Want to Fix Health Care? Create a New Donut Hole!

I have a new idea for fixing health care in the US, and <shocker> it’s not socialized medicine!  In fact, it has a lot to do with something we all love and is totally unhealthy for us:



As we look for solutions to the Medicare crisis in America, most politicians completely oppose reforming the current Medicare system.  Especially during election time, the first words out of any politician’s mouth are “for current seniors, there will be no change in benefits.”  If this is truly a fiscal crisis (as national debt hawks purport), then this approach does nothing to solve the near term problem.  Medicare costs will continue to rise 6-10% per year until they bankrupt our entire economic system.

But why are medical costs rising exponentially when health care itself only gets slightly better each year?  It’s because current insurance programs, Medicare included (and as the largest), obfuscate the true economic cost of health care.  Providers are raising their prices and insurers (including Medicare) are increasing payments year after year.  This grows unbounded because there is no consumer visibility, and no consumer pressure to lower costs.  When you need to go to the hospital, you don’t shop around for it, you go to the nearest ER or the facility your physician practices at and your insurance covers.

And here’s my new, revolutionary plan to fix this: create a new, better donut hole!

What do I mean by creating a donut hole?

Remember all that chatter about “closing the donut hole” in Medicare Part D?  Put simply, in the initial Medicare Part D, the cost of the first $2900 of prescription medications were paid for by Medicare.  Once the total cost of your annual prescriptions passed $2900, you paid 100% of the cost of the drugs until you reached $4900, at which time Medicare once again would cover your costs.  That gap in coverage was referred to as the “donut hole.”

I’m thinking we need a HUGE new donut hole in Medicare – TOMORROW!  And the donut hole should be set up something like this:

For seniors reporting income of some number (let’s say $75,000 or less/year), their Medicare remains unchanged.  In fact, their Medicare benefits increase the less money they make, such that seniors living exclusively on Social Security have full, 100% coverage.

For seniors reporting medical expenses of OVER $75,000/year, every dollar over that amount is similarly 100% paid for by Medicare.

For seniors with healthy retirement incomes (let’s say above $75,000/yr) Medicare is phased out and you have to pay every dollar of your own health care up to some out-of-pocket maximum.  (maybe, to keep it simple, let’s say over $75,000 – the key is to cover catastrophic illness and hospitalization, not every trip to the primary care physician and to the pharmacy).

This new, educated, well-connected, wealthy class of seniors who are now suddenly responsible for paying for their own health care will  begin to actively work to reduce their medical costs!  They will shop around for care, carefully plan care costs where possible, and they will drive down the cost of the whole system by applying market forces.  

This plan, if you read it carefully, has several features:

  1. It protects the poor and middle class from having to choose between eating and paying the rent and getting the health care they need.  The poor and middle class are taken care of.
  2. It protects everyone from catastrophic economic hardship/loss from unexpected or devastatingly expensive diseases/disease management.  (The true intention of traditional insurance)
  3. It opens up the system to market pressure from a very powerful and well-connected demographic of customers.

Yes, maybe they’ll have to take fewer cruises to the Galapagos Islands, but hey – they were the ones who created this mess and I don’t see why I should be the one to have to pay for it when a good number of them have plenty of resources to pay for it by themselves.  🙂

What your copay was hiding all those years…

A public rant began on an large, campus-wide email alias at work today.  Those are just too fun not to jump right in the middle of!

Apparently, a coworker wore a contact with a tear in it, and it majorly irritated his eye.  It was bad enough for him to feel like he needed to go to his eyecare professional to have his eye examined.  His rant was that they charged him for a full office visit.  It ended up costing him $80 to sit in the chair for 15 minutes while the doctor looked into his eye and determined that there was nothing wrong.

He finished his rant with the question: “Is this normal [the charge associated with the office visit] and I’m overreacting?”

My short answer to him:

Yes, it’s normal and yes you’re overreacting.

But there was a long answer as well…

Here is some background, for those who don’t know the situation.

Last year, our company made some radical changes to its health insurance offerings.  Up until now, we have only had traditional In Network/Out of Network coverage offered, with the standard premiums and co-pays.  Last year, though, a “Health Savings Plus” plan was introduced.  It featured a low premium, high deductible ($3000) insurance policy coupled with a tax-free Health Savings Account (HSA).  The company seeded the HSA with $750 as well as offered health incentives for employees to earn up to $1200 more for the account.  This plan saves the company a lot of money by shifting the first $3000 of health care expense to the employee and banking on their laziness to not accomplish the health incentives.  The company really pushed this plan to the employees, though they continued to offer the traditional plans at a higher cost.  Of course, many employees jumped at the lower cost plan.

My coworker was clearly one of these guys who got onto HSP+ without understanding how it was going to work.  He balked at playing an $80 bill for an office visit to an optometrist!  That’s usually where you START for a doctor’s office visit.  That doesn’t include any labs or imaging you might have done, which can eclipse the doctor’s office visits in costs.

Really, this just goes to show that the beloved copay has been obfuscating the cost of health care to the general public.  This guy was outraged that he was “charged that much because that’s the most that UHC will allow them to charge for such a procedure, otherwise they would charge even more (that’s what they told me to try to make me feel better about this charge.)”  He was too used to going in and paying $10 or $20 out of his pocket for an office visit, a charge he felt was reasonable for the 15 minutes he sat in the chair.  What he never bothered to find out was that his insurance company was paying 3x that price to cover the rest of the office visit.  (Also, in what universe do you think you’re going to get an office visit for just $15… especially when you’re seeing an array of nurses and doctors using expensive equipment to diagnose and treat you… but this guy’s ignorance notwithstanding…)

My advice to him, if you can’t bear to see the cost of your health care, go back to the old PPO/EPO plans.

With copays, we never saw the expenses the insurance companies were shelling out.  We never saw a true cost of health care consumption.  This is (my theory) one of the major contributors to the run-up in health care costs in America.  No one is looking at their bills, and even after they do, no one is getting upset at these industries for charging so much because their insurance is covering it.  Insurance has significantly enabled the run up of health care costs in America.  There is no downward pressure being put on prices because of the wonky payer system we have now.

Even though I think this guy is being a pansy, I kind of like how upset he’s gotten.  Should you have to go see an eye specialist every time you just want them to make sure nothing’s stuck in your eye?  Perhaps not.  Perhaps the market could come up with a lower cost way for him to get the care he needs.

To do so, though, a lot more people are going to have to get angry at the current fee-for-service policy.

For the record, here was my long answer to the whole alias (who, in proper North Texas fashion, had already blamed the whole thing on Obama).

To answer your original question, yes – it is customary for an optometrist or ophthalmologist to charge you for a full office visit as you’ve described your last visit. You had a problem with your eye. They brought you back, sat you down in the chair and examined it and determined there was no immediate health issue (that the eye was recovering from a previous trauma). It is “reasonable and customary” (an important phrase in medical billing) for this Dr to charge you, even if he didn’t prescribe any medication or pull any contact fragment from your eye.

If you didn’t like the Doctor’s bedside manner, or the way in which he told you there wasn’t a problem, I would suggest you get a new doctor. Sure, he might have given you some ideas of drops that might have relieved the discomfort in the meantime. But you can’t fault him for charging for an office visit, though, just because there didn’t end up being anything wrong with your eye.

Really (and I hear you here) it just stings more because we’re paying 100% up to the high deductible. (If you’re on the Health Savings Plus plan, that is.)

As for the politics, this is the way it’s been since Medicare was instituted (the 1960’s), which created the fee-for-service health care system we enjoy now. This is not a direct result of the recently passed health care legislation, though you could argue (and I would) that Cisco’s recent cutbacks in subsidy to our health plans are a result of the failure of industry AND government (the recent legislation) to reign in the out-of-control rise in health care costs we’re experiencing. Everyone talks about bending the cost curve down, but no one knows how to actually do it. Insurers, medical supply companies, drug companies, and the like are riding as high on the hog as they possibly can for as long as we’ll tolerate at the expense of the taxpayer and insurance policy holder.

I actually think the HSP+ plan is pretty good. Now that some of the cost they’ve been hiding for years behind “copays” is being passed on to people like us, perhaps the market will change and offer different solutions.

Mom’s Job

For the past 17 years, my mom has worked as a medical biller.  She started with an eye doctor, but now works for a family doctor.  She is a living, breathing, day-to-day witness to the insanity of our health care system.

She’s always telling me absurdities about insurance billing practices and the archaic systems that surround them, and it just cracks me up sometimes.  Only a few years ago, Medicare went to electronic billing.  Before that, everything was submitted as a paper claim and a paper check.

One little known fact about our health care system is related to how Medicare pays doctors.  Each year, the Medicare payment tables are approved by Congress.  These payment tables determine the amount that Medicare will pay for each service a doctor might perform on a patient.  All of the insurers look to Medicare as a standard on how much a medical service might be worth.  Some insurers will pay more for a service than Medicare, so the Doctor’s job (the Medical biller’s job) is to charge as much as they can reasonably expect to collect from the BEST insurer for any particular service.  This is what contributes the most to the explosion of the bottom line of medical bills.

But I digress.  One little publicized fact is that Congress has delayed approving and publishing the Medicare payment tables for 2010 when they came due in March.  They called a moratorium during the health care debate, and approved doctors to continue to use the 2009 tables through June.  In June, when congress still hadn’t acted, they stopped making payments.

What was Congress waiting for?

Turns out, for the last several years, Congress had been kicking a can down the road.  Medicare was supposed to be decreasing the payout for each service by a certain percentage every year, to help drive down health care costs.  However, Congress just kept approving the Medicare payment tables each year without decreasing the payment amounts.  Now there is a HUGE discrepancy (15 – 20%) of where payment rates are vs where they should be.

Congress failed to act in time, so the department of health and human services released new tables which now pay dramatically less for each service.  Meanwhile, doctors have not lowered their fees due to the “good” insurances still paying higher amounts.

Bottom line?  Doctors will colllect much less this year from Medicare than they did last year, while still billing record amounts.

Why is this not covered in the media?  I dont’ know.

Meanwhile, I stumbled across this hilarious Podcast on NPR Planet Money which describes my mom’s job to a T.


[audio:http://www.whiteeyebrows.com/wp-content/uploads/2010/07/Planet-Money_-The-Pain-In-The-Butt-Index.mp3|titles=Planet Money_ The Pain-In-The-Butt Index]

Obama’s Health Care Summit

When you’re sick, you have a lot of free time to sit and do nothing.  Instead of doing nothing, I spend some time watching all SIX hours of the Bipartisan Photo Op for Elected Officials to Hear Themselves Talk Health Care Summit that President Obama held a few weeks ago.

If you are bored, it’s located at www.whitehouse.gov.

It was really interesting to watch, although my wife’s eyes are still rolled back into her head four days later.

A few things I took away:
Continue reading Obama’s Health Care Summit

That Mainstream Media…

Here’s that pesky mainstream media at it again… showing two very distinctly different viewpoints on the health care issue.

I don’t care whether you agree with President Obama, or with Rep Boehner and Sen Graham… the point is: the tone is better. We’re not ooo-gaaa-boo-gaaa-boo scaring people. We’re not pounding the bully pulpit. No one’s stamping their feet and demanding their way.

We’re talking policy. We’re talking ideas. We’re discussing what we want our future to look like.

I like it.

And by the way, I’m looking more closely into the Wyden-Bennett plan, as well as the Baucus Plan.

Health Care: What to Reform

Yesterday I wasted almost a full hour trying to write the next post on Health Care.  I started and scrapped three different posts.

I just am not sure what I want to say next about this topic.  The truth is, I feel like a tiny minority here.  I clearly see the need for reform and innovation in both the payer system as well as the medical delivery industry.  But, I just don’t see any solutions that I feel I can strongly support.  I am neither for the current proposed reform, nor am I vehemently against it.

So instead of just blindly choosing a side and waving their signs and banners, I want to just discuss the reforms we need to make and share my views on how we might proceed.

Continue reading Health Care: What to Reform

Health Care: How Much Does it Cost to See a Doctor?

Just to review:

  1. In our current health care model we have providers & payers.
  2. Providers are largely an effective industry.
  3. Payers are largely a bloated system on which the industry has been built.
  4. Cost is the ultimate problem.

So today I want to delve into cost.

How much does it cost to see a doctor?

Continue reading Health Care: How Much Does it Cost to See a Doctor?

Health Care: a System or Industry?

As a nation, we are now deeply embroiled in a debate about the future of our health care industry.  My next few posts are going to be delving into the grimy details of this debate with two goals:

  1. to define what we currently have
  2. to understand what is being proposed and where it might lead us

I want to get it #1 nailed down, first, before we get into #2.  Perhaps the single most frustrating thing is to discuss a topic when not everyone in the room is coming from a similar basic understanding of the actual state of affairs…

So here we go…

Continue reading Health Care: a System or Industry?