From: amichiel@rodan.acs.syr.edu (Allen J Michielsen)
Newsgroups: talk.politics.medicine
Subject: Re: health care industry woes
Date: 19 Nov 92 04:56:29 GMT


In @agate.berkeley.edu> sherw@ocf.berkeley.edu (Gregory Sherwin) writes:
>Doctors were first against Medicare and Medicaid when it was first introduced
>years ago, but since then their salaries have skyrocketed.  ...

   This is true in part.  I work in the health insurance industry, & see &
work with this information daily...  The -din- re: M-care and M-caid has died
because the market has split.  Doctors which do, and Doctors which don't.
Doctors which don't are split into 3 generic groups. 1- Those who don't bill,
but do accept M-x payment (to the patient) as payment in full (very very
small group) 2- Those who don't M-x bill and don't care (largest group)  3-
Thos who don't M-x bill, but don't do -hard collections- to -hard luck cases-.
In all three of these cases, they don't basically care, they write off the
uncollectables as either charity donations or business loses.  M-x providers
are the very small minority.  In short, mass numbers of providers are NOT
getting rich from the M-x system.  The reasons are simple, M-x require M-x
specific billing systems, which are updated basically quarterly.  The cheapest
M-x billing systems I have seen, is $ 10,000 up front and $ 10,000 a year.
These systems are quantity based, and a typical hospital fee is probably about
$ 200,000 upfront, and $ 200,000 a year.  The -life- is about 4 years, so the
per year cost is 200,000 + (200,000 / 4) or 250,000.  A simple procedure
code mistake, typo, or error is a automatic $ 50,000 per occurance.  The vast
majority of providers are up front with M-x patients, they see them, but the
patient must do M-x reimbursement  (which means the patient pays, then gets
what they can back from M-x).

>The health insurance industry sets our costs without any real consideration
>for supply and demand economics.  Doctor X comes up with a new procedure --
>how much to charge for it?  Doctors work with the insurance industry to
>set some relatively arbitrary value to it - ie. what the insurance company
>will pay for it - and therefore doctors and hospitals charge that amount.

   New procedures are very supply and demand.  Procedures must generally be
widely available, and generally accepted before ANY insurance payment is
made.  Else the procedure is rated as experimental  (and it may be done with
waiting lists at 30 major hospitals and some insurance companies are still
classifying it as experimental).  In most cases, new procedures save time
(are faster), and save the insurance company money because it results in
less side charges  (examples, avoiding surgery, shorter hospital stays, 
simplier post procedure care & treatment).  So, even -inflated- prices save
money by avoiding other costs for the insurance.  However, it also makes it
easier for the provider to perform more procedures, and make more money.

>In an independent study comparing a Canadian hospital with an American...
>For handling just insurance FORMS, the Canadian hospital
>had an office with 4 full-time staff members.  In the U.S. hospital ...
>with 300 full-time employees to just paper pushing for ....(insurace)...

   This is true at several levels.  Example, my University required me to now
provide proof of innoculation.  They had the records, and lost them, in the
retirement of my family Dr, his records were -shrunk-, my H.S graduation was
in 1978 and those records were long gone as well. This meant a trip back to my
-new- family Dr. for a simple, single MMR (Measles, Mumps Reubella) shot.
The bill to my insurance company was $ 492, my Co-Payment was $5. My insurance
company paid $ 384.  My family Dr. Got $ 389 and I was in the office less than
20 minutes, spending less than 10 minutes with a nurse, less than 5 minutes
with a Physicians Assistant, and _NEVER_ seeing a Dr.  This is in the U.S.
   A friends sister is covered by the Canadian plan.  Her family has a history 
of breast cancer, (mother died, sister died, granmother died...) and she has
a good history of religious Mammograms on a 6 month interval.  Her Canadian
health care provider either did not read the films, or misread the films as
clean while they were not, 3 times in a row.  Finally the problem was caught
on the 4th set (still unknown to her) and she was informed.  However, the
Canadian system went back and has disallowed all coverage for treatment. The
cancer was so big, she is being punished for not getting earlier treatment.
The hospital says they told her about the 3 earlier lumps, but there is no
mention of it in her files, just a reference to the films being taken, and
followup call to patient.  Nobody in Toronto wants to treat her, the government
won't pay, and she doesn't have other insurance...

   In short, neither system is perfect.  The canadian system is much simplier
for insurance overhead, but the difference only amounts to about 15% of the
cost differential.  The holes in the canadian system are being partly plugged
by the american M-x system. Sick canadians near the borders come over in droves
for american treatment. Usually for reasons similiar to the story above.  I
don't have _any_ idea what percentage of the difference this result in.  I do
know that this canadian -overflow- is _nothing_ like the mexican overflow.
Let's say that in total, this is about 10 or 15% of the difference.  This is
nothing like the problem I had in my personal $400 MMR shot story  (which the
public health clinic would have done for $ 18 total, but my insurance company
would NOT pay the public health clinic, and $ 5 out of my pocket was less than
$ 18 out of my pocket, besides I saw my Dr (well Physicians Assistant actually)
in his suburban office at 7:30 am, not missing a minute of work or -dealing-
with panhandlers and the Health Clinic is downtown on wednesday during work
hours and loaded with panhandlers, etc...).  My Dr. -felt- he was justified to
charge $ 400 ($ 500 actually) because he had to cover his butt from my ability
to sue him.  So, he did a full blood workup to be sure I wasn't going to be
sick from the MMR, and to provide a baseline for his liability in case I get
sick anyway...  In short, it was a liability or Malpractice problem.  My
insurance company was forced to pay, because the procedures and charges were
performed, and justified by normal procedures (aka Liability).  This is the
lions share of the difference between the 2 systems.
   President Bush was completely correct in his assessment that Dr. need 
coverage from frivilous malpractice claims and outrageous jury awards.
   Clinton is also completely correct in his completely different assessment
(if you pick out of his totally general ideas and create a actual plan).
The US Health care system must be standardized on a single national billing
system  (not unlike the M-x system), so all providers have a single billing
system to buy, run, operate, and maintain.  Further, the updates to the 
system should be annual not quarterly.  Cherry picking must be eliminated.
Cherry picking is the following...  When policy pricing is experience rated
(your next year rates are based on your this years expenses), and the group
is insured by a non-profit agency which is required to absorb community rated
loses  (the next year rates are based on overall expenses, not just your own),
it is very easy for profit companies to move in and cherry pick out the groups
which are doing the best to control their expenses.  You wouldn't believe the
difference.   Everybody who chooses a insurance company, or works for a company
which chooses a insurance company that is a for profit company, is part of 
this problem in most states.  A few states are slowly moving to require that
all companies provide -state- community rated groups at -state- set rates.
(not unlike the automotive risk pool or unemployment insurance or workmens 
comp pools).  This approach should be pushed ahead quickly. So, in all 50 
states, a minimum major medical policy is available from anybody selling
health insurance in your state, at rates set by the state, which are the same
for all companies.  This negates the problems with employers _not_ supplying
or supporting health insurance to a large degree, as it provides everybody in
the state equal rate negioation ability and insulation to small employer peaks
(A small employer may well see a 600% increase in rates from one period to the
next when doing a experience based rating, just from the birth of one baby in 
the year... Large scale community rating puts the experience base of a large
group of people together to help average this bubble out.  The overall cost is
higher because it provides more coverager to more sick people.  However these
sick people are more often than not on the M-x system, using the tax dollars
of these same working people.  The difference is if you see the deduction as
fica, state, & federal withholding or as Health Ins witholding (either employer
based or employee based).  The insurance companies need the power to be able
to tell the Drs, in better and generic terms what they will NOT pay for,
$ 400 in backup tests for a $ 20 shot....   The insured needs to be protected
from this.  This is the power of the insurance companies having their own
participating providers.   The participating providers are not allowed to
go back to the insured for more payment....

   There is little or no collusion between insurance companies and health care
providers.  As insurance companies are forced to raise the rates, groups
(employers generally) are forced to shop around comparing rates.  This hoping
provides less coverage for the insured.  This trickles back down to fewer
insured, and more taxes.  Most insurance companies are pretty good about trying
to recover problems, mistakes from the providers to re-coop this.  This
appears to be the major hole in clintons outline.  The general prices and
rates should be pushed down.  Control of malpractice is only one piece.
Med school loans should be collected one way or another, either as community
service (like northern exposure) or as cash and interest.  The loses to of
the educational program is staggering (a minority of med school promises are
satisfied).

al
Newsgroups: talk.politics.medicine