(The following is the first of an occasional series of “op-ed” pieces wherein we let ourselves inject a bit of personal opinion into the company blog. The opinions in these pieces do not necessarily represent that of Precision Scribes as a company. We publish them here because companies that like to pretend they are staffed with mindless robots instead of humans are painfully boring.)
In our previous series, “Surviving the ER”, I tried to present basic facts and insights into the world of emergency medicine. How to access the system, what to expect once you are in it, the things we do particularly well, and those we prefer to leave to others. This “all things ER” focus might seem a bit narrow, maybe obsessive, especially appearing as it does on the website of a medical scribe company. Except for the facts that the emergency department is an environment in which scribes have been shown to be particularly useful, and Emergency Medicine is my specialty, and therefore something about which I can speak with some authority.
Emergency rooms are also medical oases of sorts. People of all ethnicities, ages, and socio-economic backgrounds rely on them for immediate medical care, so what goes on behind the scenes is of interest to almost everyone. While it’s true that ER’s are not immune to violence, that there have been instances of rival gangs taking their hostilities beyond the ambulance doors and unhinged patients assaulting members of the staff, for the most part the ER is seen as the place friends and foes can go for help without worrying about the person in the next bed. All creatures need water, and at one time or another all people need emergency medical care. So no fighting at the oasis.
Up to this point, I’ve done my best to present the information without personal bias. Just the facts, as I see them, of course, but without regard to whether or not I find them acceptable. It will likely come as no surprise that there are a number of things about the ways in which our healthcare system is organized and the direction in which it seems to be going that I find bothersome. Horrifying, actually.
In a departure from my normal, unbiased approach to this blog I am going to indulge in a game of “What If”. This will by no means be an exhaustive treatise on the future of medicine in America or of all the ways in which we could achieve real reform. It will be a look at some of the possibilities, ways things could be changed that would allow for near universal coverage without serious degradation in the quality of care delivered. It will be my 2¢. And it will have very little to do with emergency rooms.
To understand the problem of limited access to care, we need to look at the language. Those shut off from the healthcare system have been referred to as “the uninsured”. This implies that without insurance you are somehow ineligible for certain types of healthcare. Unless, of course, you are filthy rich and are somehow different from your filthy rich peers and actually don’t mind spending your money on things you actually need. So assuming you are of average means you must ask yourself how the concept of insured vs. uninsured became so firmly rooted in our healthcare mindset.
At one time everyone was uninsured. Doctors were paid with produce, farm animals, and cash. Hospitals, too, relied on cash payments, so their charges needed to be reasonable. Despite these quaint economics patients did reasonably well and it was the rare case when severe illness or injury landed the unfortunate patient in the poor house. Then things began to change.
Employers were given tax incentives to offer health insurance to their employees, and the ranks of the insured began to rise. Then Medicare offered government sponsored coverage to eligible seniors. Eventually the large majority of Americans were covered by one form of health insurance or another, and the chickens, goats, and bushel baskets could be left at home.
With patients no longer digging into their pockets to pay medical bills they became less aware of them. File a claim and forget about it. But there was mischief at work. Prices began to rise as doctors, hospitals, drug makers, device makers, and everyone else in the healthcare food chain realized they could raise prices and insurers would raise reimbursements almost without question. These increased costs would be passed on to patients in the form of higher premiums, but with so many getting their coverage from their jobs or the government these increases were not clearly apparent.
Yes, there were some people not invited to this party—the people with no insurance at all. But they were a relatively small number, and with hospitals and caregivers living high off the hog thanks to those who were covered the uninsured were able to be absorbed without doing any serious financial damage to those caring for them. Plus there was a safety net. In 1965 Medicaid was introduced as one of the Social Security Amendments. The term “medically indigent” was coined soon thereafter. Those without the means to pay for healthcare could apply for Medicaid, and if accepted would have at least some access to healthcare without the worry of having to pay for it.
By the 1980’s the party was in full swing. A hospital could make money, lots of it, by merely opening its doors and sending bills to one or another of the various insurance companies involved in healthcare. Doctors, too, learned that the more they did, in terms of procedures and tests, the more they got paid. And the patients, the ones actually paying the premiums to support this gluttony, were largely oblivious.
Like all good things, though, this, too, was about to come to an end. The people running Medicare eventually realized the program was headed for Brokesville unless they found a way to rein in the costs. They did this by developing a system called DRG’s—Diagnosis Related Groups. Basically this was a system by which various diagnoses were given an absolute dollar value and hospitals were paid that and nothing more to treat the problem. Pneumonia was worth, say $2,500. Get admitted to the hospital with the diagnosis of pneumonia and the hospital’s job is to get you out of there, hopefully cured, before the whole wad gets spent. Of course it’s more complicated than this, but as I said this is not going to be exhaustive, and for our purposes what I’ve outlined is fundamentally true.
It didn’t take long for the other private insurers to catch on. They began ratcheting down reimbursements as well. By the mid-1990’s a lot of the fat had been trimmed from the healthcare budget, and the uninsured began to receive a lot more attention. There was no longer the same ability to cost shift because the profit margins were getting thin. People without insurance were causing some serious financial discomfort to hospitals and caregivers alike. Though laws were passed to help protect them, (remember EMTALA?), their plight became the topic of much political discussion.
This led to the formation of HMO’s as a means of capping the cost to insurers by putting the onus of care rationing on contracted physician groups. Since then almost every new idea to control costs, and to provide universal coverage, has involved some form of rationing, and with every innovation the insurance companies have managed to stay one step ahead. They have deftly found a way to get out of the indemnity business by contracting with physician groups, and, now, with governmental agencies, to administer health care without actually being on the hook for it.
This is how it works with the ACA and the expansion of Medicaid. The government, or, rather, the taxpayer, pays for it, the insurance companies enroll patients into the program, take a piece off the top for their trouble, and pass what’s left to those doing the actual work. No risk, big profits. On the provider side the reimbursement is dismal, the pool of physicians and hospitals willing to accept it is shallow, and those enrolled in it are paying nothing, and getting little more than what they are paying for.
So what if we changed the way healthcare is financed? What if we put insurance companies back in the business of providing insurance? What if we demanded that the price of the product, healthcare, be directly related to the cost of providing it? What if we continued to fund Medicaid as the safety net it was designed to be, and not the lowest common denominator “insurance” for everyone? Let’s see.
Imagine a world in which the price of an MRI is the same, within maybe ten percentage points or so, regardless of where in this country you get one. I mean, the machine costs the same in California as it does in Arkansas and the price doesn’t change much whether it is bought for a free-standing imaging center or a famous hospital. True, the square footage it sits on is more expensive depending on location, but not so much so to justify more than a small change in price.
Then imagine this were the case for everything medical. Lab tests, imaging studies, ER visits, all of it, priced at cost plus 10%. Just like most other businesses, except maybe military contracting with its rich tradition of sticking it to the taxpayer. Why this isn’t already the case takes us back to insurance companies. Insurers make deals with hospitals and providers, in-network services, and pay different amounts to these contractors depending on location, size, and importance to the insurance company in terms of patient demand. Medicare does the same thing.
[W]hat we have is a healthcare marketplace completely disconnected from the cost of services provided…and no way for even the most sophisticated consumer to make heads or tails out of it.
Without getting into a lot of economic theory what we have is a healthcare marketplace completely disconnected from the cost of services provided, with no standards, no transparency, and no way for even the most sophisticated consumer to make heads or tails out of it. This is great for insurers but not for the rest of us.
Now imagine we remove insurance companies from the front lines of reimbursement and return that responsibility to the actual consumer. A cash-based system. In such a world there would be no need for dozens of prices for the same service. One price would fit all, and it would be driven by demand. When was the last time you saw an ad for a discount MRI? Probably never. But there are sales every day for just about everything else, and if you were buying healthcare on the open market, instead of from Blue Cross, there would be sales for it, too.
Price competition in a cash-based market would drive prices down far more efficiently than any government agency or private insurer ever could. Having run a small urgent care facility for a while, negotiating deals for outside lab and imaging studies, I know how low these prices can go.
But where, you might ask, is the money to pay for this supposed to come from? Regardless of how low certain prices can be driven by competition, healthcare is still a technologically intensive and, at times, very expensive proposition. I think health savings accounts would be a reasonable solution. Large ones, funded with pre-tax dollars, say $10,000 a year for an individual, larger amounts for families. These would be means tested. Those able to set aside the entire amount could do so, those who cannot would be subsidized by the government.
Health care credit cards for various amounts based on income, renewable annually, used for health-related expenses only, issued by the government. It sounds expensive, and I’m sure it would be, but likely less so than what the government is now spending on Medicaid, subsidies, and the rest. Plus, by having access to these credit cards patients would learn to use them wisely. An ER visit for your child’s runny nose will no longer seem like such a good idea, and the pediatrician who previously refused to take Medicaid will be happy to see her and charge the visit to the card.
This is only part of the solution. The other part is real health insurance. But rather than using it for first dollar expenses, insurance plans would be used as stop loss protection. Deductibles would apply, equivalent to the amount allowed in the health savings account per year. When that money has been spent, the insurance plan would step in to shoulder the balance. These plans could be offered by employers or purchased by individuals, and insurers would be allowed to compete across state lines to sell them. For those unable to afford these supplemental policies there would be a safety net—Medicaid. As with Medicaid today, choices of physicians and hospitals would be limited, but emergency departments would continue to see all comers, and those in need will get care. Come the new year, the credit card is replenished and the patient again has free choice.
Some fear that patients are too ignorant or unsophisticated to make reasonable decisions about their healthcare. They worry that making them spend real dollars for it would cause them to forego care they need in order to save money, even if the money is plastic and provided by the government. This view is overly paternalistic and patronizing. Given the proper information most people are capable of making appropriate choices. We may have become a country of ignoramuses, but we are not, as some care to believe, a country of idiots. People deserve the opportunity to learn and to apply that knowledge to all facets of their lives.
Now for the happy ending. If a person is fortunate enough to get through the year without depleting the health savings account, the remaining balance can be carried over. Because the supplemental insurance plans have annual deductibles it would be possible to have growth in the savings account over time. If ten thousand dollars go in every year, but on average only eight come out, the account grows by two thousand dollars a year. By the time one reaches the age of Medicare eligibility this could be a tidy sum.
At that time the money could be rolled into an IRA and used for retirement income in addition to whatever other nest egg the individual may have. Plus Social Security, of course, providing it hasn’t gone bankrupt by then.
I said at the outset that this would not be definitive or overly detailed, but that it would provide a glimpse of what could be if we and our leaders had the political will to make it happen. There are, I’m sure, a number of other ways to achieve the same end without dropping the entire business into the lap of the Federal government as we seem intent on doing today. Striving for mediocrity has never been something I’ve understood or involved myself with. Medicaid for the masses is just that.
We have been, and will again be, a wealthy nation. This wealth did not fall from the sky, but was created by individuals through inspiration and hard work. As such, we deserve better healthcare than that which the government is prepared to offer. We can afford it. We should demand it.