Consumer Focused Health

Was struck today that I have heard very little about the role of Medigap in the current health insurance debate…despite massive discussion of Medicare, Medicare Advantage, payment reform…etc.  In addition, it highlights how difficult it is to sort through the tangled web of money and influence…not sure how much I believe it, but its certainly food for thought.

This thought was triggered by Michelle Milkin’s post on AARP’s dependance on royalties from selling sponsored insurance plans:

A Hill source summed it up for me this way: “AARP has endorsed a huge reduction in funding of Medicare Advantage, which touches over 10 million middle-lower income seniors. If Medicare Advantage funding is reduced, and seniors are forced out of the program, they become potential buyers of the heavily-promoted and very profitable Medicare Supplement program sponsored by AARP (MediGap is 70% of AARP’s annual income). Medicare Supplement is a huge source of revenue to AARP. At a minimum, AARP should be required to disclose this every time they discuss Medicare Advantage.

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Sustainable health reform requires a solid foundation…unfortunately the proposals we’re seeing out of Washington create a more elaborate house of cards, as we continue to create an elaborate health care ponzi scheme.  The House that built Medicare has already saddled our country with Trillions in unfunded liabilities.  The proposals we see look to continue to reward a medical-industrial complex that creates and manages diseases rather than focusing on optimizing the health of people.

So what are the criteria of a sustainable health system? continue reading »

To err is human. Unfortunately, in our medical system, we expect that physicians are superhuman and therefore choose not to build the support and error reduction measures that would allow mere humans to competently practice high quality health care.

Having not built the systems to reduce errors, our hospitals and medico-legal system have decided that in addition, denying that errors happen is the best way to make them go away. In stark contrast to the principles of six-sigma, lean manufacuring, and other systems to reduce errors, the
medical system decided that it would instead announce the superhuman perfection of its approaches and allow those who thought otherwise to take them to court.

Per a recent article in the NYTimes:

For decades, malpractice lawyers and insurers have counseled doctors and hospitals to “deny and defend.” Many still warn clients that any admission of fault, or even expression of regret, is likely to invite litigation and imperil careers.

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This post is cross-posted at the World HealthCare Blog.

George Halverson, Kaiser Permanente’s CEO gave a keynote earlier today at the World Health Care Congress in Washington DC. The statistics he gave were compelling. The opportunities, also, really interesting. From a consumer perspective, the prescription he wrote was not– heavy on centralized best practice reminiscent of the socialistic economy.

The issues today are pretty clear– we are focusing our resources heavily on the sickest individuals.

• 1% of the sickest consume 35% of the health spend
• 10% of the population consumes 80% of the health spend

Even more compelling are the stories of conflicting interests, where an institution such as Virginia Mason is able to significantly reform health costs through better treatment up front (in this case imaging)– only to find a 30% revenue cut putting the institution at a disadvantage in being able to meet payroll and overhead expense.

But these innovations, although they lowered costs and seemingly were good for patients, hurt Virginia Mason’s bottom line. For example, “the big employers saved $100,000 in the first year. But Virginia Mason fell into the red on the average migraine case, instead of breaking even as before.”

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Theo Francis’s article in the WSJ called “Medicare offers overhaul of hospital reimbursing” contains a number of statements that reflect what side of the carrot/stick equation Medicare’s “solutions” for provider quality will fall.

Medicare proposed sweeping changes to the way it reimburses hospitals, outlining a plan that would essentially redistribute cash by reducing payments across the board and then giving providers a chance to “earn back” money by meeting quality-of-care thresholds.

Its not surprising to see individual providers opting away from Medicare patients with reimbursement not tracking to inflation, and with a 10% punitive Medicare reimbursement cut hanging over their heads, and noise about further requirements for installation of EMRs making their economics look even worse.

Unfortunately for hospitals, demographics dictate that a large portion of their patient population and revenue is tied to Medicare, where these unilateral decisions can be made. (Medicine and Economics blog has a great post on government’s difference from corporations and charity being the ability to use force, Covert rationing blog has a great post on how Medicare/insurance contracting is non-negotiable, and therefore monopolistic and potentially illegal)

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The focus on insurance as a solution to rising medical costs is somewhat inane. Its the costs, stupid.
Are we getting good value for what we’re paying. And, as this article in the WSJ highlights, the answer is clearly no, and everyone knows it.

One day in late July, Jim Dawson happily returned home. He had spent the previous five months in the hospital battling an infection that nearly killed him. The phone rang shortly after Mr. Dawson and his wife, Loretta, entered their house.

It was the hospital. California Pacific Medical Center was calling to remind the Dawsons that they owed it $1.2 million.

So how exactly does an individual with health insurance rack up $1.2M? The bill looks pretty similar to the DoD’s $12,000 toilets and $900 nails:

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Part II of a series. Part I is here.

In the US healthcare system, the predominant non-government source of health “coverage” comes from the employer. While these strange bedfellows may have been put together by wage freezes during World War II and tax laws favoring employer purchasing, it would be expected that employers receive significant benefits for the billions spent annually on healthcare as the predominant portion of the benefits package.

So what do employers get out of the bargain? And where would we expect them to do to improve those returns? Lets take a look.

Reasons employers offer healthcare:

• Part of package to attract and retain talented employees
• Tax savings relative to salary
• Improve worker productivity
• Community goodwill

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