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Health Care Rationing, Insurance and Bills, Oh My!

April 5, 2010

I have had some requests to discuss the new Health Care legislation which is front and center in the news.  I think any discussion about this legislation must go hand-in-hand with a discussion about the rationing of health care.

That last sentence scared you, didn’t it?  That is part of the problem.

Until recently (i.e. the last 20 years), before the concept of  “Managed Care”, your typical insurance policy paid for everything.

Everything!  How is that possible?  I’m glad I asked!

There were very few high cost medical procedures apart from surgical interventions.  There just weren’t any expensive tests for your doctor to order!  We didn’t have the new technologies, with their attendant costs, to drive up the cost of care.  Your internist could order x-rays of various types, blood work, vaccines, electrocardiograms and other low-cost tests.  Even if he wanted, he couldn’t run up a lot of costs!

Since that time,  technology handed your doctor the keys to revolutionary tests and procedures.  He can diagnose more things, more easily, and treat you more successfully.  He can also easily run up a bill running into the thousands of dollars without breathing hard.  MRI scans, CT Scans, Echocardiograms, Electromyelograms, Nerve Conduction Studies and a whole plethora of sophisticated blood tests!

You can see the problem.

So, we have a population of people who have been used to being able to get every possible test or procedure at the whim of their doctor, and it was all paid for with their insurance policy.  Only the most current generation of kids have grown up in the current medical world.

We cannot offer every test and every procedure for every person.

That last sentence is what has people scared about health care reform and the new legislation.  We feel like we are going to lose something; including our grip on the “Good Old Days” when you could get all care for no dollars.  The reality is that there is a limited number of dollars available to pay for health care, and it does not come close to paying for all care at all times for all people.  These sorts of costs would bankrupt any country, even one as rich as ours.  Once we understand that we have to change our mind-set, and come to grips with the fact that we will have to withhold certain expenditures, then health care reform begins to make more sense.

Certain states have already embraced rationing.  Oregon is the most famous of these.  Their plan is simple.  They have listed every possible diagnosis, and have done so in the order in which they are cost efficient to treat.  For example, the #1 diagnosis is the treatment of pneumonia with oral antibiotics.  Very cheap to treat a potentially very serious illness that used to kill people consistently.   After having listed all possible illnesses, they look at their budget.  Then….they draw a line.  A hard line.  Everything above the line gets paid for.  Everything below the line is not paid for (you can still pay out-of-pocket for these things, but the insurance will not cover it).  As of the last time I looked at the list, the first thing below the line (which would not be paid for) was Cardiac Bypass Surgery for people over the age of 80.

So what about the Health Care Legislation?

Firstly, I am stupefied by the volume of misinformation which has been passed out by the Republican Party, or those who merely are trying to play on the fears of everyone to oppose change of any kind.  It has become partisan politics at its worst, when a Republican Party is opposing legislation which they recommended, merely because it would make a Democratic President more popular.  The following are the salient points of the legislation:

1.  The government is not taking over health care, in any way.  This bill, in no way, grants the government any mechanism to control any more of the health care system than they already do.  There is no “Public Insurance Option”, it was removed from the bill because of hard-line republican feelings (working on behalf of the insurance companies who didn’t want the competition).  This bill largely is a regulatory bill; regulating the insurance companies.  The government has expanded the number of people who will be covered by Medicaid (the welfare insurance system for the poor), raising the income level for qualification.  They have also increased physician reimbursement for Medicaid up to Medicare standards (which is still not good, but at least doctors are not asked to actually lose money to see Medicaid patients!).  These changes are entirely good for everyone involved.  I don’t see anyone complaining about these changes.

2.  The legislation regulates the insurance companies in ways which should bring glee to anyone and everyone who has ever fought with an insurance company.  They can no longer deny you coverage because you are “high risk”, they cannot cancel your coverage because you have become “high risk” and they cannot charge you higher premiums because you are “high risk” and cannot deny coverage for pre-existing conditions.  This has been a long time coming.  The insurance companies have made a fortune by insuring healthy people until they became unhealthy, then canceling their coverage.  I don’t see how anyone can complain about these changes either.  The possible bad repercussions of this portion of the bill:  Insurance Rates may go up for young/healthy people to subsidize rates for the older people.  Since the insurance companies can only charge you based on AGE/SEX/REGION, they will probably have to raise their rates on the younger set.

3.  Children can stay on the policies of their parents until they are 26 years old.  Good for everyone since many children have a hard time getting coverage when they are in grad school or working their first jobs out of college.

4.  Businesses with more than 50 employees will be required to offer insurance to their employees.  This is a part of the legislation which is very controversial, and deservedly so.  If such a company (which is medium sized) fails to offer coverage, they will get charged a $2000 penalty for each employee.  That’s the bad part.  The good part is that there will be a lot of credits and discounts given to smaller business to be able to afford this coverage.  This bill is attempting to universally cover as many people as possible, because the cost of non-coverage is enormous.  For example, if a non-insured 25 year old woman, right out of college, chooses to not buy insurance coverage because she is generally healthy and something horrible happens (i.e.  She gets hit by a bus or gets diagnosed with leukemia), then she will be admitted through the local Emergency Room, which cannot refuse her care,  and will rack up a $200,000 bill while she recovers for 10 days in the ICU.  She will declare medical bankruptcy (the #1 cause of bankruptcy in this country) and that $200,000 will have to be paid for by the hospital, who passes on those costs to YOU with $5 Tylenol tablets and higher rates for care.  Those higher costs get absorbed by the insurance companies, who pass on the costs to YOU, the insured!  Thus, the cost of non-coverage leads to higher insurance rates and higher hospital costs.  Universal coverage is one answer to this problem.  The other is refusal of care to anyone who can’t afford to pay for it out-of-pocket.  The woman in the example above would be allowed to die after she got hit by the bus.  That hardly seems right either, so universal coverage seems like the best goal.  This portion of the bill may hurt small business, and is, thus far, the only portion of the bill I can see a problem with to a non-partisan eye.

5.  The bill requires that each state create a marketplace for people to compare policies and force competition.  At the moment, people who must buy their own coverage end up doing so “blindly” because they don’t understand the insurance industry or the medical system well enough to make informed choices.  Each policy is also so different as to make it impossible to compare them “Apples to Apples”.  This new requirement should bring down insurance policy rates as each company will now be competing on the same playing field, offering policies which can be compared more easily.  The only downside to this portion of the bill is that it does not allow policies to compete across state lines.  it was hoped that this would be a portion of the legislation, but it was just not possible to do so and still get it passed.  Perhaps a future bill will allow such competition, which would probably do a much better job of forcing rates lower.

6.  This bill should actually lower the deficit.  The Republicans have harped on the costs of “big government”, but this bill actually more than pays for itself, leading to less debt and huge savings.  The Congressional Budget Office (which is the non-partisan group that evaluates all such bills for their costs) has stated that the bill will save almost 200 billion dollars in the first 10 years and over 1 trillion dollars in the following 10 years.  It does so with the following new taxes:  There is a 2.5% tax on individuals making more than $200,000 per year, or couple making more than $250,000.  These rich people have a right to gripe about the bill.  There is a 10% tax on Tanning Salons (no joke).  There is also a reduction in Medicare reimbursement for Home Health Care.  These taxes and the reduced medicare reimbursement for a very specific service, more than pay for the costs associated with the bill.

7.  All individuals will be required to carry at least minimal (“catastrophic”) coverage.  If you make less than $88,000 yearly, then the government is going to help you pay for the cost of that coverage (the less you make, the more they help).  This is a sticking point to a lot of Americans who feel it is “unconstitutional” to force someone to buy health insurance.  They compare it to required auto-insurance, where you always have the option to not drive.  Unfortunately, I think this comparison is poor, since you don’t have the “option” to go without medical care in an emergency.  We can’t turn you away at the door when a drunk driver has just hit you, or you have a heart attack while jogging in the park.  Since it is not ETHICAL to deny life-saving care, you would have to say that your choice is “to not live”, instead of “not drive”.  Only people with extraordinarily extreme views would think otherwise.

There are other portions of the bill, which affect a minority of Americans.  I won’t write about them at the moment because I see that I am up to 2000+ words, and most people don’t like a long-winded blog!

Is this bill the perfect solution to our health care woes?  Not by a long shot.  This is part of the reason some people are against it; because it doesn’t solve the whole problem.

Do not allow perfection to be the stumbling block to improvement.

This is a magnificent first step towards reducing the costs of care, insuring an additional 30 million people who would otherwise not have coverage, and regulating an insurance company deeply in need of regulating.  It is just not appropriate that the same for-profit insurance company that pays for your care is also the one able to refuse you care.  Most of the fears of this Bill are unfounded, untrue and in some cases actually created to try to scare the public.

In the spirit of full disclosure, I am a moderate Democrat.

Good Health!

Dr Mike

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2 Comments
  1. spinnity permalink

    Just read through all your posts so far, Dr. Mike. Thank you for writing this- you’ve given me a lot to think about. And I am going to start quoting you on “I’m glad I asked” 🙂

  2. The only other person I’ve heard speak so rationally on this subject was Dr. Dean Edell, and I have to admit that both of you have given me a lot to think about. I suppose my primary objection to the bill is simply the sheer size of it, the fact that hardly anyone who voted on it had had time to read it, and that fact that so many things had to be bundled together. I am admittedly worried when the government accomplishes a lot all at once. I have always felt that we were safest when the government was forced to lumber along very slowly, impeded at every step. However, most of what you mention about the bill does, indeed, sound like a reasonable step towards genuine problems.

    But… Where’s the tort reform? I would’ve liked to have seen that happen first and it hasn’t happened at all. And, as I understand it, no individual will be allowed to be charged an insurance premium greater than three times what any other individual is charged. But aren’t older individuals not only much more likely to get sick but also more likely to be able to pay higher premiums? It seems like the chances of the premiums actually being paid by individuals and not the government would be higher if we allowed more of the burden to remain on older individuals, as opposed to the 20-year olds who will be forced to purchase it for the first time. And, the healthcare bill does little (or nothing) to address the impending crisis of lack of primary care. As wonderful as it sounds to have everyone insured and theoretically able to afford a doctor visit, unless something changes, everyone will be facing incredibly long wait times to see those doctors. The slight improvements in physician reimbursements isn’t likely to increase new med students’ interest in primary care. So what happens if you add millions of “new” patients to a country that’s already facing a shortage of primary care doctors?

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