November 16, 2007
The Case Against Higher Co-Pays and Deductibles
Having thought about the recent Congressional Budget Office report on health care costs for 24 hours, I now have an explanation for its mysterious -- and accurate -- claim that health care co-pays by individuals have fallen as a share of health care spending over the past 30 years.
Is that anyone's experience that you know? Most of us, especially if we have a significant health event, pay much larger co-pays and higher deductibles than we did 10 or 20 years ago. How can individual payments as a share of total health care spending have fallen to 13 percent in 2005 (about 2 percent of gross domestic product) from 33 percent in 1975 (also about 2 percent of GDP, suggesting the individual spending as a percent of income has not risen)?
That answer, as it turns out, is simple math. Health care consumption is highly concentrated. About 75 percent of health care costs are consumed by the 90 million Americans (about 30 percent of the population) with chronic disease. That means 70 percent of the 2 percent of GDP out of pocket is picked up by 30 percent of the population. Thus you could say (via back-of-the-envelope math) that the 30 percent of the population with significant health care costs saw their co-pays rise at about two to two-and-a-half times the rate of inflation -- just like the rest of the health care system.
That's painful for them as individuals. Meanwhile, the rest of health care spending, which has been rising at two-to-three times the rate of inflation for most of the past 30 years, is spread across everyone who pays an insurance bill, which is Medicare, Medicaid, the VA, and other public payers for about half the total health care tab and employers who provide health insurance for the other half. So people who worry about how the taxpayers will be able to afford to pay for government health care programs worry about rising health care costs, and employers worry about rising health care costs, and on a good day, insurance companies worry about rising health care costs, but most Americans, except those who are sick, do not.
Every poll conducted by activist groups pushing for universal health care coverage has shown that most Americans do not respond to political messages about holding down costs, but do respond to messages that the uninsured ought to be covered. The latter is obvious. If you lose your job, you lose your insurance in this society, and people want to protect themselves against that possibility.
But why don't they see that rising costs is threatening everyone's access to insurance? Two out of three Americans are healthy. They do not experience the rising co-pays and deductibles.
That's why strategies that rely on further increases in co-pays and deductibles to hold down costs are misguided. It assumes the 30 percent of the population with chronic disease has an option. Tell that to a 55-year-old former smoker with emphysema, the 20 million Americans with diabetes or the tens of millions of Americans with cardiovascular disease of one sort or another.
The only ones with options are the ones who need care before they get chronic disease: the pre-diabetic, the hypertensive, and smokers. Preventive interventions like smoking cessation programs; diabetic counseling; screening for hypertension; offering low-cost drugs and programs to prevent chronic kidney disease and cardiovascular complications are precisely the kinds of programs low-and-moderate income people will forgo (and they're the ones who suffer disproportionately from these conditions) if you increase their out-of-pocket costs.
Moreover, under the private insurance system, the only way to get insurers to provide this kind of coverage is to require it through a regulation, since the payoff in reduced health care costs is in the future, while the costs are now. Why should an insurance company pay for a prevention program for someone in their 50s who is on the road to heart disease when it is probably going to be Medicare that picks up the cost of that person when they actually get the disease?
The other argument used to support higher co-pays and deductibles is that it will make people confront their doctors about the true usefulness of expensive procedures. Perhaps. But unless we reform the fee-for-service system, doctors have an equally large if not greater incentive to argue forcibly in favor of "you'd better get that test young man." How well positioned are individual patients (I prefer that word to consumers) to argue with the opinion of their doctor? So those with money will pay the higher tab because they can afford it, while the poor and near-poor will forgo treatment because they can't.
That's rationing by income, not by medical usefulness or need. Any health care plan that raises co-pays and deductibles as a key part of its strategy to hold down costs is doomed to failure. It won't significantly hold down costs, and to the extent it does, it will make our already second-rate health care outcomes worse.
Posted by gooznews at November 16, 2007 07:46 AMNicely stated. This is one reason why I firmly believe that high-deductible plans will not be successful in curbing the rising costs in health care. Individual patients need to have fewer barriers to low-cost preventative care, especially that which would be effective in raising health outcomes while lowering future health expenses.
But if that became a reality then fewer companies, executives, and stakeholders would reap the financial benefits which they do now. And the U.S. just might eventually see a lower percentage of the GDP going to fund healthcare. We might have to invest a little more now to reap the overall benefits later.
Posted by: Lisa Emrich at November 16, 2007 03:09 PMCan't say I disagree with you re: high deductible insurance. However, it really gets under my skin when I hear over and over again about the high cost of healthcare. I agree, health care is expensive. However, do you really know where the money goes? I think people still think of the good-ole rich doctor. No doctors I work with are getting rich. Do they make a good living? Of course, they make literally life and death decisions dozens of times a day. Would you want them paid minimum wage? They make these decisions based upon the assessments and observations of the nurses. I guess nurses make too much too. How about the people in the lab? Doctors rely on the lab results to make treatment decisions. If the lab results are inaccurate, it could cause a "bad" decision on the part of the doctor. How much do you think they make? What about the actual costs of the equipment? We regularly rely on the equipment to keep someone alive, literally. Should it be cheaply made? What about the hospital employees required to do preventative maintenance on the equipment? Minimum wage? What about the heating and air conditioning people who make sure the air circulation functions properly. A hospital system is very specialized in order to help prevent the spread of disease. Should these people make minimum wage? What about the housekeeping people who make sure the equipment, floors, walls, sinks, etc. are cleaned properly with the proper chemicals, also to minimize the spread of bacteria? Minimum wage is the norm for them. Should it be?
I believe I have made my point. In the current climate of rampant malpractice claims, we as a society expect our health care providers to be perfect. To never, ever make a mistake. In the hospital setting, it takes a great number of people, all specialized in their own area of expertise, to make the hospital operate. Each and every one of them a human being. Bad outcomes can happen for the patient if just one link in this chain does not operate to perfection. The doctor gets all the blame when something doesn't go right. Name one other profession where you make life and death decisions based on the work of dozens of other people and you are expected to be perfect every single time? Where one mistake could cost you your savings, your house and your career?
Bottom line is this: It costs money to attempt to maintain a "perfect" system. On top of that, you have the government and regulatory agencies all telling you how to accomplish it. All by way of creating more and more paperwork ands more and more barriers to providing good care.
Add it all up and then tell me health care costs too much!!!
Posted by: Marty G., RN-PICU at November 16, 2007 06:38 PMMarty, I'm not sure if your comment was meant for me or was just a way to blow off some steam. I support the position that the money being spent in healthcare should be going to those who actually function together to provide that care.
"In the hospital setting, it takes a great number of people, all specialized in their own area of expertise, to make the hospital operate. Each and every one of them a human being."
I agree.
"...fewer companies, executives, and stakeholders would reap the financial benefits..."
I was not thinking of hospitals, physicians, nurses, labs, pharmacies, etc who truly affect the care of the individual patient. I was thinking of pharma execs, lobbyists, short-term investors lurking for quick gains, insurance companies, etc.
I have a perfect example. A little pharma company raised the price of their (practically) solitary drug 15 fold in August as part of 'a new business strategy.' This med is over 50 years old and has been indicated for MS exacerbations, but it has been used off-label for years in the treatment of Infantile Spasms (IS). They had only one month to sell this product at the increased price in the third quarter. On Monday, they finally announced Q3 earnings, in which they exceeded net sales of an entire year (2006) in one month!! Investors went crazy and the stock price quadrupled in 2 days and has held throughout the week. Investors think that they have a blockbuster on their hands, but really the company is ripping off insurance companies and parents of desperately sick children.
These are the types of outrageous 'costs' I think off when criticizing our healthcare system. For myself, last year I earned just below 200% FPL, have health insurance, and still spent 84% of my AGI on medical costs (primarily pharmaceuticals and absolutely no hospitalizations, surgeries, or emergencies).
Now that's outrageous healthcare cost!!
I apologize if I came across as attacking you directly. I guess I was just blowing off some steam as well as trying to make the point that the people who everyone actually sees on the front lines of health care are not the ones to blame for the costs. I think on that point, I think we agree. I think you'll agree when I say to the public "Please don't expect us to be God. We are not perfect, but the vast majority of us are doing what is best for the patient to the best of our ability. If we don't have hours to spend on the internet to find every possible rare condition that fit's your symptoms, please forgive us. We must deal with what is the 'most likely' cause. Sometimes we miss things, but believe me when I say, we have no intent to ever be wrong. Think about that before calling the malpractice attorney advertising all over the TV."
Posted by: Marty G., RN-PICU at November 16, 2007 11:29 PM"We are not perfect, but the vast majority of us are doing what is best for the patient to the best of our ability."
For that I am quite thankful. I have great respect for persons who choose careers in the health field. In fact, my grandmother was a nurse (who died in a hospital after a nursing medical error - but a lawsuit was never considered an option, especially out of respect for my grandmother). My aunt is a nurse who works in a VA hospital and even worked in a NICU once upon a time and was known as the best at getting IVs started in those tiny little veins. I also have two cousins who are pathologists and my brother is clinical therapist as well as a university associate professor.
I have great respect for those in health fields. When my brother was 14, our cousin accidently ran over him and his motorcycle when they were dirt-biking and my brother had fallen over a hill. My brother's trachea was blown open, the lowest lobe of his lung was completely blown off, a number of ribs were broken, basically the type of injuries one would incur in a car accident if being crushed against the steering wheel. The surgeons, ICU nurses, therapists, etc. did an excellent job in repairing damage and keeping him alive during his 2 weeks in ICU during which time he almost died twice. He's a very lucky man who now jokes about the 2-inch wide scars across his back as being from a shark attack or some other entertaining event.
"...we have no intent to ever be wrong. Think about that before calling the malpractice attorney advertising all over the TV."
Again, I'm glad that we have professionals who 'practice' medicine, and I mean that in the most flattering way. But, I have no idea how malpractice attornies came into the conversation.
Posted by: Lisa Emrich at November 17, 2007 12:44 AMMarty--
My only "negative" response to your comment would be that oftentimes doctors hold themselves out to be "gods"--and if they want ME to buy into their godlike omniscience, then yes--I expect perfection--or pretty close to it! On the other hand, when one represents himself as more knowledgeable than me (thanks to education and experience), but acknowledges that medicine is as much art as science, and appreciates MY partnership, I more willingly accept human imperfection.
Both you and Lisa have already expressed my sentiments that the high cost of health care radiates from trickle-down economics, and doctors, nurses and other healthcare providers are way downstream in the trickle (though not so low as patients). The insurance industry, the top-heavy pharmaceutical companies, the speculative shareholders, the for-profit (or profit-above-all) institutions, and yes, some doctors, who see patients as meal-tickets to the gravy train, share responsibility for our mushrooming healthcare crisis. (Coincidentally, these same culprits will be the ones crying the loudest, and seeking government "entitlements" if the gravy train crashes.)
Posted by: Melody at November 17, 2007 12:23 PMIn my years of clinical medicine, I have never met, not once, a physician who believes they are God, or have a God complex
The idea of a God complex is either imagined by the patient, or misunderstood, a lack of communication on one or both sides, It simply isn't present in my city. And my city isn't any more special than any other.
Or it is misunderstanding years of experience as fact and discounting the experience as playing God. Regardless it isn't in my area of the world. And that is spread among all specialties.
When I tell a family their loved one is going to die, I am not playing God, I am practicing medicine in the limits of medicine in 2007 in a setting of unmanaged patient expectations. If I can't fix a patient, it's not because of a lack of trying, it's because the patient is unable to heal themselves.
I don't heal patients. Patients heal patients. I try and help them do it with my treatments/therapies.