Monday, February 22, 2010

Cost-Effective Health Care Compromise

President Obama has mounted a new full-court press this week to finally pass a version of the Senate Health Care bill, using the "nuclear option" if necessary.

It seems he is assuming that the televised summit conference between Democratic and Republican politicos this Thursday (25 February) will fail to reach a bipartisan compromise. I hope a cost-effective compromise can be reached, but I am not sanguine.

If there is no compromise, the plan is for the Democratic-controlled House to pass a version of the bill already passed by the Senate (before Sen. Ted Kennedy passed away). Then the Senate, by a simple majority of 51, can confirm it and it will become law. I hope this "nuclear option" is not attempted. I do not believe it will work because anyone who votes for it and is up for re-election this year will understand that he or she faces a high probability of being defeated.

Here is my outline for a bipartisan compromise, based on my previous postings here and here, partially based on Democrat David Goldhill's reasonable proposals in his 2009 piece in The Atlantic. This is a very serious plan that I think has a chance of gathering bipartisan support.


1) Universal digititized patient data, securely accessible by any doctor chosen by the patient. This part should be easy to sell to President Obama and both political parties and all medical specialties. It has been technically feasible for a decade and it is past time we do it.

2) Mandatory Catastrophic Insurance coverage for all that would cover only medical costs incurred in any one year of over $50,000 or a chronic condition that incurs costs of over $5,000 per year for ten years. That coverage would include a voucher for a basic checkup once a year. The government would subsidize coverage for those who could not afford the relatively low premiums for catastrophic coverage. Goldhill estimates a yearly premium of $2,000 for this type of coverage. (By comparison, my wife and I are paying around $10,000 each if you include our out-of-pocket insurance and Medicare costs plus the contribution of my former employer and of government Medicare funding.) This is an approximation of the universal health insurance that President Obama and the majority party favors in a cost-conscious form that should be palatable to the minority party.

3) Nationwide competition by health insurance companies certified in any state to sell insurance in any other state. This will provide far more competition and bring down costs. This will be an easy sell to most members of the minority party but may be resisted by the majority party that is obligated to state health care regulators and to insurance companies that have near-monopoly positions in some high-cost states.

4) Mandatory Health Savings Accounts for all that would be tapped into for actual medical costs incurred, but would remain the property of the owner of the account (you, or your heirs) if not fully expended, as proposed by Goldhill. Employers and employees/retirees would pay into the Health Savings Accounts the difference between what they are currently paying for comprehensive insurance and out-of-pocket medical costs now and the lower cost of Catastrophic-only insurance. (For example, my wife and I would see about $8,000 per year for each of us pass into our Health Savings Accounts.) Young, healthy families with low medical expenditures would see their Health Savings Accounts grow by thousands of dollars per year, accruing as savings to prepare themselves for the likely increasing medical costs as they age. Those not so fortunate, who incur medical costs, would expend the funds in their Health Savings Accounts until the accounts were tapped out, and would then pay the remainder out of their pockets and savings, until they hit the catastrophic limits and then Catastrophic-only insurance would kick in. This is a further approximation of the universal health insurance that President Obama and the majority party favor in a cost-conscious form that should be palatable to the minority party.

The point would be to make the recipients of health care more conscious of the actual costs. Instead of calling an ambulance for every event, they would be more likely to drive the injured person to the hospital or use public transit if possible. Instead of accepting the first doctor's advice for expensive medicines or tests or procedures (that may be in the doctor's self-interest - he or she may have a boat payment due) they would be more likely to shop around for lower-cost options. That would drive down the costs of medical care for everybody and make the providers more responsive to their customers, who would be the actual recipients of health care rather than the government and insurance companies.

5) Tort reform to eliminate high malpractice premiums and defensive medicine with unnecessary tests that add up to 10% to costs. This will be a hard sell to the majority party that is in the pocket of trial lawyers, but it is an absolute necessity for support by the minority party.

6) Outcome-based reimbursement to eliminate costly surgery and medications that do not yield comparative effectiveness based on quality-adjusted life years. Though President Obama earlier seemed to favor an approach of this type, it will be a hard sell to the minority party. Some politicos in both parties who originally proposed it have backed away due to the onslaught of opposition based on "death panels" and "pulling the plug on granny".

7) No denial of insurance based on pre-existing conditions or boosting of premium costs due to illness. Given (2) and (4), anyone who has complied with the mandatory coverage requirement, which would be partly subsidized by the government for those who cannot afford it, would be protected from subsequent denial of coverage or premium increases based on illness.

Ira Glickstein

11 comments:

CentralCoastRick said...

No criticism of your compromise - it sounds pretty easy to vote for - but for the issue of cost.

Relating to this - where does 'fairness' fall - unless you conclude that good health is it's own reward (that's possible), then why would those that enjoy risky behavior (drugs, skydiving, indiscriminate sex, late term babies, etc.) pay the same as those whose behavior is cautious?

(I would make some distinction between patients whose extreme health costs / pre-conditions are outside their control. But in CA we lavish expensive health care on state prisoners - care that is unaffordable to even the middle class citizens with typical healthcare coverage.)

In any case, here's a vote for compromise - it is clear that the current congressional strategy is defunct!

joel said...

I think you've managed to figure out a plan that would be acceptable to no one.

joel said...

To be more specific, (6) "death panels" would be unacceptable to Republicans while (7) "tort reform" and (4) medical savings accounts would be unacceptable to Democrats. It's time to push the reset button and sweep aside the hidden agendas. We need to define the problem(s) and find "islands of knowledge." The latter term refers to reasonably isolated issues that can be attacked one by one. For example, tort reform is pretty much independent. It either helps or doesn't. We can wait a few years and see what impact it has on medical costs. Premiums come down or not. Defensive medicine goes away or it doesn't. Interstate competition is more complex, but again it either produces more competition or it doesn't. Any scientist knows that you don't carry an experiment by changing so many variables that the results are inconclusive. Push the reset button and define the problems rigorously. I think that's the right approach. -Joel

joel said...

I just came across an advertisement for CVS pharmacies housing a system of nurse practicianers for your minor and rapid use. (Unfortunately, there are none in my area.) Now, that's what I call a serious element of the solution to the high cost of medical care. Extending this idea, there needs to be a two or three tier system of health care in order to design a more efficient system. "Death panels" are a consequence of trying to ration limited resources. Expansion of nurse practicianers is an example of increasing the resources.

Ira Glickstein said...

Thanks Rick for your comments. It seems crime does pay if you need good health care!

Thanks also Joel. I don't think my plan will get anywhere, but I tried to include bi-partisan ideas. The mandatory catastrophic insurance and health savings accounts idea is from a self-labeled Democrat and was published in The Atlantic, a left-of-center magazine. It achieves universal coverage to satisfy the Dems while being market-based to satisfy the Reps. Many of the other provisions are already agreed to by both sides.

You brought up walk-in nurse practitioner care at CVS that is far more cost-effective than the emergency room. Walmart and others offer the most popular generic drugs at very low prices. CVS and Walmart and other commercial ventures could do a better job, at lower cost, if only the government would get out of the way.

As for rationing, it happens now when an insurance company refuses a heroic operation or expensive drugs to someone who is likely to die soon anyway. President Obama's grandmother was given an expensive artificial hip even though she had a heart condition and only three to six months to live. She passed away two weeeks after the hip operation. Obama said this level of care was unsustainable, and I agree.

I think the government has a role as an "honest broker" (Obama's words). The NIH should rate conditions and treatments for Comparative Effectiveness and issue guidelines for Quality-Adjusted Life Years that insurance companies and health providers could refer to in deciding whether to operate or prescribe expensive drugs, or simply (and humanitarianly) provide palliative care.

I guess you could call this process "death panels" and "pulling the plug on granny", if you want to appeal to emotion. But facts are facts. Any other plan is unsustainable. It is a way to reward trial lawyers and crazy surgeons, torturing the chronically and terminally ill, and wasting our children's futures.

Ira Glickstein

joel said...

Ira said: I guess you could call this process "death panels" and "pulling the plug on granny", if you want to appeal to emotion. But facts are facts. Any other plan is unsustainable. It is a way to reward trial lawyers and crazy surgeons, torturing the chronically and terminally ill, and wasting our children's futures.

Joel replies: I use the words "death panels" not as an appeal to emotion but simply as shorthand. The reaaders of this blog are too sophisticated for an emotional trick. I think the term "death panels" is good short hand, since as you yourself describe, they will in many cases determine who is worthy of treatment and who will receive pain killers to ease their final exit.

I wonder if you remember the case of Mickey Mantle's liver transplant. The transplant committee moved him ahead of other candidates even though his drinking should have eliminated him according to the rules. Such is the faith that one can put in a committee.

I suggest that a total lifetime ceiling placed on the amount any individual can receive is a more automatic and non-judgmental method for capping costs to the body of policy holders. We don't pay infinite benefits to life insurance policy holders. A policy has a payout according to the premium one is willing to pay. That's up to the individual. I don't see why the same can't be true of health insurance. -Joel

Ira Glickstein said...

Well, we've found a point where we strongly disagree, Joel.

You wrote, in part:

"I suggest that a total lifetime ceiling placed on the amount any individual can receive is a more automatic and non-judgmental method for capping costs to the body of policy holders. We don't pay infinite benefits to life insurance policy holders."

First of all, life insurance does not go to the dead person, but rather to his or her beneficiaries. Under your cap idea, we would let some people pass away who could have benefitted from an operation or treatment that would have extended their lives, at a good level of quality, for many years. At the same time, we would be giving expensive operations that would not extended their lives to people who were well all their lives but then had a major health problem and only had months to live.

For example, President (then candidate) Obama's grandmother had been given three to nine months to live due to a serious heart disease. Then she slipped and broke her hip. If she had not spent much on health care until the heart problem occured, she would have been no where near your "automatic and non-judgmental" cap.

I still do not think it would have been right to give her an artificial hip.

Even if complications from the major surgery had not killed her, and she made good use of the hip for the three to nine months she had left before the heart disease would have done her in, I do not think it is sustainable to give people expensive surgeries under those conditions.

And, neither did President Obama who said it was unsustainable. (Though he said he would have been willing to pay out of his own pocket, indicating that rich people like him and their grandmothers could get levels of treatment not sustainable for the general public, which I also agree with :^)

Actually, the mandatory Health Savings Account plan I included in my list of Health Care items would work someting like what you want. Under that plan (as outlined in The Atlantic piece by Democrat David Goldhill), young people and their employers would pay in the amounts they currently pay for health insurance each year. If they used only the yearly checkup, and never tapped into that account otherwise, by the time they were our age, that Health Savings Account would have over a million dollars in it! Thus, if they needed an expensive surgery, they could get it, despite any other health issues they might also have.

Ira Glickstein

joel said...

And, neither did President Obama who said it was unsustainable. (Though he said he would have been willing to pay out of his own pocket, indicating that rich people like him and their grandmothers could get levels of treatment not sustainable for the general public, which I also agree with :^)

Let's not talk about what President Obama said. His double-speak about his grandmother just doesn't make sense. Besides, I've never met anyone who would chose to spend any of the six months left to them going through hip replacement surgery and the attendant risks and the pain of rehabilitation. This is truely an "outlier." Let's just talk about more realistic scenarios. As long as there is unfettered access to health care, rich people will have better care. In socialist France, doctors are required to participate in the public system, but they also have private clinics on the side. Hospitals do unnecessary procedures to build and maintain their fiefdoms. Bureaucracy and greed go hand in hand.

Let's push the reset button on our thinking. I've paid an enormous amount of money into the health pool and withdrawn practically nothing (boruch h'ashem!). Are you going to tell me that now when I might actually need it, I would be denied care because it wouldn't suit some committee's idea of how to best spend funds? We need to look at real actuarial data before we make political judgments. If my payout is going to be attenuated because I'm old then it's only fair (in a gambling sense) that my premium also be decreased when I'm old. In fact, premiums are currently raised for the elderly. If I sign a "do not resuscitate" agreement, shouldn't my premiums be lower? Perhaps the health care insurance system needs to be turned over to Las Vegas where they know what's fair. ;^) I think they would do a better job than the congress and president.

Most of all our differences on this subject can be attributed to a socialistic assumption versus an individualistic assumption. That gap between us cannot be bridged, because it governs the evaluation of the goodness of any solution to a problem.

Ira Glickstein said...

Now we are getting somewhere Joel!

You say you have "paid an enormous amount of money into the health pool and withdrawn practically nothing (boruch h'ashem!) ["Blessed is the Holy Name (of God)" for those who do not know Hebrew].

Yes, you did. Counting your premiums plus those paid by your employer out of your real earnings, you would have (according to David Goldhill in The Atlantic piece) over $1,000,000 had you invested that money conservatively.

You say you have received "practically nothing" but that is not true. Over all those years you had INSURANCE in case you or your family had needed it. You and I have also paid thousands for fire insurance (and accident and liability, etc.) and may have not collected a dime (boruch h'ashem!) You buy insurance in the hope you will NOT need it!

Goldhill (and I) think it would be better for you and your employer to have paid that same amount of money into a combo catastrophic policy plus a Health Savings Account (HSA) rather than to an insurance company. Had you done that, and been healthy all your life, you would now have the $1,000,000 in your account and you would be able to get that replacement hip even if you had only six months to live due to a heart condition.

Had you been ill most of your life, your HSA would be tapped out and you would have to spend out of other savings until your yearly medical costs reached catastrophic levels and then the insurance company would apply rules that would deny you a replacement hip if the Quality-Adjusted Life Years did not justify it.

Isn't that almost exactly like the lifelong cap you wanted on medical care? People on an HSA, and their doctors, know they are spending their own money, and not "the insurance company's money" so they shop around and do not get expensive treatments unless absolutely necessary. Goldhill's plan includes a voucher for a yearly checkup so potential problems will be discovered early.

If you place a "do not resuscitate" order and die earlier as a result, your heirs will inherit the extra money thereby left in your HSA, which is kind of a reward for your unselfish behavior.

Ira Glickstein

joel said...

Ira said: Isn't that almost exactly like the lifelong cap you wanted on medical care? People on an HSA, and their doctors, know they are spending their own money, and not "the insurance company's money" so they shop around and do not get expensive treatments unless absolutely necessary. Goldhill's plan includes a voucher for a yearly checkup so potential problems will be discovered early.

Joel responds: I agree with you that now we're getting somewhere. You'll recall at the start of this discussion, I only said that neither Dems nor Reps would find the plan acceptable. I still maintain that's true, but that doesn't mean there aren't good ideas within. As you point out above, a medical savings account could have advantages. The democrats do not favor that element and they make a good point. The health marketplace is not like potatoes being sold in the town square. Our ability to shop around or to do without is severely limited.

Joanna and I have talked about our experience with doctors in "the good old days" before insurance. You had to be really, really sick before a doctor was called in. My mother suffered all her life from the heart damage that occurred due to strep throat. Joanna had scarlet fever that was neglected by her mother until her aunt stepped in. I think this may be symptomatic of the kind of neglect that may be seen and that has nothing to do with an annual checkup.

In adults, we would find people following their natural inclination to "tough it out" resulting in later and more expensive treatments. I think that annual checkups are pretty worthless for most people. The cost benefit ratio is doubtful and the detection rate is poor. For example, Joanna had a chronic cough. The doctor figured it was a nasal back-drip. We were not convinced and asked for a chest x-ray which showed a growth on the lung. In order to get an idea of the growth rate, I went to the state health department to ask about the screening x-ray she was required to take because of her work with children. They had the records for several years back. It turned out that the growth was there for at least two years. That was a relief, because it meant the growth was probably benign. On the other hand, it indicated that people who were getting annual screening x-rays do not understand that the film was only 35mm and that the screeners are just technicians on the lookout for tuberculosis. (At least that was the excuse they gave us.) It seems to me that annual checkups are simply a patch placed on the proposal to get around the health disincentive caused by deductibles. We can't expect annuals to be effective, since it would be logistically impossible for everyone to be seriously checked by a real doctor. We all know that even when we go to the doctor with tangible symptoms, diagnosis is almost hit and miss. Come to think of it, that suggests a way to really save health resources.

Medical diagnosis needs help. It is barely a science. A lot of time is spent on costly trial and error efforts to figure out what is wrong with a patient with symptoms that are shared simultaneously by many conditions. Forget about a diagnosis if your symptoms are transient. (Perhaps the research dollars we could save by not funding "exercise helps avoid......" could be applied to diagnostic techniques.) A GP seems to be hardly more than a gatekeeper for specialists. So much so, that many of us when permitted, research our problem on the internet and then select a specialist on our own. The first artificial intelligence expert adviser was a respiratory system diagnostic software developed at Stanford many years ago. Perhaps we could save health resources by better training of general practitioners and A.I. support. -Joel

Ira Glickstein said...

Excellent points Joel and I agree with all of them.

The Health Savings Account (HSA) could lead some people to delay seeing a doctor because they were trying to save money in their HSA for when they really needed it.

And, all the yearly checkup blood tests and screening X-rays and so on that we take are not properly "data mined" for meaningful trends that could better identify diseases in time to treat them.

The combined HSA plus Catastrophic-Only insurance with an included yearly checkup that Goldhill and I favor could address both issues.

My original list of seven items included, as the very first item:

1) Universal digititized patient data, securely accessible by any doctor chosen by the patient. This part should be easy to sell to President Obama and both political parties and all medical specialties. It has been technically feasible for a decade and it is past time we do it.

With all test results in searchable digital form, available (with the patient's permission) to any doctor or medical facility treating him or her, standard "data mining" techniques could have compared your wife's lung X-ray results over the years and determine whether or not that growth was likely to be malignant or not.

Any insurance company offering a Catastrophic-only policy should be concerned with catching growths and such things before they become catastrophic. Therefore, as a part of their policy, they would include not only an extensive yearly checkup, but also automatic processing of all digitized data for their customers. They would notify them when trends indicated danger. As a condition of keeping the Catastrophic-only policy in force, customers would be required to undergo more detailed tests (paid for by their HSA) if the "data mining" trends indicated they should do so.

Yes, both political parties have constituencies that oppose meaningful health care reform.

However, the majority of us have a real life or death stake in both:

1) Controlling the costs (which we must pay -there is no free lunch-), and

2) Improving the performance (since we are the patients who, if not treated early and relatively inexpensively, will get to suffer the consequences of possibly very painful and expensive treatments - or early death).

Ira Glickstein