Economics and Heath Care Reform

by: Stephen Marsh

April 6, 2012

I know, I ought to focus on the politics involved, or tell everyone how to solve the problem, instead, I’m going to discuss the economic issues that drive policy makers.

It is the economic matters that make it so tempting for policy makers.  They are:

  1. The system seems inefficient;
  2. There is a huge amount of rent seeking going on;
  3. Costs have been growing much faster than inflation.

The system appears inefficient.

The same procedure might have Medicare paying $150.00.  It might get billed to insurance companies at amounts that have them paying between $250 to $2,500.00 for the same thing.  You can get an MRI for under $100.00 in Japan.  I routinely see the same MRI billed for at between $2,500.00 and $5,000.00 in the United States.  Insurance is sold, by agents, who are paid commissions.  Bills are processed and audited.  Executives get paid bonuses.

More tempting, if you total up the entire bill for health care in the United States and then compare us to France or Canada, it seems you could have universal health care and have lots of money left over.  Especially if you reduced the money some of the people in the system make.

Of course … the quality of health care differs (there are places in Canada where you won’t get anesthesia while delivering a baby if you don’t show up during normal business hours).  Waits for some services differ.  But, when they started with the Massachusetts health care initiative (now referred to as Romneycare), it had two goals:  personal responsibility and reduced overall expense.  All generated by the “obvious” inefficiencies.

At this time I’m reminding readers that I said “appears” rather than “is.”

But it is that appearance that is economically tempting.

There is a lot of rent seeking going on.

To quote:

The simplest definition of rent seeking is the expenditure of resources attempting to enrich oneself by increasing one’s share of a fixed amount of wealth rather than trying to create wealth. Since resources are expended but no new wealth is created, the net effect of rent-seeking is to reduce the sum of social wealth.

Rent-seeking generally implies the extraction of uncompensated value from others without making any contribution to productivity. The origin of the term refers to the gaining control of land or other pre-existing natural resources. In the modern economy, a more common example of rent-seeking is political lobbying to receive a government transfer payment, or to impose burdensome regulations on one’s competitors in order to increase one’s market share.

In health care a good example is rural clinics which can be run by PAs and GPNs and the like being required to have a “supervising” doctor who is not required to supervise any patients, be within two hundred miles of the clinic or do anything but receive part of the money.

In a different field, I still remember a doctor’s deposition where he stated in outrage to the attorneys “What don’t you understand?  I wasn’t there.  I have nothing to do with that.  I’m in a different building.  All I do is get the money.  That is all my name on the paperwork shows.  I have no duties.  I’m not responsible.  All I do is get the money.”  All he did was engage in rent seeking, successfully.

There are huge struggles going on between various groups trying to cut each other out of rent seeking.  In a move I call “the revenge of the general practice doctors” GP MDs are suddenly discovering that they can force the specialists who get referrals from them to rent from them and give up a part of their practices as “rent.”  So a General Practice doctor (Many of whom made less than $90,000.00 year before they figured out how to make this work) can make considerably more (when you realize that the same doctor made only $40,000.00 while still in school, and that specialist nurses in the step down units might well make $70,000.00 a year, you can understand why the GPs felt underpaid).

Orthopedic Surgeons whom I depose regularly make about two to four million dollars a year (and if you think that is too much, just wait until you break a leg and want to get it fixed now rather than wait 2-3 days).  Other types of doctors obviously make a lot less.  One of the keys to moving from the ninety thousand dollar a year figure to the six to nine million dollars a year numbers is finding a way to successfully engage in rent seeking (something I will note the surgeons I depose have not found a way to do).  Doctors are not foolish.  Nor are others in the health care arena who are seeking to do the same thing.  Many will find a way to rent seek.

(Warning: do not think that only people in health care do this.  Adam Smith believed that whenever two or more business men were in the same room they were going to conspire against the common good and engage in collaborative rent seeking).

Almost every regulator looks at that and thinks, gee, a PhD in philosophy takes longer to get than an MD, requires higher test scores and more work, and people are willing to get them in order to earn $35,000.00 a year.  European countries pay doctors $60,000.00 a year (excepting England, where a good specialist Orthopedic Surgeon can make 100,000 euros a year according to a head hunter I had lunch with one day in Paris who was curious about the odds of getting a few American surgeons to come to England).  European countries do not have a shortage of doctors.  The Philippines did not have a shortage of doctors at even lower wages for some time (until they figured out they could retrain, get an RN degree and get a green card or H1 visa to work in the United States as nurses for $50,000.00 a year or so and started leaving their practices to become nurses in the Americas).

To say the least, the entire thing is tempting.  Notice I did not say any of the regulatory steps or aspirations are justified or correct.  This essay is descriptive, not prescriptive.  I don’t doubt that everyone feels the other guy is paid too much and they are not paid enough.  Rent seeking activities (a) are tempting as a cost cutting target (cut out the rent seeking profits and refund them to the payors) and (b) color vision (they make everything look like rent seeking — the problem Stalin got into when he started looking for malefic influences behind all of his economic woes).  You can sink yourself hunting rent seekers.

Finally, costs are growing faster than inflation.

That is huge.  Health care as 5% of the GNP — scarcely noticed.  Though think of that as one dollar out of every twenty you make.  At 20% — it is one dollar out of every five you make, and everyone notices it.  The cost gets attention.

Now, I’m not blaming anyone for the obesity epidemic (with the associated diabetes -> renal failure -> dialysis cycle) or all the other things driving health care costs up.  I’m not providing explanations or blaming pharmaceutical companies, rent seekers or anyone else.  I’ll leave that to policy makers and politicians.

But the undeniable fact is that the cost of health care costs are going up and they have passed the pain threshold and are headed towards the unsustainable threshold.  Just the drug benefit for Medicare alone is predicted to cause more damage to the United States than all the wars we have fought put together because of its economic cost and impact.  Even Forbes …

This causes politicians to become pressurized.  After all the electioneering “they are going to take Grandma’s Medicare away” sorts of things, there is real fear that at some point we will not be able to pay for health care, third rail of American politics or not.

So, what do we do about it?

I know, I ought to focus on the politics involved, or tell everyone how to solve the problem, instead” — I’m afraid that what we should do about it is something I will leave up to the commentators.

What do you think about the economic forces that are tempting policy makers and politicians.  What do you think the solution should be?  Can be?  Is there a solution?

33 Responses to Economics and Heath Care Reform

  1. Stephen Marsh on April 6, 2012 at 3:53 PM
  2. Mike S on April 6, 2012 at 3:53 PM

    This is an important topic and I’m interested to see the discussion. But from the get-go, just a few fact checks:

    1) Why is a doctor hiring an employee from whom he/she might make some money guilty of “rent-seeking”, whereas someone in a different line of work might be called an “employer”. I would assume that lawyers who hire paralegals and make money off them are also “rent-seeking”. I would assume that all of the businessmen whose ranks fill our church are “rent-seekers” because they make money off someone else’s work. Just trying to be clear here.

    2) I am an orthopedic surgeon in Utah. There is NO ORTHOPEDIC SURGEON IN UTAH who makes $1.5 million per year, let alone the $2-4 million a year quoted in the article. The median annual salary for an orthopedic surgeon in the US last year was $350,000 (meaning half made more, and half made less). Whether this is too much is a different debate, but let’s at least avoid the hyperbole that the million dollar figures represent.

    3) Regarding the amount “generalists” get paid, it’s not the figure in the tens of thousands quoted above. The average salary for a family practice doctor is $172k. The average internist made around $180k.

    4) There is a big different in training compared to other countries. While training is paid for in other countries, the average US medical school graduate has a debt of $158,000. Around 1/3 have a debt of over $200k. These are often 20-30 year loans. It’s like buying a house, just to get done with training. You obviously have to make more than someone in another country to pay off the debt.

    5) And you have to make more because of lawyers. My malpractice costs me around $1000/week, just in case I’m sued. I see an average of 30 new patients per week, in addition to follow-up patients, etc. This means that it costs me $30-35 PER NEW PATIENT just in case I’m sued by someone at some point in their case. I have spent hundreds of thousands over the past years I’ve been in practice (and never been sued – knock on wood). I’ve ordered millions of dollars in tests over that time in case I’m sued. It’s estimated that we spend between $80-150 billion a year on defensive medicine in this country. Do we really need 70% of the world’s lawyers? Are our doctors really so bad compared to the rest of the world that we have more malpractice suits per capita than anyone else in the world?

    6) The article states: I routinely see the same MRI billed for at between $2,500.00 and $5,000.00 in the United States. In Utah, MRI’s bill at around $1200. Insurance typically allows $400-600 for the study. On a typical 80-20 plan, the patient might pay $100 and the insurance company pays around $400. Nowhere near the $2.5-5k number above, and much closer to the numbers quoted in other countries.

    Just some facts for the discussion…

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  3. Mike S on April 6, 2012 at 4:13 PM

    Regarding the questions at the end of the OP:

    What do you think about the economic forces that are tempting policy makers and politicians. What do you think the solution should be? Can be? Is there a solution?

    The forces are great, as you mentioned, but ultimately the politicians won’t do anything because their short-term interests of getting reelected are stronger than their long-term interested in actually working for a better goal. The basic reason is that Americans want lower costs AS A SYSTEM, but want everything done for them INDIVIDUALLY. Examples:

    1) Obesity: No politician will ever talk about it, but this is a huge problem (pun intended). People talk about having “fat genes”. It’s just a fat lifestyle. For a staggering visual of this, check out the US Obesity Trends, just since around the time I finished high school. Obesity costs the country an estimated $150 BILLION a year, or enough to fund “Obamacares” 10-year $1 TRILLION price tag. It’s astounding. But no politician will talk about that or suggest that premiums be based on BMI.

    2) End of Life Care: No politician wants to talk about this either – care for someone in the last year of their life and/or with a terminal illness. This accounts for over 1/4 of Medicare’s budget, or nearly $100 billion a year. It would be political suicide to talk about this.

    3) Unnecessary Medicine: There are lots of things we do in the United States that patients demand and that politicians won’t talk about. In many countries, if you are over a certain age, you don’t get dialysis. In many countries, if there is a breast cancer treatment that only increases survival an average of 2 months at a cost of tens of thousands of dollars, you don’t get it. Imagine being a politician who suggested doing like we do in other countries. A family with crying eyes is gathered around grandma’s bed, who has Alzheimers and just broke her hip. An ominous voice-over says, “We could fix grandma’s hip and at least give her a chance, but Senator So-and-so just wants her to die. He may as well have signed her death sentence himself.” It’s not hard to see. So no politician will step up and do this.

    4) I have good insurance: One of the hardest things I have to do is talk people OUT of care. If someone’s ACL is torn and is loose, I don’t need an MRI to tell me that. But people regularly insist on one anyway because “they have good insurance” and it won’t cost them anything. When I try to explain that it still costs the system money, they don’t care. They want the tests anyway.

    These are all major things that cost a lot of money. Very few people will voluntarily take “less care” to save the system money, and even fewer politicians will actually put their necks on the line. So, until the system is absolutely broken, nothing will really change.

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  4. Stephen Marsh on April 6, 2012 at 4:29 PM

    Why is a doctor hiring an employee from whom he/she might make some money guilty of “rent-seeking”, whereas someone in a different line of work might be called an “employer”.

    They aren’t. On the other hand, a doctor getting legislation passed so that a Nurse Practitioner in a rural county offering health care now is required to pay him 50% of her income for non-existant supervision would be.

    The same would be true if independent bankruptcy attorneys were suddenly required to do all of their work at law offices and pay 50% of their income to the lawyers for the privilege.

    Huge difference. Most doctors are employers, not rent seekers.

    On the orthopedic surgeons, I take their depositions, under oath, and part of what comes up is what they are paid to testify and how that compares to their regular income.

    That is where I get the numbers.

    The average salary for a family practice doctor is $172k. The average internist made around $180k. Good. They deserve it. The ones I knew made about half that, which made me sad for them.

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  5. Stephen Marsh on April 6, 2012 at 4:31 PM

    6) The article states: I routinely see the same MRI billed for at between $2,500.00 and $5,000.00 in the United States. In Utah, MRI’s bill at around $1200. Insurance typically allows $400-600 for the study. On a typical 80-20 plan, the patient might pay $100 and the insurance company pays around $400. Nowhere near the $2.5-5k number above, and much closer to the numbers quoted in other countries

    Good to know. I see numbers all over the ball park in Texas.

    But your numbers reflect exactly what I’m talking about — great variability.

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  6. Stephen Marsh on April 6, 2012 at 4:35 PM

    Mike S — good to know that end of life care has dropped from the almost 50% it was headed towards.

    Your points are very good.

    Ok — so what solutions do you have to suggest?

    The median annual salary includes kids doing their residencies and others, just fyi, and is calculated with after tax dollars, not taxable income dollars.

    That does lead to numbers that are not as, err, normal, as they would otherwise be.

    Still, Utah appears to be in the same area it was before — a place where doctors make less.

    Interestingly enough, a CRNA in Berkeley, California will make $90k a year, if she or he is willing to move to Abilene, Texas that jumps to $180k, profit sharing, five weeks of paid vacation, and other benefits.

    There is huge variability in income depending on local factors, including how many people want to live where you want to work.

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  7. Stephen Marsh on April 6, 2012 at 4:45 PM

    In case anyone is curious, I suspect that all of Mike S’s numbers and comments are accurate.

    As I mentioned in my OP, the orthopedic surgeons I depose are not making any money from economic rents.

    Also, back in the day, you could calculate a doctor’s income from his med mal insurance payments. OB/GYN = 8%. Ortho = 5%. That has changed, dramatically. Obviously Mike is not making $20k a week as an Ortho.

    But that is an entirely different topic.

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  8. Susan on April 6, 2012 at 4:46 PM

    I have a suggestion. Certainly not a complete solution, but a positive step Americans can take either now or during open enrollment periods next fall:

    Move your health care to the nonprofit sector.

    Why is Kaiser so much cheaper than insurance-driven health care? Part of it is lack of rent-seeking. Part of it is doctors not being squeezed between health insurance companies and malpractice insurance companies, often putting the doctor’s interests at odds with the patient’s.

    Over a million Americans moved their accounts out of big banks and into local community banks and nonprofit credit unions in the last 6 months. We can do the same with health care, with or without a government health bill.

    Our family switched to Kaiser 8-10 years ago (can’t remember exactly when) and we’ve been happy with the change.

    Part of our reason for switching was the incentive my husband’s employer offered to choose the lowest-cost health plan they offered. Part was because the copays for Blue Cross were 2-3X more than the copays for Kaiser. Part was the Blue Cross deductible of $500 per person, compared to $0 for Kaiser.

    But the main reason was that I did not want to support for-profit insurance companies.

    I realized the other day that the only insurance we have with a for-profit insurance company is life insurance. We have moved our home and auto insurance to nonprofit mutual companies, too.

    I would like to start a movement to encourage everyone to switch to a health plan outside the for-profit sector. In some states, Blue Cruss and/or Blue Shield is still a nonprofit mutual company. In others it has converted to a for-profit company. Getting out of the for-profit health insurance system gives more good doctors an opportunity to work for Kaiser and other health plans with a purpose of helping patients have better health, not making profits for insurance companies.

    Please comment on this idea, and consider joining me.

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  9. Susan on April 6, 2012 at 4:57 PM

    *Blue Cross*

    (Sorry for the typo.)

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  10. Mike S on April 6, 2012 at 6:10 PM

    #6 Stephen: Ok — so what solutions do you have to suggest?

    I just have a few minutes before I have to run to dinner, but here is one to start:

    1) Obesity: I would make insurance premiums based on BMI. For example, a “normal” weight person costs the healthcare system around $3400 per year. An “obese” person costs around 40% more, or $4870. I would factor this into premiums, with a very rare exception for a documented hormone imbalance.

    I would also offer an incentive – a gym membership as a part of the health plan. I someone checks-in 12 times per month (ie. 3x/week), they get the $40 cost refunded off their premium. If they check in less, it’s prorated. If they don’t go at all, they don’t get a refund. Below a “normal” BMI, they get the $40 back without even going to the gym.

    More later…

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  11. Howard on April 6, 2012 at 6:28 PM

    I think defensive medicine is a very costly problem much more costly than malpractice insurance rates alone would indicate. Low cost health insurance should be offered that waves malpractice shielding the care providers from suit and the malpractice records of care providers should be made available online allowing the patient to easily avoid providers with high malpractice records.

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  12. Bonnie on April 6, 2012 at 8:41 PM

    I am fascinated by this topic, especially after just finishing Clay Christensen’s Innovator’s Prescription. I have to agree completely with his analysis. The incentives are all wrong for either politicians, insurance companies, government administrators, or doctors to change a monolithic system with a lot of momentum behind it. The key is the business sector, in organizations like Kaiser, as Susan has intimated. Christensen makes a very good case for employer-driven change, citing small specialty clinics that take advantage of different incentives to drive innovative change. In order to be ahead of the curve, we have to think of medicine as the business it is and shift our buying power to small innovators who drive the market ahead of large networks that have too much too lose to innovate. The key is the consumer. I really encourage anyone interested in health care overhaul to read the book. I’ve been involved in naturopathic care for two decades and I’m not a participant in traditional western medicine, so its economics don’t have to drive us. We’ve done just fine. It’s about us – better plans will evolve if enough employers buy in, and employers will buy in if their employees don’t blow a gasket about changes. As better plans evolve through the market, the big bad money wasters will go the way of IBM.

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  13. Bonnie on April 6, 2012 at 8:42 PM

    Whoops. Can someone go in there and turn off the italics?

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  14. Bob on April 6, 2012 at 9:01 PM

    Most Malpractice Cases contain malpractice. But it’s the Jury awards that drive up the cost of insurance for doctors.
    I have belonged to Kaiser for many years. It is a good system, but they will under treat at times. But, if you know how to ‘ask’, you can usually get what you want.

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  15. Mike S on April 7, 2012 at 2:39 PM

    Continuation of comment #10: Other “suggestions” I would do. I’ll break these into separate comments so anyone can address then each on their own merit/non-merit.

    And this addresses #14 Bob: Most Malpractice Cases contain malpractice. This is simply false.

    2) Malpractice:

    In Utah, if you have a medical license, you are required to appear on a pre-litigation panel (kind of like jury duty for doctors). Both sides present a case, a panel (one doctor, one layperson, and one mediator) states whether they feel the case has “merit”. It’s not binding, but hopefully helps keep things from going further. In my experience on the pre-litigation panel:

    – One person sued because their knee hurt after a knee scope, so the surgeon “must have done something wrong”. At the time of surgery, they had worn their knee down to bone. They actually needed a knee replacement, not a lawsuit. Yet time and money was wasted by the plaintiff’s lawyer.

    – Another case involved a fracture where the limb was too swollen to do the traditional surgery. The surgeon explained (well-documented in the notes) that a simple pinning with a brace might work if they were lucky. If not, they could always do the more traditional surgery once the swelling came down. The patient never wore the brace. It didn’t work. It came time for the second surgery. The patient sued the surgeon for malpractice. Incidentally, the patient also sued for “sexual harassment” in the operating room because she “felt sore in the pubic region” after surgery (never mind she was bucked off a horse). When I asked her lawyer if he had asked the anesthesiologist, the circulating nurse, or the scrub tech whether anything had occurred (since they were all present in the room BEFORE the surgeon even got there as per THE LAWYER’S OWN RECORDS), he replied that they hadn’t “got that far” in their investigation. They just wanted to sue a surgeon with allegations of malpractice and sexual harassment in hopes he would settle.

    – The third case I’ve been with in the past 5 years involved a surgeon who treated a fracture “right” according to standard guidelines. There was a bad outcome which will require an additional surgery to correct, but that is a known possible outcome with the type of fracture the patient had. In this case, they also sued the hospital where the patient first went, the ER physician who appropriately called the orthopedist in to see the patient, and the nursing staff of the emergency room, for a reason that I still don’t understand. This was disruptive to dozens of people’s lives.

    Granted, this is a limited subset, but the three times I have had to appear on the panel to review things, they have all been bogus. They have cost thousands of dollars to even get that far. They involved dozens or hundreds of hours. I don’t know the eventual outcome of the cases, as that’s not the role of the panel, but I would hope they were all dropped.

    But it’s not just Utah. For example, in Maine, Missouri, and Nevada, about one-third of medical malpractice insurance claims resulted in a payout to the patient. And in Illinois, only 12 percent of medical malpractice insurance claims resulted in a payout. And this includes cases that were “settled” just because the cost of paying something was cheaper than dragging the case through court.

    So, one thing I’d fix: Malpractice. Things I would do:

    – Let someone collect ALL costs of treating anything that is actual malpractice – this includes things like life-time care for a serious mishap requiring it – even if this might be $1 million+

    – Let someone collect lost wages for something that is actual malpractice.

    – CAP “punitive damages” ABOVE the above (ie. for “pain and suffering”) to $250,000.

    (Interestingly, physicians have been pushing for the above for years – trial layers fight this – as they want the “home run” reward and their 30-40%)

    – For lawsuits that are found to be non-meritorious (up to 88% of cases in Illinois, and 70-75% throughout much of the country), the plaintiff’s lawyer should be expected to pay the physician’s costs for defending against a bogus lawsuit, as well as the physician’s “lost wages” for clinics and surgeries they had to cancel to defend against such bogus lawsuits.

    These proposals would accomplish several things: People could still sue for malpractice, although you can be sure that their lawyer will surely make sure there is a “real” lawsuit before putting their neck on the line. People could still get paid everything they need to “make it right”. People could still get paid for “lost wages”. And they could still get a quarter of a million dollars for “pain and suffering”.

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  16. Mike S on April 7, 2012 at 2:53 PM

    Option #3:

    3) Walmart vs Nordstrom medicine:

    One interesting point that gets brought up is that doctors “charge too much”. The ironic thing is that it DOESN’T MATTER WHAT THEY CHARGE. For example, I could bill $10,000 for a knee replacement. In 2000, Medicare paid $1206 for a knee replacement and I would simply right the rest of the “bill” off. In 2009, Medicare paid $1185 for a knee replacement, or $21 LESS. So, even with inflation and an increase of 35% in the cost of running my practice, I get paid LESS for doing the same thing. This includes rounding on the patient, all follow-up visits for 3 months, etc. And out of this comes expenses like malpractice, rent, staff costs, health insurance, x-ray machines, supplies, etc.

    It is the same in most of medicine. Doctors can bill whatever they want. Medicare (and insurance companies who base it on Medicare) pay whatever they want. The rest is “adjusted off”. This presents some problems.

    In my practice, the majority of problems I see are very straightforward. I can literally diagnose what the problem is in 90% of my patients within 60 seconds. Yet I spend a lot of time talking to patients, going through options, etc. Some patients like this – a doctor’s visit can be a social highlight of some elderly person’s day, and they want to chat and have a relationship. Other patients just want to get in and out with just practical advice. The medical care is the same. And I get paid the same.

    So, extend the Nordstrom / Walmart model. A shirt at both stores keeps you warm. A shirt at both stores covers your skin (and shoulders if you’re a woman). They have different service.

    Let medical practices run like this. Let a doctor have a bare-bones practice with quick to-the-point appointments and charge less. Let another doctor be all touchy-feely and spend 30 minutes. Let patients decide what they want to pay for.

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  17. Mike S on April 7, 2012 at 3:05 PM

    #17: Option #4

    4) Tax Write-offs:

    As mentioned above, there are certain fixed costs with treating a patient. It costs me $30 in malpractice insurance for each new patient I see in case they sue me sometime during their care. I have costs for staff and rent and other insurance and x-ray machines and so on. If I see someone on Medicaid, I actually get paid LESS than it costs me to treat them. And if I treat someone without insurance, I actual eat the whole cost.

    In the past, there was enough “surplus” in what physicians were paid that this was easy to do. As shown in comment #16 above, the amount a physician is paid for many treatments is actually LESS than what it was a decade ago. So this “cost-shifting” ability is dwindling.

    Hospitals can still do this, as they get tax exemptions. In Utah, Intermountain gives away over $100 million in charity care a year (they actually have a great program). But they also get tens of millions of dollars in property tax exemptions as a result. If I do a surgery on someone without insurance, they can write off the actual expenses for the operating room, staff, supplies, etc against their income.

    But doctors, that doesn’t work. You cannot write off the cost of free care. It is illegal.

    So, this is something else I would change. Let doctors write off the cost of free care that they give against the amount they collect from insured patients. They would help more patients.

    As an aside, this is a big and real problem. A great study was done in Southern California. Fifty orthopedic offices were called who advertised that they treated “pediatric fractures”. There was a canned script about a family who “just got back from Mexico” with a kid’s arm that was broken and angulated 30 degrees (something that obviously needs reduced and casted). ALL FIFTY OFFICES would see them that week.

    They let a few months pass by and did the same experiment with the same script. The only difference was that they were on Medicaid. 48 OFFICES WOULDN’T SEE THEM. One office had an appointment 3 weeks out. One had an appointment in 7 months.

    It’s sad, but it shows how it is becoming increasingly hard for doctors to give free/Medicaid care. Letting them write off the cost of this would help.

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  18. Mike S on April 7, 2012 at 3:08 PM

    #8 Susan:

    Free-market economics works. You changed plans because it was cheaper. As more and more people do this, medicine will change. Some people are willing to give up autonomy for less cost – others aren’t.

    Eventually, the system will break, and we will all be in a Kaiser-type system or else universal health care. But it will be driven by decisions like yours. And if you can get more people to switch and force the issue sooner, that would be great. It’s the difference between our country and Europe. It’s messy, but eventually works (most of the time).

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  19. Susan on April 7, 2012 at 3:56 PM

    Thanks, Mike S.

    My motivation was partly to reduce my own family’s costs, but even more because of the immoral and unjust waste in the for-profit system that Stephen labelled as rent-seeking. I don’t want insurance companies to become richer and more powerful at the expense of both doctors and sick people. It is a matter of social and economic justice.

    This is why people should move their health care, just like we moved our money in recent months.

    Have you (anyone here) moved your money in the last 6 months? I did. And it wasn’t the first time in my life. Almost 30 years ago my family moved our money from Bank of America to a local S&L. Without moving our money again, those accounts finally ended up in Chase, so this time we moved to a credit union.

    Sure, the job of taking power away from “too big to fail” banks hasn’t been accomplished yet, but we’ve made steps forward. I still hope to see middle-class people who hold public and private pensions joining together to vote the stock held for their benefit in ways that will bring about broader benefits than short-term profits.

    And I want to see us start a similar conversation and movement in our health care. Would you join this kind of movement?

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  20. Bob on April 7, 2012 at 8:26 PM

    #19: Susan,
    Funny, I moved my mortgage loan to BoA because they were the only ones ‘Big Enough’ to make it happen. They sent their own in-house appraiser to my home to set the needed amount to make the refi possible.
    Being small or ‘not-for profit’ doesn’t make the company more honest, or even give you a better loan.

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  21. hawkgrrrl on April 7, 2012 at 9:23 PM

    Mike S is spot on. My own experiences with health care abroad make it crystal clear that there needs to be a fundamental shift in our assumptions about health care in the US:

    1 – make it about wellness. I absolutely agree that those with a higher BMI should have a higher premium. So should smokers, alcholics, and others at high risk for expensive care due to their lifestyle and controllable choices.
    2 – create transparency. The fact that nobody in the US really knows what things cost is a problem. I once saw a hospital bill for 19 days (when I had a blood clot), and frankly, that bill could have been written by the Pentagon. My insurance company was charged $25 for a box of kleenex, among other things. It’s unreal! If we had a set pool of money to spend on our health care, and we knew what things cost, we wouldn’t be such frivolous decision-makers. Now, the sky’s the limit!
    3 – accept our mortality. Americans have the dumb idea that we can pay our way out of death and physical discomfort. Bodies break down and stop working. We will all die. We have a much harder time accepting this than other cultures do. We should stop prolonging life indefinitely through expensive means when death is imminent anyway. Often we do so even though the quality of life is low.
    4 – doctors make mistakes. Americans think they are entitled to completely error-free health care. Instead, because of our expectations and our litigious problem-solving nature, we create an environment in which doctors can’t admit mistakes and are less likely to properly diagnose and listen to patients. Elsewhere, doctors make and admit mistakes, and people don’t sue them into kingdom come.

    In short, we aren’t entitled to perfect pain-free quality of life. Mike S’s suggestions are all spot on, but legislators won’t touch them because they want to be re-elected. Lawyers make too much money off the system to want to see changes. Doctors can’t afford to make changes thanks to their malpractice rates and student loans they are still paying off.

    Medical tourism is becoming very popular for this very reason. My husband lost a filling in the Philippines while we were on a temple trip, and he got a replacement for a mere $18 just by stopping in at a dental clinic we saw at a nearby mall. My mother-in-law broke her arm on a Sunday in Spain. She had an emergency room visit ($108 USD) and 4 different types of pain and anti-inflammatory meds (<$40 USD). This included a sling and consultation. I went to the clinic in Singapore for an eczema flare-up, and paid $18 (SGD) for the consultation and two medications. I only waited about 5 minutes to see the doctor, and they gave me the meds right there with no second trip to the pharmacy. In every case, the care we got was as good as anything we've had in the US, often much quicker. We need to quit fooling ourselves that our care is more expensive because it's better. The entire world knows that Americans are obese. We must be looking at ourselves in a funhouse mirror if we can't admit that.

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  22. Stephen M (Ethesis) on April 8, 2012 at 6:48 AM

    The incentives are all wrong for either politicians, insurance companies, government administrators, or doctors to change a monolithic system with a lot of momentum behind it.

    Which is what makes it such a tempting target.

    Thank you everyone for your input and comments.

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  23. prometheus on April 8, 2012 at 11:09 AM

    Wish I had some meaningful suggestions. As I live in Canada, many of these issues simply don’t exist for us.

    Of course, we have some long wait times for things like MRIs and whatnot, but that is the tradeoff for walking in and out without paying out of pocket, I guess.

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  24. Bob on April 8, 2012 at 11:47 AM

    #23: prometheus,
    At 65, I turned over my Medicare coverage to Kaiser’s HMO. Six weeks before this, I was paying $782 a month to them just for me. My doctor wanted me to have an MRI on my back. The Ded.+ Co-Pay would be $850! If I waited the six weeks, the total payment would be $25…nuff said.

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  25. Cowboy on April 8, 2012 at 12:00 PM

    Mike S.

    I know this is a little unusual, but I am wondering if you would be willing to contact me. I work in Provo, perhaps we could meet for lunch if you can afford the time, but either way your comments are very interesting to me.

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  26. Cowboy on April 8, 2012 at 12:00 PM

    Sorry Mike, I forgot to post an email. You can reach me at:


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  27. Cowboy on April 9, 2012 at 4:52 PM

    I should make comment here as well. Part of the problem is in trying to locate “a” cause. Mike S has made some excellent comments, particularly about the provider angle. I’m a little doubtful of Susan’s suggestion to move to non-profits, because non-profit is only a tax status, it is rarely an ideology. It sounds when talking about it on an ideological scale, but in then nitty gritty, non-profits needs surplus’s too. They just have one more channel of profit through tax exemptions. They have to commit some resources to community service and infrastructure, but as IHC demonstrates, infrastructure is investment. So they get tax breaks for investing in themselves.

    If I had to narrow the issue down to two things, I would argue for Mike S and Hawkgrrrls point about obesity and wellness, as well as healthcare financing. The problem with health insurance is not the tax status, but rather the fact that it is not really insurance at all. It is an odd mutation of health insurance into community financed medical. Life Insurance is the perfect example here. In general, when you enter into a Life contract, each of the insurer the policy holder and the insured are invested in the same outcome. That of ensuring that the insured lives. Whether a family insurers it’s principle breadwinner, or whether a company insures a “key man”, or creates a buy-sell agreement, in theory, each of these potential policy holders would prefer not to file a claim. The insurance is there to reduce the risk associated with the peril of certain persons dying unexpectedly.

    Health insurance lacks this necessary component of a common interest. Intuitively we would think that people are personally invested in their health, but a simple survey of each of our social and community circles, supported by extensive national social data, suggests otherwise. Spend five minutes at a C-store and see how much soda pop, as an example, people routinely consume, and there becomes little doubt that people are willing to satisfy their urges at the expense of their long-term health.

    Still, it’s not just that simple either. Our general attitudes about healthcare consumption are at odd’s with the principles of transferring risk as well. We don’t view going to the doctor as risk, but rather we have developed over-preventative culture of healthcare consumption, even among the generally healthy population, but insist on financing this prevention with a an instrument that was intended to protect us from unexpected medical costs, not to facilitate the routine consumption of which.

    And that brings me to the last point I will make right now, and that is the instrument itself has evolved into an efficient manager (efficient = manages high volume, in this case) of consumption. Co-pay plans and other benefits that encourage routine consumption foster the general behavior that encourages overuse of medical services.

    I don’t want to make this too long, so I have been very generalized here. So please understand that I understand, the devil is in the details. I also understand the logic that brought us managed care and it’s aftermath. I even agree there was some element of logic to it. Furthermore, please do not take my comments to suggest that I am so how suggesting that preventative care should not be sought or taken. Rather in retrospect, I am doubtful that it has been in our long term good to finance it through an insurance plan.

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  28. Bob on April 9, 2012 at 5:14 PM

    #27: Cowboy,
    People don’t go see a doctor because it’s free.
    “Key Man” policies are a scam. Companies keep them in force long after their CEO is retired. Then when he does die, the company gets millions.
    Mormons LOVE their soda pop. You better get another example.

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  29. Stephen M (Ethesis) on April 9, 2012 at 5:33 PM

    It is an odd mutation of health insurance into community financed medical. or why the move to require all health insurance to pay for contraceptive expenses.

    The debate was much clearer when it was situated in colleges and applied only to college students. Huge discussions at the Chronicle of Higher Education about the topic, completely untinged with any religion arguments.

    Bob — some insurance policies are just tax favored investment vehicles.

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  30. Mike S on April 9, 2012 at 5:50 PM

    #28 Bob: Mormons LOVE their soda pop.

    It is ironic, isn’t it? Studies generally show that coffee and tea aren’t really that bad for you, and in fact have some health benefits when used in moderate amounts. In fact, some of the longest living people in the world drink tea.

    Contrast this with soda, which every study just about unanimously shows is terrible for you – whether full of sugar or diet. Yet as members of the Church we don’t drink coffee or tea because of our “health code”, and we teach our children that they are “bad for you”. Yet we pump ourselves full of soda (me included).

    Perhaps it’s time to revisit our “code of health”…

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  31. Cowboy on April 9, 2012 at 5:58 PM

    ““Key Man” policies are a scam. Companies keep them in force long after their CEO is retired. Then when he does die, the company gets millions.”

    I fail to see a scam in there. Generally in order for an insurance contract to be valid there has to be insurable interest. I’m not sure if legally that is only required at the inception of a contract, or through the life of it. Still, that is not the point. If the insurer has this information disclosed, where is the scam?

    “People don’t go see a doctor because it’s free.”

    There is a lot of space between “I do not require any medical attention” and “I require immediate medical attention”. But again, that was not the point. People should be free to consume healthcare just how they want to, in some accordance with their means. I strongly believe this. I debate the wisdom however, in requiring that every single medical transaction (including most prescriptions) also require an insurance transaction. This partly effects why only people with health insurance can afford healthcare.


    “or why the move to require all health insurance to pay for contraceptive expenses.”

    Indeed. I struggle with rational behind allowing an entity that does not share in the risk, dictate how risk is managed.

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  32. Bob on April 9, 2012 at 6:38 PM

    #31: Cowboy,
    A ‘Key Man’ policy can continue, (or any life Insurance policy) even when the insurable interest has ended.
    My mom Xed my dad, but keep a life policy on him for ten years. She tired of paying for it, cancelled it, and asked for the cash value. As my dad was still alive, they sent him the money…..

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  33. Cowboy on April 9, 2012 at 6:57 PM

    Yeah, if he was the policy holder as per the contract, that’s how it goes. The one I’ve saw was a divorced man who forgot to change the beneficiary when he remarried. Ex-wife recieved the benefit.

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