It's thus predictible that a commission appointed by the governor wants to move in a new direction: capitation. That's when the state pays providers a fixed amount for each person (in the plan, or in their practice) and lets the providers figure out how to treat them.
Capitation looks attractive, because it discourages doctors and hospitals from doing too much. But, as with all good things in life, it has a few downsides:
- It shifts the insurance risk to smaller entities who are less easily able to bear it
- Correspondingly, it eliminates many of the benefits of pooling. Doctors who happen to get stuck with a sicker population go broke. If you try to rig the payments to account for degrees of sickness, you will quickly get mired in a system even more complicated than the current health insurance system. This is why "paying for health rather than procedures" never pans out.
- It exacerbates the existing problem with fixed payments in health insurance, where doctors compete to get you in and out of their office as quickly as possible
- Single payer advocates are fond of complaining that when you force consumers to bear the cost of their own health care, there's no guarantee that they'll cut back on unnecessary services. Well, there's arguably even less guarantee when the guy making the cuts isn't the one who gets to die if it turns out that test was needed
- The political incentive will be to mandate an ever-greater number of services and treatments at the same time as they cap the payments. The result will be an outflow of doctors from the state, or medicine.
I predict this lasts about half a news cycle before the public outrage overwhelms state legislators, who start screaming for the heads of the traitorous, heartless bastards who suggested it.
So if they implement capitation and it doesn't work, the process of canceling it would be 'decapitation', right?
Beautifully well done sir.
Capitation also effectively means the end of allied health care, such as Physical therapists, Occupational therapists and the like, since they have to fight for the same dwindling amount of cash that the doctors and hospitals are fighting over. Since a patient would likely see these professionals over a longer period of time tyhan the doctor or hospital, they would receive far less for their efforts.
Isn't this a real killer for a federalized health care/health insurance offering?
Massachusetts has decreased the empirical number of uninsured, and the cost of the program has far overrun it's projections and is actively failing within years of it's launch. It hasn't even lasted long enough to determine the health outcomes of the state improving.
I think a reasonable question to ask about the Massachusetts program would be thus:
Has it improved the overall quality of healthcare received?
The recent numbers put the financing for the program at double the original estimates, with that number consistently growing. Yes, the number of uninsured is lower, but for what Massachusetts taxpayers paid (and continues to pay) one wonders if it would have been cheaper to just buy all the uninsured private coverage.
But buying them private coverage would be a direct distribution of wealth, rather than the "roundabout we're giving everyone the same thing" version they currently have now.
Appearances are important, after all.
One wonders, but apparently one is unable to google average health care costs in the private sector and multiply that by the number of uninsured now covered and see if that is more or less than what is currently being spent.
Or one could just flog one's own preconceived notions without any knowledge any call it a day. Either way, I'm psyched about what one is doing!
Nutella,
I wasn't told there would be any math in this comments section.
Ah, just kidding. A fine point you raise, so a googling I go.
According to 2007 "America's Health Insurance Plans" (AHIP) survey ( http://www.ahipresearch.org/pdfs/Individual_Market_Survey_December_2007.pdf)
"AHIP reports that the average annual individual health insurance premium in Massachusetts in 2007 was $8,357, including employer sponsored plans. This is almost $6,000 a year more than the national average of $2,613 dollars a year."
The generally accepted number of uninsured in Massachusetts prior to their program was around 600,000.
600,000 X $8,000= $4,800,000,000.
Apparently Massachusetts only ended up enrolling around 420,000 people in to the program.
420,000 X $8,000= $3,360,000,000.
Massachusetts budgeted $13 billion for Health and Human Services
http://www.mass.gov/bb/gaa/fy2009/app_09/dpt_09/hehs.htm
Of that $13 billion, around $3.1 billion was used for MassHealth Managed Care, the program used to cover the uninsured.
http://www.mass.gov/bb/gaa/fy2009/app_09/act_09/h40000500.htm
Maybe my math is wrong, but it appears that yes, that is about what is already being spent.
Tree Joe, that national average amount amazes me; because that $8k price tag will only buy you a high-deductible plan in ME. Small risk pool that's aging, and only one company selling individual plans -- no competition.
And our rates are going up again, though not the 25% Anthem wanted.
And then there's the MA price tag. After my 20 years in Boston, I'm wondering: do they support the innovation of their teaching hospitals, just like the US supports medical innovations for the rest of the world?
Isn't it time to better distribute the innovation costs, instead of burdening a small group with it?
Don't they mandate coverage in Mass? How can there by any uninsured?
If you don't get health care you pay a fine of $295.00. Considering the cost of insurance for a family is $12,0000 a year, its not much of an incentive.
Btw, I haven't seen much discussion of this (it's all superficial), but does anyone actually discuss WHERE the double-digits increases in health-care spending per year is coming from?
I mean, we've all heard "well this is a factor and this is a factor" but what is it on a yearly basis that has been operating for over a decade to sustain double digit growth in cost?
The money has to be going somewhere. If it isn't physicians and practitioners (told by median salary scales and other stats), and it isn't health insurance companies (their profit margins are pretty darn thin), then what is driving it? Is it simply that the quantity of consumed health care is increasing by double digits a year?
If so, then we need to decrease consumption, not increase the pool of people consuming....right?
Joe
This is purely speculative, but could increased usage of fertility treatments, which aren't cheap, and the subsequent care of multiples, premies, etc., who require very expensive care, be driving up the various health care spending measurements?
The absolute numbers of IVF pregnancies are way too small to be relevant. Per the CDC, there are only about 142,000 IVF cycles performed in America per year, and only about 43,000 of those result in live births. Contrary to popular opinion, only about 35% of IVF births are multiple pregnancies, almost all of which are twins. Even then, 40% of twins are born at full term, and most of the rest are actually born near-term (34-36 weeks gestation) and need only a few days of NICU care or none at all.
There are more Clomid pregnancies than IVF pregnancies, and there aren't really many hard stats on them since the CDC doesn't require tracking, but the twin pregnancy rate from Clomid is also much lower, about 10%, and Clomid doesn't increase high-order multiples. Injectible gonadotropins do carry higher risks of muliples, and that's where most of the well-known high-order multiples come from. (Jon & Kate Gosselin's twins and sextuplets are both the result of gonadotropins.) IVF is what you turn to if you want to make sure you *don't* have triplets, because you can control how many embryos you put back into the woman. Ironically, many women use them rather than full-blown IVF because they are far less expensive. If insurance covered IVF, it would actually help reduce the rates of infertility multiples, by encouraging women to avoid gonadotropins and pursue single embryo transfers.
Overall, though, infertility treatment multiple pregnancies just are not a significant percentage of medical spending. Statistically, we spend much, much more money taking care of spontaneously-conceived multiples or premature babies born to women with poor prenatal care.
Higher-tech medicine is more expensive. As people live longer(and remember, older = sicker), get more procedures done to extend their life, use more drugs, and do all that other wacky stuff, every one of them has a price tag, and usually not a cheap one. People are paying for increased longevity and quality of life.
Rich: Yeah, that's a factor, but a very small one. Most medical spending is on old people.
Costs would not have risen to the extent they did had the legislature not screwed things up so much by legislating such extravagant coverage mandates. You can't buy a high-deductible, almost catastrophic coverage policy here. Arguably, a healthy person in their 20s really only needs this.
I don't mind the mandate -- I look at it like auto insurance. Plus, when I lost my health coverage through my employer, I was able to pick and choose my own private policy through the Connector. It was easy. I do mind capitation. I think people are going to go ape $hit over it.
Absolutely right about costs. A few years ago, when my son wasn't covered by my employer's policy, I found him a high-deductible policy for $50 a month, and that wasn't the company's lowest rate because he had a minor pre-existing condition. In many states, you can't get a policy like that. Once the feds take over, there will be a lobbying feeding frenzy over what all the policies have to include. To benefit us. Sigh.
So what that means is that almost any medical care in the state is strained through an insurance company, instead of a substantial quantity of small transactions being paid directly.
Which means that a minor ailment, dunno, ear infection, flu, instead of a quick look over and prescription, since the costs for the doctor of billing the insurance company are high, the whole gamut of tests are done to make it worth while. Just in case.
So then one must capitate the whole thing because costs are out of control.
How about just getting the government/insurance companies out of everything below a threshold?
Derek
I wish health insurance was more like auto insurance - not in the being madatory sense, but in the "designed for large, unpredictable, fairly unlikely losses instead of for paying everything associated with the thing being insured".
If something unlikely happens, like I don't notice a pizza-delivery person driving down the street and end up sideswiping a Pontiac, my car insurance covers it. But if I ding the fender on a pylon in a parking lot, or need an oil change or new tires, I pay for it out of pocket. I think health insurance should work more like this - you pay for things like doctor's visits and minor prescriptions out of pocket, and use insurance if you have a heart attack.
Related update: by 50 to 35, voters oppose a public option on the federal level.
http://www.rasmussenreports.com/public_content/business/healthcare/july_2009/50_oppose_government_health_insurance_company
So you don't like a system where there is an incentive to give more care than necessary, but you don't like one where there is an incentive to give too little care either? Well, then the answer is obvious. Just have a system where the incentive is to give everyone the perfect amount of care.
Unfortunately, it isn't that easy. Under any system where care is provided or subsidized by the government, people will attempt to consume more care than necessary. If the doctors are paid for the extra care, they will provide it. There must be some way to limit this problem if we care about reigning in costs.
One of the interesting results of the Rand Health Insurance Experiment is that in most cases, getting less health care didn't result in worse health outcomes. So providing an incentive to provide less care seems eminently reasonable.
Mcarey - It's quite easy. You need to provide a system in which individual choice is the foundation.
When you drop that, then you are going to have a very inefficient system with underrepresented groups and groups getting screwed.
Individual enablement is the foundation for success in large systems.
Joe
A recent article in the Times supports your suggestion that there is good reason to ration care WISELY:
"It is common for opponents of health care rationing to point to Canada and Britain as examples of where we might end up if we get “socialized medicine.” On a blog on Fox News earlier this year, the conservative writer John Lott wrote, “Americans should ask Canadians and Brits — people who have long suffered from rationing — how happy they are with central government decisions on eliminating ‘unnecessary’ health care.” There is no particular reason that the United States should copy the British or Canadian forms of universal coverage, rather than one of the different arrangements that have developed in other industrialized nations, some of which may be better. But as it happens, last year the Gallup organization did ask Canadians and Brits, and people in many different countries, if they have confidence in “health care or medical systems” in their country. In Canada, 73 percent answered this question affirmatively. Coincidentally, an identical percentage of Britons gave the same answer. In the United States, despite spending much more, per person, on health care, the figure was only 56 percent."
Plutarchos - I consistently hear personal satisfaction or confidence as a measure of a successful healthcare system...but that's an absolutely terrible measure.
It's completely cultural. It has no bearings on outcomes or spending per person, it's all about expectations.
No, not expectation. Simply that for most people, health care is not a large part of their lives.
For men, once past getting pieced together from time to time during the teens and early 20's, many won't see a doctor until their buddy keels over dead at 56, or they feel some symptoms that need looking after. Women are a bit different, with childbirth and the like, but for most people, consuming health care is not the norm. These people also happen to be prime wealth generators and voters, and hate paying taxes. Satisfaction with the health care system is low taxes and no one collecting a bill when you show up in emerg needing stitches.
In the US, health care is on people's minds because you have to write a big check every so often for it. Nothing like getting people to pay for things to decrease their satisfaction.
Derek
As a demonstration of the unreliability of polls, I'll link the USA Today/ABC poll from 2006 showing 89% of Americans are happy with their health care.
http://www.usatoday.com/news/health/2006-10-15-health-poll1.htm
Do you have a link? Speaking to the topic in general, there is an issue of what might be given the title of medical epistemology. How does one know that a certain drug or nutritional treatment may be useful and reasonably safe? How does one come to the correct conclusion about a diagnosis. Medicine is historically a craft and, though there is a scientific basis to medicine, these are issues which we might, in the interest of knowledge and correct practice, more formally confront. 'Unnecessary tests' have generally been ordered to find out if some treatment other than what we are currently contemplating is in fact necessary. If that treatment surprisingly turns out to be necessary, then, of course, the test was 'necessary.'
It worries me that the conversation always seems to go in an either/or direction, instead of looking at the overall problem and figuring out where we can reduce health care inflation and health care waste.
An enormous amount of health care inflation is due to a population that simply has no grounding in how to care for itself.
That same population is targeted by a food industry that is understandably more interested in moving units of five-times-fried buffalo wings than serving the nutritional needs of the country.
And an entertainment industry that would prefer to keep young children on the couch with their x-boxes than engaged in physical activity.
The end result: We lose hundreds of billions of dollars every year to treating overweight and obesity related illness. Money that could go into cancer care, research, et cetera.
We could reduce that inflation by spending a much smaller amount on the front end - an aggressive public health campaign that emphasizes good nutrition and a sensible level of exercise.
We have essentially been subsidizing an epidemic of entirely preventable diseases related entirely to a very sick American "lifestyle." The result is not only catastrophic financially, but ethically.
The solution is not to take care away, but to provide a level of K-12 physical and nutritional education that will obviate the need for care of preventable disease.
I agree with your end-point here and have promoted it vigorously. Our schools are focused on teaching to tests (and not teaching skills for life) and have decided that out of the spiritual, emotional, intellectual, and physical aspects of life they are going to focus on 1 and a half.
I believe every child should have 30 minutes of vigorous physical activity during the school day (i.e. heart rate elevated over 65% of max for that child for 30 minutes straight), and probably another 15 minutes of sustained moderate activity.
Joe
P.s. My wife is a health and P.e. teacher and a damn fine one at that....she notices how many people go into that particular field of teaching out of laziness or a focus on after school sports/clubs. That should tell you how the principles look at the position as well unfortunately.
You know when I've gone to New York, I notice that people are thinner than in Fort Worth. What does Frito Lay have against Texans? Very little probably. Unfortunately however, our freedoms allow for people to sell them things they want to eat. Orin Kerr's grandmother, in a book Lost Prussia, that he recommended in Volokh Conspiracy, is noted to have told her family that she had always tried to lose weight and, after she was detained by the Nazis, she was able to do so. To return to the topic of New York, maybe it is that people are used to walking a little bit getting around on the Subway or that there aren't well stocked grocery stores with cheap food in Manhattan. I don't think jumping for bogeymen like the fast food industry or, off hand, 'educating' people K-12 is going to get it. OTOH, it may be useful to learn the cultural factors that influence obesity, I don't think were there yet. Maybe more bike trails or subsidized rail or other things would do more for our health than arresting the doctors, etc.
"I don't like a system where the doctor has a financial incentive to give me unnecessary tests. But I'm even less fond of the idea of giving her financial incentives not to give me necessary ones."
Megan,
Do you understand that the issue is not only one of incentives to provide not only unnecessary tests, but unnecessary and sometimes harmful treatment?
I wish that you had the time to take a week off from blogging and serve a week in an urban emergency room. It would truly inform your perspective on the situation.
There's a reason there are so many doctors leaving the AMA, and pushing for single payer. And there's a reason they're joined in that fight by so many nurses.
And there's also a reason that those of us who have treated patients of all income levels are a little skeptical about your libertarian-flavored slant on this issue.
No, I wouldn't want a situation like we have in banking, where no outsiders are given a voice in the reform (alleged) of the system.
But I'm deeply concerned that the discussion of health care is being hijacked by free market ideologues, and by otherwise well-meaning people like yourself who have no experience working either with patients or with the health care system.
Plutarchos - Doctors and nurses can be and are motivated by many things besides what is best for the patient. A single payer systems offers them, potentially, the least administrative work and insurance hassle (a good thing), but not necessarily the greatest opportunity to provide the greatest proportion of patients with quality care.
In my experience, doctors and nurses actually despise medicare even though it's a single payer system for a large chunk of their patient population (the elderly needing so much care and having access to it).
I've been involved with patient care for a long time now in one function or another, and part of my job now is to offer attractive health solutions for people who feel uninsured/underinsured/are seeking alternative treatments. I'd like to ask you: what would you expect me to gain by going into an emergency room for a week?
I already know the health insurance system is tremendously out of whack. What exactly would you expect me to learn?
Around 1/2 of the new doctors trained in Canada end up moving away from the utopia of universal health care up here. God forbid they end up in the US. They must be mad.
Derek
From a raw political viewpoint, if Obama gets his way, he will cripple the Democratic Party. However watching the democrats do serious injury to the country would make this a pyrrhic victory.
For others, if you know doctors who are harming patients, please report them to the state medical board. Do not stand silently by when you can prove such claims. You have a moral obligation. Or you are full of BS.
The government is going to create yet another new bureaucracy (and I assume a new czar) to tell doctors how to treat patients. Please tell me what you think medical schools are doing? Or do you just assume that doctors are idiots or corrupt?
Were is Obama finding these super-humans to run his vision. He has clearly never run any organization of any size.
People want to live longer and hopefully fuller lives. They are demanding more medical care. The only way Obama care works (ie saves money) is if he drastically rations care. The government starts to decide that this group dies, that group waits, and that group gets paid less.
"For others, if you know doctors who are harming patients, please report them to the state medical board. Do not stand silently by when you can prove such claims. You have a moral obligation. Or you are full of BS."
DanC, overspending and unnecessary invasive procedures are part of the system. Please read surgeon Atul Gawande's June 1 New Yorker article
http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande
It is why we prefer to run invasive procedures for heart disease, even when we have clinical evidence that heart disease can be more effectively (and more cost effectively) treated (not just prevented, but treated) through diet and exercise - neither of which carry the risk that comes with surgery.
"People want to live longer and hopefully fuller lives. They are demanding more medical care."
Indeed, they do. Unfortunately, there is plenty of evidence that "more medical care" does not equal a longer or fuller life. More medical care does not even equal "better medical care."
If you don't get that aspect of health care, I recommend the Gawande article. There are also many recent articles that suggest a surfeit of early screening is essentially useless, except in boosting health care inflation.
Of course, if you have a resolute and remarkably simple faith that the free market can fix anything and everything, there's very little I or anyone else from surgeons to medical researchers can write to convince you otherwise.
I have read the article and I don't buy it. You have almost no private insurance in a small town in Texas, in order to attract doctors they have made it easy for doctors to have a comfortable living, Please read numerous Congressional hearings on improving health care delivery to rural communities.
The failure that Gawande writes about is the "failure" of the government run system.
The claim that more medical care is not the same as better medical care means what? Doctors are morons or thieves? Medical schools are training people to kill people? What are you claiming about medical professionals?
Do you see variations in medical treatment? Yes. But as information spreads and consensus forms practice patterns change. Is that process sometimes too slow? Yes, but if you think the new bureaucracy will be a nimble little system, well if you have have a resolute and remarkably simple faith that the federal bureaucracy can fix anything and everything, there's very little I or anyone else from surgeons to medical researchers can write to convince you otherwise.
BTW
"It is why we prefer to run invasive procedures for heart disease, even when we have clinical evidence that heart disease can be more effectively (and more cost effectively) treated (not just prevented, but treated) through diet and exercise - neither of which carry the risk that comes with surgery."
So that is Obama stage 2. Tell heart patients all you can offer is a diet and exercise plan, it is more cost effective, - and the name of a funeral home.
Sort of like the old Soviet system. A cardiac unit in Moscow required patients to walk up four flights of stairs for treatment. If you couldn't make it, they couldn't treat you. I guess that system is a viable system for some.
It'd work for a weightloss clinic
"It is why we prefer to run invasive procedures for heart disease, even when we have clinical evidence that heart disease can be more effectively (and more cost effectively) treated (not just prevented, but treated) through diet and exercise - neither of which carry the risk that comes with surgery."
And the other reason is that in every study of diet and exercise programs, separately and together, physician supervised, group therapy assisted, drug aided, whatever the hell you want there was less than 10% of people who achieved weight loss sustained over 1 year. Please see NIH Consensus guidline for evidence. If "diet and exercise" was a drug the FDA would not let it be marketed because it is not effective.
Treejoe,
I'm happy to answer that, but I had directed the question to Megan, who I understood to be a blogger.
Since you are asking, I guess it would help me to answer it if I understood first what you mean by:
"I've been involved with patient care for a long time now in one function or another, and part of my job now is to offer attractive health solutions for people who feel uninsured/underinsured/are seeking alternative treatments."
What does "offer(ing) attractive health solutions" actually mean?
I had always thought that the language surrounding health care had become bizarre and obfuscatory, but I have to admit, I'd never heard that one before. I'm so sorry, but... I can't figure out what on earth you mean by that? Does that mean you’re in the insurance business? Or that you sell herbalife? Or you’re a scientologist?
Please pardon my ignorance! On a very general level, what I thought Megan could gain by ER exposure would be actually working with a very wide variety of patients - from industrial accident victims to stage 4 cancer patients, to the homeless, all of whom come through, with various degrees of insurance. Obviously, some familiarity with what constitutes the bulk of very expensive ER care and some face-time with patients would be useful. It would also be helpful for her to understand what it's like to have TB patients come in, and to have to put on the appropriate headgear to deal with them. In short, there's a whole novelistic but also humanistic aspect to ACTUAL patients and our interaction with them that she's missing.
This sort of experience was actually very useful for Wendell Potter, the former head of Cigna's Public Relations Department, who, when confronted with the actual health care people were getting near his hometown, came out as a whisteblower against the health care insurance industry, and has in fact testified in congress.
I will also ask that since, in your experience of "offering attactive health solutions for people who et cetera" you noticed that doctors and nurses despise medicare, then how does that compare to their contempt or hatred of Cigna or any other private insurance company?
And I apologize for probably not being able to respond to your next post until much later, as I'm headed out.
Howdy Plut,
Thanks for the kind reply. Alot of people are confused by what I do, so I don't typically offer a short direct description though I'm proud of it. Here's a description of me so you know where i'm coming from...sorry for the length:
I recruit patients for clinical research on new drug/device therapies. Specifically Phase II-IV trials. Right now I'm recruiting for a pediatric GERD study, benign prostate hyperplasia, diabetes & hypertension, and just finished up a COPD study. I work on every level, from direct contact with the patients to devising and running national advertising campaigns (my international reach is limited right now to more in-direct means).
In the past year, I've personally managed the recruitment of about 2,000 patients into various clinical trials and I've worked in about 12-15 different therapeutic areas.
I offer them "attractive health solutions" in that alot of them get a benefit of health monitoring out of participation in the research....someone is being paid by the pharma company to literally go over their health status with a fine tooth comb. Sometimes the subject receives a free approved first-line medication in combination with the experimental therapy, sometimes they receive placebo.
I'm proud because, on average, I reduce the time of a Phase III study by 30% (on pharma companies wise enough to come to me during study launch). That translates into, for example, 4 more months on patent if the drug is approved (4 months time savings is typical).
A quote from a recent article, "Each additional day
clinical trial delays extend a drug's development could cost companies between $600,000 in foregone sales for a small or niche product and $8 million for a blockbuster drug."
When drug companies price a drug for market, as well as decide whether to conclude studies on it, they assess how long they will have before it becomes generic, how much it costs to develop it, etc.
By increasing it's time on market in patent by 4 months, the drug price can be reduced a meaningful (though small overall) amount and help drive down the cost of future drug development.
Hence why I enjoy what I do :)
Before this, I worked at developing training programs for investigators (i.e. psychiatrists, psychologists, nurses) for central nervous system studies....we'd train them on how to standardize their ratings of disease severity to remove as much bias as possible in large research programs across lots of doctors.
Before that, I worked in a hospital conducting physical/chemical/nuclear stress testing. And before that I did metabolic research at Hopkins.
So there's my career....in 3 of the roles, I worked intimately with patients in various stages of the healthcare system. My current role requires that I be able to figure out who they are and how to communicate with them about one of their most sensitive issues.
In this role (especially), I work with roughly 2500 doctor's offices a year.
Yes, they all hate CIGNA and a few others. They don't like blue cross blue shield either in my experience, but it's more just because it's an administrative nightmare to deal with....not because it's an evil company.
And with those statements in mind, one of my core recommendations is to remove the various barriers in place around the country (state and federal) that create all these seperate health insurance requirements and unique programs. Create a universal coding language for all of the above (private insurers and medicare). Give private insurers a chance to create their own nationalized healthcare and gain the efficiencies within, along with a consistent federalized coding standard to reduce both insurer and provider costs, overhead, and headaches.
Just a couple of thoughts from thinking about how different insurers are hated....they are hated partly because our system can not be dealt with in any sane way.
Oh yeah. THAT's why I read the comments.
Indeed!
Sorry, my sarcasm meter isn't working this morning. Are you and Yancey being serious or facetious? I'm asking because I genuinely felt bad for leaving such a long comment, but maybe you enjoyed a few of the things i wrote?
I love CIGNA. They get people prepaid on their bill and they pay very well for opioid detox.
I had thought the type of compensation system being considered by Massachusetts -- and now widely employed by Britain's NHS if I'm not mistaken -- does not disincentivize physicians from administering "necessary" tests, but indeed incentivizes them. That's because compensation is partly based on wellness results. Am I wrong?
It may be that such a system is hard to get working right, and sounds better in theory than it works in practice, but when paychecks are at least partly based on wellness results, physicians ought to have a financial incentive to recommend necessary tests. They also, of course, have the incentive of avoiding lawsuits, and of maintaining their professional reputations. And the "incentive," such as it is, of medical ethics.
Been there, done that, have the scars to show. Short summary. Capitation did not work in the 90s. The basic problem was both insurance risk and a misalignment of incentives between agents and principals. If the MD group actually reduced costs the excess was quickly captured by the insurer/employer. No real incentive to keep down costs. Cost overruns were eaten by the medical group. ( heads I win, Tails you lose) The risk of not doing something was borne by the medical group, ie malpractice risks. Within the groups the professionals who kept costs low did not get the savings. This had to do with the various schemes for splitting the capitation. The physician fees had to be split between all the specialties based on a per member per month formula. Just figuring out who was on a panel at any specific time was an administrative nightmare. Also you had to calculate within the specialty groups to pay each MD. Depending on the group formula there could still be incentives for visits and procedures (define fairness, get everyone to agree, give three examples). There was also no incentive for preventive care or even good care since the group would not capture the lower costs in 5-10 years when the patient was healthier. Essentially no one could solve the difficulties in aligning the interests of the principals (payors), customers (patients) and the agents (health care providers). Payors wanted cheap, patients wanted the best/most, MDs knew you could pick 2 out of 3 and were caught in the middle. Capitation died because patients didn't trust it and the agents went "John Gault" and refused to contract.
I not too long ago moved from New York to Mass and have seen an appreciable change in my health care. I have no idea if it is due the reforms but I have never witnessed such efficiency between my doctor and my health insurer and me. I've observed everyone involved in my health care is certainly trying to cut costs and it hasn't in any way come at a sacrifice to my care. The electronic medical records my doc uses is cool too - makes the visits super quick as he and the nurses recall info instantly. My health insurer links with those records and I can access them through Google Health. I can see everything my doctor has ordered for me. No more wondering like Elaine in Seinfeld what the doctor wrote in the patient notes. For whatever the Mass plan has in way of failings I have to give the Commonwealth credit for giving it a try. It is more than most of the other states can say. Tangential to all that I have to say for all we hear about Americans being fantastic innovators and entrepreneurs, I am dismayed by the rhetoric we so often hear about England and Canada and their major failings and automatically linking them to our proposals (I've lived in Canada - its great to know you won't have a bill when you go home, but it isn't nice to hear you are going to wait ages to see a specialist). I am confident we can find a uniquely American fix for our health care/cost situation.
Anyone know if they considered the Dutch option? The Dutch do almost the exact same thing but with with "ketens" or "chains" for each disease, varying the cost paid per patient by disease.
So, they identify the 5 or so diseases that account for the bulk of classifiable health spending (heart disease, COPD, diabetes, etc.). They figure out an average cost of caring for a patient with this disease. They offer to pay the insurance and managed health companies this average to care for any patient with this disease*, and the companies can keep the difference between that amount and how much they actually spend. Presto, innovations in cost savings emerge!
Well, it's more complicated than that, but Dutch medical supply companies like Philips really are doing amazing and innovative things in the area of cost savings in part because of their home country's regulatory environment and incentives.
If MA wants to keep the cost-saving incentive portion of its program but solve some of the issues Ms. McArdle raises, then perhaps it should give the Dutch system some consideration.
* They are not allowed to turn down any patient with this disease. This regulation prevents them from turning down the more sickly patients and only accepting the less costly ones, while still pocketing the disease average. This still leaves open the possibility of competition by patient selection, though, as companies can still be selective about whom they actively market their offering to.
You are describing case rates. Case rates also failed in the 90s. Bottom line, the same issues for capitation. If you succeeded in case rates you only captured the excess for one year. Of course if the savings was from variation due to small numbers (insurance risk) you were in trouble the next year. (lots of theories/papers on how to reduce costs have foundered on that rock) Selection and coding became important. Again if you treat correctly for long term outcome the savings will not be seen for years. By that time the treating group will not be getting the savings. Why work hard so that someone else will reap the reward? The agent-principal problem again along with compensation issues and game theory. Some how the policy wonks never seem to remember that physicians, patients, and the payors are human actors who respond like people, not insensate widgets.
My Massachusetts group premiums went up 30% this year. The system isn't working.
BTW - Obama care has exempted federal employees, in the plan as it currently stands. So Obama care is good enough for us serfs but not for he lords.
Each state has its own laws and rules. The regulatory environment impact a number of the component industries in the system in wildly different ways, from mandated coverage to access to payment to innovation. States Rights needs a bigger part of the discussion.
My state's Sen. Snowe's latest "Snowe Report" touches in this:
Notice that her safety net isn't income driven, it's This option would be available from day one in any state where – after market and insurance reforms are implemented – affordable, competitive plans still do not exist.
It would be really nice to see a good regional profile of what problems are. Provider shortages here? Specialist glut over there? Lack of competition up yonder? Anyone know of such a beast?
"If you succeeded in case rates you only captured the excess for one year. ... Again if you treat correctly for long term outcome the savings will not be seen for years. By that time the treating group will not be getting the savings."
Can you explain why this is the case? In the Netherlands the government guaranteed the same per patient payments for certain periods (say 5 or 10 years) so you certainly didn't only see a one-year savings. As well, they renegotiated the contract at the end of the period only based on a national average - not your actual savings or costs, but the cost of the entire industry - so if you were relatively more efficient you harvested the gains.
I apologize if I did not understand your point and appreciate your insights.
As someone who has lived both in Europe and the USA, it is truly pointless to compare costs and outcomes between the two regions. You are dealing with 2 entirely different populations and exposing yourself to a much higher risk pool in the USA. I am shocked when I see overweight people in Germany. I am also shocked when I see a middle aged American who doesn't have a beer gut or isn't still carrying those pregnancy pounds 20 years later.
People likely don't realize that when I have to pay for their medical care via government program, I am going to insist on a say when it comes to their weight and dietary habits. ;)