Health care rationing?

Posted at 9:53 AM on August 19, 2009 by Bob Collins (13 Comments)
Filed under: Health, Politics

At the same time MPR's Kerri Miller was hosting a discussion today on where the money goes that's dumped into health care, and why health care costs so much, a Harvard professor was sounding an alarm that health care reform will lead to rationing, and getting significant pushback from an unlikely source.

"The best solution to this problem of private overconsumption of health services would be to eliminate the tax rule that is causing the excessive insurance and the resulting rise in health spending, Martin Feldstein wrote in a Wall St. Journal column today called ObamaCare is all About Rationing." Alternatively, Congress could strengthen the incentives in the existing law for health savings accounts with high insurance copayments. Either way, the result would be more cost-conscious behavior that would lower health-care spending."

Feldstein went on CNBC this morning, where anchor Mark Haines found his view objectionable.

Haines: Why would that lead to rationing?

Feldstein: Because that's what the administration strategy is. They've said they're going to cut the projected rate of growth on health care spending by 30 percent over the next two decades. That came from a White House study released in June. And the way they're going to do that is by setting rules for doctors and hospitals, what they call 'cost effective forms of treatment' that will limit the kinds of things that can be done.

Haines: And we don't have rationing now?

Feldstein: We have some of it, but this...

Haines: You bet your bippy we've got it. C'mon. You have profit-motivated bureaucrats making rationing decisions.

Feldstein: But I can talk to my doctor. I can talk to my hospital and say, 'should we do this or not do that?' And people with private insurance today have those kinds of options.

Haines: And then the insurance company has the final say on whether it actually happens, right? Rationing care.

Feldstein: They turn down very, very few things and, again, it is not the government that's doing it. So if my insurance company doesn't allow certain drugs, or doesn't allow certain kinds of treatment, I can choose a different kind of policy. And the idea as I see it in the Obama proposal is to force us all into a certain kind of spending pattern because the government is concerned -- the administration is concerned -- about how much the government is spending on health care, and Medicare, and Medicaid, but in order to control that, they want to change the kind of treatments that you and I -- outside the Medicare and Medicaid system -- can get on our own.

Haines. I'm sorry, but how are you being... how are we being forced into anything? You will be allowed to keep your private insurance.

Feldstein: Yes, but what the administration is talking about, what they describe in this White House report, is what they call 'comparative effectiveness research.' In other words: Their studies will say whether a particular kind of treatment is worth the money. And that's what concerns me.

Haines: Wait a minute! You want to be able to have anything regardless of its cost vs. its effectiveness?

Feldstein: No, I want to make that decision.

Haines: How are you qualified to make that decision?

Feldstein: I and my physician together will talk about whether something is worse spending the money to do. Whether the risks associated with not doing this test or that test are risks that we want to take. And I think that individuals who want to pay out of pocket, there ought to be higher co-payments. But I think individuals and their physicians rather than a bureaucratic process should be making the choice.

Haines: First of all, the private insurance companies are a bureaucracy, so this bureaucrat argument is nonsense. And, second, you'll pardon me sir, but your argument is a very easy one to make by someone who has money.

Feldstein: But 85 percent of Americans have insurance. So it's not that we're talking about a small handful of people who have insurance. And one of the nice things is there's choice. I can, here in Boston, I can join any of a number of plans and they're going to differ (Bob notes: He didn't mention that Massachusetts has universal health care) in the kinds of hospitals I would have access to and the kinds of limits on various things. So there's choice and it seems to me that's one of the things that's made the American health care system so good. That it has stimulated research. It has stimulated new technologies...

Haines: Well I'll say, again, sir, you have these choices because you can afford them. A lot of people can't afford them. And we're 29th in the industrial world in infant mortality. We spend two-and-a-half times what Britain spends for worse outcomes...I'm sorry.

Haines got so worked up, he turned the interview over to his co-anchor.

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Comments (13)

This argument about choice is intrinsically flawed. In order to argue that it's better for people to have their choice of whatever health insurance and treatment they want, you must first assume that they would qualify to purchase any insurance plan that they want and that is simply not the case.
It also assumes that once you have insurance they will cover any condition you may have. This is also not necessarily true.

On top of that, even if that were the case, you'd still have to live under the assumption that people can afford any plan they please. This is also not true.

I should know, I have permanent injuries from a car accident. I've been bounced between agencies and continually told that it is not their responsibility. I can't always qualify to buy individual insurance and the only plans I qualify for have premiums that start at 10% of my yearly income. So even with coverage, I can't afford to go to the doctor.

At one point I had my doctor and my physical therapist recommend that I keep attending physical therapy, but the insurance company told me that I should no longer need it and they would not pay for it, so I stopped going, because without coverage it is WAY out of my price range.

Due to scenarios like that, I think the argument that more private choice will fix our current system is oversimplified and naive at best.

Posted by Jennifer | August 19, 2009 11:07 AM

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I caught the first part of Keri Miller's show this morning, and I think the most important point -- one that I think we all know to be true, but that I haven't heard spoken until today -- is that health care is not a normal market. That is, we don't know what something is going to cost until after it's been done. I think the same thing holds true for insurance. You can buy a plan, but you don't find out whether or not it's actually a GOOD plan until you have to use it, at which point you may no longer be able to switch even if you desperately want to. And that is not real choice.

Posted by Heather | August 19, 2009 11:29 AM

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I've told this story before but when I had a bad shoulder a year ago, the doc (a great guy), sent me down to radiology for a CT scan or MRI (can't recall which). It wasn't until I got the bill that ifound it cost about $2,500.

The route between the doctor and the pain injection took me to the radiology, a specialist -- that included a visit with nurse first -- a pain clinic, a visit with a nurse, the shot, a followup -- and a visit with a nurse .

By the last treatment scheduled, the bills had already started coming in and were about $6,000. I decided then "the heck with it; I'll live with the pain."

I would've decided that earlier, but nobody ever tells you how much stuff costs.

Consumers get a lot of criticism for not asking the question, but we don't know what to ask. What WHAT costs? We don't know what's going on behind the scenes for which we're being billed.

So maybe the answer is requiring medical people to tell you how much something will cost up front?

I presume that wouldn't add a dime to the cost of providing health care.

Would people go without health care? Of course they would. But most people do that now by not seeking it in the first place.

Posted by Bob Collins | August 19, 2009 11:42 AM

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@bob collins
"So maybe the answer is requiring medical people to tell you how much something will cost up front?"

Except they don't know the cost.

And it is different based on what insurance you have or don't have. They charge what the insurance company will pay.

Posted by BJ | August 19, 2009 11:52 AM

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I love the "we don't know what it will cost until we're done" argument. Most service work suffers from this, but most service providers find a way to set a price for a particular service. Maybe one of these cost containment commissions can develop a book for this. Given Bob's example they should know what is needed from a resource stand point to perform a CT scan or MRI of an adult male shoulder.

Not to be flippant about this but when you take a car into be serviced they have a rate book. A particular task, say a brake rotor replacement, has a particular cost associated with it. If they have a junior mechanic do it, it takes more time but he is paid less per hour. A master mechanic will complete the job faster but he is paid more so it works out. Granted Bob is not my 2002 PT Cruiser and his radiologist is not my mechanic. But for the common tests and diagnostics you would think that a "standard" could be determined and adopted. Those providers that are more efficient will make more profit and those that are less efficient will have an incentive to be more efficient.

Posted by JackU | August 19, 2009 12:59 PM

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@jackU

They don't know the cost, what does a tablet of Lipitor, Provacol and Zocor cost? How about a months supply. If you have a months supply at home, but are in the hospital for over night stay but left it at home, should you get the single dose that costs 3-5 times that of a single dose in a months supply.

What about Diabinese, Tolinase, and Metformin?

Prozac and Zoloft?

My wife gives out a 20-50 drugs per night, while many are the same over and over, how is a nurse supposed to "sell" you on getting them?

They do know about some costs, like you suggest, maybe even 80% of all things can posted.

I think of the www.minuteclinic.com with prices for about 20-30 things right on the web site http://www.minuteclinic.com/en/USA/Treatment-and-Cost.aspx

I think one issue that is not getting a ton a play is choice. I don't have a choice of insurance now, I have to go with the 1-2 plans my work offers.

Posted by BJ | August 19, 2009 2:22 PM

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Finding out the cost of health care can be pretty difficult. My son's health bills were stacking up, so before his next appointment I called to find out how much it would cost. That question required checking with a supervisor and calling me back 24 hours later.

That's insane.

Posted by Kevin D. Hendricks | August 19, 2009 3:22 PM

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Bob Collins, your anecdote is terrible. You can't always just "live with it", it could be something serious, an different people have different pain tolerances and work requirements. Imagine the same shoulder pain but you work in a stock room, lifting heavy things all day. Suddenly not so easy to ignore.

In the end, some things are necessities (asthma medication, blood sugar test strips, etc) and you aren't often qualified to make that decision yourself, especially in a pinch. Health care is a captive market.

Posted by JSmith | August 19, 2009 4:18 PM

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What I'm describing is pretty much a way of life, especially for older men, I think. We would demand of our loved ones that they get to a doctor. But we tend to ignore warning signs whether it's because we're afraid of what they might be or, I think more likely, we're simply not willing to shell out the cash.

In this economy, for me personally, absent signicant pain or obvious threat, there's very little right now that will motivate me to go to an ER or a doctor. And I have insurance.

That's the reality of what the health care situation is once you move it out of town halls and tv/radio talk shows.

Posted by Bob Collins | August 19, 2009 4:33 PM

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In order to achieve major reduction in health care spending, we will have to reduce consumption of medical care. There simply are no other options.

From a top down standpoint, one obvious option would be to limit the procedures covered by insurance = rationing.

From a behavioral standpoint, we could encourage healthy lifestyle to reduce the need for health care. Reducing obesity, for example, would reduce diabetes, high blood pressure, heart conditions, etc.

We have three choices. Healthy lifestyle, rationed health care, or continuing growth of health care spending.

Posted by kennedy | August 19, 2009 4:44 PM

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Bob,

What if you paid a premium below or around 8% of yearly income (depending on income bracket), and had no or low copays for all procedures. And on top of that, for regular checkups and procedures you paid nothing out of pocket at the time of service.

Would you be more inclined to go to the doctor?

I ask because these things are basically what the various bills are proposing.

Some of these caps/policies would be required of private insurance, nearly all/some semblence of them for the Health Insurance Exchange (basically the "Congress Plan"), and all for the "public option". The basic idea is that you would come out enough on top to provoke you into participating in preventative/regular treatments which would keep costs down. Combined with a mandate it would increase the risk-pool which would also keep costs lower. These are all in the plan.

Posted by JSmith | August 19, 2009 11:16 PM

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Your question is an interesting one. First, let me be clear here -- I currently pay $11,520 a year for premiums, which givesme the right to pay $35 in copays and X% of the bill. I also have a flex account to pay those pre-tax. This year I set aside $3,500 for that. We burned that through that by May 1.

The "preventive" thing is a bit of a crock where reality is concerned -- or at least where I'm concerned. My annual physical already IS, basically, free (in terms of copays), and I live a relatively healthy lifestyle.

I still burned through tens of thousands of dollars. So, yes, while the "if you're healthier, you'll be cheaper to insure" may be true, but it isn't an absolute, and it isn't a cureall.

But my point is simply the whole "keep healthcare costs down by having the consumer know more about the cost of health care is more theoretical than practical. I'm assuming my story isn't unusual. THIS is what that theory looks like in real life.

I also believe the only real money that will end up being saved in some health care scheme, is the cost of my time filling out paperwork and arguing with insurance companies. But I'm realistic about that.

One possible problem with the entire health care debate is it's mostly being waged and decided by people who don't really know much about it except on a theoretical level.

YMMV

Posted by Bob Collins | August 20, 2009 7:35 AM

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It's not all theory, of course. Nearly every first world country except the United States has some UHC implementation (either public or private via regulations), so there's practical real world examples, with studies showing what portions work and what don't.

So theoretically we should be able to implement something and know in advance it should work out. Sadly, the debate isn't really a debate. There hasn't been much argument, merely outright rejection and railing against everything proposed (no matter what setup has been put forward).

It would have been much more useful if one side had started with Single-Payer (read: Single Insurer, not single Provider ala Britain's NHS), and the other size had started with the Swiss System and they met somewhere in the middle.

We likely would have ended up with something close to the Australian model (which may happen eventually anyway).

Note that Australia spends around 8% of GDP on health care, and the US spends 15%.

Posted by JSmith | August 21, 2009 8:19 AM

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