Beyond the Lies: Solving the Problem

Managed care. Utilization review. Mother-May-I. 1-800Nurse-From-Hell. As managed care organizations (MCOs) tried to stem the soaring cost of health care during the 1980s and ‘90s, physicians felt trapped between their usual practice of providing every intervention of potential benefit, and health plans’ increasingly intrusive constraints. Physicians began to meet denials of coverage with indignant insistence, begging and pleading, or fudging and sometimes outright deception (Morreim 1991a). As Werner and colleagues note, the problems have not disappeared (Werner et al. 2004). I will argue they need to be re-cast. First, realities are not always as described in the dilemma. Sometimes the care or funding being denied isn’t necessarily necessary. Second, and more importantly, new economic structures can obviate many of these lie-or-deny dilemmas. Regarding the first point, health care in the United States is too often characterized by misuse and overuse of medical interventions (Morreim 2003). New medications and procedures too often become standard practice without adequate evidence of effectiveness, best uses, or long-range safety. One need only look to recent examples of Vioxx, bone marrow transplant for breast cancer, or arthroscopy with lavage and debridement for osteoarthritis of the knee (Mello and Brennan 2001; Moseley et al. 2002; Topol 2004). The bare fact that a physician deems an intervention necessary does not guarantee that it is. The second question concerns whether there is any way to avoid such predicaments in the first place. The answer is, to a significant extent, yes. We begin with some fundamentals. Pervasive thirdparty payment creates a pervasive challenge: if A and B spend C’s money (if physicians and patients spend health plans’ money), C has two basic options for limiting how much A and B spend. C can dictate precisely how much A and B can spend, on what—utilization review. Or C can transfer financial risk, as in capitation: “do what you want, doctor, because now it’s out of your own pocket.” The former undermines physicians’ clinical autonomy while the latter creates major conflicts of interest (Morreim 1991b). Where patients and physicians have no significant contact with the economic consequences of their medical decisions, third-party payers will not allow them to control the costs, nor thereby the medical decisions. At least for lower-level health care costs, this problem can be largely avoided by bypassing third-party payment entirely. This need not be a harsh “pay out of pocket or go without care.” Rather, there are new ways to bring patients into contact with economics—and thereby into control over their own care—without creating significant barriers to care. The Health Savings Accounts (HSAs) that emerged in January, 2004, combine catastrophic insurance policies carrying a high deductible with a tax-exempt fund to cover deductible costs. Deductibles for individuals must be at least $1,000, $2,000 for families. HSAs have the potential to return health care choices to the privacy of the physicianpatient relationship, at least for routine lower-level medical decisions and, in the process, to obviate the need for gaming and deception. HSAs offer important advantages (Morreim 2002). Within the deductible range, health care decisions are completely controlled by physicians and patients. No thirdparty payment, no need for utilization review, no need to incentivize physicians to guard the fiscal coffers. At the same time, there are usually no financial barriers to care so long as there are funds in the HSA. And the great majority of people will have ample funds. Because catastrophic insurance is much less costly than a standard policy, the employer or individual purchaser can use those savings to help fill the tax-free HSA fund. Additionally, employers or even the insurer can fill all or part of the HSA. Individuals can contribute, tax-free. Catastrophic insurance coverage takes over once the deductible has been met.