The Rock and the Hard Place

by Dave Schuler on April 11, 2014

Over the last couple of weeks there have been two actions by the Congress which, if anyone had been paying attention, should convince us that there is no hope of containing the growth of healthcare costs within the constraints of the present healthcare system. The first was the annual (or nearly annual) ritual of passing the “doc fix”. That is the postponing of the imposition of the reduction in reimbursement rates that the Congress determined were necessary 15 years ago and which they have dutifully postponed taking effect ever since.

The second is the abolition of the cuts to Medicare Advantage that were enacted into law as part of the PPACA and which, in theory, would help to pay for it.

We’ll never cut costs as long as any reduction in benefits or reimbursement rates might result in political repercussions.

But cut we must because increasing healthcare costs are bankrupting state and local governments.

It might be the case that some future Congress will prevent the load of the expansion of Medicaid from falling on the states as it’s scheduled to do. I doubt it but it’s possible. IMO it will be hard to justify without nationalizing Medicaid which I find difficult to imagine happening.

That still won’t be enough to save state and local governments. We need healthcare reform.

{ 5 comments… read them below or add one }

Modulo Myself April 11, 2014 at 10:01 am

A couple weeks ago, I received from my insurance one of those non-bill statements, showing that the cost of a visit to my GP for a sinus infection came out to $550. This was a new twist with my insurance because usually I just pay the copay and see nothing else.

We aren’t going control healthcare costs until we start explaining where this $550 goes, in my opinion. There seems to be an enormous amount of discussion aimed at everything but the basic interaction with medical system.

As far as what I would pay, out of my own pocket, for a visit to a GOP for a sinus infection–like most normal human beings, I don’t want to pay this $550.

Andy April 11, 2014 at 4:50 pm

Dave, this is what early 21st century American Centrism looks like.

Andy April 11, 2014 at 4:57 pm

Well, a FFS system where the consumer of the service is separated from the payer by a middleman is a system that’s going to get a lot of weird pricing. And fraud.

I think I’ve told this example before, but a close friend has a child who had liver cancer. He got a liver transplant (and is doing very well now), and the whole thing cost something around $150k. My friends actually got an itemized list of charges and a lot of it was crazy or incomprehensible. In one case, there was a daily charge for physical therapy after the operation. But most of the time when therapist came by, the child was sleeping or was too sick from meds to do anything. The insurance company (Tricare – aka the US taxpayer) was billed for those visits even though no service was performed. And then there is the deconstruction of every little thing into a billable expense. It seems to me that the AMA has sought to break-up procedures into small components to create more billable items.

This is a system of payment that needs to be destroyed and replaced with something more transparent.

Dave Schuler April 11, 2014 at 5:08 pm

a lot of it was crazy or incomprehensible

Not so crazy or incomprehensible. Every time a practitioner sticks his or her nose in the door, they can find a code to bill it under. If you’ve ever been in the hospital and wondered about the parade of doctors, nurses, etc. coming into your room and not doing much, they’re goosing their billing.

The way restaurants figure out how much to charge for meals has very little to do with the costs of the food. The very short version is that they figure out how much they need to make, calculate the number of meals they can expect to serve, and divide to determine the average cost of a meal.

I haven’t been involved with hospital billing systems for a long time but what they do isn’t too much different. They figure out what they need to earn and then figure out how to earn it. What’s actually done is only related indirectly.

jan April 11, 2014 at 5:47 pm

“We’ll never cut costs as long as any reduction in benefits or reimbursement rates might result in political repercussions.

But cut we must because increasing healthcare costs are bankrupting state and local governments.”

We can’t do that! After all, ‘cutting’ is evil. Everyone knows that. The modern social progressive way is through higher taxes. First you go after the ‘rich.’ Then when they dry up, just work your way down the ladder of who has the most money. Augment this remedy by putting wedges between races, classes and finally between men and women. Manipulate stats, instilling feelings in people that economical circumstances are improving. Make winner and loser categories, forming iron-clad constituencies to create a spicier governmental brew. Then patiently wait until it explodes, blaming the final product on the republicans. At that point, start all over again with clean hands.

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