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Tag Archives: Insurance

The Supreme Curve Ball

The Supreme Court decision on the Affordable Healthcare Act threw us a curve ball. Many people who predicted the outcome of the ruling swung and missed – including me. The Court agreed with the government’s argument that the individual mandate contained in the Affordable Care Act was not a tax … for purposes of the Anti-Injunction Act (which would have prevented a lawsuit regarding assessment or collection of the mandate and forced those bringing suit to sue for a refund after paying it). At the same time, the Court declared that the individual mandate contained in the Act was a tax … for purposes of validating and enforcing the mandate. To me that’s a stretch. That’s like legal argument defending a dog bite lawsuit by simultaneously alleging that (1) I don’t have a dog, (2) you weren’t bitten, and (3) my dog didn’t bite you. President Obama has declared the Supreme Court decision as a “victory” but this victory is largely Pyrrhic. The Supreme Court’s decision will become a rally cry for the 41% of Americans who believe the law should be overturned and the 27% of Americans who believe the mandate should be overturned. Romney’s campaign will emphasize Romney’s commitment to repeal the law – whether or not he truly intends to do so. While some argue that “President Romney” wouldn’t have the ability to repeal the law, President Obama’s decision not to enforce our country’s immigration laws shows that an executive order refusing to enforce laws can have the same effect as repealing a law. A dog with no teeth can’t bite you. In addition, President Obama and all the legislators who supported the ACA have essentially approved the largest tax increase in US history … in an election year. How many voters will be happy at the thought of a new and expanding tax that coerces us to purchase a commercial product which we may not even be able to use? The growing public backlash in this regard is probably the reason that the White House is backpedaling and stating that the mandate really isn’t a tax … even though the same White House stated that the mandate was a tax in the media and during oral arguments on the issue. The mandate stands because it is a tax and now President Obama and our legislators have to live with the consequences of their decision. In case you were wondering, here are how each of the House members and the Senators voted on ACA. But many people will think that the tax … er, um … penalty is OK because our government is going to provide us with insurance. Millions of more patients will be INSURED! If you’ve read WhiteCoat’s Call Room on a regular basis, you know why this is such a false and empty promise. Insurance amounts to a series of promises. First there is a promise that, in exchange for a premium payment, someone else will pay for your medical care. Then there is a promise that someone else will provide your medical care. Finally, there is a promise that you will be provided with the medical care you need when you need it. While the government wishes to expand the number of patients who receive our government-mandated “insurance”, many states are planning to restrict the eligibility for the “insurance” that our government wishes to provide to us. In other words, states don’t want to pay for your insurance. A House Ways and Means survey showed that 71 of the Forbes 100 companies could save a total of $28.6 billion in 2014 by dropping health care coverage for their employees. The Affordable Care Act ...

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Obamacare Is Wrong, But The Chief Justice Is Right

By Birdstrike M.D. Yesterday, my 2 year old asked me, “Daddy, do clouds make rain by forming condensing nuclei of water vapor which act to form droplets which fall to the ground?”  I said, “No, son.  No.  You’ve got it all wrong.  Actually, those drops of rain are the tears of our founding fathers crying over the recent Supreme Court decision on Obamacare.” As I predicted it would many months agoon Student Doctor Network, the Supreme Court upheld the Supreme Court upheld the Affordable Care Act (ACA).  I was against “Obamacare” as it has come to be known, from the very beginning.  I am still against it, for reasons too numerous to count.  On the face of it however, the entire rationale for declaring Obamacare unconstitutional was absurd, and rather disingenuous.  Amongst the 2000 pages of this behemoth of a law, the one portion that makes the most sense is the “individual mandate”, which is the single portion that actually attempts to require all Americans to take at least a sliver of responsibility for the cost of their own health care expenses.  This is the one and only portion of it that is actually revolutionary and acts to reverse the central core of what is wrong with the health of our people, and our healthcare system itself: the complete lack of responsibility of so many individuals for their own health, and healthcare expenses. Like many of you, I wished that the Supreme Court would overturn the law so that we could rebuild it in a way that makes sense both to patients and physicians, and less so to politicians.  However, as much as it pains me, I have to admit that Chief Justice John Roberts’ opinion was courageous and brilliant.  It tears my heart out to write it, but its true.  As I interpret it, what he essentially told America and the opponents of Obamacare was, “Don’t ask me or the spirits of our Founding Fathers to overturn your law, written by your representatives, and approved by your President with some fabricated technicality to fix your ‘Oops!’ Man up, and live with it.  Otherwise, if you don’t like it throw the fools out, elect a new government and start over, or fix it”. Indulge me for a minute and allow me to play the “What Would Our Dead Relatives Have Thought, Game”:  The Founding Fathers of this country lived under true tyranny.  They were ruled by a tyrant King that would not hesitate to jail or execute someone for speaking an opinion infinitely less offensive that my own, and simply on a whim.  Many of them lost their lives fighting for the right simply to have representation. (Remember your history class, “No taxation without representation!”?)  I’m sure they would conclude that we have that luxury, and many other life easing luxuries they did without.  (You know, real important stuff like electricity, running water, insulin for diabetics, iPhone 4s with integrated Siri personal assistant.)  They didn’t have to worry about 40 million people being uninsured.  Health insurance didn’t exist.  It wasn’t a crisis for them, that only 80% of people could get an MRI.  0% of people got MRIs.  MRIs didn’t exist.  Neither did door-to-doctor times, ED wait-time billboards, sterile technique, antibiotics, cab vouchers or Sierra Mist with a meal tray. If the “individual mandate” for all Americans to buy health insurance was severed from the ACA and we had to choose between it and the rest of the bill in its entirety, I would choose to keep the individual mandate, and strike down the other 2000 pages from this complex ...

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Why Bundling Payments Won't Reduce Costs – Part 1

Probably one of the largest pending changes in health care is payment reform. Right now, payment for medical services is essentially a fee for service model. Patients (or their insurers) are generally charged for the services utilized. If a patient goes to hospital for chest pain, and a physician evaluates the patient, either the patient or the patient’s insurer pays the physician for those services. If the physician orders an EKG and lab tests, either the patient or the patient’s insurer pays the hospital for the EKG and lab tests. If the patient is admitted to the hospital, the hospital gets paid a given fee for the admission. It goes on and on. The feds want to reduce costs by changing the payment model for medical care to a “bundled” approach. I don’t think it’s going to work. Bundling won’t change the behaviors necessary to save money. This will be a two part post on why. This part will discuss incentives and how they drive utilization of health care. Next part will apply those concepts to bundled health care. Why is our current system going bankrupt? It is all about incentives. There are three main concepts driving health care costs: profit, demand for services, and fear. Before we can see the effects of a policy change on health care costs, we need to understand how these concepts drive the actions of the major players in the health care market. For Providers, the incentive is currently to provide more services. Demand for services is created by illness. When ill, patients often demand as many medical services as the providers are willing to provide. Patients may seek alternative providers if their demands are not met. There is little incentive to provide less care with increased demand. Profit is created by providing services. In a fee for service environment, the more services that are provided, the more that the providers are paid. If patients want the testing or services, more often than not, they get the testing or services. Unhappy patients tend not to come back. No patients = no income. The most pervasive fear for providers is fear of liability – either legal or professional. This fear is often mitigated by providing more services. Increased testing decreases the fear of liability because if there is a bad patient outcome, the provider can point to all the testing and argue that they should not be liable because “we did everything we could.” It is uncommon for a provider to suffer adverse consequences for performing too much testing. Fear of liability may lead to extremely expensive and questionably beneficial medical care. Hospitals also fear regulatory sanctions. It is comical to watch hospital administrators scurry about when there is a JCAHO survey. Poor performance on a JCAHO survey threatens a hospital’s Medicare reimbursement. For Insurers, there is an incentive to increase customers who pay into the system, but who do not take money out of the system. Demand for services is still created by illness, but as demand for services goes up, insurer profits go down (or, in the case of government insurance, debts increase). Insurers profit by having healthy and wealthy subscribers. Healthy subscribers pay into the system, but don’t take as much out of the system. Insurers can increase profits by raising insurance premiums, but must be careful when setting prices. If premiums are raised too high, healthy insurers may drop their coverage because they perceive too much of a disconnect between the premiums that they are  paying and the services that they are utilizing. In that case, the profits from increased premiums ...

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Pennsylvania Medicaid's Cost "Savings"

While scanning the news this morning, I laughed out loud at Pennsylvania’s newest proposal to cut Medicaid costs. According to this Kaiser Health News report, Pennsylvania plans to pay Medicaid recipients up to $200 to visit “higher quality and lower cost hospitals and doctors.” Gary D. Alexander, the Pennsylvania secretary of public welfare, compared the idea to a shared cost savings. “If the state saves $1,000 on a medical procedure we may give the beneficiary $100 or $200 as a reward.” Does anyone see a problem with this approach? Let me lay it out for Mr. Alexander, just in case someone who reads my column has his e-mail address. In some of the inner-city emergency departments where I have worked, there used to be a policy that patients would be given subway tokens … or bus fare … or cab vouchers at the conclusion of their ED visit. The theory was that hospitals didn’t want patients loitering in the emergency department waiting rooms after their visits trying to find a ride home.  The policy was also viewed as creating good public opinion since the hospitals were making sure that patients had a way home if they came by ambulance and had no other means of transport. Ambulance transport to the hospital is provided at no cost to the patients. Ambulance transport home must be paid with credit card. Once the general public got wind of the cab voucher policy, guess what happened. Patient volumes increased. Ambulance transports increased. Wait times went up. People waited hours for free medical care so that they could then get their free subway token … or bus fare … or cab vouchers at the end of their visit. The policies were quickly discontinued. If Pennsylvania begins paying people to go to “better” hospitals, the cab voucher fiasco will occur in Pennsylvania, only on a much grander scale. Once Pennsylvania Medicaid recipients learn that they will be paid to go to a certain hospital for medical care, those hospitals will be deluged with patients. To those receiving public medical assistance, the medical care is free, the medical testing is free, and the medical procedures are free. Now, with a monetary incentive to have a procedure done at a given facility, what do you expect will happen? Patients get $200 if they get a cardiac catheterization at one hospital versus another? Twelve year olds will go to those emergency departments complaining of crushing chest pain. Patients get $50 if they go to one emergency department that provides “higher quality”? There will be lines out the door. Medicaid will end up footing the bill for an increase in medical care because it has incentivized the patient population to seek out that care. Brilliant. Just brilliant. Mr. Alexander even went to a meeting of “300 health insurance executives” in Washington and pitched his plan. I’m sure he got a little round of golf claps for his innovative approach to reducing health care costs. This is what happens when people who make policies have no practical experience in the industry in which they are making the policies. Mr. Alexander was a political science major in college and has a law degree. You want to decrease utilization? Pay Medicaid patients that same $200 at the end of a year only if their medical resource utilization (ED visits/prescriptions/whatever other variable you want to control) is below the average utilization for other Medicaid recipients for that year. Kids get $50 per year. Send out letters to those who didn’t get the money telling them why they didn’t get their “incentive payment”. That policy ...

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Death Panels and Access to Care

I read an article in the New York Times that underscores my argument that health care insurance does not and never will equal health care access. Our federal and state governments are being crushed by debt. There are many reasons for that debt, and addressing the reasons for the debt are a necessary aspect of decreasing the debt. For example, if a family household had overdrawn its checking account by several thousand dollars and their credit cards were maxed out, most people would consider it foolish for the family to purchase expensive cars, to donate large sums of money to charity, to go out to eat at expensive restaurants, or to continue purchasing large amounts of weapons to stockpile in its basement. When in debt, there are two options – earn more money or reduce spending. Using the example of the family in debt, perhaps they sell their assets and move into a smaller house. Perhaps they eat macaroni and cheese for dinner. You get the picture. But if we assume that the family has cut all of its non-essential spending (and many would argue that this part of the analogy fails when applied to state and federal governments), yet is still in debt, then how can the family further reign in costs? That is the problem with which most governmental entities are now faced. Arizona has taken a drastic step to reduce costs. It is now refusing to pay for expensive medical care to some Medicaid patients in need of organ transplants. According to the article, the decision amounts to “Death by budget cut.” Patients such as a father of six (pictured at the right), a plumber, and a basketball coach all need various types of transplants, but are no longer eligible to receive them. The state estimates it will save $4.5 million per year by not providing these services to roughly 100 Arizona citizens. The state also warns that “there will have to be more difficult cuts looking forward.” Read that as Arizona being poised to cut funding for other types of expensive care. Going back to the analogy about the family – is it morally appropriate to just let family members die because you don’t want to pay for the cost of caring for them? This fairy tale about providing “insurance for all” is the biggest problem with the health care overhaul. We can strive to provide “insurance” for everyone, but “insurance” is only as good as what it insures you for. If you are on Medicare and need expensive care or if you live in Arizona and need a transplant, you still have insurance, but that insurance just doesn’t pay for your medical care. Even though patients pay into the system all of their lives, they get nothing out of it when they actually need the care. Ponzi medicine? If governments were serious about providing medical care for patients, they would create a system similar to the VA Hospital system that is available to every citizen in this country. You walk in the door, you get medical care. Perhaps the care wouldn’t be as good or as fast as care available at private facilities, but care would at least be available. As the implementation of health care reform takes place, it begins to appear that our new health care system may provide the most benefits to the people that use it the least. Don’t get sick and you’ll be just fine.

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Destitute Companies Get Health Insurance Pass From Feds

Why repeal the new health care law? Just get a waiver so you don’t have to comply. When companies are required to pony up money for the new health care reform law that is going to give everyone in the country insurance, guess what happens. The companies balk. Multiple companies have applied for and received waivers so they don’t have to change the “insurance” they provide to their employees. By threatening to raise health care premiums by 200 percent or threatening to drop coverage altogether, the companies got the Department of Health and Human Services to cave. Now the companies have our government’s blessing to continue offering “insurance” to their employees that is capped at a few thousand dollars per year instead of the $750,000 required in the health care law. Guess who got the waivers. Among others, there were these little known companies named McDonalds, Aetna and Cigna. The United Federation of Teachers’ Welfare fund was in there, too. According to the Sun-Times article, there are still 114 companies whose waiver requests haven’t been reviewed. McDonalds is perfectly content to provide its workers with McNugget insurance where workers pay $727 per year for coverage that has limits of $2000 per year. One visit to the emergency department and their coverage is gone for the year. But who can blame McDonalds? The chain only had sales of $22.7 billion last year and its profits were a paltry $4.5 billion. Poor Cigna’s profit increased 346% from 2008-2009. I don’t know how they stay in business. Aetna’s net income totaled $562 million for the first quarter this year and last year’s revenue was only $8.62 billion. We should just become stewards to those companies less fortunate than us and provide medical care oops, medical insurance to all these company employees … free of charge. It’s just the right thing to do. For a list of all the companies too destitute to comply with the new health insurance law, take a look at the Department of Health and Human Services web site.

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