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The less our health system pays insurance carriers, the more we can lower patients’ costs and invest in world-class care

I was employed for 20 years as an anesthetist in a metropolitan hospital with an upscale clientele. We worked closely with our department’s anesthesiologists to provide the required anesthetics for surgical patients and others. As interesting as the practice, the staff and the patients were, it was a challenge from the “back office” that more and more frequently caught my attention.

The calculation of hospital charges and individual provider fees for an anesthesia department is a convoluted and confusing process. It was made more so by the differing “requirements” our patients’ various insurance carriers demanded. At the time there was no computer software to process the data. Thanks to a manic nature I successfully wrote our department’s first program. I had thus, for years, been in the trenches of medical billing and its interface with insurance carriers.

Our current national movement toward health-care reform is long overdue. A few observations from a participant might be useful.

I’ve found patients and their providers to rather quickly develop a trust, a personal bond. In fact, the treatment of patient life-long medical needs is not infrequently described as an art. It is also the business of health-care providers — i.e., physicians, nurses, technicians, and the institutions where they practice. This is the fundamental health-care transaction: “doctor / patient.”

Insurance carrier is a facilitator
Neither patient nor provider is dispensable. Comparatively, the role of the insurance carrier is only one of facilitation. Doubt that? Sum doctor plus insurance carrier, or patient plus insurance carrier. Neither adds up to anything of function or meaning.

The purpose of our health-care system is to keep our public as healthy and productive as is reasonable. The purpose is not to provide a means to riches for insurance carriers, nor even frankly, to provide the business setting for their existence.

We need to be certain our health providers and their infrastructure are adequately funded, now and into the future, by providing incentive to attract future expertise. Dollars are needed to maintain and modernize hospitals. It is, in my view, manifestly irresponsible to suggest that helping an insurance company meet its non-care expenses is in any way of the same consequence as ensuring we 1) conserve patient dollars and 2) have world-class providers. If a patient must spend a health-care dollar, let it flow to the providers who earned it.

Government has shown efficiency
There is, of course, a need for the insurance “function.” Our government, though, in its administration of the successful Medicare and VA programs, is already demonstrating its efficiency in providing that service. Inclusion of a robust public option within the congressional reform package extends this efficiency to the populace at large. Robust means immediate, available to all, accountable to the government and blessed with the ability to negotiate rates with providers and drug firms.

The least essential segment of the patient/carrier/provider system is the carrier. The fewer dollars insurance companies take out of the system the more we can lower patient costs — and the more dollars we can invest in those who actually do the work, our nation’s providers.

Robert Gratz lives in Minneapolis.

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Comments (8)

  1. Submitted by myles spicer on 08/11/2009 - 09:27 am.

    Well said. I have two friends who are rabid conservatives, and who rail against any government involvement in the health care system. Like me, they are senior citizens; but both are retired military officers (one a Naval Academy grad). I ask them constantly if, given the choice, they would opt to turn Medicare and Tri Care over to private insurance companies. Under constant prodding, they admit they would NOT! Both programs work well, and are highly beneficial to them personally. Guess it comes down as usual to “whose ox is being gored”.

  2. Submitted by Greg Kapphahn on 08/11/2009 - 10:32 am.

    Let’s take a moment to remember what insurance was designed to be… Insurance of all kinds was originally a means by which interested individuals could voluntarily group together as a way to protect themselves from unexpected expenses or losses.

    Each person joining the insurance plan agreed to contribute a certain amount of money by the month or by the year, and if that person was unfortunate enough to have losses – an accident, a house fire, storm damage, a health problem, etc., money would be taken from the pool of money contributed by all those in the plan to compensate that person for their loss.

    The plan was generally owned by those who were insured by it. Contribution rates and covered losses would be set as a reasonable compromise between the expense of covering absolutely every tiny loss and charging those insured rates that would be cost prohibitive. Payment for those managing the plan were generally equal to others presiding over a similar pool of money – adequate but not exorbitant.

    Insurance today bears little or no resemblance to those “good old days.” Now most insurance companies are owned by shareholders who are not generally insured by the plan. The pool of money resulting from the premiums paid by those who are insured is no longer used primarily to pay for legitimate claims. Rather, the aim of most of the companies seems to be to “maximize shareholder value” and CEO pay by playing investment games with that pool of money.

    The purpose of the company is no longer to break even each year by setting rates and paying out claims sufficient to do so, but rather to protect and increase that pool of money (which doesn’t even belong to the people playing with it). They increase rates because they can in order to have more money in the pool to play with. They deny claims in every way possible because paying out claims is a threat to that money pool.

    They are, in reality, no longer in the insurance business. They are simply ripoff artists buried under layers and layers of bureaucracy. If we could see what they are really doing, we would see them as armed thugs standing outside the door of every hospital, clinic and nursing home demanding a substantial payment before any doctor, nurse or patient would be allowed to enter.

    They represent nothing less than a cancer on medical care in this nation, and like a cancer, they will eventually destroy the entire industry by blindly seeking their own self interest and soaking up more and more of the resources devoted to health care until the public, the doctors, the nurses, the hospitals, the clinics, the nursing homes,etc. are all dead.

    The current health care reform efforts represent our nation’s first attempts to excise this cancer from our health care system. As has already been said, the most expensive option is to do nothing.

  3. Submitted by Mark Sobotka on 08/11/2009 - 03:08 pm.

    I must disagree with the author’s claim that Medicare and the VA system are a success. More and more doctors and healthcare providers refuse to accept Medicare, it’s running out of money and it’s way more expensive than we were told it was going to be in 1965 when it was inacted. The VA system has numerous issues related mostly to government buracracy, and survives mostly due to dedicated health care professionals that have learned how to manage thru those bureaucratic hurdles.

    The author introduction does provide a good evidence for reform of the current system. There is a need for standards to faciliate better communciation between the provider, the insurance carrier and the patient. The best solution would be for the providers and carriers to agree on those standards (maybe with a little persuasion from government) and oversight from a party representing the patients.

    Once we get the carriers operating on a level playing field, we need to promote increased competetion by allowing individuals to select their own carrier and coverage. The current tax code impeds that from occuring and needs to be changed. Competition is the only solution that will keep the costs of health care in check. The current proposals before congress promote a solution that has no competition, only government regulation. The last thing I need is 535 clowns in Washington DC setting healthcare policy for an even larger group of idoit bureaucrats to write rules and regulations for. Imagine having to appeal to your congressperson or senator to get a rule waived when you need care the most.

  4. Submitted by Karen Sandness on 08/11/2009 - 03:22 pm.

    One way to keep Medicare solvent would be to open it up to younger people (maybe people over 50, who have a tough time on the individual private market), who would pay the premiums but require much less care than the over-65 crowd.

  5. Submitted by Bernice Vetsch on 08/11/2009 - 03:26 pm.

    Great article (and comment from Greg K.)

    The tragedy we now see is that insurers are being allowed to tell Congress what they want “reform” to look like. And they are getting pretty much what they want — continued rises in profits each year — while giving up some of the ways in which they make those profits — denying payment for previous conditions, for instance.

    The language has changed from “health care reform” to “insurance reform” as Congress continues to compromise with industry instead of with voters/patients, a goodly majority of whom want single payer universal care and a gradual 10-year phaseout of private insurance.

  6. Submitted by Robert Gratz on 08/13/2009 - 06:25 pm.

    Ms. Sandness,

    Thanks for your response. Your comment in particular moves the debate forward. Others agree. See:
    http://prescriptions.blogs.nytimes.com/2009/08/12/questions-for-dr-marcia-angell/#more-21

    Best regards,
    Robert Gratz.

  7. Submitted by sangryul han on 08/14/2009 - 12:46 am.

    Misinformation & Correction :

    1. Rationing & A long Line :

    With the help of upcoming IT system, the concern of a long waiting list probably doesn’t matter. And now that docs are liable for patient’s outcome, no intervention in the final decision is allowed other than ‘recommendations’ for best practices.

    In the government-run, single-payer Medicare program, enrollees choose their own doctors, receive care in a timely manner. Similarly, the public option can be viewed as extension of medicare, exactly speaking, an upgraded version of it.

    2. Saving & low Quality :

    Most part of savings is made up of weeding out such wastes as so called “doughnut hole” , the unnecessary subsidies for insurers, the duplicate tests and unproven sham level of treatments, abuse, exorbitant costs by the tragic ER visits and so forth. As president Obama noted, the analogy of insulation, weatherization would be appropriate.

    With that in mind nearly two-thirds of the cost of reform will come from reallocating money, overall, the financial architecture is looking good.

    And let me stress : If you are a physician, and your pay is dependant upon your patient’s outcome, you will most likely strive to prescribe the best medicine available earlier in the process, let alone skimming the wasteful, unnecessary, and risk-carrying procedures.

    3. Take-over ;

    The runaway premium similar to the peak fuel price last year and left so many folks in despair insists on staying the course with the attitude ‘unchanged’, clearly this trend could bankrupt individual, business, and government. Now the government subsequently is tasked with these two main assignments, first, to address premium inflation, second, to expand coverage to all in urgent need.

    In order to cover all and not to add to the deficit, the public option can not set the same rates of private market, rather, it needs to have BALANCING function to keep it in check in terms of INFLATION, too. Unfortunately, this ‘unavoidable’ direction is aggressively being accused by the runaway premium, citing government ‘take-over’ .

    Under the circumstances the energy bill to determine human future and the other major issues are presently piled up, who wants to waste time making enemies ?, which also does not benefit the forthcoming election.

    with the heartbreaking tears in mind (Nearly 11 Million Cancer Patients Without Health Insurance), private market also needs changes and should join together to complete this reform , as promised, otherwise, the runaway premium only has itself to blame while new firms are filling the void with competitive deals.
    And It can be said that fair competition starts with a fair, sustainable market value.

    However, Job-based coverage (indirect payment) and a limitation code over transfer, mandate code, and ample capital, reduced ER costs, IT base to streamline the administrative processes and trim costs might be favorable to the private market. Over time, supposedly, the public plan will concentrate more on basic, primary cares, and the private insurers will provide their clients with differentiated services.

  8. Submitted by sangryul han on 08/14/2009 - 12:47 am.

    4. Tax rise :

    In the context the current health care wastes an estimated one-third – or about $700 billion – on unnecessary procedures, unnecessary visits to the doctor, overpriced pharmaceuticals, bloated insurance companies, and the most inefficient paper billing systems imaginable, health care reformers have often cited the system at Mayo Clinic as a model.

    In modernized society, the business lacking IT system is unthinkable just like pre-electricity period, nevertheless, the last thing to expect is happening now in the sector requiring the most accuracy in respect to dealing with human lives. Apparently the errors by no e-medical records have spawned the crushing lawsuits, and these costs have led to the unnecessary tests, treatments, even further, more profits so far.

    Thankfully, the pay for ‘outcome’ pack modeled after the system at Mayo Clinic is most likely to expedite the introduction of IT system, and the combined system is capable of shifting volume into quality in Medicare & Medicaid, thereby offsetting the 239 billions of estimated deficit, which is generated by $245 billions, the 10-year cost of adjusting Medicare reimbursement rates so physicians don’t face big annual pay cuts.

    Supporters of the agreement say it could save the Medicare System more than $100 billion a year and ‘improve’ care, supposedly even a quarter of it might be enough to meet the goal of revenue-neutral. Moreover, in case this innovative idea applies to the public option, presumably it can lower the overall expense sharply, too.

    Please be ‘sure’ to visit http://www.nytimes.com/2009/08/13/opinion/13gawande.html?hp for credible evidence !

    And in respect to preventative program, surprisingly enough, the system today is designed around treating patients once they become sick, following ‘spillover’ and ‘levee breach’ , as too high level of preventable chronic disease accounts for it. By contrast, all of the excellent health systems seem to have one feature in common, an expansive, systematic preventative program demanding immense investments.

    Some say the effect of preventative program is below zero compared with investments, or takes a long time even beyond next decade window, but if this program in the exemplary systems is disorganized, the odds are high that they will also face the same pressing need for reform in a few years. Like common sense, fire needs to prevent in advance or foil in early phase, and it would be the most cost-saving measure, in my mind.

    Just like marriage, economy also undergoes up and down, however, economic downturn is not reflected in the employment-based system. The rising mental stress & ‘keep eating habit’ , which are the epicenter of a number of different diseases, might be traced to this insecure system and exorbitant premiums.
    Once the health care reform provides the general public with peace of mind, the rising mental stress, obesity caused by the the deep-seated apprehension and exorbitant premiums may bend the curve surprisingly.
    And reducing the tragic ER visits can lessen costs for the already insured, what’s more, the balancing function of public option could mitigate fast-rising premiums.

    I guess If the cost of the reform is an issue Americans take seriously, then all of the ‘free’ nations in the world should withdraw the existing public policy. Instead, it might be the ‘will’ of reform to end disgrace. Here is the hope, while the runaway premium wound up in the collapse of middle class ranging ‘ from finance to mental health’ , alongside the peak fuel price and fast-growing mortgage rate, this time, clearly, the positive impacts involving massive job creation, promising stem cell research, several times more economic effects of ‘from bed to work’ , in return, will lead to economic recovery.

    Thank You For Reading !

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