they make a living from having customers who pay their bills. From their end, it doesn't matter whether that's the patient paying the bill, their insurance company, or a government single-payer plan: the bill is paid and they have made money.

how do you think costs will be controlled?

That's a great question, one that has been batted back and forth here countless times. I think removing insurance companies and their obscene profit margins as middlemen is part of the solution. Ensuring that everyone has easy, subsidized access to basic primary care will help as well by catching problems before they become worse, more expensive problems. But those are only part of the picture, and the question of how to reduce costs is a separate question than the one of whether or not we have a moral obligation to ensure that everyone has access to said care.

How we move forward from here with health care reform depends greatly on whether or not we decide that such a moral obligation exists, and generate the same political will to expend resources on it that seems so easy to generate when the decision is whether or not to drop bombs on someone.

But we do have to first make the decision that it is necessary. Then we can worry about how--because it is a question of how, not whether we can.

Seb, how do YOU think "costs will be controlled" without somebody, somewhere, making less money out of providing "health care"?

I am willing to have all sorts of faith in the profit motive, free markets, and so on -- but I have a deeper faith in simple arithmetic: money spent equals money received. Health care COSTS are health care INCOMES.

Maybe somebody, someday, will invent a universal vaccine that prevents all disease, or a robot that can do any surgery, or a one-click diagnostic scanner. Would such things reduce health care costs? Sure: but only if they put lots of physicians out of business.

The inventors of such things will surely be driven by the profit motive, by the way, so part of what we save on doctors we will have to pay to the inventors. Let's be optimistic, however, and believe that our overall health care costs would indeed go down.

Is it not obvious that the reason our costs would go down is precisely because doctors' incomes go down? Those cost-controlling inventions don't reduce costs; on the contrary, they cost plenty. The cost reduction comes ONLY from paying doctors less, either because we need fewer doctors or because doctors learn to get by on smaller incomes.

So look: you can argue, if you like, that we must "control costs"; you can argue, if you like, that we must "incentivize" doctors with lots of money; but you cannot pretend that those things are arithmetically compatible. Unless, of course, you argue that we can control costs by cutting the incomes of some other class of health care providers, e.g. insurance company CEOs, pharma shareholders, hospital janitors.

If "cost control" is what you want, SOMEBODY HAS TO MAKE LESS MONEY. Okay: who?

--TP

russell, the article states that only 2 % of MA residents chose the high deductible plan in 2010

Correct, however at the national level it's about 10% of all insureds, and growing.

I think the personal responsibility issue is huge, and I'm not sure how you would suggest addressing it.

That's a good question.

To the degree that people don't get basic care because they don't understand that the deductible is waived, you could address it be explicitly decoupling stuff like that from private insurance. Just treat it as a straight-up public health initiative.

To the degree that some people just don't want to go to the doctor, I'm not sure there's much you can do.

Maybe pay them to go to the doctor? It would probably net out to be a cost savings, but would open up a whole other collection of cans of worms.

And no, I'm not seriously suggesting that we pay people to go to the doctor. It's a joke, and even if it weren't, it would never fly, regardless of how the cost/benefit numbers played out.

If "cost control" is what you want, SOMEBODY HAS TO MAKE LESS MONEY. Okay: who?

Oh, you're missing the elephant in the room. The other road to cost control is providing service to fewer people. Let's all take ten guesses as to who gets left out when that road gets taken.

Not actually payment for visits to the doctor but over here there is a bonus system that reduces your co-pay for dental care, when you have a check-up at least once a year (at no cost to yourself). The co-pay reduction gets bigger over time but you get back to the starting point if you interrupt the series (i.e. one full year without check-up).

The other road to cost control is providing service to fewer people.

No, that's what we do now, and it costs a lot, since those people then go to the emergency room or need more expensive care later.

reduces your co-pay for dental care, when you have a check-up at least once a year

Very smart answer to the question of how to encourage people go to get "normal maintenance" medical attention. I wonder if we'll ever get to the point where we can implement rational policies like that.

...how do you propose to incentivize people bothering to spend an enormous part of their adult life becoming doctors if "profit has no legitimate, defensible place"

"First, do no harm."

Doctors are a cartel and they legally limit the number of medical school openings each year.

No. New medical schools are uncommon not because they are opposed by physician groups, but because it's difficult to impossible for them to break even financially. Lawyers have a similar "cartel" in the form of the bar, and yet, new law schools have been proliferating like weeds - because they make money, hand over first.

Secondly, the number of physicians is not limited in this country by the number of medical school slots because we can import physicians from abroad. What IS limiting are residency slots, and there is better support for the idea that subspecialist training slots are limited by specialty licensing groups with an interest in limiting competition.

No, that's what we do now, and it costs a lot, since those people then go to the emergency room or need more expensive care later.

No. Uncompensated emergency room care could be dealt with pretty easily, with direct allocation of a few billion dollars. It's much cheaper than comprehensive universal coverage by an order or two of magnitude.

Secondly, EVERYONE needs more expensive care later. Unless you're one of the lucky few who drop dead suddenly of a stroke or cardiac event, you'll likely die after several decades of progressively more severe medical problems. Preventive care is a terrible misnomer, because nothing is really being prevented. For most of us, poor health is simply being delayed, not prevented. For the recipient, it's still a good deal. But from the perspective of the government, there's no real savings. You're just kicking the can down the road, and in most cases having two pay a few more decades of social security on top of it all.

That's a great question, one that has been batted back and forth here countless times. I think removing insurance companies and their obscene profit margins as middlemen is part of the solution.

You're talking about an industry that according to a quick check of Yahoo's industry browser has a mean net profit margin of 3.8%. That's hardly piracy, considering that most companies are in the 1-3% range with a few outliers dragging up the mean.

That puts them way down in the industry profit listings, with such currently hot sectors as catalogs and mail order and home improvement stores.

I think you have a rather strange conception of "obscene profit." Either that, of you're going to have a heart attack when you see how much brewers are making these days.

Definition of Obscene profit: "Any profit earned by somebody selling something I want, but expect to have difficulty affording."

Preventive care is a terrible misnomer, because nothing is really being prevented. For most of us, poor health is simply being delayed, not prevented. For the recipient, it's still a good deal. But from the perspective of the government, there's no real savings. You're just kicking the can down the road

To me, this is a very weird argument.

Based on what you're saying, preventive care gets us better health and a longer life for the same $$$ spent.

To call that "no real savings" puzzles the hell out of me.

More value delivered for the same cost. What's not to like?

You're talking about an industry that according to a quick check of Yahoo's industry browser has a mean net profit margin of 3.8%.

You're also talking about an industry that insists that it has to aggressively look for incredibly trivial errors in policy paperwork in order to deny payment for people who actually get sick and file claims.

To me, it's not the amount of profit that is obscene, it's what is done in order to secure the profit.

If private insurers could deliver a useful product to the market for a price that allowed anyone who wanted insurance to get it, we wouldn't be having any of this discussion. I frankly wouldn't give a crap how much money they made.

They cannot, or will not.

Russell, I guess you are not accustomed to the concept of 'sozialverträgliches Frühableben' (socially responsible early departure from life). If you get preventative now, you'll live longer (beyond your productive age) and by that cause more net cost. Ideally you would die one day before you draw your first social security money (after having paid into the fund all your working life without interruption). Same if you get a serious illness that will decrease your productivity for a longer period of time.
Over here there were calculations that from a fiscal point of view smoking should be endorsed while alcohol should be condemned. Smoking shortens life significantly saving far more in SS etc. than the needed additional healthcare will cost. Alcoholism on the other hands carries huge costs, decreased productivity etc. while not shortening life enough => net loss.
Btw, nothing new here since the concept was known to (and got endorsed by) Platon (for free people) and Cato the Elder (for slaves).

You're talking about an industry that according to a quick check of Yahoo's industry browser has a mean net profit margin of 3.8%. That's hardly piracy, considering that most companies are in the 1-3% range with a few outliers dragging up the mean.

A link would be nice. I'm also curious what 'mean net profit margin' means. Does it mean after all salaries have been paid out? I ask because you have salaries like this:

Ins. Co. & CEO With 2009 Total CEO Compensation
Aetna, Ronald A. Williams: $18,058,162
Coventry, Allen Wise: $17,427,789 (took over from Dale Wolf)
WellPoint, Angela Braly: $13,108,198
United Health, Stephen Helmsley: $8,901,916
Cigna, David Cordoni: $6,593,921 (took over from CEO H. Edward Hanway)
Cigna, H. Edward Hanway: $18,800,000
Humana, Michael McCallister: 6,509,452
Health Net, Jay Gellert: $3,643,342

link

Is that profit margin calculated before or after those salaries are paid?

It's amazing to see CEO salaries that high at companies that don't make a f**king thing. Zero production. Jesus.

I think that there is a certain bare minimum of care that no one--for any reason--should have to do without simply because they cannot afford it.

At a minimum, I am talking about basic care such as wellness checkups, cancer screenings, or seeing your physician to find out if that twinge in your arm is the beginning of tennis elbow or just acute soreness.

Seb beat me to it, but since we're on the subject, let's take cancer screenings: supposed the doc finds a tumor? Is treatment at MD Anderson or the Mayo Clinic part of the basic package, access to the best oncologists, etc? My guess: the basic package includes everything short of in vitreo fertilization and elective plastic surgery.

We'll all grow old and die before someone can list what is NOT in the basic package. We'll probably all be dead before someone can credibly answer TP's question. Good question, TP.

While I tend to agree with hairshirtthedontist on some level (and think that there are all sorts of improvements to be made on the corporate governance of CEO and high level executive pay), the answer to "Is that profit margin calculated before or after those salaries are paid?" when you are talking about salaries in the <20 million range and profit in the 4-8 billion range (wellpoint being the first one I looked up since I was interested for other reasons) is "not-significant to the profit ratio".

[Correction]

It looks like WellPoint's high profit recently is because of a sell off of a division. The more normal basis is closer to 1.2 billion.

Still, I would think that if a CEO was getting 20 million (and Aetna's CEO got 23 million in 07 and 24 million in 08), you wouldn't see execs under that all huddled around a quarter or even half a million.

Missed this: Tex: Is there a "right" to public safety? National Defense? If you answer "yes" then I'd throw that question right back at you.

I don't consider either a 'right', i.e. something a citizen can go into court and enforce. Rather, I view them as obligations gov't assumes. I don't view health care, food, a home, a car or a computer to be 'rights'.

Gary, did you get my email?

Is that profit margin calculated before or after those salaries are paid?

Before. Wages, etc is an expense.

You should check out executive compensation of those companies. Check out their proxy reports, and compute how much of gross (and net) income the executive pay they disclose is.

Not all annual reports split out pay and benefits as a separate expense, and I haven't seen that any at all split out executive pay & benefits. I've checked out Exxon Mobil as just a sample, and for a company that grossed 300 billion and netted 19 billion, they paid their executives (just the ones that appear on the proxy statement; corporate officers only) something like $200 million. That's salary and stock.

So for them, it wouldn't make any big difference in profit margin. For other companies it might be different story.

Agh.

After. Wages is an expense, so it gets subtracted (along with lots of other stuff) from income.

Slarti, I am confused. Are you saying that a company which buys $1M worth of stuff, sells it for $2M, and spends $1M on "wages, etc" to do so, has a "profit margin" of 100%?

Also, just for curiosity, how much would you pay for stock in such a company?

--TP

Aetna, Ronald A. Williams: $18,058,162

Aetna took in roughly $34b in revenue in 2009, and so Williams' compensation would be a mere 0.05% of revenue.

The other way to look at this is Aetna cleared about $1.2b on that income in 2009, and so Williams' compensation, if deleted entirely, would change their profit margin from ~3.53% to ~3.58%. Tot up all of Aetna's "named" executive compensation and knock that off their expenses, and we're talking about ~3.65%.

The rest of their executive staff eats up some further, inconsequential expense. But the real issue is not so much what they make, but what you'd have to pay their replacements.

I expect that'll kick off some animated discussion.

Are you saying that a company which buys $1M worth of stuff, sells it for $2M, and spends $1M on "wages, etc" to do so, has a "profit margin" of 100%?

No.

Net income is income minus expenses. Your mythical company has 0% profit margin. Compensation and cost of materials are both expenses.

Is treatment at MD Anderson or the Mayo Clinic part of the basic package, access to the best oncologists, etc?

No. The answer is obviously no, and the question is a red herring.

Harvard Pilgrim health plan offerings.
Blue Cross/Blue Shield Federal plans comparison.

Something like one of those. It's not like nobody has thought about what goes into a basic health care package before.

All of this is academic. We'll all be dead before there's anything remotely resembling a federal single-payer system in this country.

In spite of the apparently critical tone of my original post, I'd be delighted if the MA plan was available nationwide. I'd call it a victory and move on.

I know some folks who recently had care at MD Anderson and Mayo. They are (or, were) very wealthy. Regular folks will go to the local municipal teaching hospital, just like they do now.

So no worries. Nobody's gonna make you pay for poor folks to go to Anderson.

Although some of them still may see some of the best oncologists etc., because some of the best oncologists etc. still work at the local municipal teaching hospitals, because they are not motivated solely by $$$.

compute how much of gross (and net) income the executive pay they disclose is.

It's not that relevant to the question at hand, but allow me chime in and say that it's insane that these people make 8 figure salaries.

It's not their freaking money. And hell yeah, there are people who could do easily as good a job for an order of magnitude less.

That is the norm in most of the rest of the world.

C-level executives at companies of this size have become a parasitic rentier class. They are a net drag on the health of the companies they manage.

So no worries. Nobody's gonna make you pay for poor folks to go to Anderson.

First, giving something the name "Basic" doesn't make it so.

Second, proponents of HCR/single payer, etc often speak of health care as a right. While I disagree with that on principle and as a practical matter, for those of that view, if health care is a right, it's a right available to all and in equal amounts. That is what a right is. Carried to its logic conclusion, yes, I and everyone else would be paying for access to the top private clinics because otherwise the right to good health would be apportioned in a discriminatory manner.

And, actually, I do pay a lot to insure others. I just asked my office manager how much I pay Blue Cross to insure my small operation. The answer is $74,400 annually (slightly over 10K per covered employee, the others are covered through their spouses, thankfully). As a Blue Cross insured, I can tell you, the coverage isn't that great (I get what my employees get). The co-pays are significant, which gets to the heart of your post. A bigger concern is that Blue Cross is so cheesy on its fee schedule that a lot of good docs won't take their patients.

The concern I have, when people talk generally about a "basic package" available to all, is there will inevitably come comparisons between those who can only afford the basic package and those who pay more for more coverage. The inequality inherent in a basic/enhanced set of benefits will inevitably produce complaints, with the endgame being a basic package that isn't so basic. And even less affordable.

Which brings me back to Tony's question: who is going to take the pay cut?

v>That is what a right is. Carried to its logic conclusion, yes, I and everyone else would be paying for access to the top private clinics because otherwise the right to good health would be apportioned in a discriminatory manner.

Right. Which is why, given First Amendment rights, you and your local NBC affiliate both have the right to use VHF channel 11 to broadcast on.

Hey, wait a minute, aren't you a frigging LAWYER?

Are you going to sit here and claim with a straight face that, because the Constitution guarantees criminal defendants the right to legal representation in court, that all defendants have the right to an attorney of the stature and capability of F. Lee Bailey or Robert Shapiro or Allen Dershowitz? Or of you?

Are you really going to float that argument? That because some defendants can afford really good, really expensive lawyers, that the natural endgame is that all defendants will soon be represented by top-tier Ivy Leaguers?

Really?

Because that's what you're trying to do here. And it rests on the assumption that we are all stupid, apparently.

Here is some data, unfortunately, it isn't divided into industries.

http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1181&context=key_workplace&sei-redir=1#search="executive+compensation+worker+salary+comparison"

and this
http://www.commondreams.org/headlines05/0412-10.htm

The United States long has had the industrialized world's largest gap in pay between chief executives and blue-collar workers. CEO compensation swelled from 85 times what workers earned in 1990, to 209 times in 1996, and 326 times the following year. In 1999, CEO pay surged to a record 419 times the average worker's wage, according to the U.S. Bureau of Labor Statistics.

The gap then declined, to 282-to-1 in 2002, before surpassing 300-to-1 the following year, according to the research and advocacy group United for a Fair Economy (UFE).

Comparable figures for other wealthy nations generally do not exceed the double digits.

Speaking for myself, this sounds pretty obscene to me. If the medical/insurance sector was greater than that, I hope it wouldn't just be me thinking it was obscene.

Which is why, given First Amendment rights, you and your local NBC affiliate both have the right to use VHF channel 11 to broadcast on.

Your second comment was a lot better. I have the right to buy a media outlet or start one and then say what I want. That right is enforceable. Health care, as a right, means that I would have the enforceable right to medical care and treatment. That right is, among many other elements inconsistent with a 'right', a claim on someone else's time, talent and labor. Not so the media analogy.


because the Constitution guarantees criminal defendants the right to legal representation in court, that all defendants have the right to an attorney of the stature and capability of F. Lee Bailey or Robert Shapiro or Allen Dershowitz? Or of you?

You raise, in your own shy, understated way, a fair point. Wrong, ultimately, but fair. The very uneven quality of public defenders and court-appointed counsel is such that the right to counsel is more theory than reality. It's just short of an illusory right. Put in a different context, if health care were a right, and if it was doled out in the quantity and quality of court-appointed counsel, we'd all get a free band aid and subsidized euthanasia. Which is a different way of making my point to Russell: if the basic package turns out to be as mediocre as publicly paid criminal defense counsel are (for the most part), because the number of health care consumers is in the millions and because they are not criminally accused, they are likely to complain vocally and have their complaints heard. Which makes the basic plan not so basic and drives the cost up further.

Still waiting for an answer to TP's question . . .

One also notes that, despite the existence of a right to a public school education for all US children, nobody has successfully argued that all children have the right to something like Philips Exeter or Horace Mann.

You're making an argument that is not only unsupported by the facts, it's one that all of US history argues against.

Put in a different context, if health care were a right, and if it was doled out in the quantity and quality of court-appointed counsel, we'd all get a free band aid and subsidized euthanasia.

THis is not an argument against single payer health care, it's an argument in favor of a better-funded public defender system. And since I have long argued that public defenders should be funded equally as much as district attorneys' and states attorneys' offices, I'm fine with that.

First, giving something the name "Basic" doesn't make it so.

I believe you miss the freaking point.

Typical privately provided health insurance policies do not offer unlimited access, or any access at all, to "premium" tiers of service, however those are construed.

The most generous offer access with small co-pays and no coinsurance to a specific set of providers, who sign as providers for that plan.

If you want something else, you pay more.

Nobody's proposing that anything more generous than that be offered publicly.

Damned few people are arguing for anything more than carrot and stick public incentives for folks to participate in private markets.

The most wild-eyed proposal I've seen anywhere is to expand the enrollment requirements for Medicare.

I'm just trying to ground the discussion in reality.

Second, proponents of HCR/single payer, etc often speak of health care as a right.

Not me.

And, actually, I do pay a lot to insure others

For purposes of this discussion, I think it will be useful to distinguish between you as a person and the professional enterprise you own and operate.

As a Blue Cross insured, I can tell you, the coverage isn't that great

It's better than nothing.

there will inevitably come comparisons between those who can only afford the basic package and those who pay more for more coverage.

A reality check: is there currently a broad undercurrent of dissatisfaction among those who receive, frex, Medicare because they don't get all of the benefits that wealthy folks can buy?

Everybody understands that, if you're well to do, you can buy what you want.

Your argument here is like arguing against public transportation because everyone is going to want a free Bentley.

Everybody doesn't want a free Bentley.

if the basic package turns out to be as mediocre as publicly paid criminal defense counsel are (for the most part)

A lovely kick in the nuts to the public criminal defender community.

who is going to take the pay cut?

To the degree that there is a "pay cut", it would probably be spread fairly broadly across a spectrum of health-care-related industries.

And costs can, contra Tony P, be reduced in ways that aren't a simple matter of directly reducing somebody's income.

Long story short - none of this is going to happen anyway. The *most generous, most liberal* thing that is going to happen is Obamacare, which basically consists of MA-style carrot and stick incentives for people to buy into private insurance markets, plus some new rules limiting private insurer's ability to deny coverage.

In which case we will see some of the perverse results that we now see in MA - people will avoid getting cost-effective preventive care because they think, rightly or wrongly, that they will have to pay for it out of pocket.

Depending on whether all of this goes to the SCOTUS and what kind of mood Anthony Kennedy is in that day, we could end up with bugger-all.

Speaking for myself, this sounds pretty obscene to me.

The combined compensation of the CEO and the entire 38-person board of Toyota Motor Company was just under $16M">http://economictimes.indiatimes.com/news/international-business/Toyota-cuts-pay-and-bonuses-of-top-executives/articleshow/6089747.cms">$16M in 2009-2010.

Combined. Almost 40 people. Toyota Corporation, the LARGEST AUTOMOBILE MANUFACTURER IN THE WORLD.

In Japan, corporations are now required to disclose executive compensation in excess of 100 million yen, about $1.1M.

A little over 8% of all company presidents, and about 1.4% of all executives, will have their compensation disclosed under that law.

European executives typically make about half of what their American counterparts make.

American C-level managers make more money than is justifiable by any objective analysis. As a non-objective analysis, I'll offer my opinion that they are, as a class, a bunch of entitled, greedy, parasitic rentiers.

They make the money they make because nobody is either inclined or in a position to say "no" to them.

nobody is either inclined or in a position to say "no" to them

It all depends on how many people care about saying "no" to them, doesn't it? And I, personally, don't really care very much.

I'm perfectly ok with doing things like e.g. changing the rules that dictate how one stacks the boards of directors of publicly-owned corporations. I'm also perfectly ok with changing income tax rules to treat stock transfers as real income. In short, I think that it's probably better and more effective to treat the disease, and not the symptoms.

Because (I hope I'm not being tediously repetitive, here) I really don't care how much money people make. I just don't. I care more about market-rigging. Unrig the market, and see what happens then.

Phil: "And since I have long argued that public defenders should be funded equally as much as district attorneys' and states attorneys' offices, I'm fine with that."

Thank you.

Because (I hope I'm not being tediously repetitive, here) I really don't care how much money people make.

Neither do I.

Warren Buffett is a billionaire? He did an unbelievable amount of his own personal homework, for decades, and found really good places to put people's capital. For his billions, he made thousands of other people millionaires.

Bill Gates is a billionaire? For all of my complaints about his business methods, he made computer technology accessible to the non-technical business community, which created unbelievable gains in productivity. And a lot of the folks who actually wrote the code got to be rich, too.

For Bill Gates, ditto Larry Ellison.

If you create millions and billions worth of value, and some of it lands in your pocket, mazel tov.

I'm not seeing that level of value creation in your average C-level manager.

IMO your suggestions are all great, and I agree that treating the disease rather than the symptoms is the most effective way to go.

The folks that should be saying "no" to C-level executives in your typical large publicly traded corporation are the shareholders. In a perfect world, I would say stakeholders, but that's obviously just crazy talk, so I'll settle for shareholders.

For a variety of reasons, that don't happen.

Talking about symptoms and disease is the same as conflating that percentage of profits of health insurers signifies quality of what they provide. Profits do not matter for quality of coverage, what matters is percentage of health insurers company income used for covering health procedures.
While profits are 3.5% of income private insurers spend between 60% and 70% of their costs(income less profit). Medicare on the other hand spends 97% of income on health coverage and 3% is administrative costs, no profits. Private insurers have about 25% of income as administrative costs. Talk about private efficiency.
Private administrations also include panels of commission incentivized employees who spend their time searching for ways to deny the coverage. I call them "real death panels"
Obamacare includes the law that orders that health coverage expenses must be over 70% which private insurers wants to eliminate, solely for that rule, everything else benefits them.

Even "no denying of coverage" rule benefits private insurers because it will eliminate their "death panel" expenses and leave more for the shareholders or CEO bonuses.

Wish I could find the blog entry I read recently, written by an upper executive at a major investor relations firm which represents several Fortune 500 companies. He was commenting on proposed "Say for Pay" rules changes which would allow shareholders to have a say in executive compensation, rather than letting it be decided by compensation committees comprised of board members who all scratch each other's backs.

His arguments (such as they were) came down to:

1. If you don't like the CEO's salary, sell your stock, it's the best vote there is!
2. Shareholders are too stupid to see how valuable C-level execs are and how much they should get paid.
3. What about those fatcats in Congress and their earmarks, huh? What about that?

America, 2011. Gotta love it. This, from Slate on the recent revelation that GE, in a year of record profits, not only paid no US corporate taxes but received more than $3 billion, is great, too.

Let's see...$3.2 billion is $200 million more than the amount that the Obama Administration wanted to slash from the Low Income Home Energy Assistance Program, because the White House was showing that it was serious about restraining spending in tough times. So the poor go without fuel, and G.E. gets $3.2 billion in handouts, and the budget almost balances out. Fiscal discipline!

Or, if you don't want to get mad on behalf of the poor: General Electric collected an average of $18 from every household in America last year, just for being so good at doing its taxes. Every month, your family paid G.E. a buck fifty.

I, for one, welcome our new plutocrat overlords.

Russell: And costs can, contra Tony P, be reduced in ways that aren't a simple matter of directly reducing somebody's income.

There may be some sense in which that's true, Russell, but I can't think of one. And that's why reducing costs is not MY major concern.

And that's also why I think McKinney ought to take a stab at answering my question himself. He seems to think that "who is going to take the pay cut?" is a stumper of a question, but it's only a stumper if cost reduction is a non-negotiable goal.

I don't know how much of McKinney's firm's $74K Blue Cross pays over to doctors, how much to its billing clerks and actuaries and corporate officers, how much to its lawyers. McKinney surely would be happy to pay, say, $64K for the same medical services. But that $10K he saves, somebody on that list doesn't get. It's not for ME to say who that somebody should be.

--TP

There may be some sense in which that's true, Russell, but I can't think of one.

Basic simplification of information and document handling.

I guess that, ultimately, that still comes out of somebody's wage somewhere. Somebody's getting paid to shuffle paper. So I guess your point stands.

But it doesn't reduce the level of care made available.

I actually think costs are an important place to focus, because costs are what are going to break the bank. They are what is going to make the possibility of widespread availability of health care via insurance increasingly untenable.

But if I read correctly between the lines of your comment, yeah, if cost cutting is needed, I'd prefer to cut things that don't directly result in health care being provided to people.

"In Japan, corporations are now required to disclose executive compensation in excess of 100 million yen, about $1.1M.

A little over 8% of all company presidents, and about 1.4% of all executives, will have their compensation disclosed under that law.

European executives typically make about half of what their American counterparts make."

I suspect it is true that European executives make less than American counterparts, but a huge amount of the difference is in perqs which aren't reported as income in Europe, but are considered income in the US. I used to work for a company that had European and Asian subsidiaries. After Sarbanes-Oxely we had to really hammer down exactly what their perqs were. It took two years to get them to disclose everything, and it was at least 20% of their salary that the US accounting side was explicitly aware of. Maybe it was just poor accounting practice at the company I worked for, but it seemed like it was just a different cultural way of treating perqs.

Sebastian, while I think you have a point, I suspect one of the reasons why perqs are treated differently is that US perqs seem more likely to be fungible. I may be wrong, but total compensation that is counted as income is things like stock options, perhaps housing. There are probably a few other things. In Japan, rental housing (but not primary housing) is a perq that isn't taxed (this is because of the phenomenon of tanshin funin where the husband is assigned to a distant location and moves there while the wife and kids stay. On the other hand, Japanese execs don't get stock options and the other things that can push up the total comp package such that according to the pdf link I gave above, the total comp package in 1999 was 5x the Salary and bonus.

I'm mulling over this "health care is not a right" argument.

Does that mean it is morally accepotable to in effect tell uninsured people to go off and die already?

A little story: One of my colleagues in dog rescue is prey to every rightwing meme he hears on FAUX and is quite upset by the evil Obamacare that is a socialist takeover of medical practice etc. He was also upset when the cost of a two hour vgist for a minor outpatient treatment was billed at 7,000 some dollars (His insurance paid.) He actally went back to the doctor's office to demand an exclamation for why his bill was so high. The doctor's receptionist gave three reasons.

1. The bill covers the costs of the patients treated who could not pay their bills because they had no insurance
2. The bill covers the salary of the staff every doctor has to hire to chase down insurance companies and birddog them into paying bills
3. The bill covers the cost of treatments for which the insurance companies found bogus ratioalizations to not cover and for which the doctor's medical billing person has already spent too much time trying to collect.

I got most of the way through medical assiting school and the comments about insurance companies playing games cynically to dodge payment are too true.

Anyway I pointed out to my friend that the individual mandate is there to address the problem of covering the costs of treating people who cannot pay. I don't know if AHC act deals effectively with insurance companies who try to dodge their obligations. It is true that one of the factors driving up medical costs is the cost to doctors and hospitals of collecting from insurance companies.

One also notes that, despite the existence of a right to a public school education for all US children, nobody has successfully argued that all children have the right to something like Philips Exeter or Horace Mann.

Phillips is a private school. I don't know about Horace Mann. However, again making my point, their are gross disparities between different public school systems. Most parents want the best for their children. They don't want a basic minimum education for their children, they want the full meal deal through high school and some degree of assistance through college and even grad school. Likewise, the proposed basic plan for health care will remain basic until people see how it compares to the stepped up plans. Right now its the haves vs the have nots. Ten, twenty years down the road, it will be the Basics vs the Upgrades, all on the public treasury, if I understand Russell's contention.

And that's also why I think McKinney ought to take a stab at answering my question himself. He seems to think that "who is going to take the pay cut?" is a stumper of a question, but it's only a stumper if cost reduction is a non-negotiable goal.

Fair is fair. I'll take a stab at it. Medicare artificially bends market forces. That was sustainable back in the day when docs made a lot more per service than they do today. Today, health insurers enter into contracts with docs at, say 110% of Medicare, per surgery or per service, what have you. Docs are realizing they can't cover overhead, malpractice premiums etc and make a living. So, the long term viability of a Medicare-centered reimbursement regime is, in my view, questionable. That is to say, even today, many of the docs are taking a paycut. So, market forces have been bent. The questions are: will they stay bent and, if they do, will the quality of service be affected?

My crystal ball says market forces will clash with cost benders for the foreseeable future with attendant drags on the national treasury, as benefits, both in number and in quality are reduced. You may be able to pay less and get more for a while, but not forever.

So, my answer to your question is: everyone in the HC system takes a pay cut, and the trade off is they work less and in the long term, the number of really gifted people who would have gone into medicine will decline markedly and we will have widespread, relative mediocrity. The wealthy will still have their private clinics which will offer better room service and a lower in-hospital infection rate, but not a significantly higher level of service.

It's kind of amazing how every example of a right which has clearly not been escalated and made equivalent to the most expensive and highest-quality privately available option somehow proves your point that that's where health care is headed, rather than flatly contradicting it. That's some catch, that Catch-22.

One also notes that GPs in the United States earn, on average, nearly double what their counterparts make in similarly advanced countries, without providing markedly better health outcomes, and in some statistical categories resulting in markedly WORSE outcomes.

McKinney
How did you come up with this
everyone in the HC system takes a pay cut, and the trade off is they work less and in the long term, the number of really gifted people who would have gone into medicine will decline markedly and we will have widespread, relative mediocrity.
while knowing that there are many doc bills unpaid either by uninsured or private insurers and that Obamacare has "no denying coverage" and 30million more people insured.
Where is that cost of collecting payments, unpaid bills, medical billing coders going to go? Will it just disappear into the air?
Where is the cost of having "death panels" payroll on private insurers income go? Also disappear?
Also, where is the cost of covering unpaid ER visits coming from? Is that money coming from Mars? Or from state and federal budget/your taxes?
So many elemental factors are missing in your conclusion.
Obamacare is bringing more insured, no denying coverage, unified billing coding and standardized levels of coverage trough public exchanges. All these will simplify doctors jobs and bring less costs. So they will be able to charge less and work more with patients. Therefore they will be able to see more patients in the same time for more income.

Phil, a "right" to an intangible for which there is an unlimited supply, such as speech or religion, costs very little to secure and enforce. A 'right' to a service, particularly a service that is quality, quantity and price sensitive, necessarily entails comparisons and conflict when someone gets more than someone else. That is why the Basic Package is problematic.

Yes, but those comparisons and conflicts don't inevitably lead to the service provided being the highest-quality version available, which I think I've provided ample evidence of.

You've yet to name a single agreed-upon right for which the availability of more expensive, higher-quality private options has led to the provision of that right escalating ever upward in quality and cost. Not one.

You're arguing by assertion, then arguing that real-world counterexamples actually prove your case.

You've yet to name a single agreed-upon right for which the availability of more expensive, higher-quality private options has led to the provision of that right escalating ever upward in quality and cost. Not one.

Medicare goes up every year in cost. Quality is another issue. Inequalities of funding/outcomes in public education are an ongoing source of discontent and political football. Once a right to a service becomes an entitlement, costs go up, in part as a function of demands for "more and better" service.

Medicare goes up every year in cost.

Beyond the rate of inflation? How much of it is related to the greying of the population as the Boomers age?

Inequalities of funding/outcomes in public education are an ongoing source of discontent and political football.

And yet, here we are. It still doesn't get us anywhere in the neighborhood of "OMG taxpayers will be sending cancer patients to the Mayo Clinic." Not even close.

If we do find a way to spend less on health care, prefereably without more people dying sooner than they otherwise would, no one has to take a pay cut. They can get to work on our crumbling infrastructure. There are plenty of more useful endeavors for people to persue than finding creative ways to deny other people health care or doctors payment for health care. They can make f**king movies or write songs. Just about anything would be better than this unproductive, money-grubbing BS.

'1. The bill covers the costs of the patients treated who could not pay their bills because they had no insurance
2. The bill covers the salary of the staff every doctor has to hire to chase down insurance companies and birddog them into paying bills
3. The bill covers the cost of treatments for which the insurance companies found bogus ratioalizations to not cover and for which the doctor's medical billing person has already spent too much time trying to collect.'

Wonkie:

That synopsis points out a situation that I recognize as essentially true and likely widespread, although I cannot say that based on facts, but I have seen multiple instances of the same (and for similarly large dollar amounts for relative simple treatments.

Here is where I see some problems with the model described:

1) Where a doctor treats a patient who has no insurance and no personal financial means to pay, knowingly billing that cost to another patient who does have insurance or means is different from stealing in what way?

2) A simple billing system from the doctor to the designated insurer is really all it seems the doctor should staff. Once the claim is denied, the doctor's bill should go to the patient, and that is where the collection effort by the doctor should start. If the coverage is individual, then the insured deals with the insurer and, if unsuccessful, must then deal directly with the doctor. If the doctor finds the collection effort unsatisfactory, then the failure to pay might be reported to the credit bureaus. If the coverage is group insurance through an employer, since many, if not most, employers are paying 70% to 80% of the premiums, it seems they would have an interest in denied claims by the insurer, and they would benefit by staffing to analyze and deal with abuses. Individuals in the group policy could work through the employer's staff to deal with improperly denied claims.

Is this not how any other service provider would initially approach this?

It still doesn't get us anywhere in the neighborhood of "OMG taxpayers will be sending cancer patients to the Mayo Clinic."

Which is not what I said. I asked, if health care is a right, does everyone have the same right to the best the system has to offer. Russell's frustration with me is that he (1) does not contend health care is a right and (2) is comfortable with a basic package. My problem is (1) how does one define a basic package that doesn't leave out important stuff and (2) how does one keep that package from growing?

GOB--patients assign their rights under the policy before the doctor sees them. The solution is to require prompt payment or incur penalties and liability for attys fees if the account owed by the insurer is turned over for collection.

'GOB--patients assign their rights under the policy before the doctor sees them. The solution is to require prompt payment or incur penalties and liability for attys fees if the account owed by the insurer is turned over for collection'

From a simple business transaction perspective, how is this doctor-insured-insurer relationship different from one involving home or auto repairs between repairer-insured-insurer? And if it is different, why should it be?

"My problem is (1) how does one define a basic package that doesn't leave out important stuff and (2) how does one keep that package from growing?"

McKinney, how do you answer those questions now?

Other countries have made some decisions about these issues.

Because more focus is placed on preventive care and wellness, things aren't as expensive because more people are well more of the time. The more time that people spend being well, the more of a budget there is for providing better care to people when they're sick.

Where this design falls short is that better care means longer life for people who might have otherwise died, such as (but not limited to) old people, traumatic injury victims, and premature infants, all of whom are prone to chronic illness requiring expensive care.

No matter what system is available (government provided health care, single payer, private insurance or whatever) the costs of treating certain people are enormous. What do you think we should do now? What about a soldier who returns from war with a traumatic brain injury and disabling, disfiguring wounds? Or a premature infant with chronic neurological problems? Or someone who has a debilitating stroke?

We don't have to say that "health care is a right" to believe that treatment shouldn't be based solely on people's ability to pay. Or do you think that treatment should be based on that? What is your solution?

Because more focus is placed on preventive care and wellness, things aren't as expensive because more people are well more of the time.

Where are you saying this is true, now?

I asked, if health care is a right, does everyone have the same right to the best the system has to offer.

And, using my examples of legal representation and primary/secondary education, the answer is clearly "No." QED.

Moving on.

And, just for the record, you absolutely did say, . . . let's take cancer screenings: supposed the doc finds a tumor? Is treatment at MD Anderson or the Mayo Clinic part of the basic package, access to the best oncologists, etc? My guess: the basic package includes everything short of in vitreo fertilization and elective plastic surgery.

We don't have to say that "health care is a right" to believe that treatment shouldn't be based solely on people's ability to pay. Or do you think that treatment should be based on that? What is your solution?

What I believe is that you do what you can afford. We have a population slightly less than France, Germany, England, Italy and Spain combined. We have huge deficits. Experts differ, but the majority believe this is a major problem. Everything our gov't has done on a large scale: defense, SS, Medicare/Medicaid has cost grossly more than projected and has been riddled with inefficiencies. The problem isn't widespread corruption or incompetence, by and large, it's human nature and the nature of (for the most part) unaccountable and very large organizations.

HCR is 2400 pages long. No one understands it. If it stands, despite the hopes of supporters, history indicates that we will have an even larger and more unwieldy and more expensive entity than ever before. It is a recipe for massive and indeterminable waste, duplication of effort, inefficiency etc.

When you get to the point that you are out of money--we are there--you have to live on what you make less your debt service. Want more spent on health care? Ok, what part of defense and SS are you going to cut? What about the discretionary side? And how do you overcome the inevitable, across the board pushback?

And, just for the record, you absolutely did say, . . . let's take cancer screenings: supposed the doc finds a tumor? Is treatment at MD Anderson or the Mayo Clinic part of the basic package, access to the best oncologists, etc? My guess: the basic package includes everything short of in vitreo fertilization and elective plastic surgery.

I did say that, in reply to Russell's view that everyone should have a basic package. As I've said repeatedly, that package would inevitably grow and become more expensive.

From a simple business transaction perspective, how is this doctor-insured-insurer relationship different from one involving home or auto repairs between repairer-insured-insurer? And if it is different, why should it be?

It's different because there is a public interest in people having access to health care, whereas there is far less if any broad public interest in people having access to the services of auto mechanics.

There is a class of things that are important enough that we do them for ourselves, directly, through public means, without relying on the market to make them happen. The argument here is that access to basic health care should be in that list.

I'm curious to know why anyone thinks it should not be.

My problem is (1) how does one define a basic package that doesn't leave out important stuff and (2) how does one keep that package from growing?

(1) We do this now. Every public and private provider of health insurance has well-defined plans that spell out what is and what is not covered, and to what degree, and under what conditions. This is extremely well-worn territory.

(2) Medicare has been around since 1965. During that time, coverage has been expanded significantly exactly once, when optional coverage for pharma was introduced with Medicare D four or five years ago.

Almost fifty years, one expansion of coverage.

We don't have to speculate about this, we have an actual, real-world track record to look at, of almost a half-century duration.

There are lots of thorny issues to address in this overall issue, but the specific thing you're worried about does not appear, realistically, to be one of them.

And, of course, all of this talk about expanding the role of public providers is 100% academic. If it was going to happen in this generation, it would have happened over the last two years. It ain't gonna happen, at least not until pretty much everyone reading this is dead and gone.

It'll be remarkable if Obama's mandate for universal coverage through private providers survives.

"The government is going to take your money and give it to some other guy". Americans hate, hate, hate, hate, hate that. So it ain't gonna happen.

Americans hate, hate, hate, hate, hate that.

unless that "some other guy" is a defense contractor.

'There is a class of things that are important enough that we do them for ourselves, directly, through public means, without relying on the market to make them happen. The argument here is that access to basic health care should be in that list.'

We have foodstamps for those whose income does not provide proper nutrition, we have subsidized housing, and we have medicaid. I understand the need for and support all this.

But for those not on public assistance, my thought is that they should handle the financial responsibility for their health care costs. As a general rule, if someone is gainfully employed, chooses not to have health insurance, incurs medical bills and does not pay them, then at the very least their credit rating should go to zero.

It is a recipe for massive and indeterminable waste, duplication of effort, inefficiency etc.

We have that now.

Now, today, we pay a per-capita amount in public money comparable to comparable OECD countries that have a relatively more socialized form of medical insurance.

ON TOP OF THAT, we pay about the same amount again in private money.

And our outcomes are, at best, roughly par. In some specific areas, mainly where sophisticated technologies are involved, we do better. In most measures of basic public health, we lag.

We already, today, piss away health care dollars like a sailor on shore leave.

As an aside, having worked quite a bit in and around the dreaded private sector, I'm always amazed that folks assume that operations there are more efficient than in the public sector. Private organizations are also quite often wasteful, inefficient, and ineffective.

Things are well run, or they aren't. There are well run things, and badly run things, in both the public and private sectors. There's nothing magic about the private sector.

The comments to this entry are closed.

Blog powered by Typepad