One bill shows what one national health care provider considers “fair payment” for laboratory testing performed prior to my surgery. I matched that bill up with my insurance explanation of benefits to determine which prices go to what tests. Click on the picture below to enlarge.

Fees for the lab testing were discounted anywhere from 70% to 90% off the provider’s published rates.
A CBC cost $8.12
PT/PTT (coagulation studies) cost a total of $10.15
A basic metabolic panel cost $8.12
Nearly $200 in “handling fees” was waived.
They accepted five bucks instead of the $16.70 they charged for drawing my blood.

In summary, it would have cost me $350 for the tests if I didn’t have insurance.
Instead, it cost me $31.46 for the tests since I do have insurance – more than a 90% discount.
Great for me, but a gouge to patients who don’t have insurance.

The thing is … if the medical provider advertised these rates to all the patients who don’t have insurance or who have high deductible plans, it would probably have lines of customers out the door waiting to have their blood drawn. In fact, they would probably still have lines out the door if they doubled the prices below.

I don’t care how much providers want to mark up their prices. That is their business and they can keep that secret.

We go to a grocery store and purchase products at the advertised price, yet few of us know how much the grocery store has marked up the price. The ability of shoppers to vote with their feet keeps prices down.

In order to decrease costs of health care, health care reform must include some form of transparency in pricing.

The system just isn’t going to work.

Let me get my soapbox out here. [Tap tap tap] Is this thing on? Good.

First, there’s still this misconception that the “mandate” to purchase insurance will somehow translate into accessibility of medical care. It doesn’t work that way. I’ve said it before. Purchasing health insurance doesn’t mean that you have access to health care any more than purchasing car insurance means that you have access to a car. If your insurance is cut-rate,  chances are that your medical care will be cut-rate. You can’t make a silk purse out of a sow’s ear.

The general idea of “insurance” is conceptually sound. Everyone pays into a system to spread the risk of paying for a catastrophic event. You pay$100 per month to presumably avoid having to pay $100,000 or more if you have a major medical event. The amount of money paid into a system is dependent upon how much money is taken out of the system. If there is a surge in the number of people needing medical care, one of two things happens: More money has to be paid into the system or less money has to be taken out of the system through rationing of medical care or providing lower quality less expensive medical care. There aren’t any other variables to change. Cost, availability, and quality. That’s it.

The proposed system creates too many loopholes. It caters to special interests. It changes the cost/availability/quality variables in ways that the public doesn’t realize. So lets look at a few examples.

First, what exactly are we getting for our money in the current system – or in the proposed system? Many people don’t know. With regular insurance plans, your policy guides coverage. Maybe you have exclusions for certain conditions. Maybe there is a limit on how much the insurance company will pay for a certain type of care. Maybe certain types of care (like dental care or vision care) is unavailable. But at least you know what you’re getting. Can anyone say with certainty what type of medical care they’re going to get once they start paying into the new and improved health care system? I sure can’t. The lack of specifics opens everyone up to being refused care once they’ve paid into the system. After all, the feds and/or insurance companies can just say “We never agreed to pay for that type of care.” In essence, we’re paying for what’s behind the curtain without really seeing what’s behind the curtain.

Speaking about “exclusions” on insurance, under the current plan, “exclusions” on insurance policies will be limited. True that insurance companies have used exclusions and rescissions unethically in the past, but when used appropriately, exclusions keep people from gaming the system. If you’ve had a bum knee for 20 years, you shouldn’t be able to pay one month’s insurance premiums and then be entitled to the newest titanium replacement, the services of the best orthopedist, and unlimited therapy. If everyone gamed the system that way, the system would collapse because there would be a tremendous funding input/output mismatch that couldn’t be sustained by just increasing insurance premiums. No one would purchase “insurance” because they know that they could just get a policy once a catastrophe either occurred or was about to occur. Outlawing or severely limiting insurance exclusions essentially amounts to allowing people to purchase homeowner’s “insurance” while their house is burning to the ground. Result: Quality of care will decrease or costs of insurance will skyrocket – or both. Our family’s health insurance premiums have jumped about 30% in the past 8 months, so we know where this is headed.

Then there is the issue of spreading risk. Remember how everyone needs to pay into the system to spread the risk? When fewer people pay into the system, either the amount of care decrease to create a new equilibrium point with input/output of funding  -or- everyone else must pay more into the system to maintain the status quo.  Look at all of the waivers that have been granted under the new health care legislation thus far. Multibillion dollar companies like Blue Cross Blue Shield, Cigna, Aetna, and McDonalds are all getting a pass on purchasing insurance. When people want to use the system but they don’t pay into the system, they create a greater expense for those who do pay into the system. Why there are so many insurance companies and unions receiving these waivers, anyway?
There is also a religious exemption to purchasing insurance. Whether Amish, Muslims, or other religious groups will be exempt from purchasing insurance under the new health care plan remains to be seen, but ultimately if they do receive care and don’t pay into the system, those extra unfunded participants will result in additional increases in expense and/or decreases in care.

Yesterday, I posted a comment to ERP (from ER Stories) on Kevin’s blog about ERP’s notion that the “mandate” was a good thing. In that comment, I noted that one of the other issues that we have to address is the tremendous amount of inefficiency in our current system. Bureaucracy has to diminish, not increase. Empowering the IRS to enforce the insurance mandate is heading in the wrong direction.

We also need to learn to say that we aren’t going to pay for medical care that has a negligible effect.
Providers have to be comfortable doing that and the public has to become comfortable hearing that.

End of life care needs to be compassionate, but made with the understanding that everyone is going to die. We need to become comfortable with the ideas of hospice care. Yes, maybe we can eek another few weeks out of your loved one’s life, but what will the quality of that time be? How much should we pay to keep the shell of the person that was once your loved one alive? There have to be checks and balances in place to prevent “death panels” but we can’t afford the system of end of life care as we know it. It’s a tough question, but it is one that needs to be asked and one that needs to be addressed.

Medications are another huge expense. Track medication use. Have a national database of what patients are getting what medications at what pharmacies. This will decrease multiple prescriptions from different providers and decrease adverse medication interactions or overdoses from the little old ladies who can’t remember their medications. If you aren’t taking your medications, a national registry will also let us know that you aren’t filling your prescriptions.
If you can’t afford your prescriptions, you can go to the federal medication dispensary inside the federal health care clinic at the free VA system and get your medications for free. They will have a limited formulary with mostly generic medications. If you don’t want to wait in line at the federal dispensary, then you go to the pharmacy and pay for the prescriptions out of your pocket. If you want the new designer medications that have the same effect as WalMart’s $4 medications, that’s fine. You need to pay for them out of your own pocket. If your doctor won’t work with you to find a medication on the $4 list, then find another doctor.
Introduce free market forces into the medication market and prices will have to come down. Pharmaceutical companies can’t make money on their blockbuster drug if no one can afford to purchase it. Want to hedge your bet against being stuck purchasing outrageously expensive medications for an orphan disease? Maybe there’s an insurance policy for that.

Stop playing semantics regarding the need to fund the system. The administration has already admitted that the “mandate” is really a “tax.” Call it a tax and implement it like a tax. If the public wants access to care, we need to increase everyone’s taxes. Kick up the Medicare tax deduction from everyone’s paychecks by 10% and forget about the “exemptions” and waivers from the “mandate.” Everybody pays their fair share. Tie the Medicare tax to costs of care. If costs go up, the tax goes up, but if costs go down, so will the taxes. Maybe we implement some type of consumption-based tax so that even those who are in this country illegally, who are visiting from other countries, or who do not work will still pay something into the system when they purchase groceries and other necessities of living.

Then do something to actually increase ACCESS to care. Open up the VA System to every citizen in this country. Expand the system to include county hospitals as well. Fund the systems exclusively with the new tax money. Then, if you walk in the door with your verifiable US ID, you get free care. All those taxes you paid are now funding your care. If you are visiting this country, you purchase insurance before your trip or you pay with a credit card – just U.S. citizens do when they visit your country. If you’re here illegally, you still get care, but then you’re getting detained, processed, and deported once you’re discharged from the hospital or you’re stable for transfer. You’re breaking our laws, so it’s about time that we either enforce our laws or we change our laws.

What would happen if we repealed the health care law and put the system above in its place?

So far, sounds like a lot of changes heading in the direction of free market medicine.

The plan would also both increase payments to … and increase involvement of … primary care providers.
And there’s a lot of feel good discussion of how the plan will increase quality of care and efficiency of care – all while reigning in costs.

One of the experts in the Times article highlighted a problem with the plan “The real mistake [is creating a plan] motivated by the principle of efficiency savings. History shows clearly that quality will suffer as a consequence.” Goes back to that whole principle about “Fast care, free care, quality care. Pick any two.” It appears that British patients may be faced with a decision whether they want to pay more money for better quality.

But I still have to credit Great Britain for this new plan, because I think there are a lot of good ideas here.

From an article in ModernPhysician.com (registration required)…

Pricing transparency gaining renewed interest
Led by a physician lawmaker, members of Congress on both sides of the aisle have shown renewed interest in mandating a boost in healthcare pricing transparency, including charges for physician services.

Just so Matt and others don’t think that all I’m all talk and no action, I’ll let you in on some things that I did at the conference.

I attended some excellent lectures about leadership.

• Colonel Thomas Kolditz gave a great talk about leadership in extreme circumstances. He described his interviews with many soldiers, Iraqi prisoners, sports team captains and their teammates, and various other people in leadership positions to determine what makes a good leader. Why do people follow some leaders and not others? Commitment is important. If a leader doesn’t believe in a mission, neither will the rest of the team. Effective leaders work with the team – they get down in the trenches and don’t sit on the sidelines barking orders and cheerleading. Trust is also important. If team members are worried about whether their leader might throw them under the bus, they will second-guess the leader’s intentions. The biggest factor in being an effective leader is competence. Col. Kolditz described his interview with a group of soldiers in an elite army unit. Almost all of them hated their commander. They thought he was a jerk. But every one of them said that when the rubber met the road he knew what he was doing and that there was no one else they would rather have leading them in their missions.

• I listened to Dr. Melissa Givens, a Lieutenant Colonel in the US Army, describe how difficult it was to manage the shootings at Fort Hood and all of the unexpected difficulties they had in trying to save the wounded soldiers. Ever wonder what it’s like to watch one of your co-workers die right in front of you? She told us how she was in the same room where the shootings took place only two days prior to when the shootings occurred. Very informative and very emotional.

• I watched a room full of physicians throw up their hands in frustration when a California physician showed how his group and other groups in the state are having difficulty staying solvent because California does not allow medical groups to bill patients fair prices for the care that they provide. Insurers lowball payment to the physicians and the California government made it illegal for the physicians to bill the patients for the remainder of the payments. Many physicians are considering whether or not to leave the state. California patients may soon be getting what they – or their insurers – pay for.

There were other lectures about how health care reform fell short and some possible options for the future.
One of the most informative lectures I attended was given by a former Congressional aide and current consultant who described his impressions about how legislators come to decisions and what does and does not influence a legislator’s decision-making. Personalized letters to legislators really do make a difference.

And I went to legislators’ offices.
The legislators weren’t in town when I went to visit, so I was lucky enough to get appointments with some of their staff.
I discussed ideas for health reform and medical malpractice reform with one legislator’s assistant. He took my name and said that he was going to have another assistant get in touch with me to get some more ideas and input.

I spent 45 minutes talking with one legislator’s assistant who is the go-to person for health care policy. I didn’t try to sell anything to him, I asked him if he had any questions that I could answer for him. We sat there for 45 minutes talking. Below are some of the things we discussed.

“What do you think about the SGR?” He asked.

• Honestly, I don’t think they should fix it. Nobody cares about it right now. All they know is that they can keep kicking it down the road until it becomes a big enough problem that someone is forced to fix it. The only way to deal with the issue right now is not to fix it. Cut payments to physicians. Let most of them drop out of the system. Let the patients who depend on Medicare be stuck without medical care. Almost immediately, the AARP will pay for a bunch of buses for all the grandmas and grandpas with their pink hair and canes with the tennis balls on them (probably my own mother included) to go to Washington and demand a fix. Only then will legislators realize that the current system is unsustainable and unfixable. We can’t patch this system and expect that it will continue to work. We must focus on starting over and creating an entirely new system that will be sustainable in the future. And a side note – if you try to create another system without extensive input from physicians, it will fail in the same manner that the current system is failing.

“Do you think that the AMA represents the views of physicians across the country?”

• Not really. I believe there is a lot of attrition from the AMA and know of many physicians who have dropped their membership. At the same time, membership in specialty societies is growing. ACEP is a perfect example. ACEP’s membership is going up, not down.

“How would you make the health care system better?”

• Patients must have more skin in the game. Right now many people think that the value of the health care they receive is their $20 copay. You can’t get work done on your car for that much. A plumber would laugh at you if you told him that was all you would pay him. But, in practical terms, all a physician visit is worth is $20. That mindset has to change. $20 per visit won’t even keep the lights on.
  There is a tremendous demand for high technology and for extensive testing that is often low yield. That is because a majority of patients have no direct responsibility for paying the cost of the testing. There is no incentive for patients not to want a test and there is no incentive for a physician not to order the test. In fact, with the push toward “patient satisfaction” as a basis for reimbursement, the incentive for physicians to order extensive testing will only increase. If patients don’t have skin in the game, costs will continue to rise no matter what regulations are put in place. I guarantee it.

• The only instance in which patients and physicians work together to decrease costs is when patients have to pay out of pocket for their medical care. If a patient’s medication goes off formulary for their health plan, the patient goes to the physician to find an alternative or to get the physician to request an exception from the insurance company. If a physician would like an MRI on an patient’s back after the patient was injured at work, the patient will not get the exam done until worker’s compensation agrees to pay for the test. This is what we need – patients need to be responsible for the costs and physicians need to help them determine what they really need and don’t really need. If patients want a low yield test, no problem – but they have to pay for it out of their pocket. Let them have ten low yield tests if they want. The only one who bears the cost of the testing is the patient.
  Homeowner’s insurance doesn’t cover the cost of someone mowing your lawn and it doesn’t cover the cost of your kid breaking a window.
  Auto insurance doesn’t cover the cost of oil changes or fixing your tire.
  Why should health insurance cover routine medications and routine medical care? It shouldn’t.

• Health savings accounts have to become an integral part of our culture. Use the money in those accounts to pay for routine health care costs. Make money in the accounts tax-free to encourage people to use them. Allow patients to carry some of the money in the accounts over to future years, but require that they spend at least some of the money in the account each year to encourage people to engage in preventative health care practices. Family practitioners could drop all their insurance plans and could all go “cash only.” No insurance hassles. Money at time of services. They’re happier and more productive. More people go into family medicine. Patients get seen quicker. What a concept.

• Mandatory insurance isn’t fair and it probably isn’t Constitutional. You want everyone to pay into the system, increase taxes in an amount proportionate to the amount you’ll need to provide for medical care and provide the care at government-run hospitals for free. You don’t have to pay for an insurance policy, you have to pay 5% more in taxes. In return, you have access to health care at any VA hospital. Include county hospitals if you need more access. Will the care be the best available? Probably not. Will everyone get a same-day appointment? Not likely. Will everyone have access? Absolutely. Do this and you could eliminate much of the costs that are currently wasted on insurance companies.

“What do you think still needs to be included in the health care bill?”

• Malpractice reform. The AAJ has talking points stating how direct medical malpractice costs are an infinitesimal amount of total medical expenditures in this country. The statistics are true, but are only half of the story. The AAJ states that instilling fear in medical practitioners is good for medical quality of care. That fear drives defensive medicine. Defensive medicine accounts for hundreds of billions of dollars in indirect medical costs – at little gain to the system. If lawsuits improve quality of care, then the trial lawyers have failed. They’ve been suing doctors for decades and mistakes are still being made. The only thing that seems to go up is the size of the judgments. We can’t sue our way to better health care. Yes, I said that and yes the assistant laughed. I think he even wrote it down on his pad.

• Damage caps are a tricky subject. Capping a patient’s damages at $250,000 isn’t fair to the patient, but neither is making a doctor liable for a $60 million judgment. There has to be some reasonable limit to damages, but even those limits won’t decrease the physician fear of being sued. [I actually agree with Matt on this point - in almost all cases, caps don't save physicians money, they save insurance companies money - but if insurance companies go out of business, hike rates, or stop offering coverage because of a $60 million judgment, physicians will have a more difficult time finding coverage and won't be able to practice. There has to be a happy medium].

• Like it or not, we will likely need to provide some type of limited liability protection to certain providers if we want to increase the numbers of those providers. Few physicians like being on call at hospitals because they know that they probably won’t be paid for the care and that they are highly likely to be sued if anything goes wrong. We have to ask ourselves whether we value the ability to find a physician to care for us in an emergency more than we value the right to sue that physician if anything goes wrong. Which is more important to us: Perfect care or available care?

We had other discussions, but this post is already getting too long.

You naysayers want my ideas? Here they are.

Now try to show me how they won’t work and come up with some better ideas.

Read his Newsweek article about his experiences being admitted to an Argentinian hospital and how he believes we should be focused on the costs of health care in this country.

His bill for a hospital stay with dehydration in Argentina: About $1500. Similar hospitalization in the US: $10,000 to $15,000 – if he was lucky. Money quote: “Most Americans have no idea how much their health care really costs, nor do they know how well it really works ….”

We desperately need price transparency in our health care system.

Look at the four systems in Pennsylvania that I reviewed in a previous post. If one hospital cost 4 times as much as another hospital for treating the same medical problem, would that affect anyone’s decision on where to go for medical care?

One commenter to the article noted that “Health services are often urgently needed and the consumer doesn’t have the time or inclination to shop around.” If people shop around for weeks to find the best deal on a car and spend all Sunday morning going through newspaper ads to find the cheapest head of broccoli at the grocery store, I have no sympathy for those who “don’t have the time or inclination” to research where they would want to go if their life was on the line or if they needed specialized surgery.

Regardless of what health care reform measures are taken, we still need to be educated consumers with our most important assets – our lives.

The New York Times is warning that the urban patients may feel the pinch of the health care bill as it tries to rein in out of control health care costs.  It notes that the goal of the bill is to cut Medicare costs by 15-30% by restraining the hospitals that cost the most.  As it turns out, these hospitals are located mainly in urban areas like New York and Los Angeles.  The bill will mandate that an independent body, such as the Institute of Medicine, will be tasked with studying then mandating that urban hospitals make changes in how they do business.  Urban hospitals fear that they will be compared, as the Dartmouth group did, to the costs and utilization of hospitals such as the Mayo Clinic and other midwest institutions who have lower overheads and treat different types of patients.  The real fear is that the IOM will recommend that the efficient hospitals will be rewarded with higher compensation while they are left with reductions.  Wouldn’t that be a real kicker if the areas of the country that have supported health care reform the most,urban blue states, end up getting hurt the most by that reform.