Risk management and the use of force
During a conference at the L.A. Chamber of Commerce today, Gov. Schwarzenegger made the pitch for his health care reform package. It's an impressive plan that draws on a premise—mandatory health insurance for all—that some great minds support. Like Columbo, though, I've been scratching my head and thinking about something that's still puzzling me. To make the numbers work (i.e., to make it cost-effective for providers to offer insurance to everybody regardless of pre-existing conditions and the like), the plan relies on getting the Golden State's 6.5 million uninsured residents into the system. It's especially attractive to mandate that young and healthy people pay for insurance, since they'll help fund the system without, in most cases, burdening services.
My question: What will be the mechanism for compelling these people to buy insurance? Not everybody who is currently uninsured is unable to pay for it. How do you force a person who just doesn't want to buy insurance to buy insurance?
So I asked the governor. His response was that it would be like auto insurance: You have to have auto insurance to drive. I questioned the comparability of the two cases: In the case of auto insurance, there's a privilege the state can deny you if you don't comply. If you don't buy liability insurance, you can't drive legally. What privilege can the state take away if you refuse to buy health insurance, since denying emergency room care is not an option?
To this, Daniel Zingale, the governor's senior policy advisor, replied that there will be many places to "reach out" to the currently uninsured, specifically naming schools and the tax system. (In Massachusetts, the insurance mandate is covered in state income tax forms, which require filers to specify that they are insured.)
The governor then said that what his plan really aims for is to "change the mentality of people." He mentioned his own experience as a young immigrant accustomed to the situation in Austria, where everybody had health coverage, and bewildered by the challenges of getting covered in the U.S. The mentality change, he added, is part of establishing a "culture of coverage." He and Zingale both said that the currently uninsured do want to be covered.
I'm all for changing the mentality of people, but I still think there's an issue here: If people don't want to come to the ball park, nothing's gonna stop them, and if they don't want to buy insurance, at some point you'll have to force them. I don't know that that's a showstopper, and there appear to be many ways of addressing the problem. But the end point I keep seeing is the use of force to get that healthy 25-year-old freelancer doing something he or she just may not want to do. Compulsion is not an issue anybody wants to talk about this early in the proposal, but it's a real issue nonetheless.
His comparison to his own upbringing in Europe is off-kilter. The nationalized healthcare EMPLOYS the physicians, nurses, techs, medical assistants. There is no insurance company to tangle with, no middle man, whereas here the entire industry is dependent on them. While he can idealistically say "free healthcare for everyone," my question is (and no one in the government is willing or even understands HOW to answer this is: What is the rate of reimbursement going to be for the solo practitioners in a system which is giving away care for free?
Typically, we have received checks of $8.00 from the State of California to cover a surgical consultation for a MediCAL patient. This doesn't even cover our staff time, which runs at $55.00 per hour for a combined coverage for 2.5 employees. Our rent is over 2500. month, and what we pay for malpractice insurance is squeezed by the other side of the insurers who dictate what they will pay us through contracted rates. In fact, the average return on claims for a physician is somewhere between 40 -50% due to contracted rates. Those are sorry numbers, indeed.
The fact is that here in the US, medicine is not only an art, but it is and has been for the past 30 years, a business which like any other, needs to have a profit margin. Solo practioners and even medical groups are not non profit organizations. The Gov needs to come through with concessions for doctors so that they can continue to meet technological demands, pay their staff living wages, and also meet all practice expenses as well.
Posted by: callie | January 20, 2007 at 09:51 PM
One of the most coercive aspects of our present system has to do with the way private insurance carriers are forced to cover the costs of Medicare and Medi-Cal patients.
It's easy to get lost in the cost/benefit analysis, but it's the sources and uses analysis that tells the real story here--one of the main reasons health insurance costs so much is because Medicare and Medi-Cal only pay for a fraction of the hospital services they consume, and private health insurance and the self-insured are forced to cover Medicare and Medi-Cal's unpaid bills.
Show me a hospital in an area where the demographic has an unfavorable ratio between Medicare/Medi-Cal patients and the privately insured, and I'll show you a hospital that's in financial trouble.
I can't give you the exact number as I've been out of the business for a while now, (Perhaps someone who more recent knowledge will chime in?) but Case Mix used to be the first report my CFO wanted to see every morning. Case Mix showed how many Medicare/Medi-Cal patients there were on the census relative to the number of private insurance patients. If that ratio was bad, if there were more than, say, five Medicare/Medi-Cal patients for every privately insured patient, (depending on what they were in for) then we were losing money.
Using that ratio, if we add 6.5 million uninsured patients into the system, and we assume they go into the hospital at the same rate as the privately insured, how many more privately insured people have to pay into the system, just to keep costs for the privately insured where they are now?
Yes, we're going to have to coerce a lot of people who don't want and maybe don't need medical insurance to pay into the system. ...but there are other kinds of coercion we'll suffer too. Health care providers can only provide as much services as they can get reimbursed for. When services are consumed by people who don't pay for them, those service will not be available to the people who paid for them. ...which means services will need to be rationed in some way.
That's an egregious form of coercion. Just because you want an MRI next week--and can pay for it--that may not mean you can get one. ...and there are quality of life questions that will arise. Right now, in my PPO, if I don't think my doctor's doing enough, I can just go to another doctor and, more or less, get what I want up to my maximum coverage cost. If my PPO has to cover the costs of 6.5 million additionally uninsured, I'm not sure I'll be free to do that for long. I think we can expect "medical necessity" to become increasingly important for private insurance patients under the Governor's plan--that what rationing is all about.
http://en.wikipedia.org/wiki/Medical_necessity
So you have ulcerative colitis, and you're not responding to medication anymore, but you don't want to have your entire colon removed, you just want the bad bits out, and try to stay on the medication and see how that works? That option may not be open to you under the Governor's plan. ...'cause a total colon removal and life with a colostomy bag is probably a lot less expensive than an annual endoscopy to check for cancer, continued medication, especially if it may end up in a total colon removal in twenty years anyway.
Posted by: Ken Shultz | January 21, 2007 at 08:28 AM
Comments by Ken Shultz | January 21, 2007 at 08:28 AM -
OK, so you have a little problem. I unfortunately am on Medi-cal. You think it's great? We get free medi-cal? I wasted my body for my family and ex-husband and in return get bad health that I have to pay for in pain and the inability to enjoy my life past 45. I spent my time freeing my ex to get great job security and the kids to grow up being loved and excelling so they can make good wages.
And now, I NEED an MRI. Not because I may have to have a big piece of colon removed, but because if I don't, I may end up dead, or quadraplegic.
Do you KNOW how long a person on Medi-cal has to wait to get an MRI?
At least 3 months, that's not including the tests that need to be run and the physical therapy before medi-cal will even accept the request. That means it could be 5 - 6 months before I get the MRI. The condition I have is one they push everyone else aside to get you to the MRI. Medi-cal says you can get the MRI and puts you on a long list, irreguardless of the risk to your life of waiting.
How would you like that?
It's right there, and I can't do a thing.
I'm trying to keep working, but at this rate, untreated, I could get bad enough to have to quit.
Then I'll be on welfare.
What do you think of that?
I know, you don't care. It's all about you.
I would have to collect SSI. But you know what? Think again.
They'd tell me, I can't get SSI as I don't have a diagnosis and I need to get an MRI. Until then, I'm not disabled.
So, I wait till I can't feel my legs anymore.
While I had enough money, I paid for medical and prescriptions.
Now, because pharmacies that charge medi-cal way too much for meidcations, I may stay with the pharmacist I've found who's prices are decent.
Don't go after medi-cal and people who might die with or without medi-cal, go after those doctors and pharmacies that charge higher costs.
I'll tell you what.... You get me in to get an MRI and I'll give you MY colon.
Have fun eating. When I'm paralized, I won't care if I do.
Posted by: JK | May 24, 2007 at 11:16 PM
"One of the most coercive aspects of our present system has to do with the way private insurance carriers are forced to cover the costs of Medicare and Medi-Cal patients."
Callie, the same thing is happening here in my country today. I agree with you on this part.
Posted by: L.A. auto insurance | June 13, 2007 at 09:24 AM
I'm not really sure why this is the way it is. It's been a long time now and I'm not sure if this still works today with respect to insurance whether in health or car or property.
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