White Coat Underground

Once again, I’m sucked into the discussion on health care reform. I despise this topic, because so much of what is wrong with our current system could be fixed relatively easily, if Americans could just take an ideologic leap.

Most of us have heard of “pre-existing condition (PEC)” clauses—those rules that allow insurance companies to deny payment for care based on your previous history. There’s a lot of facets to this, and laws vary tremendously (your results may vary). For example, a company may simply refuse to insure you (although some companies don’t have that choice, but they can still price you out), but more commonly insurers will refuse payment on services related to conditions that existed before you enrolled in the policy. You remember (don’t you?) the huge questionnaire you filled out before you got your insurance? And the request for all previous records? This is where you can end up in a heap of trouble.

You see, if you have, for example, type I diabetes, you already know about it and most likely disclosed it. But what if you forgot that you saw a colon specialist ten years ago and had a polyp? Let’s say you develop some rectal bleeding, go for an exam, end up having a colonoscopy where a tumor is found, and have to have surgery. You may also need chemotherapy, etc. If you have a PEC clause, your insurer is going to take a close look at your past and find that colonoscopy, and you’re going to end up responsible for tens of thousands of dollars of bills you weren’t expecting. You thought cancer was bad…

But don’t be too quick to blame the insurance company—it’s really your fault. No, I don’t mean your memory lapse about the damned polyp, I mean your ideology. As an American, you implicitly or explicitly support the current health care system, and the current system demands PEC clauses.

Insurance relies on pooled risk. Lots of people pay in, and hopefully, the payout is lower than the pay-in. This give insurance companies incentive to insure only healthy people, so that they can collect the most money for the least risk. Our system also encourages healthy people not to participate at all—why waste money on insurance if you’re young and healthy? Chances are you won’t need it.

If all the healthy people opt out, and only sick people are left, the level of risk is high, and the insurance company may not be able to make a profit, or even make ends meet. Don’t forget to factor in the fact that many insurance risk pools are small—most Americans under 65 rely on employer-provided plans. If my little practice has one sick person, our insurer may have to raise our premiums so high that we drop our employee benefits.

Medicare is funny though. Just about everyone over 65 participates, healthy or ill. Of course, people over 65 will be, on average, a lot more ill than younger people. Just imagine if we could somehow improve the risk pool for Medicare, you know, like adding all Americans to it. Pre-existing conditions would be irrelevant, since everyone pays, everyone plays, and everyone is covered.

A single-payer system would eliminate the immoral but nearly-unavoidable practice of excluding pre-existing conditions. So what are we waiting for?

Comments

  1. #1 David
    August 18, 2009

    my main concern over single-payor is that funding levels would be at the mercy of politicians. A budget cap implies a limit on which treatments are covered. With each swing of the election pendulum, the list of covered procedures would change erratically.

    Another concern might be that with a single payor, there’s no standard for “customary and reasonable” fees for service, and physician compensation would be ratcheted down to help politicians reach their goals of pandering to voters on tax cuts.

    I think single-payor might work well in other countries, but may not translate so well here.

  2. #2 wazza
    August 18, 2009

    The problem, David, is that currently, the “list of covered procedures” is chosen by a group of people whose only responsibility is to their shareholders. It’s in their interest to minimize it, always.

    If it were in government hands, their responsibility would be to voters. If they cut the list drastically, people who lose treatment get outraged, and they get voted out. New people voted in on a platform of wider healthcare make at least a token effort to include more conditions (well, they are politicians) and you keep swinging back and forth until you get all the cover you need. Make healthcare a central issue in the political discourse, and you might even get to the same level as Europe eventually.

  3. #3 David
    August 18, 2009

    Wazza, the redress with insurance companies is either through government regulatory action or court cases. There is no redress with government decisions, until an election cycle comes and goes. And you see how conservatives distort the issue in the public forum.

    Private insurance in the US covers far more treatment options than NICE allows coverage for in the UK. And medicare fee-for-service levels (so called “RVU” codes) have driven physician reimbursement by medicare to levels that make it non-profitable for most physicians to see medicare patients, unless there’s a procedure involved. Many docs I know have decided to stop seeing new medicare patients.

    I also hate our current system. I despise for-profit insurance companies. I think fee-for-service and capitation are both twisted reimbursement systems that drive bad patient care. Docs get paid more for procedures than for cognitive services, and new physicians are driven away from non-procedure specialties. We have out-of-control malpractice courts that don’t compensate most injured patients and award payments when it’s not appropriate, at tremendous cost. Single-payor won’t solve any of those issues.

  4. #4 mrcreosote
    August 18, 2009

    Why does everyone keep useing the UK or Canada as the only way to do socialised health care? Why not the ‘mixed model’ like in Australia, or most European countries? In Australia, there is usually pressure to expand what is covered by the government health system, such as a program to address mental health issues, especially depression, which wasn’t covered before, and now the possibility of including basic dental. Any attempt to restrict services is met with major resistance from the general public.

  5. #5 Tony P
    August 18, 2009

    And we’re never going to see a change in ideology until we disabuse corporations of the notion that they have the same rights as a flesh and blood person.

    We need to make the big corporations quake at the very hint that we’re displease with them.

  6. #6 katydid13
    August 19, 2009

    I think this is an important point to emphasis because having only ever had either employer paid (the parents or my own) or university provided insurance that didn’t have pre-existing condition clauses, I wasn’t didn’t know all of this. I understood the part about immediate pre-existing conditions, which makes about certain amount of economic sense. If you could wait and buy health insurance when you needed it why buy until something happens? However, I didn’t realize the extent or how far back they can go.

  7. #7 daedalus2u
    August 19, 2009

    The solution to private insurance companies not covering certain conditions is the free market where other private insurance companies will cover those conditions and charge appropriately. The problem is that there is no transparency. What conditions are covered is buried in mountains of fine print and can be changed retroactively by the private insurance company. The rate payer doesn’t have the option of choosing a different insurance company because what is covered is unknowable by the rate payer until the claim is denied and then it is too late.

    The solution to a government run single payer not paying for treating a condition would be for a private insurance company to sell insurance just for that condition and only that condition. If it isn’t cost effective for a private insurance company to cover that condition and only that condition, how could it be cost effective for a private insurance company to cover that condition under other circumstances? It can’t be.

    The private insurance companies are arguing out of both sides of their mouth. They say they can provide better coverage at a lower price than a single payer government program, but are unwilling to allow a single payer government program to happen because they know they actually can’t compete.

    They know that a major flaw in the private insurance system is the denial of coverage retroactively, but they are unwilling to not do that.

    I am encouraged that some Democrats are now saying the GOP is not negotiating in good faith and it is time to stop wasting time going through the motions of negotiating with them.

  8. #8 Philip H
    August 19, 2009

    @ David:
    Wazza, the redress with insurance companies is either through government regulatory action or court cases. There is no redress with government decisions, until an election cycle comes and goes. And you see how conservatives distort the issue in the public forum.

    Um, ok, how well has that worked in the U.S. so far? Name the last time insurance companies were SUCCESSFULLY sued because of pre-existing condition clauses. Hard to do, isn’t it.

    See, the idealogical leap PalMD is asking for is a good one, but it misses the mark. The leap we need to make is that healthcare is not a good, like Cheerios, or cars, or flatscreen tv’s, that exists in anything like a free marketplace. If it were, then there would be many more uninsured in this nation. And there is already a government option – Medicare – which hasn’t hurt competition in what remains of the pivate sector for those over 65 (ever seen all the supplimental care policy ads).

  9. #9 Charlotte
    August 19, 2009

    David, do you have any details of the treatments not covered by NICE that are available in the US, and what %ge of folks in the US have insurance that would cover the cost?

    NICE is an independent organisation probably appointed by politicians, but not directly affected by the political atmosphere. They can be ordered to reconsider their decisions by a judge if a legal challenge is brought.

    I don’t know whether GPs in the UK are better paid, have lower costs or simply don’t have the student debt burden of US PCPs but they seem to do rather better financially and have reasonable working hours. That may be a union issue rather than anything relevant to the current debate.

  10. #10 Ramel
    August 19, 2009

    daedalus2u do you really belive the free market will do that, I mean seriously? The free market means that companies do what is in their interests, even if the companies are not activly conspiring to retain PEC clauses non of them will damage their profitabilty or risk triggering an economic arms race with their competitors. The transparency problem is a syptom, not the cause, no reason not to try to solve it but don’t think it will solve the bigger problem.

  11. #11 daedalus2u
    August 19, 2009

    I don’t believe a free market could work in health care. What we have now in health care and what the GOP wants is nothing close to a free market in health care.

    A real “free market” would force the insurance companies to honor their policies and not renege on them retroactively or prospectively by using deceptive language.

    The GOP are free market ideologues. They maintain that the free market can do anything better than government can. They make that lie so that the non-free markets that they put in place via no-bid contracts, collusion, bribery and lying can extract more money from the government to enrich their cronies.

    On the one hand they say the free market is better and cheaper, but on the other hand that the free market can’t compete with the government. Which is it? If the free market is better and cheaper then the government program will be worse and more expensive and it is the government program that will fail.

  12. #12 Ramel
    August 19, 2009

    I’m sorry but the free market is a fallacy, they eventually produce a monopoly (or near monopoly) every time. The big companies can always use their size to out compete and kill off the smaller companies. On occasions where a market reaches stalemate the companies will strive to maintain the status quo, even if they are prevented from actively creating a cartel.

  13. #13 Gerard Harbison
    September 17, 2009

    Medicare in 2007 accounted for 15% of the federal budget, or $440 billion, about $10,000 for every person covered. Covering 300 million Americans at the same level would have cost $3 trillion. The federal budget in 2007 was $2.7 trillion total.

    Of course, you could argue the costs for everyone would not be nearly as high as they are for Medicare. In fact, we only spent about $7,500 per capita on health care in 2007. That would reduce your health care costs to only 85% of the total federal budget. On the other hand, you provide Medicare-level services to everyone, including the currently insured and the large fraction of the currently insured who have high deductibles (like me), and the costs per capita will increase, not decrease.

    Ultimately, none of the math for single-payer works without large increases in taxation, or a massive reduction in costs. Sure, Britain has half the health care costs America has, but Americans would not like the NHS either as patients or as doctors. I’ve been a patient, and my brother was a doctor there until recently. I now live in the US, and my brother practices in Ireland, which does not have single-payer.

    So, Pal, how would you feel about a 50% decrease in your income? You’d take it for the team, right? :-)

  14. #14 LanceR, JSG
    September 17, 2009

    Right. Because nobody would pay insurance premiums to a public plan. Everyone would just turn into a complete freeloader.

    And your depiction of NHS rings rather false, considering the many people who live with NHS who appear to be madly in love with the idea.

    Strawman much?

  15. #15 Gerard Harbison
    September 17, 2009

    When I pay money to the government now (and of course I pay 1.45% of my income in Medicare tax, like everyone else, and my employer pays the same amount) we call it taxation. You propose that when I pay still more of my income to the government, we instead call it a ‘premium’. Okay….

    As for my depiction of the NHS; I was born in the UK. I lived in the UK. Most of my family lived in the UK. Some of my family still lives in the UK. I apologize if our experiences don’t gibe with what you’ve read on a website.

  16. #16 KristinMH
    September 17, 2009

    Why does everyone keep useing the UK or Canada as the only way to do socialised health care? Why not the ‘mixed model’ like in Australia, or most European countries?

    [nitpick] In Canada we don’t have vision, dental, or prescription drug coverage (at least not in Ontario). You have to pay out of pocket or get private top-up totally-a-scam insurance for that.* I would call that a mixed model. [/nitpick]

    Not that I would want to deal with the US health care system, of course. I WISH I lived in the UK and could see an NHS dentist. I haven’t been to the dentist in three years.

    *Dental coverage is not sold by itself. The least you can get is dental + prescription drug coverage, which for a healthy 29-year-old = minimum $600/year. Total dental benefit provided = maximum $300/year, not including preventative care. Odds of said 29-year-old (i.e. me) using prescription drug coverage or needing dental surgery approach zero. Pure profit for the insurer.

  17. #17 freetoken
    September 18, 2009

    “Insurance relies on pooled risk. ”

    Exactly, and if you want to change that then you better be prepared for the consequences.

    There are many actors in this scenario which are taking “risk”, not just individuals with specified pre-existing conditions. Yet the reality of life tells us that we can’t avoid all risks, at best we can just minimize them.

    Ultimately your punch line is hidden here: “If all the healthy people opt out[.]” That is the problem isn’t it? Healthy people choosing to not pay for someone else’s healthcare. It may make sense to you to FORCE other people to do your bidding, but there are real elements of authoritarianism in the desire to make other people do your bidding.

    For all the hyperbole and misdirection that comes out of the right-o-sphere, there is a kernel of truth to the expressed opinions to resist centralized control over the individual lives of citizens. Ultimately you, PalMD, really do believe you know best how to make decisions for other people’s lives, how to spend their money, how to choose to prepare for their eventual decline in old age.

    The political/philosophical question which naturally comes out of your approach is this: why stop at health insurance? How many other aspects of life incur risk? Think of all those people who have to pay double for car insurance just because they live in certain zipcodes. We could compile a long list of such disparities.

    Your solution trivializes the history of life, politics, and government in the US (and probably elsewhere as well.) My hope is that people will think seriously before giving the government power to make all the decisions in life for them.

  18. #18 PalMD
    September 18, 2009

    I love libertarian wackaloons…really. Such good entertainment.

    It may make sense to you to FORCE other people to do your bidding, but there are real elements of authoritarianism in the desire to make other people do your bidding.

    Um, no. We live with other people in something called a “nation” and we share the burden and privilege of citizenship. We pay taxes to support roads, a military, etc. The question is not “should we do some things collectively” because we must. The question is whether health care should be one of those things.

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