Health Insurers Making Record Profits as Many Postpone Care

[Capt Bringdown]

The nation’s major health insurers are barreling into a third year of record profits. (http://www.nytimes.com/2011/05/14/business/14health.html?_r=4)


The UnitedHealth Group, one of the largest commercial insurers, told analysts that so far this year, insured hospital stays actually decreased in some instances. In reporting its earnings last week, Cigna, another insurer, talked about the “low level” of medical use.

Yet the companies continue to press for higher premiums, even though their reserve coffers are flush with profits and shareholders have been rewarded with new dividends.

[RandomGuy]

And while the slowing down of demand is good for insurers, at least in the short term, the concern is that patients may be tempted to skip important tests like colonoscopies or mammograms. The new health care law will eventually prevent most policies from charging patients for certain kinds of preventive care, but some plans still require someone to pay $500 toward a colonoscopy.

In recent times, insurers have prospered by pricing policies above costs, said Robert Laszewski, a former health insurance executive who is now a consultant in Alexandria, Va. The industry goes through underwriting cycles where the companies are better able to predict costs and make room for profits. “They’re benefiting from a very positive underwriting cycle,” he said.

“Maybe managed care is finally working,” he said. “Maybe this is the new normal.”

Still, he emphasized, health care costs, even if they are rising at 6 percent or 7 percent a year, are increasing at a much faster pace than overall inflation. “We haven’t solved the problem,” Mr. Laszewski said.

That 6 or 7 percent a year will destroy your retirement savings. You almost certainly have not saved enough for health care in your waning years.

You have been warned.

[DMX7]

Don't worry, Paul Ryan's voucher has got you covered.

[boutons_deux]

“We haven’t solved the problem,”

:lol

They aren't even WORKING on the criminally exorbitant sick-care costs problem.

[Winehole23]

Too bad the Dems were too chicken to pass a health care reform bill that would rein in costs when they had the chance. Instead, Obama opted to give the store away to pharmaceutical and insurance companies.

Deal with it, boutons: Congress gave Obama the deal he wanted from the beginning. Single payer was never on the table.

[boutons_deux]

Barry was not getting any of the big items of health he campaigned on.

The sick-care industry was ready to "Harry & Louise" him with $100Ms if he dared touch their cheese.

The sick care vampire squid will continue to suck $Ts out of Human-Americans' pockets for decades, and there's no way to stop it.

YOU deal with the fact that USA is fucked by UCA, and unfuckable.

[TeyshaBlue]

Barry was not getting any of the big items of health he campaigned on.
lol....he didn't even ask for them.


The sick-care industry was ready to "Harry & Louise" him with $100Ms if he dared touch their cheese.
Yeah ok.


The sick care vampire squid will continue to suck $Ts out of Human-Americans' pockets for decades, and there's no way to stop it.

YOU deal with the fact that USA is fucked by UCA, and unfuckable.

unhinged rant achieved. congrats.

[Winehole23]

Barry was not getting any of the big items of health he campaigned on. Barry did not fight for any of the things he campaigned on. Big difference there.

[boutons_deux]

yep, the first time the US elects a black Pres, and he blows the stereotype by being a eunuch in the service of UCA and capitalists.

[coyotes_geek]

yep, the first time the US elects a black Pres, and he blows the stereotype by being a eunuch in the service of UCA and capitalists.

Care to elaborate on this?

[TeyshaBlue]

lolz

[Agloco]

Still, he emphasized, health care costs, even if they are rising at 6 percent or 7 percent a year, are increasing at a much faster pace than overall inflation. “We haven’t solved the problem,” Mr. Laszewski said.

Confession time. I'm afraid I'm part of that problem.......

The thought that technology will always improve lives is a largely American phenomenon (based on my travels, which are quite extensive). There comes a point where that technology becomes unaffordable and begins to drain the economy. I believe we hit that point in the early 90's and are now reaping the rewards for our shortsightedness.

Anyone wanna venture a guess as to how much it costs to deliver and site a magnet? There's a reason that the scan of your leg costs 2 grand. Who's gonna pony up? You? Me? :lol Of course not. Insurance will or John Q Public eats the cost (in urgent/emergent cases).

I can tell you, there's nary a gadget that I use which costs less than 5 figures. All of them are considered vital in the chain of care which we provide to patients. New technology = new treatments, but it also means new costs associated with those treatments. In the case of a typical rad onc treatment, that's the cost for the linear accelerator (or gamma knife, SRS, etc), CT, x-rays, labs, treatment planning and/or brachytherapy afterloaders, nurses, dosimetrists, and last but not least those greedy doctors (yours truly) who are responsible for ensuring that the entire platter gets delivered to your table properly.

Think about it. That scheme is a non-starter in 1905 America. Today? It's killing us and there's no stopping the train, the insurers know this. Keep in mind I speak only about my sub-specialties (Radiation Oncology, Radiology, Nuclear Medicine). This conundrum applies all across the board to a greater or lesser degree.


“We haven’t solved the problem,”

:lol

They aren't even WORKING on the criminally exorbitant sick-care costs problem.

How do we solve this? I'm all ears.

[Agloco]

yep, the first time the US elects a black Pres, and he blows the stereotype by being a eunuch in the service of UCA and capitalists.

:rolleyes

[lazerelmo]

There comes a point where that technology becomes unaffordable and begins to drain the economy.


Only when the cost is subsidized so the price can be artificially inflated. I believe we reached that point on July 30, 1965.

[baseline bum]

Barry did not fight for any of the things he campaigned on. Big difference there.

The Obama presidency in a nutshell.

[boutons_deux]

How do we solve this? I'm all ears.

universal public (no-profit) health insurance. Available to everybody, nobody can opt out. Paid for out of income deductions, no cap.

Citizens would be have the option of having their health insurance premiums reduced by participating in wellness programs, with wellness factors tested annually. No malus for self-inflicted fat fucks who smoke and drink, but fit and lean people would have a serious bonus (deduction) for staying that way.

Anybody could buy for-profit supplementary insurance to be treated in 5-star for-profit medical facilities. But they couldn't opt out of govt health insurance, only add to it.

salaried doctors working in no-profit govt clinics and hospitals. No more need for independent docs to generate $250K a year just to cover overheads. All they do is practice medicine, draw a salary.

Universal electronic medical records.

Subsidized doctor education to address the huge and ever increasing gap in primary care docs. Free medical education in return for 20 year commitment to being a govt primary care doctor.

govt health patients would obtain drugs and medical supplies/devices only from govt no-profit dispensaries.

For govt medical specialists, more free specialists education to be matched by longer commitment to being a govt employee. They would of course get higher salary.

Kill Medicare Advantage.

Medicare/medicaid/VA would be replaced by universal health care.

Govt as hard-assed single-buyer of drugs/devices for the govt health system.

Make illegal direct-to-consumer medical marketing.

This is not govt takeover of private operations, but a govt-run health insurance/care system in parallel with the for-profit sick-care/insurance corps.

[Wild Cobra]

That 6 or 7 percent a year will destroy your retirement savings. You almost certainly have not saved enough for health care in your waning years.

You have been warned.
Well, maybe people should work on staying healthy in the first place.

[Wild Cobra]

I agree with Agloco. Technology is advancing at a faster pace than it becomes affordable. We are finding more and more ways to cure people of things that would kill them in the past, and this extension of life is becoming unreasonably expensive.

The hard facts are it will come down to the "have's" and the "have-not's" for who gets what. We simply cannot afford to give everyone the best care.

[ElNono]

Confession time. I'm afraid I'm part of that problem.......

The thought that technology will always improve lives is a largely American phenomenon (based on my travels, which are quite extensive). There comes a point where that technology becomes unaffordable and begins to drain the economy. I believe we hit that point in the early 90's and are now reaping the rewards for our shortsightedness.

Anyone wanna venture a guess as to how much it costs to deliver and site a magnet? There's a reason that the scan of your leg costs 2 grand. Who's gonna pony up? You? Me? :lol Of course not. Insurance will or John Q Public eats the cost (in urgent/emergent cases).

I can tell you, there's nary a gadget that I use which costs less than 5 figures. All of them are considered vital in the chain of care which we provide to patients. New technology = new treatments, but it also means new costs associated with those treatments. In the case of a typical rad onc treatment, that's the cost for the linear accelerator (or gamma knife, SRS, etc), CT, x-rays, labs, treatment planning and/or brachytherapy afterloaders, nurses, dosimetrists, and last but not least those greedy doctors (yours truly) who are responsible for ensuring that the entire platter gets delivered to your table properly.

Think about it. That scheme is a non-starter in 1905 America. Today? It's killing us and there's no stopping the train, the insurers know this. Keep in mind I speak only about my sub-specialties (Radiation Oncology, Radiology, Nuclear Medicine). This conundrum applies all across the board to a greater or lesser degree.

I don't doubt one second what you say. Now let me ask you this, why does an x-ray (by all means ancient tech) costs nearly 10x as much in the US than in a third world country? Heck, even MRIs are fairly old tech these days.

[Wild Cobra]

I don't doubt one second what you say. Now let me ask you this, why does an x-ray (by all means ancient tech) costs nearly 10x as much in the US than in a third world country? Heck, even MRIs are fairly old tech these days.
It's the enhanced resolution of the machines I think. It could also be added regulation costs, calibration time frame requirements, paying full price rather than the state buying them, or several other factors.

[baseline bum]

To reduce health care costs we also need to drastically improve our diets and activity levels. I am not at all for a sin tax on high fat or sugary food, but these are a couple of steps I would take:

* End the corn subsidies. Perhaps that would eliminate some of the HFCS that is put in every single piece of processed food one can buy at the store. Cut the fucking ethanol fuel subsidy too. Ethanol is crap as fuel.

* Eliminate sodas, candy, chips, and fried foods at K-12 schools. There is no way our schools should be pushing kids into eating junk food when their parents aren't around. No fake juice loaded with extra sugar either.

[Wild Cobra]

To reduce health care costs we also need to drastically improve our diets and activity levels. I am not at all for a sin tax on high fat or sugary food, but these are a couple of steps I would take:

* End the corn subsidies. Perhaps that would eliminate some of the HFCS that is put in every single piece of processed food one can buy at the store. Cut the fucking ethanol fuel subsidy too. Ethanol is crap as fuel.

* Eliminate sodas, candy, chips, and fried foods at K-12 schools. There is no way our schools should be pushing kids into eating junk food when their parents aren't around. No fake juice loaded with extra sugar either.
I'm with you on much of that. I would say eliminate those in the school lunches, but allow the purchase of some items still.

Be authoritarian if you like that political choice, but I believe in personal responsibility.

[boutons_deux]

personal responsibility of kids is a loser against the sinister power of food marketing and its food-like engineered substances.

[Agloco]

I don't doubt one second what you say. Now let me ask you this, why does an x-ray (by all means ancient tech) costs nearly 10x as much in the US than in a third world country? Heck, even MRIs are fairly old tech these days.


It's the enhanced resolution of the machines I think. It could also be added regulation costs, calibration time frame requirements, paying full price rather than the state buying them, or several other factors.

WC hits on a few of the reasons. Let me be clear Nono, I in no way endorse freely spending more for what appears to be the same tech, but the devil is in the details here. X-ray, CT or any other modality using ionizing radiation walks a fine line with the FDA. The regs are about to tighten once again as a matter of fact. So yes, an X-ray costs less in a third world country, but you get what you pay for: significantly more missed diagnoses, and higher radiation burden over time. The second is really not all that bad (provided you're not getting serial CT's inappropriately), but here in the US the mere mention of the word is enough to send giant balls of red tape flying from every imaginable nook and cranny.

MRI? Siting a magnet typically runs 1 million per Tesla of field strength, plus the special floor, ceiling, and wall design required for the Faraday Cage and cryogen storage. About 12-15 million all told. Sure it's a non-ionizing modality thats been around for a while, but to maintain clinical field strengths of 1.5T or 3T requires superconducting coils, which in turn requires near absolute zero temps. Cryogen installment and their replacement are the single most expensive upkeep cost for a magnet (besides me :lol). A quench will run you a cool 75k. Newer self shielding magnets are hitting the floor now, as well as mini models that might not require cryogens. That will definitely reduce cost.

Also, keep in mind that cancer clinics are in competition with one another. I can't get away with planning your radiation therapy on outdated/cheaper equipment. I guarantee you won't like the bargain you got. Imagine me coming into your room: "Well Mr. ElNono, I think we've hit most of the tumor, but I cant tell if I also got some of your aorta with this equipment. If only we had the same planning platform as that clinic on the other side of town......". That holds true for Radiology (STRIC, etc. ), Nuc Med, Interventionals both Radiology and Cardiology, etc. About the only department that can get away with using outdated inferior equipment at times is the ED, for obvious reasons.

The tech monster knows no boundaries. My sub-specialty is the proud owner of the most expensive piece of equipment...impressive no?

http://www.mdanderson.org/patient-and-cancer-information/proton-therapy-center/index.html

Look up the cost of building one of these puppies. :wow


To reduce health care costs we also need to drastically improve our diets and activity levels. I am not at all for a sin tax on high fat or sugary food, but these are a couple of steps I would take:

* End the corn subsidies. Perhaps that would eliminate some of the HFCS that is put in every single piece of processed food one can buy at the store. Cut the fucking ethanol fuel subsidy too. Ethanol is crap as fuel.

* Eliminate sodas, candy, chips, and fried foods at K-12 schools. There is no way our schools should be pushing kids into eating junk food when their parents aren't around. No fake juice loaded with extra sugar either.

BB sees it correctly. Back to basics. Preventative social behavior helps out quite a bit. :tu

[boutons_deux]

The $100M+ costs of proton machines plus $Ms/year in operating/maintenance costs increases the risk that the proton machines will be used to the max, even when cheaper alternatives exist.

Has proton beam therapy, still very recent, been proven to deliver better cancer control with less collateral damage, in any term?

[Agloco]

The $100M+ costs of proton machines plus $Ms/year in operating/maintenance costs increases the risk that the proton machines will be used to the max, even when cheaper alternatives exist.

Has proton beam therapy, still very recent, been proven to deliver better cancer control with less collateral damage, in any term?

Yes. But it's not always cost effective. Carbon ion therapy is being looked into now as well. It's hoped that the cost will be more competitive than protons.

Don't take my word for it, look below.

http://www.ncbi.nlm.nih.gov/pubmed/1311773

http://www.ncbi.nlm.nih.gov/pubmed/16168831

http://www.ncbi.nlm.nih.gov/pubmed/17668954

http://www.ncbi.nlm.nih.gov/pubmed/18237800

http://www.ncbi.nlm.nih.gov/pubmed/20427218

http://www.ncbi.nlm.nih.gov/pubmed/17878101

http://www.ncbi.nlm.nih.gov/pubmed/20425080

http://www.ncbi.nlm.nih.gov/pubmed/16332592

http://www.ncbi.nlm.nih.gov/pubmed/15885828

http://www.ncbi.nlm.nih.gov/pubmed/17704408

[boutons_deux]

A friend of mine got quote from LLU, $137K if he had insurance, $37K if he didn't.

[Agloco]

A friend of mine got quote from LLU, $137K if he had insurance, $37K if he didn't.

He's in good hands at Loma Linda. I know some of the kids over there. Good crew. Interesting that the price jumps to 137k with insurance. And folks actively wonder why premiums continue to rise along with HC costs in general.

Would your friend be eligible for this therapy in your universal care system? Or would a govt entity nix the idea on the basis of "cost ineffectiveness"? Just curious. If it's prostate cancer, would they just kindly ask him to have it sliced rather than pay the cost for protons?

[boutons_deux]

The Truth About Health Insurance Company Profits: They're Excessive

Last week the New York Times reported that the health insurance industry is enjoying record earnings while millions of Americans get less medical care. Wall Street investors are delighted with the industry's profits, and to health insurance executives, that's all that counts. Insurance CEOs want investors to buy their stock and keep share prices marching higher, and that's exactly what has happened. To achieve excessive profits, insurers are happy to gouge consumers and small businesses, do little to rein in medical costs and spend billions of our premium dollars on lobbying, secret political activities, bloated executive pay and stock buybacks.

AHIP's focus on profit margins is misleading and designed to protect their massive income by shifting attention away from their return on equity -- a key measure of profits as a percentage of the amount invested. That return is a phenomenal 16.1% as of today. By that measure, health insurers are ranked fourth highest of the 16 industries in the health care sector. They also deliver a higher return for investors than cellphone companies, beer companies, mortgage companies, life insurance companies, TV broadcasters, drug store companies or grocery stores.

AHIP likes to talk about how insurance profits are a small share of national health spending -- less then one penny of every dollar spent on health care in the U.S. -- but that is an absurd, deceptive and self-serving statistic. Yet even their own chart of this data shows that the share of the health care economy sucked up by health insurance profits has more than tripled over the past decade.

One penny of the health care dollar is worth $347 billion over 10 years ending in 2019. That one penny would pay for more than one-third of the entire cost of the health reform program.

http://www.huffingtonpost.com/ethan-rome/the-truth-about-health-in_b_863632.html?view=print

[boutons_deux]

Interesting that the price jumps to 137k with insurance.
Would your friend be eligible for this therapy in your universal care system? Or would a govt entity nix the idea on the basis of "cost ineffectiveness"? Just curious. If it's prostate cancer, would they just kindly ask him to have it sliced rather than pay the cost for protons?

just "interesting"?

It's an example of sick-care providers ripping off health insurance companies, who then pass on the costs to customers. Just another way the exorbitantly expensive, (2x times eg Germany or France) sick-care sucks wealth out of Human-Americans.

Do you think LLU loses money at $37K for proton beam (outpatient) treatment? Well, I guess they gotta pay off those Wall St loans + interest and insurance.

If proton beam therapy ever had the evidence, eg overall cancer-specific survival, reduced late-onset morbidity, reduced sexual/urinary "bother", that it's $100K better than da Vinci or stereotactic IMRT or whatever, then I'd expect universal health care to cover it.

FDA already approves a bunch expensive crap drugs, tested only by the drug mfrs suppressing negative outcomes, that are no better or even worse than what they replace or than old generics, and Medicare/Medicaid pays for them.

Even chemo is FDA approved and that's known to provide little or no effect on overall survival, causes 2ndary cancers and other diseases, and for extending life only for a few weeks (even forgetting about the horrible quality of life chemo visits on those few weeks).

[ElNono]

WC hits on a few of the reasons. Let me be clear Nono, I in no way endorse freely spending more for what appears to be the same tech, but the devil is in the details here. X-ray, CT or any other modality using ionizing radiation walks a fine line with the FDA. The regs are about to tighten once again as a matter of fact. So yes, an X-ray costs less in a third world country, but you get what you pay for: significantly more missed diagnoses, and higher radiation burden over time. The second is really not all that bad (provided you're not getting serial CT's inappropriately), but here in the US the mere mention of the word is enough to send giant balls of red tape flying from every imaginable nook and cranny.

I'll agree with the possible higher radiation over time (although odds are you're getting higher doses in the US than anywhere else by means of doctors ordering MRIs when an XRay will do, something I'll touch on a little later). The missed diagnosis part is really debatable.


MRI? Siting a magnet typically runs 1 million per Tesla of field strength, plus the special floor, ceiling, and wall design required for the Faraday Cage and cryogen storage. About 12-15 million all told. Sure it's a non-ionizing modality thats been around for a while, but to maintain clinical field strengths of 1.5T or 3T requires superconducting coils, which in turn requires near absolute zero temps. Cryogen installment and their replacement are the single most expensive upkeep cost for a magnet (besides me :lol). A quench will run you a cool 75k. Newer self shielding magnets are hitting the floor now, as well as mini models that might not require cryogens. That will definitely reduce cost.

I'm fairly aware of the costs, as we had one installed in the building one of our customers owns about 6 years ago. We got to tour around while it was being put together. Impressive stuff. That said, I don't know of anybody losing money on these machines. Neither in the US or anywhere else, and those are also a lot cheaper overseas than around here.


Also, keep in mind that cancer clinics are in competition with one another. I can't get away with planning your radiation therapy on outdated/cheaper equipment. I guarantee you won't like the bargain you got. Imagine me coming into your room: "Well Mr. ElNono, I think we've hit most of the tumor, but I cant tell if I also got some of your aorta with this equipment. If only we had the same planning platform as that clinic on the other side of town......". That holds true for Radiology (STRIC, etc. ), Nuc Med, Interventionals both Radiology and Cardiology, etc. About the only department that can get away with using outdated inferior equipment at times is the ED, for obvious reasons.

True, but I think there's some distinctions that need to be made when we discuss this. It's difficult to compare Ultrasound, XRay, CT scans and even MRIs these days, volume-wise, to high end specialty equipment, IMO. The former being much more common in day to day diagnosis (and older tech in general) vs the latter used in the treatment phase. I understand the latter being much more costly, but I don't see a reason why the price discrepancy on the former is so big (well, I do in part, but the tech has little to nothing to do with it).


The tech monster knows no boundaries. My sub-specialty is the proud owner of the most expensive piece of equipment...impressive no?

http://www.mdanderson.org/patient-and-cancer-information/proton-therapy-center/index.html

Look up the cost of building one of these puppies. :wow

BB sees it correctly. Back to basics. Preventative social behavior helps out quite a bit. :tu

When talking about day to day diagnosis machines, I think the tech is among the last in the list of actual costs overruns. I think there's more than that, and it's a multi-tiered issue. I agree that overzealous regulation can be one part, but there's plenty of others factors too, IMO. Doctors ordering tests way over of what it's needed (either because they're trying to cover their asses or because they own one kind of equipment but not the other), expected ROI figures being much higher than in other places, having to negotiate with insurance what that ROI will be, etc. It's a truly a chain where each part wants their piece of the pie, and the patient is ultimately the one with the least leverage.

I'm all for preventive medicine, but unfortunately at the cost of a doctor's visit or lab test these days, it can easily be prohibitive for people without insurance, and it simply won't do squat in getting diagnosed with cancer or some other illnesses.

Thank you for taking the time to write, BTW. Even if we don't agree 100%, this is the sort of discussions that we need to have.

[boutons_deux]

Getting back to the cost of UCA health care:

Insurance Industry Flack Screws Up, Points Us to Report We Really Should Read

"October 2009 white paper by Thomson Reuters entitled, " Where Can $700 Billion be Cut Annually from the U.S. Health Care System?" The title of the report is hyperlinked, but when you click on it, you get a page of gobbledygook.

I actually searched for the report and read it closely. Guess what? There is no such chart in the Thomson Reuters white paper and no breakdown of cost drivers as depicted by AHIP. In fact, had AHIP executives actually read the paper, they surely would not have brought it to the attention of the media. The insurance industry does not fare well at all.

A major point of the Thomson Reuters paper is that up to $700 billion that we spend on health care in the U.S. is wasted and that a big reason for that waste is our multi-payer system of private health insurance companies.

"Health care providers must deal with dozens of health benefit plans to bill successfully for services rendered," the report said. "Health plans must support systems for underwriting, claims administration, provider network contracting, and broker network management... Simplifying our health care system's administration could reduce annual health care costs by almost $300 billion."

Then there were these bullet points that surely will never appear in a health insurance industry presentation:

• The average U.S. hospital spends one quarter of its budget on billing and administration, nearly twice the average in Canada. American physicians spend nearly eight hours per week on paperwork and employ 1.66 clerical workers per doctor, far more than Canada.

• In 1999, health administration costs totaled at least $294.3 billion in the United States, or $1,059 per capita, as compared with $307 per capita in Canada. After exclusions, administration accounted for 31 percent of health care expenditures in the United States and 16.7 percent of health care expenditures in Canada.

http://www.huffingtonpost.com/wendell-potter/insurance-industry-flack_b_864126.html?view=print

[boutons_deux]

"Preventative social behavior helps out quite a bit"

No argument there, but it ain't gonna happen. eg, being morbidly overweight/obese is acceptable in America, and that epidemic is growing.

And it costs $100Bs /year.

Here's a new twist on defensive medicine:

Fla. Doctors Refusing Fat Women OB/GYN Care

A recent survey by the Florida Sun-Sentinel found that 15 of 105 OB/GYN practices in South Florida refuse to take on new patients who are overweight. Some practices limited new patients by weight (200lbs and heavier, for example) or by BMI score. Reasons cited included equipment that couldn't handle the weight of obese or overweight patients, increased risk of birth complications, the high cost of malpractice insurance, and a fear that the patient would eventually have to be referred to a specialist anyway. "People don't realize the risk we're taking by taking care of these patients," Dr. Albert Triana told the Sun-Sentinel. Triana's firm declines obese patients. "There's more risk of something going wrong and more risk of getting sued. Everything is more complicated with an obese patient in GYN surgeries and in [pregnancies]."

http://motherjones.com/blue-marble/2011/05/fla-doctors-refusing-fat-women-obgyn-care

[TeyshaBlue]

Getting back to the cost of UCA health care:

Insurance Industry Flack Screws Up, Points Us to Report We Really Should Read

"October 2009 white paper by Thomson Reuters entitled, " Where Can $700 Billion be Cut Annually from the U.S. Health Care System?" The title of the report is hyperlinked, but when you click on it, you get a page of gobbledygook.

I actually searched for the report and read it closely. Guess what? There is no such chart in the Thomson Reuters white paper and no breakdown of cost drivers as depicted by AHIP. In fact, had AHIP executives actually read the paper, they surely would not have brought it to the attention of the media. The insurance industry does not fare well at all.

A major point of the Thomson Reuters paper is that up to $700 billion that we spend on health care in the U.S. is wasted and that a big reason for that waste is our multi-payer system of private health insurance companies.

"Health care providers must deal with dozens of health benefit plans to bill successfully for services rendered," the report said. "Health plans must support systems for underwriting, claims administration, provider network contracting, and broker network management... Simplifying our health care system's administration could reduce annual health care costs by almost $300 billion."

Then there were these bullet points that surely will never appear in a health insurance industry presentation:

• The average U.S. hospital spends one quarter of its budget on billing and administration, nearly twice the average in Canada. American physicians spend nearly eight hours per week on paperwork and employ 1.66 clerical workers per doctor, far more than Canada.

• In 1999, health administration costs totaled at least $294.3 billion in the United States, or $1,059 per capita, as compared with $307 per capita in Canada. After exclusions, administration accounted for 31 percent of health care expenditures in the United States and 16.7 percent of health care expenditures in Canada.

http://www.huffingtonpost.com/wendell-potter/insurance-industry-flack_b_864126.html?view=print

This is the argument that is the most potent weapon in the single payor position. Administrative overhead is absurd. There's a thriving industry of HIS companies (Healthcare Information Systems) who charge enormous sums of money to deliver software billing solutions, with widely varying success. I used to read HIStalk for years. It's mind numbing how complex these issues are due to the byzantine paperwork construct foisted by the insurance indusrty. It's so counter-intuitive to continue to develop wildly different coding and billing processes, you'd think that the billions saved by developing a standardized billing methodology would be something they would jump on like a fat kid on cake. But no.

[RandomGuy]

Confession time. I'm afraid I'm part of that problem.......

The thought that technology will always improve lives is a largely American phenomenon (based on my travels, which are quite extensive). There comes a point where that technology becomes unaffordable and begins to drain the economy. I believe we hit that point in the early 90's and are now reaping the rewards for our shortsightedness.

Anyone wanna venture a guess as to how much it costs to deliver and site a magnet? There's a reason that the scan of your leg costs 2 grand. Who's gonna pony up? You? Me? :lol Of course not. Insurance will or John Q Public eats the cost (in urgent/emergent cases).

I can tell you, there's nary a gadget that I use which costs less than 5 figures. All of them are considered vital in the chain of care which we provide to patients. New technology = new treatments, but it also means new costs associated with those treatments. In the case of a typical rad onc treatment, that's the cost for the linear accelerator (or gamma knife, SRS, etc), CT, x-rays, labs, treatment planning and/or brachytherapy afterloaders, nurses, dosimetrists, and last but not least those greedy doctors (yours truly) who are responsible for ensuring that the entire platter gets delivered to your table properly.

Think about it. That scheme is a non-starter in 1905 America. Today? It's killing us and there's no stopping the train, the insurers know this. Keep in mind I speak only about my sub-specialties (Radiation Oncology, Radiology, Nuclear Medicine). This conundrum applies all across the board to a greater or lesser degree.

How do we solve this? I'm all ears.

Here is something to keep in mind:

All health care is rationed.

Yeah, I used that word.

Many people point to Europe and say "Do you want health care rationed like it is over in Big Bad Socialist Land?" , but fail to realize that we ration health care in this country too.

Rationing in an economics sense is simply the distribution of limited, finite goods, like health care services. There will always be more want of things than supply, so you have to figure out how to get desired goods/services to those who need it. Old school commies, ration things by "first come first serve" breadlines, and so forth.

We ration things by ability to pay, in free-market systems. It goes to the highest bidder, and when the price exceeds the perceived value, people voluntarily drop out.

The problem is that, for life-saving things, the quantity demanded is not very sensitive to price. If you need that expensive doo-hickey/treatment, you will pay for it with little regard to how much it costs. (reference: "elasticity")

Due to the nature of the interrelationships between supply and demand (high inelasticity), your best bet to bite into the rise of the price, is to work on the supply end. (edit) IMO.

Heavily subsidize medical schools and equipment to increase supply of doctors and equipment.

The best studies on reducing usage is to impose some modest cost-sharing like fairly small co-pays. One gets the biggest "bang for the buck" in the first few dollars of co-pay schemes that place some burden on the patient,i.e. the most reduction in usage occurs in the first few dollars of co-pay, so increasing co-pay % has less and less effect on usage as the % paid by the patient goes up.

Current indications are that a vast amount of money is being paid out by Medicare fraudulently, so you have to spend some solid bucks on fighting fraud, but any insurance company worth their salt does something similar. That said, I
stil think there are some gains to be had by going whole hog on a national government-run health insurance programme that covers most things with some out of pocket expenses.

Another thing that would really probably reduce usage is forcing people to enact living wills. Most of the money a person will spend on health care in their life-time occurs in the last few years of life. Most people, if you ask them, don't want to be held in a semi-vegitative state on a resperator for 5 years, being fed through a tube.

But, they fail to express this will, and that decision falls to a loved one out of their mind with grief, or in the absence of this, a doctor/hospital afraid of lawsuits if they let someone die.

The counties in the US with the least amount of money spent on health care relative to the rest of us, have active programs concerning end of life planning.

There you go.

RG's RX.

FYI: RG audits HMOs for a living, and understanding cost structures of these entities, as well as that of providers, is central to his job.

[boutons_deux]

"your best bet to bite into the rise of the price, is to work on the supply end"

People don't "shop around" for health care, prices aren't published, etc. The sick-care market is not "free" and with "competitive" providers.

"on reducing usage is to impose some modest cost-sharing"

Show me the numbers of how much of the $T sick-care annually is gratuitous over-consumption?

Seniors are already using "pill splitters" because they can't affored their co-pays and prescription drugs.

Poor people over-consume health care by sitting in the emergency room for hours and hours?

America would rather wallow in its sick sick-care system than learn how other industrial contries provide sick-care for 50% less per capita.

Anybody serious about learning something:


http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/countries/

http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/view/

[boutons_deux]

btw, there's already a severe, and worsening, undersupply of primary care/family docs.

The demand is there, the supply isn't. Why not?

[RandomGuy]

"your best bet to bite into the rise of the price, is to work on the supply end"

People don't "shop around" for health care, prices aren't published, etc. The sick-care market is not "free" and with "competitive" providers.

"on reducing usage is to impose some modest cost-sharing"

Show me the numbers of how much of the $T sick-care annually is gratuitous over-consumption?

Seniors are already using "pill splitters" because they can't affored their co-pays and prescription drugs.

Poor people over-consume health care by sitting in the emergency room for hours and hours?

America would rather wallow in its sick sick-care system than learn how other industrial contries provide sick-care for 50% less per capita.

Anybody serious about learning something:


http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/countries/

http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/view/

I would agree that prices need to be more up-front. That said, most co-pays are very obvious and clear. They put them on the insurance cards. Generally you know how much something will cost you out-of-pocket.

As for "gratuitous over-consumption" there have been a couple of good studies that show that making tests free to the patient (no co-pay at all) tends to cause a lot of unnecessary tests.

I remember sitting through a committee meeting addressing a recent study that confirmed an older one, but can't exactly remember the names. Best I could come up with:
http://www.ncbi.nlm.nih.gov/pubmed/11684621

I could not put an exact dollar figure on the amount of truly unneeded testing/treatment of symptoms done. I don't think it would completely solve all of our problems if we avoided 100% of it though. Reducing some of the cost inflation by means of co-pays is something that most health insurance is doing anyways.

Drugs are one thing that we need to spend a bit more on. Keeping up with drug regimens keep people out of emergency rooms.

Poor people do over-consume emergency care, because they under-consume preventive care.

One doctor pushing for single payor is rather fond of telling a story about a woman who had to stop taking her medicine due to cost and ended up dying in the emergency room, after accumulating costs for the last hour or two of her life that would have completely covered her perscription for the next 30 years.

As for comparing other countries, it is a hard thing to make direct comparisons.

I think getting rid of the paid middlemen, i.e. private health insurance companies, would probably go farther than some would want to believe.

[RandomGuy]

btw, there's already a severe, and worsening, undersupply of primary care/family docs.

The demand is there, the supply isn't. Why not?

More profit in becoming a specialist, and rising medical school costs.

That will change over time, as primary care docs get to charge more, I guess.

One of the reasons I think we need to subsidize medical school more, to get out ahead of predicted demand/supply a bit.

[boutons_deux]

"tests free to the patient (no co-pay at all) tends to cause a lot of unnecessary tests."

patients order tests because there's little/no co-pay?

Doctors order tests to up their fee-for-service.

[fyatuk]

I think getting rid of the paid middlemen, i.e. private health insurance companies, would probably go farther than some would want to believe.


One of the reasons I think we need to subsidize medical school more, to get out ahead of predicted demand/supply a bit.

I definitely agree with both these things, although I think it'd be best to work insurance based managed care out of the system entirely. A system contingent on something like a medical IRA (with employer contributions like current group health insurance policies) combined with a public catastrophic cost policy would solve a lot of the consumer end problems, and in many cases could ease the burden on SS.

[boutons_deux]

"ease the burden on SS."

?? SS pays medicare bills?

What if all Americans were paying $15K/year per family into a public insurance option rather than paying that to for-profit insurers, their execs, their shareholders? That would be an enormous pool of insured to cover insurance payouts.

There are so many ways to fix Medicare/Medicaid/VA (the military is paying $100Bs for vet care) but the VRWC won't let the sick-care corps' revenues be touched. The voucher system increases the revenues to for-profit insurers, leaving the medicare patients to battle for payouts and care, which we know is a disaster.

[fyatuk]

"ease the burden on SS."

?? SS pays medicare bills?


Pay attention much. I said medical IRA. Since almost every single person pays more to insurance (even without employer contributions) than receives (and presumably this would stay the same heading into an medical IRA setup), people would actually have retirement savings allowing for cutbacks to social security benefits without damaging most people's standards of living.

[Agloco]

I'll agree with the possible higher radiation over time (although odds are you're getting higher doses in the US than anywhere else by means of doctors ordering MRIs when an XRay will do, something I'll touch on a little later). The missed diagnosis part is really debatable.

MRI confers no dose. Perhaps you meant CT or fluoro? I do agree with the overuse of MRI though, and radiology in general. More and more internists are relying on us to make diagnoses versus relying on physical exam, etc. Cost is rising due to that.

As for missed diagnoses, yes there's always a fine line on how you define it. Clinician limited, tech limited, etc. Mammography is a perfect example of this. It's simply a specially adapted x-ray machine. As simple as the differences are though, the clinician cannot catch smaller lesions nearly as effectively without one. Later stage disease = higher cost.


I'm fairly aware of the costs, as we had one installed in the building one of our customers owns about 6 years ago. We got to tour around while it was being put together. Impressive stuff. That said, I don't know of anybody losing money on these machines. Neither in the US or anywhere else, and those are also a lot cheaper overseas than around here.

No radiology department should be losing money on any machine if managed correctly. It's the only way to keep up with the Jonses so to speak. Part of my passage was directed at this silly behavior. In some instances the tech is warranted but in all too many cases it's not. I can't speak about overseas costs, but I'm hard pressed to believe that the machines are substantially cheaper. Debatable obviously, but again I dont know the costs exactly. I do believe though, that its a "number of units" game. Here in the US we feel the need to have an MRI on every street corner. Why?



True, but I think there's some distinctions that need to be made when we discuss this. It's difficult to compare Ultrasound, XRay, CT scans and even MRIs these days, volume-wise, to high end specialty equipment, IMO. The former being much more common in day to day diagnosis (and older tech in general) vs the latter used in the treatment phase. I understand the latter being much more costly, but I don't see a reason why the price discrepancy on the former is so big (well, I do in part, but the tech has little to nothing to do with it).

When you say volume-wise, do you mean use or the physical number of units out there? Tech has quite a bit to do with it though. Pricing components is always a scary thing. So the machines are overpriced sure, but the components are as well. There's the rub IMO. I don't claim to understand the phenomenon that causes it. I tend to think a bit more simplistically. If you own a bread shop (or other needed commodity) and you know everyone is running around with 50 bucks instead of 10, you're more apt to raise your prices. MAybe I've got it wrong but that's the sense I get. It's not very fair.



When talking about day to day diagnosis machines, I think the tech is among the last in the list of actual costs overruns. I think there's more than that, and it's a multi-tiered issue. I agree that overzealous regulation can be one part, but there's plenty of others factors too, IMO. Doctors ordering tests way over of what it's needed (either because they're trying to cover their asses or because they own one kind of equipment but not the other), expected ROI figures being much higher than in other places, having to negotiate with insurance what that ROI will be, etc. It's a truly a chain where each part wants their piece of the pie, and the patient is ultimately the one with the least leverage.

Yes as I noted above, it's a problem when nearly half of our radiology consults are for what staff deem inappropriate scans. It's not just internists, almost every specialty is at fault. Most physicians ordering the scans have no idea what the modality actually does and learns from the staff radiologist as they explain why they're so irate. Defensive medicine is a contributor no doubt. What's the answer to that though? I don't have a good one.


I'm all for preventive medicine, but unfortunately at the cost of a doctor's visit or lab test these days, it can easily be prohibitive for people without insurance, and it simply won't do squat in getting diagnosed with cancer or some other illnesses.

It's designed to reduce risk. That's really all you're left with in any case. There's plenty of room to save on costs despite non-compliance or economic hardship because enough people are showing interest. It's not nearly as high as we would hope, but it's positive.


Thank you for taking the time to write, BTW. Even if we don't agree 100%, this is the sort of discussions that we need to have.

:tu

I usually throw these thoughts together rather quickly. I'll invariably leave out some things. Thanks for pointing them out.

[Agloco]

Here is something to keep in mind:

All health care is rationed.

Yeah, I used that word.

Many people point to Europe and say "Do you want health care rationed like it is over in Big Bad Socialist Land?" , but fail to realize that we ration health care in this country too.

Rationing in an economics sense is simply the distribution of limited, finite goods, like health care services. There will always be more want of things than supply, so you have to figure out how to get desired goods/services to those who need it. Old school commies, ration things by "first come first serve" breadlines, and so forth.

We ration things by ability to pay, in free-market systems. It goes to the highest bidder, and when the price exceeds the perceived value, people voluntarily drop out.

The problem is that, for life-saving things, the quantity demanded is not very sensitive to price. If you need that expensive doo-hickey/treatment, you will pay for it with little regard to how much it costs. (reference: "elasticity")

Due to the nature of the interrelationships between supply and demand (high inelasticity), your best bet to bite into the rise of the price, is to work on the supply end. (edit) IMO.

Heavily subsidize medical schools and equipment to increase supply of doctors and equipment.

The best studies on reducing usage is to impose some modest cost-sharing like fairly small co-pays. One gets the biggest "bang for the buck" in the first few dollars of co-pay schemes that place some burden on the patient,i.e. the most reduction in usage occurs in the first few dollars of co-pay, so increasing co-pay % has less and less effect on usage as the % paid by the patient goes up.

Current indications are that a vast amount of money is being paid out by Medicare fraudulently, so you have to spend some solid bucks on fighting fraud, but any insurance company worth their salt does something similar. That said, I
stil think there are some gains to be had by going whole hog on a national government-run health insurance programme that covers most things with some out of pocket expenses.

Another thing that would really probably reduce usage is forcing people to enact living wills. Most of the money a person will spend on health care in their life-time occurs in the last few years of life. Most people, if you ask them, don't want to be held in a semi-vegitative state on a resperator for 5 years, being fed through a tube.

But, they fail to express this will, and that decision falls to a loved one out of their mind with grief, or in the absence of this, a doctor/hospital afraid of lawsuits if they let someone die.

The counties in the US with the least amount of money spent on health care relative to the rest of us, have active programs concerning end of life planning.

There you go.

RG's RX.

FYI: RG audits HMOs for a living, and understanding cost structures of these entities, as well as that of providers, is central to his job.

Good points and insight, especially the parts in red. We've had discussions about end of life treatments numerous times and will continue to have them time and time again. I think there's a fair amount of resistance to the idea of living wills being mandatory. People are always ready to read between the lines or look for the silver lining in their predicament. It's human nature. To most patients I speak to the idea is ....... "too set in stone-ish" if that makes any sense (sorry, way past my bedtime). I agree with the idea though FWIW.

You used the word rationing. It's a fact and you're right. It's also a fact that John Q Public doesn't recognize the situation as such. Perception is reality as they say. So the answer is education. How do you deliver the message about possibly not being able to pick your provider or not being able to get your MRI done wherever you want though? Someone has got to step up and take that bullet in Washington. It's a lot like entitlement programs to many. Easy to give, hard to take back.

Subsidizing medical education is a great plan and needs to go through, but what happens to compensation once supply is up? Compensation is already a problem even with the shortage (for internists and FP's).

[Agloco]

just "interesting"?

Moderately at that as I have no frame of reference for it's potential significance.




Do you think LLU loses money at $37K for proton beam (outpatient) treatment? Well, I guess they gotta pay off those Wall St loans + interest and insurance.

Depends on the patient throughput. Do you know how many they treat? I don't.



If proton beam therapy ever had the evidence, eg overall cancer-specific survival, reduced late-onset morbidity, reduced sexual/urinary "bother", that it's $100K better than da Vinci or stereotactic IMRT or whatever, then I'd expect universal health care to cover it.

Who determines if it's 100k better?



Even chemo is FDA approved and that's known to provide little or no effect on overall survival, causes 2ndary cancers and other diseases, and for extending life only for a few weeks (even forgetting about the horrible quality of life chemo visits on those few weeks).

Chemo's one of the first set of agents developed for cancer. Newer more effective therapies have come along which have supplanted it. It's not as if the FDA approved it after the fact.

[RandomGuy]

"tests free to the patient (no co-pay at all) tends to cause a lot of unnecessary tests."

patients order tests because there's little/no co-pay?

Doctors order tests to up their fee-for-service.

Patients go along with doctors because there is little to no copay.

Doctors are free to do tests, even ones that only are marginally needed.

There is little to no evidence that I am aware of that doctors in the US, on a widespread basis, perform useless tests or procedures to bump up fee income.

That said, I have little doubt that some doctors do exactly that. Some, but not any large percentage.

If it were really really widespread, we should have more evidence of it. Given that is a fairly common idea, I would wonder if insurance companies might not fund a study to see if that is the case. If it were, one might expect someone to publicize the results. I realize there are a couple of "ifs" there.

By and large though, I am reasonably sure most doctors don't do that to any great degree.

Fee for service does set up a motivation for them to do so, and I think that is probably not the best way to structure and pay for health care.

[RandomGuy]

Good points and insight, especially the parts in red. We've had discussions about end of life treatments numerous times and will continue to have them time and time again. I think there's a fair amount of resistance to the idea of living wills being mandatory. People are always ready to read between the lines or look for the silver lining in their predicament. It's human nature. To most patients I speak to the idea is ....... "too set in stone-ish" if that makes any sense (sorry, way past my bedtime). I agree with the idea though FWIW.

You used the word rationing. It's a fact and you're right. It's also a fact that John Q Public doesn't recognize the situation as such. Perception is reality as they say. So the answer is education. How do you deliver the message about possibly not being able to pick your provider or not being able to get your MRI done wherever you want though? Someone has got to step up and take that bullet in Washington. It's a lot like entitlement programs to many. Easy to give, hard to take back.

Subsidizing medical education is a great plan and needs to go through, but what happens to compensation once supply is up? Compensation is already a problem even with the shortage (for internists and FP's).

I think we ought to mandate end of life planning. Suck it up, and stick people's noses in their own mortality.

If you want to accept Medicare, then you have to do exactly that. I don't feel that is too much to ask. It is logical, and the right thing to do.

As for compensation for FP's and so forth, getting out of med school with no debt would go a long way towards the bottom line.

It isnt how much you make, it's how much you keep. I think heavily subsidizing the education can make lower wages from a large supply bite a lot less.

If that doesn't do the trick then simply suck up the fact that we might have to add more to their pay somehow, in the form of block grants to states to pay for clinics in underserved areas where it might not be fully economical in a pure free market.

I am generally all for letting free markets do their thing, as they tend to reward efficiency, but that doesn't mean I have blind faith in the system to be ethical, or efficient when it comes to the entire economy as a whole.