Wednesday, August 20, 2008

Why Pretty Lady's Healthcare Plan Makes Sense

Sometimes, Pretty Lady thinks that everybody thinks she's joking. Or possibly they simply don't take her seriously, which is not quite the same thing. But she continues to insist that her healthcare plan is the BEST healthcare plan, because it carries inherent, structural checks which obviate debacles like this:

Oversupply of Medical Resources Results in Ineffective, Costly Treatment

A major cause of high health care costs is treatment that does not result in better outcomes for patients. No matter who pays for this care, it does not help patients live better or longer, and thereby drives up health care costs without providing any corresponding benefit. In some parts of the state, patients are, on average, hospitalized too often and for too long, leading to unnecessary tests, procedures and specialist visits.

  • Unnecessary care does not result in better health: patients who live in regions with above-average spending are not any healthier as a result and are less satisfied with the care they receive.
  • Ineffective, costly care is driven, in part, by Medicare and private insurance payment policies that encourage doctors to order more tests and procedures. The greater availability of specialists and hospital beds also leads doctors to send patients to specialists or to the hospital more frequently than provides any value for patient health.
Do you see? When people do not have a vested interest in controlling the money spent on themselves, money gets spent uselessly. You see how the problem is with BOTH Medicare AND with private insurance companies; the problem is that the money is not in the hands of the consumer.

This is not a public/private dichotomy, then; it is a consumer-driven versus large-unwieldy-system-driven dichotomy. Just because you, the consumer, purchase a private insurance plan, does not mean that your healthcare is consumer-driven. It is driven by large, totalitarian forces that then have you at their mercy.
Excessive Administrative Expenses Drive Up Costs

Many administrative costs within California’s health care system are the result of efforts to shift costs from one payer to another—from the insurance company to a hospital, or from a physician to a patient. This paperwork increases total costs without improving outcomes for patients.

  • Complex billing and insurance requirements raise administrative costs. For example, the process by which physicians have to demonstrate to insurance companies and others that they are capable of providing high-quality care is time intensive and duplicative. On average, physicians submit 17 credentialing applications annually to insurance companies, hospitals, and other health care facilities, and completing each application requires nearly 90 minutes of staff time.
  • Researchers have estimated that billing and insurance-related activities consume at least 5 percent of health care dollars in California, or more than $9 billion annually. This estimate excludes costs related to oversight and management that directly improve patient care.
Again, this is just stupid. If healthcare were truly consumer-driven, meaning that consumers could choose any doctor whatsoever (as Pretty Lady, with her brand-new Perfect Health HSA can), and there were unlimited consumer feedback accessible in a venue similar to, say, the Internet, patients could simply do word-of-mouth research and go to the physician, hospital or alternative care provider with the best prices and the best results. Costs which are the insurance company's responsibility versus costs which come out of the HSA would be clearly delineated; both the insurance company and the consumer would have incentive to go over every bill with a fine-tooth comb, to insure they are not being scammed. Inflated cost-dumping would thence cease very quickly, with minimal administrative costs.

Prescription Drug Marketing

Californians spend millions of dollars annually on prescription drugs that are no better than cheaper alternatives or that may have dangerous or unrecognized side-effects. Heavy marketing to consumers and to physicians by pharmaceutical companies is a key reason that these lucrative, if not always beneficial drugs, get prescribed.

  • Drug advertising generally encourages the use of newer, more expensive medications, even if they are no more effective than existing ones, because new drugs remain under patent protection and produce strong profits for pharmaceutical companies. The side effects of new drugs are less well understood and therefore patients who take them are exposed to greater risk.
  • For example, Merck heavily promoted Vioxx as a superior alternative to other anti-inflammatory medications, despite a lack of evidence that it was more effective. Roughly 25 million Americans took Vioxx, bringing huge profits to Merck, before it was discovered that Vioxx causes heart attacks and may have killed 50,000 Americans.
Prescription drug marketing used to be illegal. It should be illegal again. The prescription drug industry will no doubt sustain the blow; it might even drive down costs of prescription drugs, since all those TV ads must be terribly expensive.


Chris Rywalt said...

Thinking about your healthcare plan, I find myself wondering two or three things. One was already brought up, but not discussed very deeply, when you first proposed the plan: Who decides what qualifies as "real" medicine and what's quackery? In other words, how does a person or institution get licensed to accept health vouchers?

Anything involving licensing of any kind is a huge opening for graft and boondoggles of all kinds. Witness the enormous grinding infrastructure for any kind of certification in this country.

There's also the not-so-small matter of the vouchers becoming black market currency -- which happens with food stamps. Since food stamps can't be used on everything, people trade their stamps for money or favors or whatever to get the things they can't buy.

The final question is a little more pernicious, I think. What's to prevent medical providers from keeping their fees high across the board to siphon as much as possible out of everyone's vouchers?

Ultimately the problem -- which probably has a name, although I don't know what it is right now -- is whose money is being spent by whom. You can spend your own money on yourself; you can spend your own money on someone else; you can spend someone else's money on yourself; or you can spend someone else's money on someone else.

Our current system is mostly Number Four -- spending someone else's money on someone else -- and that's the least efficient choice. Unfortunately, spending someone else's money on yourself isn't exactly great, either, because cost still isn't much of an object -- it's not your money!
Really, to maximize efficiency, we want to have people spending their own money on themselves.

Which brings us back around to the problem insurance was originally meant to solve.

I'm not sure that there's an answer within a capitalist, market-driven system. Everything has its drawbacks. Healthcare is intractable the way education is. That is, if you have a teacher who needs to make, let's say, $30,000 per year to live; and they teach 30 students; your minimum education cost is $1,000 per student-year. There's just no way to reduce that cost except larger class sizes, and you can't expand class sizes without reducing quality. You're stuck until someone comes up with an entirely new and different way of doing things.

Healthcare has the same kind of problem but even more complex, because medicine is so insanely complex itself.

I suppose any plan could be shot down by someone. So is what we have now really working that badly? Maybe it's as good as it's going to get. Sad, I know.

Anonymous said...

Pretty Lady

Have just now gotten around to this post. You exhibit too much common sense on this matter – it leads to suspicion and not being taken seriously. Mr. Rywalt’s above comments regarding the difficulties of getting from here to there are significant. Fixing the fix always appears maddeningly daunting. So, step by step, start with prescription drug marketing. Besides the ads being expensive, they are annoying and overtly “pushy”. Putting pressure on Congress to once again make such advertising illegal would not be overreaching.

Anonymous said...

My name is Tony Gomez and i would like to show you my personal experience with Vioxx.

I am 56 years old. Have been on Vioxx for 2 years now. Everybody that works for the fda that oked this drug should be put in jail.

I have experienced some of these side effects -
heart attack hardening of the arteries and nerve damage in my feet

I hope this information will be useful to others,
Tony Gomez