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Rational Choices in Healthcare

A week and a half ago, Dr. J at The Gormogons posted something entitled The Problem with Third Party Payors.  I had been meaning to write about the topic for the past couple of months, but never quite got around to it, probably because it is personally embarrassing.

Dr. J’s point is pretty succinct:

…if you want high quality healthcare at the lowest costs possible, the patient, and not his insurer (be it private or public) has to have the principal power of the purse.

He goes on to explain:

When patients are put in the position of controlling their health care dollars they make rational economic decisions. They ask for generic medications rather than eschew them. They go to a ‘Doc-in-the-box’ rather than the ER as the cost is posted and usually less out of pocket than going to the ER would end up being. These are just the modern examples.

He also talks about how doctors used to impact the process

The doctor, too, had a better handle on things with regard to cost containment because:
a) he had an idea how much things cost, as he was the one writing the bill
b) the patient, who was for most things, cutting a check, would ask him, ‘Do I really need that test/treatment, what are my options?’ rather than, ‘I want the brand new ICD with Opti-Vol™ Technology and a Rhythm Discriminator instead of the single lead shock box ICD, I don’t care how much it costs because I haz teh insuranzes!!!!’

And for the final coup de grace

Health insurance costs have spiraled out of control in large part due to the fact that the individuals receiving the commodity are not, in large part, paying for the service. As a consequence they, themselves do not act as a financial check on cost.

All I can say in response is, “Guilty.”

As my regular readers know (and thanks to both of you for sticking with me, by the way) I’ve been unemployed and without health insurance for several months now.  It was kind of a rude awakening.  My former employer was a governmental entity.  We had good insurance.  A lot of my co-workers, especially the long-term ones (the ones who were hired back in the days when we didn’t have co-pays and such), bitched mercilessly about how bad our insurance was, but compared to most of the private sector folks out there we had I had (they still do have) pretty amazing insurance.  I had the option of higher deductible amounts/lower premiums, a prescription plan where my out-of-pocket cost was (I think, it’s been a while now) $5, $10, or $30 depending on the medication, a healthcare reimbursement account (pre-tax deductions) which I could use for the co-pays, deductibles, and other out-of-pocket expenses.  Pretty good stuff.

I’m a firm believer in incentives and disincentives.  That’s probably not surprising, given the 32 years I worked in Corrections, as Corrections is built on a system of incentives and disincentives starting with “do this or you’ll go (back) to jail.  It was only after I didn’t have it anymore that I realized how perverse the incentive system was with my insurance.

Let me preface the rest of my comments by saying that the Head Rat and I had/have some ongoing health issues (although I have commented elsewhere that some of mine have been significantly minimized since I no longer work in Corrections).  You can take it as a given that we were going to meet the deductible, low or high.

First, there was no net gain for me in going with the higher deductible amount.  The decrease in premiums almost exactly matched the difference between the low deductible and the high deductible.  No incentive there to try to contain costs.  (Not that there should have been.  Obviously, there would have been for someone who was healthy and didn’t need to see a doctor regularly.)

Second, knowing that we were going to incur significant medical expenses, I had the full $5000 deducted for the healthcare reimbursement account.  No incentive to question the need for tests or procedures to minimize costs there, because once you put the money in the account, if you don’t use it, you lose it.

Third, I had no real incentive to use generic medicines since I was paying the out-of-pocket expenses with the reimbursement account, which, by the way, had the added feature in recent years of having the pharmacy’s database accessible to the Account Management Company’s claims department so that the co-pay on the prescriptions was deducted from my account automatically with the swipe of a card.  It’s amazing how a hundred dollars worth (or more) of co-pays for brand name prescriptions doesn’t seem like a big deal when you are just swiping your card.  And, you never really think about how much the insurance company is paying out.  Well, I actually did keep track for a while, but it didn’t change my behavior because I had to spend the account money or lose it.

The first thing we did when I knew I was going to lose the insurance was schedule doctors appointments to discuss with our physician which medications we could do without and which could be changed to generics or less expensive alternatives.  We’re not seeing any doctor regularly, and certainly not the specialists.  I would find a way to get the Head Rat to the Pain Management specialist regularly, but there’s no point because the meds she was on actually cost several hundred dollars for a month’s supply.

Near the end of his post, Dr. J. says

But Americans also want to be able to feel assured their health care needs will not bankrupt them. Unfortunately for decades they have been told by liberals that health care is a ‘right’ and therefore should be ‘free.’ Those lies made having an honest conversation virtually impossible, especially given most people look at their take-home pay, and their co-pay, and everything else is money that they don’t see.

I certainly resemble that remark.  Personally, I’d love to have my old insurance back, but the sad fact is that there wouldn’t really be any incentive to behave differently than I did before.

Actually, that’s only partly true.  I wouldn’t put as much money in the healthcare reimbursement account (although I remember reading somewhere that the maximum amount has been reduced to $2500 anyway) and I would pay for everything up front and then submit the bills for reimbursement rather than using a card.  Other than that, there really wouldn’t be a reason to do much else differently.

If I were designing a plan with incentives I would respond to, I would want a plan that completely covered an annual check-up (and maybe one more visit to the doctor per year).  Pretty much everything else that’s routine (office visits, prescriptions) I would want to be on a percentage basis after a deductible rather than having fixed co-pay amounts (under my old insurance, the office visit co-pay was the same, no matter what else was done, the “what else,” of course being billed later).  To encourage their use, fully covering the $4 generics might be a nice touch.  I would still want catastrophic events that require hospitalization to be covered.

On the other end of the spectrum, I’d like to find a doctor that would offer a discount if I handled submitting the claim to the insurance company and just paid the bill myself.  In a set-up like that, I’d also like to find a doctor who offered a discount for payment in full at the time of the visit.  Surely not having staff tied up in claims processing and getting paid up front would be worth something to a practice.  Of course, having a list of visit and procedure costs would be nice.  (Do you know what a “regular” office visit with your doctor costs?  Mine is about $80.  The Pain Management specialist was $120 just to walk in the door, have a nurse do a med check, and get the handwritten prescriptions for the coming month¹ – no doctor involved, except to sign off on the prescriptions.)

I have no idea whether any of that would be economically viable for an insurance carrier.  I just know those are the kinds of things I would respond to.  But, in lieu of Obamacare, and absent a lot of the current restrictions, I’m pretty sure someone would offer some choices that would reward customers who actively tried to minimize costs.  And, I believe it’s time we tried something, anything, that would reward personal responsibility.

As an aside, I appear to be in better health than I have been in years.  The Head Rat has more days where she can’t get out of bed due to pain, but on the days she can, she’s more alert and active than she’s been for quite a while.  But, even when she was on the various medications and pain killers, she still had days when the pain was so bad she couldn’t get out of bed.  Overall, she’s probably worse off.  On the other hand, when she’s up and about, it’s nice that she’s more “here”.  While our situation is unfortunate, we’re hardly unique.  There’s nothing particularly tragic about our situation and nothing particularly noble about us making do with what we can afford and getting by as best we can.  Thousands of other folks out there do it.

The only difference between us and a goodly number of folks out there is that neither of us believe we are entitled to our (or any) doctor’s services whenever we want and neither of us believe that it is in any way your responsibility to pay for what services we do receive.  And no, that doesn’t make us special.  It makes us responsible adults.²

1) in case you haven’t had any experience with narcotics lately, prescription narcotics are not ever refillable.  You have to have a handwritten prescription every month.  Theoretically, I guess it’s supposed to cut down on fraud and over-medication.  I just find it interesting that that particular requirement guarantees the pain management doctor $1400 per year per patient and that’s just the required check-in visits…

2) at least as far as health care is concerned.  I’ll get back to you on some of our other life areas.

{ 1 } Comments

  1. Rat Jr.No Gravatar | July 18, 2012 at 8:17 am | Permalink

    Do you know who I wish would be required to pay for Mom’s pain management visits and the medicine perscribed? The Obama/Obamacare-thumping b**** who swears that stealing money from Medicare Section D is okay to pay for Obamacare. But in all reality if she had to, she’d just use her student loans and grants- which by the way she is super supportive of that shiny new bill about student loan forgiveness- meanwhile she’s out buying barbie dolls and movies and video games with the loans and grants and starts freaking about the cost of books and living expenses of her three bedroom apartment because she doesn’t have quite enough money. So she begs Grandma for some on the side.

    No, I don’t hate this girl but there are times where I imagine how much nicer the world would be if she was like Helen Keller before Anne Sullivan and we could just shut her away. I mean she’s costing tax payers money anyway right?

    Disclaimer: I am being facetious, I wouldn’t normally support shutting someone like Helen Keller away, I believe in people should have a chance at life even if they are disabled.

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