Health Insurance Reform

I don't know much about the specifics of the current discussions and debate regarding health insurance reform. Since Congress has not finalized a bill in both houses prior to their August recess, I believe a lot of the details are still up for debate. What I do know about is my experience with health care and health insurance when I injured my back a few years ago. Based on that experience, I have some thoughts and opinions on how this system should work. More specifically, my thoughts are more along the lines of identification of problems I experienced. Its much easier to point out flaws than develop solutions and after thinking over this stuff for a few years, good solutions still allude me.

The trend in health-insurance I've noted is the move to HDHP (high-deductible health plans) and HSA (health savings accounts) and which usually are presented right along with the buzzword-BINGO term of "consumer-driven health care". The idea behind consumer driven health care is to bring a market-based approach to making health care better and more affordable.

The first part in this plan is the HDHP. Deductibles are raised to several thousand dollars in an effort to make the health-care recipient have "skin in the game". The "consumer" (more on the use of that term later) aka "patient" is responsible for paying all of that deductible and so has an incentive to shop around and find the most economically efficient way to get the services he/she needs. Its the consumer's money paying for the service and just like consumers have for ages, they will force the market (health care system) to provide quality products/services at competitive prices.

The trick to making HDHPs work is the second prong of this new idea, the HSA. The HSA is a tax-advantages account that holds funds used to cover costs of health care for the account owner. Money from these accounts can only be used for approved health-care services (physicals are OK, going to the witch-doctor is not) and all contributions are tax deductible. Also, this account is independent of the employer; when I lost my job at Cessna I kept my HSA and can continue to use that money for any health expenses I may have in the future.

The first real catch in consumer-driven health care shows up when the question of who is mainly responsible for funding the HSA arises. At Cessna, the employee is. The company contributes about 20% of the annual maximum contribution and the employee can choose to contribute more (tax-deductible) money or not. In my case, as a Cessna employee, the result of this was a significant increase in the cost of health care by me, the employee. I was responsible for 80% of the annual deductible whereas before this change, it was more like %40. I know of two other companies that have HDHP/HSAs and the employer provides the majority of the funds. In these cases, the employee bears roughly the same cost burden as they might under a more traditional plan but now has an incentive and discretion to use those funds more wisely.

The HSA funds aside, though, "consumer-driven health care" has a fatal flaw that will somehow need to be addressed if it is ever to take hold. The root of the problem is actually revealed in the syntax: "consumer". Consumers are people who shop around, look for good deals, make informed purchasing decisions, do their research, drive markets to better value and better products. Very few of these apply in a health-care setting.

Firstly, patients have a SEVERE knowledge gap regarding what kind of treatment and care they need. This will always be true and this is why we go to doctors. Granted, if an individual has a long-term specific condition, he/she can actively educate him/herself and ask intelligent questions of the doctors. Cancer patients tend to become more educated over time because they have an incentive and the time to become more educated. But nobody, when presenting with a severe pain in the stomach for example, will wait to hear the doctor's diagnosis, go home and read up on it, and decide whether he/she agrees with the doctor. As patients, we must place or trust in the our doctors and do the best we can to be informed as we go through treatment. In this regard, we are never informed consumers in the health-care market.

Secondly, as things stand right now, patients/consumers have a very hard time determining the price for a given procedure. Have you ever tried to shop around for routine treatment, trying to get the best price? I dare you to try. I started and gave up quickly. The structure of the health insurance system right now is not designed to easily define the price of a given procedure; there is no price tag for a colonoscopy (as was my case).

I know I won't get this exactly right but here is how the billing system worked when I was under the health insurance at Cessna. The health care provider has a number that most closely approximates the sticker price for a given procedure. If you were independently wealthy but had no insurance and walked in and asked for that procedure, that's how much you'd pay. If you do have health insurance, though, your insurance company has signed up with one or more "networks". I don't know all that goes into being part of a network but I do know part of it: price control. My health insurance, by being part of a given network, had gotten the health care providers to agree to charge a certain amount for a given procedure. By being in that network, the health care provider has a greater likelihood of seeing more patients because the health insurance company provides financial incentives to the patients/consumers to use in-network providers. So, if I go to in-network providers, rather than charging me the sticker price for the procedure, they charge me the lower network price and the provider sees more people like me who are trying to control their own health-care cost. You still with me?

Now, with the reduced price, the health care provider sends the bill off to the insurance company (as a courtesy to the patients, rather than making them deal with this mess). The insurance company takes that bill and looks at the specific agreement they have with me, the consumer/patient to determine what, if any part of this they will pay. Have I met my annual deductible? Am I in the cost-sharing payment zone? Is this preventative care that the insurance company pays for entirely? Is treatment even covered? (Have I gone to the witch-doctor who is then trying to get paid by the insurance company?) The health insurance company runs the claim through their computers and comes up with the amount they will pay the health-care provider. A payment for that amount is made.

The ball is back in the hands of the health-care provider. Odds are, the amount that the insurance company paid is not sufficient to cover the bill they sent. The provider then has a choice; do they bill the patient for the remainder or do they just absorb the loss. Most of the time, I'm guessing they bill the patient. To me, the end consumer/patient, this is my actual out-of-pocket cost.

Do you see all the machinations that number went through before I eventually got the bill? Trying to predict this number can be very difficult. The health-care provider should be able to quote the in-network cost they will bill the insurance company and it should be possible to call the insurance company and, if given the right information, they should be able to have a very good estimate on how much they will pay the health care provider but I'll let you guess how easy and how many phone calls it would take to figure out the final cost to the consumer/patient. If it was two phone calls totaling less than 30 minutes, I would be thrilled. In my experience, it was nowhere near that simple.

(As a side note, this billing shenanigans is entirely avoided for organizations like Kasier Permenante, a health care provider that is also an insurance company. There is no external billing, no passing-the-buck. All of these costs are monitored and set in-house and because there is no distinction between insurer and provider, the final cost is much more easy to determine up-front. Also, the patient never has to wonder if a given procedure is covered by insurance; if the doctor's prescribe it, the procedure is covered.)

In my case, it gets worse. As an example, my doctor recently suggested I have a colonoscopy done and I started trying to look into how much this would cost. It turns out that there are several parties involved in a colonoscopy. There's the facility (provides the location for the procedure), the doctor (the one actually doing the procedure), an anesthesiologist (keeping the patient safely unaware during the unpleasantness) and if a biopsy of something in the colon needs to be done, a pathologist of some sort. In the case of my health care provider, my doctor would perform the operation and the clinic I went to had a colonoscopy suite. When I called asking about prices, my clinic was able to quote to price they would bill the insurance company with a high degree of certainty for those two parts of the bill. The anesthesiologist, though, was brought in from out-of-house and any one of several may be used during that procedure. Each anesthesiologist has a different cost, I had no control over which one was used the day of The complications for the pathologist was similar.

So what I am supposed to do as an empowered consumer in this consumer-driven health care? How am I supposed to compare prices when there is literally no define-able price tag? Do I go look for a larger clinic here in town that also has a colonoscopy suite and also staffs an anesthesiologist and a pathologist so that all costs could be known ahead of time? That wouldn't even solve the problem because then I would only have a price for that clinic and not knowing what I was getting for that price doesn't really help me. How can I compare prices when I can only get one place in town to even get me a quote, anyway?

My point, if it is not utterly obvious, is that consumer-driven health care is dead in the water until a price tag for procedures is readily available. There is no way it can work until I can call five colonoscopy providers in Wichita and get five prices. Even then, I face the difficulty of not knowing what I'm getting for my money? Do I go with the cheapest provider? Do I go with the provider I know best? How do I learn about each of these providers? Online reviews for doctors? Ask around?

You see, we aren't consumers when it comes to health care; we're patients. There may be some areas of health care that could eventually fit a market-based model. Colonoscopies are routine; it may be possible to create a health-care system where a consumer can effectively shop around for a colonoscopy using a traditional consumer mind-set. Maybe there will be online reviews for colonoscopy providers. Maybe a clinic in town will specialize in colonoscopies and find a way to provide a cheap and effective way of doing the procedure and they end up doing most of the colonoscopies in town. It could happen and I don't necessarily think it would be a bad thing. I also agree that one way to control health-care costs is to provide incentives for patients to get the least expensive, best treatment they need. Having skin in the game is not a bad thing at all.

But we're patients, not consumers. We're not customers and clinics are not merchants selling wares. At some point, health care is a highly personal and personalized/customized system. Whatever the reform brings, if it forgets this point we all loose. There is no other way to keep people healthy than by treating, handling, and caring for them on an individual basis, case-by-case. This is why we go to see doctors in person, often ending up waiting longer than we'd like in some lobby. We need that individualized care and market-based models, if permitted to control the entire system, do not afford the individual.