Category: Health Care Costs

How Romney’s Successor Subverted His Plan

Romney’s goal, with the individual mandate, was to require people to buy catastrophic insurance that would cover emergency care. Romney’s version of the mandate was designed to compensate for the effects of the federal EMTALA law that requires hospitals to provide emergency care to everyone, regardless of their ability to pay…

However…when Deval Patrick assumed office, he populated the Health Connector board with progressives who favored mandating costly comprehensive insurance, instead of cheaper catastrophic coverage.

“The Romney administration had envisioned an unsubsidized exchange program that provided small employers with a healthy defined contribution model,” writes Archambault. “The model’s goals were to move the current employer-based system to an individual purchase decision and encourage competition and consumerism.”

But that’s not what the Patrick administration implemented. Instead, Massachusetts’ “Commonwealth Choice” plan forced insurers to offer standardized “Gold,” “Silver,” and “Bronze” plans that were required to offer generous, comprehensive coverage, including mental health, substance abuse, rehab services, and vision care. Small businesses could only offer their employees plans from one of the three tiers, further limiting consumer choices. (This framework is also part of the federal Affordable Care Act.)

More from Avik Roy.

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Apr 16, 2012 | 2 comments | by

‘Free’ Health Screenings Vary As Much As 700%

Test

Cost Range

Mammography

$169-$403

Type 2 Diabetes

$51-$437

Cholesterol

$117-$374

Colonoscopy

$786-$1,819

Pap Smear

$131-$476

Of course, if there is no deductible or copayment (as required by ObamaCare), patients have no reason to care about this.

More from Kelly Kennedy in USA Today.

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Apr 13, 2012 | 5 comments | by

Cancer Treatment Costs are Worth It

[T]he cost of cancer treatment in the United States was higher than such care in ten European countries from 1983 to 1999. However, they also found that for most cancer types investigated, U.S. cancer patients lived longer than their European counterparts. Cancer patients diagnosed during 1995-99, on average, lived 11.1 years after diagnosis in the United States, compared to just 9.3 years from diagnosis in Europe.

The researchers concluded that by standard metrics that value additional years of life in dollar terms, U.S. cancer patients paid more but achieved better results in terms of longevity. Even after considering higher U.S. costs for treatment, their calculations showed the extra longevity was worth an aggregate of $598 billion — an average of $61,000 for an individual cancer patient. The value of additional survival gains was highest for prostate cancer patients ($627 billion) and breast cancer patients ($173 billion).

Full Health Affairs study worth reading.

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Apr 11, 2012 | 11 comments | by

What if We Regulated Legal Services Like Health Care?

Well, the future of American health care is now controlled by lawyers. That may not be news – doctors, drug makers, and medical-device makers have long complained about the cost of lawsuits. But this different: The future of PPACA is in the hands of the Supreme Court. Hundreds of lawyers billed thousands of hours analyzing and preparing briefs for the case. And that’s after countless hours spent by Congressional staff lawyers putting the bill together in 2009 and 2010. The result? A “law” so confusing that even the legislators – themselves mostly lawyers – could not bother to even try to read it.

It makes one think: If the lawyers are designing the health-care system, shouldn’t they be forced to operate under regulations similar to those they’re imposing? How, for example, do lawyers get paid? Today, they negotiate fees with clients. That hardly seems fair. In health care, doctors don’t negotiate fees with patients, they get paid according to an opaque schedule determined by health plans. Lawyers should do the same. The solution is “legal insurance”. After all, who amongst us knows when we’ll need a lawyer? It is often an unpredictable expense, and yet the “market” seems to have failed to provide such insurance. Government must intervene.

And what about seniors? Can they all afford the legal services they require? Certainly not. So, we need a compulsory, single-payer, legal care program for seniors. The Department of Justice will oversee all claims. How will fees be determined? That’s easy. Let’s define a standard “unit” of legal care. For the sake of argument, let’s say it is preparing a will for a married couple, each 60 years of age, with a combined household income of $100,000 and wealth of $200,000. Suppose this will takes ten hours to prepare at a cost of one thousand dollars. Thus a standard “unit” of legal care is $100 per hour. Cases that are more complex than this will receive higher hourly reimbursements. A divorce, for example, could be “worth” 1.4 times the standard charge per hour. Fixing a dispute over whether your neighbor’s fence is on your property could be “worth” 0.8 times the standard charge. Of course, there would also be geographic adjustments so that lawyers who practiced in high-cost areas earned more. You might think that the Department of Justice could not possibly manage the overwhelming complexity of this system.

You’d be right, that’s why we would outsource the project to the American Bar Association, which will maintain the codes and earn licensing revenue from vendors who sell manuals, software, training, et cetera to lawyers across the country who need to master the codes in order to submit claims. This revenue will comprise almost all of the ABA’s business in the years to come. Needless to say, any reform to the system will have to be blessed with the ABA’s imprimatur, which the government and media will promote as representing the will of all lawyers.

And what about the quality of legal advice? Look again at the ongoing Supreme Court ObamaCare case. Anyone could submit an amicus brief without any external vetting. Today, the only person a lawyer has to satisfy is her client. Any lawyer who wants to try out a new legal theory is free to do so. This is very confusing, messy, and adds needlessly to legal costs. So, the federal government should establish a 15- person “independent legal advisory board” comprised of the best scholars from the nation’s top law schools. All legal arguments will have to be approved by this board before being used in court, arbitration, or negotiation, to ensure that clients (and “the system”) get value for money.

Well, lawyers, what do you say? Any takers?

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Apr 11, 2012 | 6 comments | by

Employers Get Tough

Once a year, employees of the Swiss Village Retirement Community in Berne, Ind., have a checkup that will help determine how much they pay for health coverage. Those who don’t smoke, aren’t obese and whose blood pressure and cholesterol fall below specific levels get to shave as much as $2,000 off their annual health insurance deductibles.

Julie Appleby’s article in USA Today.

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Apr 05, 2012 | 4 comments | by

A $5,000 Tummy Ache

The cost for just walking in the door of the emergency room? That came to $1,288. The ultrasound nicked him an additional $1,135. A comprehensive metabolic panel (blood analysis) was billed at $1,212. Moser was also charged $158, accidentally, for the saline solution he had turned down. The total came to $4,852.55, not counting separate bills that would arrive later and total nearly $1,000, including $540 for pathology and $309 for the doctor.

 Source: Steve Lopez in the LA Times. HT: Jason Shafrin.

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Apr 04, 2012 | 11 comments | by

Myth Busters #19: Are Bundled Payments the Answer?

One of the more peculiar mental twists by the health academics is the notion that the answer to the problems with fee-for-service is to bundle some of these services into single packages.

As we argued in our last posting, FFS is not a problem in health care or anywhere else. The problem is third-party payment. But for the moment let’s suspend our disbelief and accept that FFS is a problem. In what way does bundling solve it? Or even address it?

The proponents of bundling would go from paying a fee for a single service to paying a fee for a bundle of services. It is still fee-for-service. In fact services are already bundled. An office visit to a doctor “bundles” many discrete services such as weighing the patient, getting a blood pressure reading, checking pulse and lungs, interviewing the patient about how she is feeling and whether she is having any reactions to the drugs that were prescribed during the last visit. These services are not billed separately but are “bundled” into an “office visit” package.

Presumably, the advocates of bundling would want more and bigger bundles, or they think they know what should be in the bundle better than the physician does. Or perhaps they have no idea what they are talking about. It is simply the latest term they use to pretend they have something to say.

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Apr 03, 2012 | 16 comments | by

The Best Thinking on Health Reform — in 1933

Professor C.E.A. Winslow Chairman of the Executive Committee of the Committee on the Costs of Medical Care and Professor of Public Health at Yale University summarizes the results of five years of foundation funded effort on what to do about the broken U.S. health care system in the January 27, 1933 issue of Science:

  1. Use the equivalent of HMOs run by hospitals for accountable, integrated, care: “Medical service, both preventive and therapeutic, should be furnished largely by organized groups of physicians, dentists, nurses, pharmacists and other associated personnel. Such groups should be organized, preferably around a hospital, for rendering complete home, office, and hospital care.”
  2. Use capitated payment to accumulate collective reserves to pay for services: “the costs of medical care [should] be placed on a group payment basis, through the use of insurance, through the use of taxation; or through the use of both these methods.”

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Apr 02, 2012 | 4 comments | by

Medical Care in 1933

Claims about what is wrong with U.S. health care have changed little in the last century. Lamenting that “the old neighborhood life has gone and with it the intimate and prolonged personal contacts which made the old relationship between physician and patient simple and easy of attachment,” and that “still more deeply is this relationship affected by the subtle forces of a society dominated by the profit-motive,” C.E.A. Winslow, a Professor of Public Health at Yale University, gives a thoroughly modern list of the problems with U.S. health care from January, 1933:

1. Maldistribution of facilities in various geographical areas: states should have equal numbers of physicians per 1,000 people. The modern term is “healthcare disparities.”

2. Maladjustment of services in all areas: “In the rural areas, even where general practitioners are available, there is grave lack of hospital and laboratory facilities and of consultation service…On the other hand, the cities as a whole show a markedly excessive development of specialization.”

3. Waste in the provision of services: “There is a wide-spread waste of time and of overhead costs in the rendering of service on an individual basis. About 40 per[cent]…of the average physician’s income in consumed in overhead expense.”

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Mar 30, 2012 | 8 comments | by

Bloggers Conference

I will be at the Economics Bloggers Forum in Kansas City all day today. The Kauffman Foundation will be putting a live stream of the forum from roughly 8:30 AM through 2:30 PM (down during lunch and breaks) on www.growthology.org.

I will be making two points, elaborated below the fold.

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Mar 30, 2012 | 6 comments | by
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