A Health Care Overhaul Could Kill 2 Million Jobs, And That’s OK

jaeger19 · Jun 5, 2019

distraff said:
We spend 3.5 trillion in healthcare and 25% of healthcare costs are administrative, you can look it up easily. Not quite 1 trillion, but it will pass 1.5 trillion in the next few years because healthcare costs are projected to rise to nearly 6 trillion by 2027.

I actually work as a software developer for a company that tries to simplify complexity for insurance companies. Software is already heavily used by the healthcare industry but there is no sign of a decline in administrative costs. People often believe software is the magic bullet to simplify everything, but software can only automate some things and often causes costs of its own, needs to be expensively revised when processes change, which they always do, and the complexity management software does encourages people to add more complexity on top of that. Also, even if software does save on costs, because healthcare is so bad at reducing prices, companies are likely to add that to their profit margins, or their executive pay, or doctor pay, etc. Remember that the executive pay, profit margins, legal costs, and software costs are already part of the administrative costs for healthcare providers, insurance companies, drug companies and middlemen and are unlikely to be reduced by software.

In an ideal world software is the magic bullet to reduce administrative costs, in the real world it only manages complexity very expensively and allows people to heap more complexity on. We are going to have to simplify our systems themselves and make them more cost effective, rather than relying completely on software to manage all the crazy complexity and hope it doesn't matter anymore.

\
Yep... I remember when all the rage to reduce medical costs was forcing the healthcare industry to "adopt electronic medical records"

Oh boy that was supposed to save billions. Pooh... at the time.. hardly anyone was NOT using electronic medical records. Problem was. government... state.. federal..and their insurances.. etc.. REQUIRED hard copy charts. Want to get a patient approved for surgery... you are FAXING.. hard records to the Medicaid representative.

Want to pre authorize VA? Again.. faxing the hard copies of the chart. And so on.

Greenbeard · Jun 5, 2019

I need to break this into 2 posts, unfortunately.

Slavister said:
You tell me. Who SHOULD make that decision?

This gets at a fundamental question and reminds me of a JAMA article from last month asking Does Employment-Based Insurance Make the US Medical Care System Unfair and Inefficient?

For many decades, employment-based insurance has set the standard for US medical care, although several features are now being questioned by health policy experts, including but not limited to giving patients a wider choice of clinicians and hospitals, generally relying on fee-for-service payment, and allowing self-referral to specialists. These cost-increasing features are especially valued by higher-income patients. Employment-based insurance covers approximately 60% (180 million of the 310 million) of insured individuals, but enrollment is highly correlated with income. In high-income households (family income >400% of the federal poverty level), 84% are enrolled in employment-based insurance. In low- and middle-income households (family income from 100% to 250% of the federal poverty level), only 35% are enrolled in employment-based insurance.2 The result is a product mix of care that caters to the preferences of higher-income patients.

Emphasis is on specialty and subspecialty care, expensive technology, extra capacity to facilitate access (US hospitals have an average occupancy rate of 65% compared with an average of 76% according to the Organisation for Economic Co-operation and Development), and more and better-quality amenities, including space and privacy in the hospital.3 Architects who build in many countries suggest that design for US hospitals must also include better space for visitors and professional staff. This more costly product mix (specialty care and hospital amenities) is appreciated by patients at all income levels, but higher-income patients would and sometimes do pay extra for them. Many low- and middle-income households would be better off if medical care was less costly, and they had more money for other public and private goods and services.

An imperfect but useful analogy to the differences in product mix between the US medical care system and those of other high-income countries is the difference between Whole Foods (a chain of upscale grocery stores) and Walmart (the largest grocery retailer in the United States). Shoppers who buy their food at Whole Foods spend much more than Walmart shoppers for a more expensive mix of products (ie, by analogy, high-cost drugs, access to specialists), not more food. By analogy, if the US government subsidized the Whole Foods shopper as it does for individuals with the tax advantages of employment-based insurance, and imposed on Walmart requirements for products, personnel, and equipment, Walmart’s costs and prices would increase. Given enough subsidy for Whole Foods and cost-increasing regulations on Walmart, the low-cost alternative might disappear. Such a low-cost alternative does not exist for most of medical care. Its absence is not a problem for high-income patients, but it is for many low- and middle-income households that would rather spend less on medical care. Of note, there are more than 10 Walmart stores for every Whole Foods store. The opposite is true for medical care as most physicians and hospitals strive for high standards and very few concentrate on lowering costs.

The preference of high-income patients for a costly product mix also adversely affects the efficiency of research and development in the choice of projects because market size influences the direction of investment in innovation. Almost all private medical research and development is directed toward extending the product mix with few attempts to discover new lower-cost interventions with truly disruptive innovations. The interests of high-income patients not only result in inefficiency in medical care production and innovation, but also adversely affect the way the United States finances health care. The present system, which is a mix of employment-based insurance, other private insurance, numerous government programs, including Medicaid and Medicare, each with its own eligibility rules and payment schemes, and out-of-pocket payments, is extremely costly to administer.4,5 The large role played by private insurance in the United States helps high-income households because the price of the insurance is the same regardless of income, whereas government plans typically require higher-income individuals to pay a larger share of the nation’s medical care bill.

Greenbeard · Jun 5, 2019

I usually describe the concept in terms of Holiday Inns and Hiltons but Whole Foods and Wal-marts works great, too.

Many other countries tilt toward Holiday Inns/Wal-marts when it comes to service mix, capacity, etc. (E.g., the NHS's penny pinching has lately been a disaster for them in the U.K.). Arguably artificially so. We, as the article argues, probably artificially tilt toward Hiltons/Whole Foods. And that artificiality has come not because the government has interjected and told us we're all staying in Holiday Inns tonight but rather because nobody has told us what it costs to stay in a Hilton or asked us to pay directly when we opt for one. So of course the demand for Hiltons is quite high. And then we grumble at the piece of our neighbors' bill we have to pay each month in the form of a premium.

So you ask the good question of who should decide which course of treatment to pursue, given the relative costs and evidence base, and the provider or site of care. If a question has to be asked, who should answer it? Or a choice to be made, who should make it? Ethically, it seems to me, the answer has to be you. But of course two realities have to be taken into account: 1) most of us don't have the clinical expertise or knowledge of underlying cost differentials from one site or provider to the next, and 2) the scale at which our health care costs exist is often beyond the actual means of us (this has been the case since at least the 1920s when people realized we needed to start moving to an insurance model of financing care).

That suggests to me that a key role of payers/insurers is as decision aids. Every insurance plan has a benefit design which defines the financial rules by which you access the benefits covered under your policy. Historically they've been blunt instruments and rather dumb: you pay a deductible, maybe some coinsurance, and/or fork over a set co-pay for various visits. Which unless the full price of the service is below the deductible, etc doesn't tell you much.

If your relative share of the costs for treatment options reflected their relative clinical value (inclusive of cost), a concept called value-based insurance design, and if your cost-sharing varied by provider and care setting in such a way as to reflect their relative underlying cost structures, you could make decisions that reflected your values and your means while preserving your choice of competing options. In other words, if benefit designs really encoded clinical and financial information about the options in front of you, scaled in a way that's meaningful to you as an individual person, then choice could be made meaningful again. And you as the patient/consumer could become both the seat of decision-making and financial responsibility. Since detaching the two from each other is arguably how we've ended up with a Hilton/Whole Foods-based system here that could be good.

I don't know, based on the population's preferences and willingness to pay, what the right ratio of Holiday Inns to Hiltons or Wal-marts to Whole Foods is. If you ask me to set that ratio, I'm probably not going to get it right. I don't know for a fact, as many seem to suspect as an apparent overreaction to our glut of Hiltons/Whole Foods, that the population really wants a radical swing to the opposite pole and would like to see every Hilton replaced by a Holiday Inn. The only way to know the relative abundance people want is to ask them, and that requires putting their wallets, not their words, to the test.

I assume some people read my threads or posts and think I'm arguing against "Medicare-for-All," whatever that means. I'm not. I'm arguing against simplifying and sloganizing an extremely difficult and complex set of issues and decisions that need to be made and assuming that someone random person (like me!) can turn a dial and get it right for 300+ million of us.

Manc Skipper · Jun 5, 2019

Greenbeard said:
I usually describe the concept in terms of Holiday Inns and Hiltons but Whole Foods and Wal-marts works great, too.

Many other countries tilt toward Holiday Inns/Wal-marts when it comes to service mix, capacity, etc. (E.g., the NHS's penny pinching has lately been a disaster for them in the U.K.). Arguably artificially so. We, as the article argues, probably artificially tilt toward Hiltons/Whole Foods. And that artificiality has come not because the government has interjected and told us we're all staying in Holiday Inns tonight but rather because nobody has told us what it costs to stay in a Hilton or asked us to pay directly when we opt for one. So of course the demand for Hiltons is quite high. And then we grumble at the piece of our neighbors' bill we have to pay each month in the form of a premium.

So you ask the good question of who should decide which course of treatment to pursue, given the relative costs and evidence base, and the provider or site of care. If a question has to be asked, who should answer it? Or a choice to be made, who should make it? Ethically, it seems to me, the answer has to be you. But of course two realities have to be taken into account: 1) most of us don't have the clinical expertise or knowledge of underlying cost differentials from one site or provider to the next, and 2) the scale at which our health care costs exist is often beyond the actual means of us (this has been the case since at least the 1920s when people realized we needed to start moving to an insurance model of financing care).

That suggests to me that a key role of payers/insurers is as decision aids. Every insurance plan has a benefit design which defines the financial rules by which you access the benefits covered under your policy. Historically they've been blunt instruments and rather dumb: you pay a deductible, maybe some coinsurance, and/or fork over a set co-pay for various visits. Which unless the full price of the service is below the deductible, etc doesn't tell you much.

If your relative share of the costs for treatment options reflected their relative clinical value (inclusive of cost), a concept called value-based insurance design, and if your cost-sharing varied by provider and care setting in such a way as to reflect their relative underlying cost structures, you could make decisions that reflected your values and your means while preserving your choice of competing options. In other words, if benefit designs really encoded clinical and financial information about the options in front of you, scaled in a way that's meaningful to you as an individual person, then choice could be made meaningful again. And you as the patient/consumer could become both the seat of decision-making and financial responsibility. Since detaching the two from each other is arguably how we've ended up with a Hilton/Whole Foods-based system here that could be good.

I don't know, based on the population's preferences and willingness to pay, what the right ratio of Holiday Inns to Hiltons or Wal-marts to Whole Foods is. If you ask me to set that ratio, I'm probably not going to get it right. I don't know for a fact, as many seem to suspect as an apparent overreaction to our glut of Hiltons/Whole Foods, that the population really wants a radical swing to the opposite pole and would like to see every Hilton replaced by a Holiday Inn. The only way to know the relative abundance people want is to ask them, and that requires putting their wallets, not their words, to the test.

I assume some people read my threads or posts and think I'm arguing against "Medicare-for-All," whatever that means. I'm not. I'm arguing against simplifying and sloganizing an extremely difficult and complex set of issues and decisions that need to be made.

American healthcare is like a restaurant where all the meals are $5,000. So long as you can pay, you can eat, but if you can't afford it then you starve.

Greenbeard · Jun 5, 2019

Manc Skipper said:
American healthcare is like a restaurant where all the meals are $5,000. So long as you can pay, you can eat, but if you can't afford it then you starve.

Not exactly. The "problem" we have is that lots of households that can't afford $5,000 get meals that expensive under our system. The problem isn't that a sliver of rich people are getting super expensive meals (that's certainly not why 18% of our GDP is in health care), it's that most of us get super expensive care when the time comes. And then when we all get our share of that bill our reaction is "Jesus Christ, that's expensive!"

The point of that JAMA article is that employer-sponsored insurance, which tends to skew gold-and-platinum level (i.e., generous) has artificially pushed us into becoming a nation of $5,000 meal consumers--to the detriment of those who aren't lucky enough to be among the 160+ million with ESI and would appreciate less opulent meals. E.g., this is a snapshot of group (employer-based) plans by actuarial value a decade ago:

Percentage Of Group Policies, By Actuarial Value And Plan Type, 2010

We as a nation aren't starving for health care, as anyone will tell you we're pouring more into that sector than any nation on earth!

The challenge is that if we want to mitigate the overall spend, we need to wean people off the $5,000 meals they've gotten accustomed to. And my point above was that it's not clear if they want to be weaned off. Or at least it's not clear how many do.

One test was the ACA marketplaces, which allows insurers to bring differently priced provider networks directly to consumers. And certainly there was some grumbling about lower-priced narrower network options, but they proved pretty popular sellers because at the end of the day many people would rather save money than ensure access to the most costly providers. Finding the right balance, though, is going to require a lot more asking like that.

Slavister · Jun 6, 2019

jaeger19 said:
You have waffled all over the place. Now you are saying that 99% of the time when you go to the hospital... which is a far cry from what you were saying before.

Not really. I might not have been precise enough in my first post but in the last few posts I clarified it already. I was talking about 90% because, as I said already, ...

When people go to see a doctor in Canada, they don't see a bill 99% of the time.
When people go to hospital in Canada, they don't see a bill 99% of the time. (When they don't request a private room.)

Slavister · Jun 6, 2019

Greenbeard said:
That suggests to me that a key role of payers/insurers is as decision aids. Every insurance plan has a benefit design which defines the financial rules by which you access the benefits covered under your policy. Historically they've been blunt instruments and rather dumb
...
if benefit designs really encoded clinical and financial information about the options in front of you, scaled in a way that's meaningful to you as an individual person, then choice could be made meaningful again. And you as the patient/consumer could become both the seat of decision-making and financial responsibility.
...
I'm arguing against simplifying and sloganizing an extremely difficult and complex set of issues and decisions that need to be made and assuming that someone random person (like me!) can turn a dial and get it right for 300+ million of us.

Thank you for both of your thoughtful replies. I read both of them in full. I think just like with Walmarts and Whole Foods, it DOES make sense to have a lot more of the former. A lot more people are financially constrainted than not, and more importantly, countries make an effort to cover health care at high enough standard that it just does not make sense in most cases to look for a better option. At the end of the day, we have to cover ALL people at as much of a level of coverage as we can afford by collecting some reasonable amount of extra taxes. There is nothing wrong with having additional options on top of it for additional pay IMO.

Here is a question: looking at the rest of the world, all countries have their Walmarts vs Whole Foods, and all countries have their Hilton's vs Holiday Inns. Yet, does a single country have the sets of options you are thinking of, easily understandable by the patients? Well, to some small degree, maybe - I think there are private clinics and practices and treatments you are free to use if you pay on your own, but much of the population gets quite reasonable care with the one option they get from the government. Why is that?

My guess is at least part of the answer has to do with extra complexity in medicine. It's one thing for average Joe to decide which tomatoes they like more or at which hotel to stay. It's another to understand whether medical choice A or B for the price of X or Y is better. As you allude to, it could be very hard to simplify the choices to present to patients. (I would even say it's even harder in our society than other countries, because we are much more litigious.)

US has tried to do things differently, and they are clearly neither cost-effective, nor have the proper financial motivations for medical providers. Maybe we try to pick what others have done first, before again trying with a new system that seems even better?

jaeger19 · Jun 6, 2019

Slavister said:
Not really. I might not have been precise enough in my first post but in the last few posts I clarified it already. I was talking about 90% because, as I said already, ...

When people go to see a doctor in Canada, they don't see a bill 99% of the time.
When people go to hospital in Canada, they don't see a bill 99% of the time. (When they don't request a private room.)

First. that is a far cry from what you said initially. Now you are doing a nuanced position. AND its not reflective of medicare in this country.. nor is it reflective of most single payers in the world.

Fine.. I want to see your evidence.. other than your opinion.

Because I have presented the facts regarding Canada. How about you present the evidence that shows that no bill is generated 99% of the time when you go see a doctor.

jaeger19 · Jun 6, 2019

Manc Skipper said:
American healthcare is like a restaurant where all the meals are $5,000. So long as you can pay, you can eat, but if you can't afford it then you starve.

That's a blatant lie.

jaeger19 · Jun 6, 2019

Greenbeard said:
Not exactly. The "problem" we have is that lots of households that can't afford $5,000 get meals that expensive under our system. The problem isn't that a sliver of rich people are getting super expensive meals (that's certainly not why 18% of our GDP is in health care), it's that most of us get super expensive care when the time comes. And then when we all get our share of that bill our reaction is "Jesus Christ, that's expensive!"

The point of that JAMA article is that employer-sponsored insurance, which tends to skew gold-and-platinum level (i.e., generous) has artificially pushed us into becoming a nation of $5,000 meal consumers--to the detriment of those who aren't lucky enough to be among the 160+ million with ESI and would appreciate less opulent meals. E.g., this is a snapshot of group (employer-based) plans by actuarial value a decade ago:

Percentage Of Group Policies, By Actuarial Value And Plan Type, 2010

We as a nation aren't starving for health care, as anyone will tell you we're pouring more into that sector than any nation on earth!

The challenge is that if we want to mitigate the overall spend, we need to wean people off the $5,000 meals they've gotten accustomed to. And my point above was that it's not clear if they want to be weaned off. Or at least it's not clear how many do.

One test was the ACA marketplaces, which allows insurers to bring differently priced provider networks directly to consumers. And certainly there was some grumbling about lower-priced narrower network options, but they proved pretty popular sellers because at the end of the day many people would rather save money than ensure access to the most costly providers. Finding the right balance, though, is going to require a lot more asking like that.

Just to clarify here though.. when we talk about "weaning people off 5000 dollar meals"..

What we are really talking about is 1. Access: We pay that 5000 dollar price because when we want to get a surgery, or a procedure.. we want it now.. not four months from now.. not 6 months from now. Heck.. we want diagnostics to be that fast. We don't want to wait for an MRI for our shoulder waiting behind people that have more difficult problems.
And we want our local hospital to have all those services.. we don't want to have to drive 120 miles to a major city center to get an MRI or surgery at a regional care center.

2. Choice. We want our choice of physicians and caregivers. We not only want to go to the specialist when WE think a problem is bad enough, but we want to be able to go to the physician of our choice

3. Equity: WE love equity in our healthcare system. We don't want the rich to be able to get the better rooms, the better doctors.. all that access.. while the poor and middle class weight and get double rooms instead of single rooms.. to wait for procedures etc. We like that the poor person with Blue cross from Heinz.. is in a private room.. while the CEO with of Heinz with the same insurance.. is in a private room at the same hospital.. and both are getting their procedure that day..from the same surgeon.

These three things inject a lot of cost into our system.. That access requires more rural hospitals, more hospital beds, more staff, more x ray machines, more MRI machines, more specialists etc.
And that infrastructure and staff has to get paid for.. whether its being used or not. So that its available.. when you need it.

There is no free lunch here. If americans are going to get the savings they think they are going to get from Medicare for All..."like other countries"... then we are going to have to do the things that reduce those countries costs.

Neomalthusian · Jun 6, 2019

distraff said:
We spend 3.5 trillion in healthcare and 25% of healthcare costs are administrative, you can look it up easily. Not quite 1 trillion, but it will pass 1.5 trillion in the next few years because healthcare costs are projected to rise to nearly 6 trillion by 2027.

I actually work as a software developer for a company that tries to simplify complexity for insurance companies. Software is already heavily used by the healthcare industry but there is no sign of a decline in administrative costs. People often believe software is the magic bullet to simplify everything, but software can only automate some things and often causes costs of its own, needs to be expensively revised when processes change, which they always do, and the complexity management software does encourages people to add more complexity on top of that. Also, even if software does save on costs, because healthcare is so bad at reducing prices, companies are likely to add that to their profit margins, or their executive pay, or doctor pay, etc. Remember that the executive pay, profit margins, legal costs, and software costs are already part of the administrative costs for healthcare providers, insurance companies, drug companies and middlemen and are unlikely to be reduced by software.

In an ideal world software is the magic bullet to reduce administrative costs, in the real world it only manages complexity very expensively and allows people to heap more complexity on. We are going to have to simplify our systems themselves and make them more cost effective, rather than relying completely on software to manage all the crazy complexity and hope it doesn't matter anymore.

The citation for the 25% administration claim isn’t really up to me to go find. I’m with you on your tech related comments overall. My point has been that people seem to imagine single payer and a federal bureaucracy administering the nations health care payment would drastically reduce complexity, bureaucracy, and administrative costs in general. I have an extremely hard time believing that.

Slavister · Jun 6, 2019

jaeger19 said:
Fine.. I want to see your evidence.. other than your opinion.

Because I have presented the facts regarding Canada. How about you present the evidence that shows that no bill is generated 99% of the time when you go see a doctor.

This is based on my knowledge of people's experiences where it's actually 100%, not even 99%, but I am sure there are some exceptions, so I told you 99%.

If you want to look at evidence, then going along with same kind of evidence you presented, here is a paper that shows 98.8% <-- oh I am sure you'll tell me this is a "far cry" from the 99% I quoted you earlier.

jaeger19 · Jun 6, 2019

Slavister said:
This is based on my knowledge of people's experiences where it's actually 100%, not even 99%, but I am sure there are some exceptions, so I told you 99%.

If you want to look at evidence, then going along with same kind of evidence you presented, here is a paper that shows 98.8% <-- oh I am sure you'll tell me this is a "far cry" from the 99% I quoted you earlier.

View attachment 67257743

Ughh… look.. Now you are doing the percentage of spending that you were accusing me of doing. and since cost are more in the hospital.. then you aren';t capturing visits out of the hospital.. in other words you aren't capturing the actual visits.

Plus its the total of public spending.. which includes the spending of the territories and Provinces..and not just the Canadian single payer.

And at the end of the day.. Its not like Medicare in the US..

Slavister · Jun 6, 2019

jaeger19 said:
Ughh… look.. Now you are doing the percentage of spending that you were accusing me of doing.

Which is why I qualified what I said with "then going along with same kind of evidence you presented". I agree it's not the number itself - I could not find the number itself, but hey, you thought this was good enough for your evidence... In fact, you said you provided evidence and wanted to see mine (despite my pointing out inaccuracy of yours). When I show you same kind of evidence that you provided, you complain...

jaeger19 said:
... and since cost are more in the hospital.. then you aren';t capturing visits out of the hospital.. in other words you aren't capturing the actual visits.

I don't know whether they count physicians seen as part of hospital stay under "hospital" or "physican" on that specific graph.

jaeger19 said:
Plus its the total of public spending.. which includes the spending of the territories and Provinces..and not just the Canadian single payer.

Bogus distinction. Already addressed. Whether Province or Central Govt is covering the costs, does not matter. It's a mix there for who sets standards and laws and runs the programs. Either way, it's single-payer within each Province, if it makes it better for you.

jaeger19 said:
And at the end of the day.. Its not like Medicare in the US..

And that does not matter. I was talking about how people do this in other countries. New medicare-for-all program could be doing the same and does not have to be what Medicare happens to be in US today.

jaeger19 · Jun 6, 2019

Slavister said:
Which is why I qualified what I said with "then going along with same kind of evidence you presented". I agree it's not the number itself - I could not find the number itself, but hey, you thought this was good enough for your evidence... In fact, you said you provided evidence and wanted to see mine (despite my pointing out inaccuracy of yours). When I show you same kind of evidence that you provided, you complain...
.

NAh.. it not complaining.. its frustrating watching you run around with the goal posts in your hands.

Bogus distinction. Already addressed. Whether Province or Central Govt is covering the costs, does not matter. It's a mix there for who sets standards and laws and runs the programs. Either way, it's single-payer within each Province, if it makes it better for you.

No.. not at all.. a VERY important distinction. Because the Canadian single payer does not pay for a lot of stuff. Now.. yes.. DEPENDING ON YOUR PROVINCE..you may.. or may not have coverage for a number of things.

Now.. you want to hold that up as an example to the US? That means you have a weak federal insurance.. and its left up to the states as to how you get coverage. Think about what that means to most of the country that does not live in a rich state.
You have gaps in coverage.. (which is why one million Canadians go without medications because of lack of coverage)
You have problems with portability both because of employer based insurance and because of provincial insurance.

And that does not matter. I was talking about how people do this in other countries

Exactly.. and as pointed out.. most countries.. you get a bill. You get bills in Canada.. you get bills in france.. you get bills in Spain.. etc..

Oh it might depend on hospital versus outpatient.. or durable medical goods or whatever.. but at the end of the day.. you are still getting a bill most of the time for healthcare.

Your premise that there were no bills is not based in fact.

New medicare-for-all program could be doing the same and does not have to be what Medicare happens to be in US today.

Bingo..and you have exposed the lie that the proponents of medicare for all are selling.

Why are they calling it "MEDICARE FOR ALL"...when you admit.. its not going to be what MEDICARE actually is today?

I think that's easy to understand.. because current Medicare is a very popular program.. and Medicare for all proponents.. want to trick people into believing that they are going to get medicare.. when really they are not.

A Health Care Overhaul Could Kill 2 Million Jobs, And That’s OK

Wrinkly member