Wouldn’t it be great if we could point to just one thing to solve the health care/health insurance crisis in America?
In this column I have addressed multiple issues, but always come back to the fact that it is the underlying cost of care that drives health insurance premiums.
The “80/20 rule” says that 20% of the group (customers, students, volunteers…) is responsible for 80% of (income, problems, work done). In health care we see a similar principal. One study concludes that 30% of all Medicare expenditures are attributed to the 5% of beneficiaries that die each year, with much of the cost occurring in the last month of life! Speaker Paul Ryan recently referenced studies that suggest 50% of costs are attributable to 5% of the sickest patients.
These statistics are used by those who support the idea of high risk pools. This is not a new concept. Before the ACA, (Affordable Care Act, aka Obamacare) California had a high risk pool known as MRMIP (Major Risk Medical Insurance Pool). Uninsurable individuals could get on a waiting list for coverage. Premiums were about triple the standard rate.
The maximum benefit was $75,000 per year and $750,000 lifetime. The waiting lists would be a year or more depending on the experience of the pool. Funding was limited, so when the money was low the list got longer. It was better than nothing, but would cause an Individual to delay care for as long as possible in hopes they could get into the pool.
High risk pools are based on the idea that if we split the group into the “really sick” on one side and” the rest of us” on the other, rates will go down for the healthier population. But the reality is that things change. People get sick, even if they started out in the “healthy” pool. Insurance pools mature and rates need to be adjusted to cover that pool. In the long run, rates end of increasing and the results will be the same, unless you keep pulling people out of the pool when they get very sick.
As I read the proposed AHCA (American Health Care Act”, these risk pools would only be for those that had a lapse in coverage. So in reality all the sick people that are in existing pools will continue to impact that pool. IN other words, all those sick people that are already in the group will continue to effect the rates.
Clearly, better management of chronic illness and providing a graceful and dignified exit from this world are key to controlling health care costs. The ACA included enhanced reimbursement strategies for ACO’s (Accountable Care Organizations). This model rewards the provider for taking steps to better manage the health of the patient. This was a direct attempt to try to address the actual costs of care.
A former hospital executive jokingly refers to the fact that hospitals really doesn’t want patients to get well. After all if they aren’t in the hospital, the hospital has no income. There is always a bit of truth in a joke, isn’t there?
A “fee for service” model pays providers for each procedure that you receive. It doesn’t take a rocket scientist to figure out that if you “do more procedures” you make more money. Ask a cancer patient how frustrating and expensive it is to be subjected to multiple tests each time a new doctor is involved in their care or with each hospital admission.
What about that last year of life? Is it true that the more money you spend, the better quality of life? It’s America, more is better, right? Not so, in my opinion
As an insurance broker for 39 years, I have had the privilege of being involved at some of the most intimate and vulnerable moments of an individual’s life. One of the worst involved an 87 year old woman who suffered from multiple chronic conditions. She was frail, not ambulatory, clearly close to the end. When I visited her at the hospital, they told me they were prepping her for gall bladder surgery. It took all of my self-control not to cry out, “Are you crazy?”
The ACA provides payment to doctors to discuss end of life issues with patients, preferably before the situation became critical. This is a long way from creating “death panels”. Too bad my 87 year old client did not have the gift of such a discussion prior to having to endure such a brutal death.
Will the new law decline to pay physicians for this type of care? We will wait for the Senate’s proposal to find out. There is a reason the ACA was over 1000 pages. This topic is complicated!
Banarto, McClellan, Kagy and Garber, 2004*