Why does the Wall Street Journal persist in peddlling the rosiest of scenarios when characterizing the likely outcome of the Ryan plan for Medicare reform?
As for the hardest nut, Medicare, Mr. Romney has moved about two-thirds of the way toward Paul Ryan’s “premium support” plan. Like the Wisconsin Congressman, he’d give all seniors a defined cash contribution to choose among private insurance options.
Still to come are major details like how the premium-support payments would grow over time, but even endorsing the Ryan concept is unusual in this Republican field. (Jon Huntsman is the laudable exception.) Mr. Romney also attempts to inoculate himself against Mr. Obama’s inevitable Mediscare attacks by retaining traditional fee-for-service Medicare with its arbitrary price controls as an option for seniors, unlike Mr. Ryan.
But the key reform point is that Mr. Romney says that all beneficiaries would receive the same fixed payment whatever plan they chose. In other words, premium support would ensure that all seniors get basic coverage, but if they wanted more expansive coverage they’d have to pay for it themselves. This would introduce competition to keep down costs over time—the alternative to the brute price controls and rationing of ObamaCare.
The problems with this are that the course of treatment is not prescribed by the patient but by the physician, standards of care constrain the physician’s options for a course of treatment, and in many places the alternatives for care are too limited to provide real competition. In summary, healthcare is not retail trade.
A far greater likelihood is that, having exhausted their funds, seniors would be fobbed off on the Medicaid system, contributing to an even more rapid fiscal collapse in the states, already strapped to pay for healthcare.
The snippet above appears in a rosy review of Mitt Romney’s latest budget speech which might well have bee subtitled “Positions to run in a Republican primary on”. Eliminating waste, fraud, and abuse are evergreens but most of the federal budget is Social Security, Medicare, defense, and interest on the debt.
“But the key reform point is that Mr. Romney says that all beneficiaries would receive the same fixed payment whatever plan they chose.”
“Whatever plan they chose.” Wouldn’t the government have to force insurers to take 65+ folks on? I’d like to meet a 65-year-old who does not have some preexisting condition.
Competition will provide some cost control, but controlling demand would yield greater cost control. In the present system, the patient and physician have little incentive to limit the course of treatment, but for people with a high deductible ($5,000+) and no co-payment, the patient and physician have great incentive to limit the course of treatment.
In the high deductible and no co-payment scenario, generic drugs are preferred, and tests are minimized. The physician will put forth a range of options, and the physician will discuss each option with the patient. The physician will explain the risks and the benefits, and the patient will decide the course of treatment for them. There may be physicians who would refuse further treatment based upon the patient’s choice, and that would be another consideration for the patient.
For my family, we have never had a physician who would not try to work with us to keep costs down. One physician has a list of Walmart discount drugs, and she will charge half price if you are out in 15 minutes. She also keeps track of our area’s testing facilities in regard to costs. Many of our physicians are willing to try a lesser course of treatment first, and if conditions do not improve, we will move to the higher cost options.
This may or may not scale up, but I have seen very little discussion about something along these lines. My guess is that unless you fall into this scenario, it is unfathomable. I run into this all the time, and it is hard to convince people that we are a heartbeat away from death or disaster. I suspect that framework could be built that would include a self limiting mechanism and a feedback loop.
I have seen proposals using the VA as a model. I am personally in the VA system, and the physicians try to not go overboard with treatment. The use of generics is encouraged, and the VA uses a lot of nurse practitioners. The VA pharmacy system is another cost saver. While this is a good system, I doubt it would scale up. The VA is limited to military veterans only, and veterans tend to be substantially different than most other people.
“For the Snark was a Boojum, you see.”
TastyBits,
I like how you’ve reasoned your own management of medical care. However, it involves a cooperative pact, so to speak, with yourself and your physician of choice, to use the medical system, rather than abuse it.
By having a high deductible and no co-payments, I’m sure trips to your doctor are ones where there are deliberate concerns, rather than simply, “I’ve got a little cold, better get some antibiotics” type.
However,IMO, most people don’t look at their medical care, with an eye on costs and accountability, as you and your family do. If they did, our health care system would not be as strained as it currently is.
BTW, my husband and I do the same as you, having what’s called a catastrophic health plan, with a high deductible. We often go to alternative medical sources to maintain health, rather than waiting for a physical breakdown, also practicing the whole watching weight, exercising, and diet approach — something that can be personally managed by us, in order to assist our own bodies staying in a healthy state.
Sometimes, though, I believe such behavior is easier for people who are generally more self-reliant. When you operate from the inside out, looking first to yourself for a solution, tweeking one’s health plan (costing less) and habits is a no-brainer. But, when one is always looking for an outside door of opportunity, the sirens of government’s helping hand to be there, then they’re not as concerned about costs, their own health maintenance, nor pondering if they really need to seek the assistance of a doctor.
“In summary, healthcare is not retail trade.”
I reject this assertion. My father, who was a doctor, oft noted that “one-third of the people who come to my office are not sick. They come for other reasons, and because they think its “free.””
I’m with Tasty and Jan. But of course I would be, I’ve been saying essentially the same for years.
PS – good thing you didn’t do the Monty Python thing with “Naughtybits.”
“By having a high deductible and no co-payments, I’m sure trips to your doctor are ones where there are deliberate concerns, rather than simply, “I’ve got a little cold, better get some antibiotics†type.”
There is a problem with high deductible plans. When we study those plans, what we find is that total costs sometimes actually increase. Patients do not always know which care to skip to avoid paying those higher costs. They then end having more expensive procedures later.
This is a finding that, in retrospect, is actually quite intuitive. Deductibles and co-pays have been steadily increasing for many years now. Yet, health care costs continue to rise. If we add in one more bit of knowledge, it makes even more sense. 50% of people account for 3% of medical spending. IOW, medical spending is highly concentrated among a fairly small group of people. If you are in that group that is spending that money, you are going to blow by your deductibles and co-pay limits. High deductibles are most likely to (positively) affect spending among those who consume relatively little health care.
Steve
Jan,
We also practice going to the doctor or an urgent care facility before Friday. Contrary to popular belief, the emergency room is not free. If you can pay on exit, it is usually cheaper, but cheaper is still not cheap.
Drew,
“TastyBits” = dog food
Steve,
We learned that it is more expensive to wait too long (ER visits). Waiting a few days to a week, nature allows nature to take its course, but it does requires paying attention to the condition. A $5,000+ deductible with no co-pay is a deterrent to over using the medical system. We are well beyond destitute, but our jobs do not offer health insurance. Individual/family plans are expensive, and my guess is that most people have no idea of how much. If necessary, we could absorb the cost, but birthdays, vacation, and Christmas will be less extravagant.
With a co-pay, we may be more likely to go to the doctor, but with a $5,000+ out-of-pocket deductible, we make choices that most people find unbelievable. An MRI is expensive for one position, and most people do not have a clue that multiple positions are additional costs. (Position may not be the correct terminology.) For us, minimizing the positions is essential, and it can be done with a physician and imagining technician willing to make an effort. This is one example of lowering costs.
This is anecdotal, but everybody I know with insurance finds this bizarre. They expect to be able to see the doctor anytime, to have any tests (MRI, CAT scan, etc.), and to get the best drugs possible. To them, any limits would result in death or great bodily harm. My guess is that this is the prevailing attitude among most people.
If the system were able to include self-limiting mechanisms and feedback loops, I suspect people would begin to make medical decisions with a financial consideration. When the choice is between a hip replacement for great-grandma and a new car or family vacation, hip replacements demand will decrease, and great-grandma will be zipping around on a scooter. This is an extreme example to illustrate the point of a self-limiting mechanism.
Any solution will include some type of limits, and I would argue that self-limits, where possible, are the best type.
“For the Snark was a Boojum, you see.”
“Any solution will include some type of limits, and I would argue that self-limits, where possible, are the best type.”
A concept which seems to make sense, but then we look at the data to see what really happens and it is not so good sometimes. As I noted above, people often forego cheap treatment which results in more expensive therapy later. While I absolutely agree that we need limits, I am just not sure of the best way t go about it. There may be some level of deductible which works well, I just dont know what it is. I also know, that for people who have insurance, when a major illness hits, they blow through the deductible quickly and never even ask about costs. When a local, nationally syndicated libertarian writer came to my OR with his sick wife, he never asked about costs even once.
“We are well beyond destitute, but our jobs do not offer health insurance. Individual/family plans are expensive, and my guess is that most people have no idea of how much.”
A lot more, and for small businesses, under 50, you are looking at a 15-20% increase over what big businesses pay.
Steve