All You Can Eat Healthcare and the Road to Socialized Medicine: One Family’s Perspective
by: Stephen Erickson
25. Mar, 2010 
1 Comment
The doctor looked at me and asked if I knew I had a heart murmur. “No,” I replied nervously, “no one has ever said that to me before.”
He prescribed an echo cardiogram. “It’s probably nothing,” he said, “but we need to make sure you don’t need a valve job.”
The doctor was my new old doctor. That is, he had been my doctor when I was single. Now my wife and I had moved back into the area and I wanted a physician closer by. I had always liked this doctor.
About $1600 later, after the echo cardiogram, I was given a clean bill of health. I say “given” but in fact they gave me nothing except a bill. They did not even call. I had to phone the doctor’s office, where someone casually informed me that I was fine.
A few weeks later my wife went to this same doctor. And guess what? She was diagnosed with a heart murmur too. Quite a coincidence, no? Knowing my story, she refused to schedule the echo cardiogram even though the doctor said it was “urgent. ” Instead my wife consulted a second doctor who found no heart murmur.
Clearly our doctor either 1) has a hearing problem, 2) is part of practice that profits from piling on extra charges, 3) practices an extreme form of defensive medicine or 4) responds to some combination of these three. Thinking back, I also remembered an unnecessary x-ray years ago.
This anecdote is relevant to our recent healthcare reform debate in the United States because my wife and I have a high-deductible plan. The $1600 came out of our own pockets. We are going to fire our doctor. In so doing, my family strikes a small blow for healthcare efficiency.
But if we had a more luxurious plan, one with no or just a small deductible, we might have shrugged the whole episode off. To paraphrase George Will, folks who pay at the door at the Great American Heatlhcare Banquet consume all they can.
The lesson for healthcare reform is obvious. Universal high-deductible plans could substantially drive down healthcare costs. Doctors who over-prescribe medical services will be put out of business.
High-deductible plans are not just for the young,healthy and wealthy. And they could be made progressive by a voucher system that helps fill the medical-savings accounts of low-income workers.
For a still more paternalistic approach, citizens or their employers could be required not only to buy high-deductible plans, but also to make contributions to their own health-savings accounts (as you can read here, Whole Foods already does this for its employees). Those most struggling to make ends meet could be given vouchers both for the plan and to help fill their own health-savings accounts. Arguments about helping the working poor pay for healthcare should not get in the way of getting the structure right.
Unfortunately the Democratic legislation that passed in the House Sunday does not encompass this kind of cost-saving reform. At the healthcare summit with Republicans, President Obama showed his disdain for high-deductible plans . He argued that such plans would keep people from going bankrupt, but that consumers would not seek out preventive care. He implied that he had failed to fully consider some creative alternatives or that consumers just are not smart enough to look after their own health.
So often it seems that left-leaning politicians seek control from the top without considering the myriad effects below. Some effects are hard to predict, but many are not.
Consider the rational course of action for me and my family now that the President has signed the healthcare legislation into law. Instead of being a small force for healthcare efficiency, my family and I will probably become a drain on the system. We will be tempted to drop our children’s insurance coverage, since under the new law we can always insure them later if they get very sick. Insurance companies will not be allowed to turn us down. With our current high- deductible plan we are already accustomed to self-insuring up to $5000 a year anyway. We might simply take what we had been spending on their insurance and beef up our health-savings account instead.
In 2014 every citizen without health insurance will be forced to pay a penalty of up to $2085 (though I am not sure if my family will qualify for this maximum) and no one, including adults, can be denied insurance due to pre-existing conditions. The $2085 sum is more than $5000 less per year than my family’s current high-deductible policy. Our family will have no incentive to buy insurance. I may pay the penalty, drop insurance for the whole family, self -insure for the smaller bills, and buy insurance only if we experience a medical crisis.
At some point — maybe after the insurance companies are wiped out and the government starts paying all of the bills — fines will have to rise to the level where paying them instead of carrying insurance makes no financial sense. The insurance I will be required to buy will have a very low deductible or none at all, so it will be more expensive than my former policy. But tax payers will subsidize me and my family so long as our income is under $88,000.
Maybe we will pay less than we do now. Maybe we will pay more. Who knows? But our low- or no-deductible plan mandated in the future and subsidized by other taxpayers will pay our way into the Great American All-You-Can-Consume Healthcare Banquet. We will automatically say yes to any expensive test our doctor prescribes. Why wouldn’t we? Doctors, with incentives based on profit or fear of law suits, will continue to pile on helpings of tests and treatments.
Cost controls are already necessary and will increasingly become more so, but they will not include cost controls managed by healthcare consumers like me and my family or driven by market forces. The structure of the healthcare bill clearly indicates that a bureau or panel in Washinginton will decide what treatment is necessary and what is not. Insurance companies will either disappear of become completely regulated. Progressives who favor a single payers healthcare system should have faith. It is coming, and taking us all along for the ride.
Author Info
I’m torn on this one. On the one hand, overutilization is a problem endemic to any third party payor system, and I think HSAs are part of a viable solution to help curb that. On the other hand, at least under the current system, I do see his point when it comes to the possibility of HSAs discouraging preventative care – even when preventative care is not subject to the deductible, at least for a certain economic segment. If you can’t afford to fund the HSA every year, then the cost of treating what might be found, to the tune of $4-5k might feel just as unreachable to someone of limited means, as much higher amounts would to the rest of us, leading to an attitude of “why bother, even if they find something, I can’t afford to get it treated anyway?”
To be fair, you did address this is in the form of vouchers, which is something that I’ve given serious consideration to, myself, but I run into one problem with that idea, which I can’t seem to figure out a way to get around – in that case, you’re still paying with someone else’s money, which seems like it would largely defeat the purpose, because it seems like it would remove the primary incentive to be a smart healthcare consumer. Any ideas on how to change that, while still making them a viable option for those with lower incomes?
Another issue I have with relying solely on HSAs is the complexity of today’s medical billing. Every procedure under the sun has its own CPT coding, and a growing number of providers, in response to low reimbursement rates, seem to engage in practices like unbundling – breaking as many charges as possible, and charging for every single one of them. A simple late night visit to urgent care turns into an office visit fee, an after hours charge, billing for every individual test, the blood draw for the test, etc. I have an HDHP/HSA myself, and it has been my experience that my insurance company isn’t nearly as aggressive when it comes to this, as they are when the charges are their risk. I have concerns that this would make it very difficult for your average consumer – perhaps consumer outcry would be the answer? People would not tolerate any other good or service being billed as healthcare is now – imagine going to a restaurant and being billed separately for not only your meal, but your napkins, silverware, and every time the wait staff came to the table! Let’s not even get into what a bill looks like when you have a couple of weeks in the hospital – your average consumer would be completely overwhelmed by that. (Although to be fair, only the first $5,000 or so would be their responsibility, there’s still no incentive – especially when the billing is so complex – for them to try to understand exactly what it was the hospital billed for, anyway. Even requiring a written description of each code wouldn’t be much help for those not intimately familiar with medical terminology.) I don’t think it’s a matter of folks not being smart enough to look after their own health, but a matter of the way we bill for healthcare being EXTREMELY complicated and confusing.
I also don’t think HSAs do enough to have a drastic effect on the massive amounts of administrative waste. Right now, every insurance company has a different set of complex rules, different denial codes, different remittance statements, and different explanations of benefits. About the only things that are standardized are the forms and the procedural and diagnostic coding itself, and even then, as illustrated above, there is more than one method of billing for the same visit. This leads to a huge amount of waste from both ends – but especially on the part of the providers, who have to devote a sizable percentage of their practice income just trying to get their claims paid. I’m not sure how to fix this, while retaining a way of billing that enables the providers to accurately report exactly what it is that they did, without abandoning fee for service billing entirely, or over-regulating the insurance companies. And while it’s easy and tempting to push for increased regulation on the insurance companies in today’s political climate, all that really does is shift the administrative burden and cost to them, which would lead to an increase in premiums.
Ideally, I think the best system would have all parties sharing part of the risk – patients, providers, insurers, and in some cases, the government. What would you think of a system where we (the consumer) were responsible for the costs on the bottom end, and the government was responsible for costs on the extreme high end? This would help contain costs by making them more transparent to the consumer, possibly forcing us to demand a more efficient form of paying for all of this, but also eliminate the need for insurers to have much of an underwriting staff at all – they would know that no matter what their claims experience was with a particular patient, their costs would be somewhere between A and B. They could then plan and set premiums accordingly.
Ultimately, I wish the phrase “rationing of care” could be removed from this debate. There’s really nothing “rational” about the way we behave regarding health care – including condemning the people we hire for attempting to contain costs, when that’s exactly what we’re paying them to do. We just want them to deny someone else’s claim – not ours.