America’s HealthCare Crisis Part II: How much is that policy in the window?

Warren Buffet likes insurance companies.  Take a look at his portfolio and you will find it loaded with several insurance companies.  That is because insurance companies have a great business model (despite the licking they have taken over the past year and half).  They can, and do, select their customers carefully, picking out those most likely to make them money.  They raise their prices as and when they want to.  And they are notoriously bad at paying out claims.  So though they may be great for Buffet’s portfolio, they can have a profound impact on businesses they deal with.

Look at their influence on the medical profession.  A doctor has no choice – the legal community has made sure that a non-insured doctor is an extinct species.  And as the doctor goes shopping for medical malpractice insurance, s/he is at the mercy of insurance companies who jack up the fees to make sure that the doctor pays for hypothetical lawsuits that may or may not occur.  An obstetrician can pay as much as half her/his income on getting medical malpractice insurance.  As a result some specialties are dying, and in some states there is an acute shortage of obstetricians.

The insurance companies have an equally important influence on patients.  In combination with health management organizations, they dictate medical care.  The length of a visit is pre-determined – based on the estimate of some bean counter who determines profitability, not medical complexity or appropriateness.  It is no wonder that patients do not feel that doctors do not them give adequate attention.  Insurance companies also determine what procedures get done, again based on profitability concerns.  If a patient gets frustrated with his/her insurance, they can always switch.  At least in theory.  There is a bewildering array of false choices, with all kinds of restrictions on doctors (in network or not, primary care or specialist, etc), medications (co-pay, generic or trade name), pre-existing conditions, etc.

It is therefore not surprising that the “health care reform” targets insurance companies.  Under the guise of concerns of a government run insurance company, various alternatives have been mooted, such as a ‘non-profit exchange’.  Naturally, the insurance companies are against it.  After all, how could they compete against a government-run non-profit?  The insurance companies cite patient satisfaction data that show that a majority of patients are satisfied with their insurance.  What is left out in the survey is the fact that most such patients have company sponsored insurance plans, an anachronism of the 1940s and 50s.  Ask the same question to those who pay for their own plans, and we may very well see a different response.

It is clear that any genuine health care reform has to address the issue of insurance companies.  But what form of  should it take highly debatable.  Should there be a single payer system, doing away with insurance companies all together?  Should business paid medical insurance be taxed?  What about Medicare and Medicaid, the two big elephants in the room that will probably be bankrupt soon?  Should they even exist if there is to be an insurance ‘exchange’?  There are several alternatives, among them

1. I agree with those who suggest that business provided insurance should be taxed.  In fact, businesses should get out of providing any health coverage completely – if GM did not have to provide health care, it may not have had to go into bankruptcy.  Health is the responsibility of the patient, not the company.  While a company can provide incentives for healthy behavior, such as not smoking or belonging to a gym, providing health care insurance promotes over-use by those receiving it.  No one has an incentive to curb the excessive use – the companies get a tax break, insurance companies get hefty premiums, and patients “enjoy” services whose cost they have little idea of.  It also ties employees down to jobs that they dislike, but stick to in order to get health insurance.  Thus, I obviously oppose the Obama administrations proposal or mandate that businesses should be required to provide health care.
2. Do we need yet another government run organization?  In fact, maybe it is time to get rid of Medicare and Medicaid.  The latter is about to go bankrupt, and fewer and fewer doctors accept it.  The former is not too far behind and if the two are not discontinued voluntarily, they will either bankrupt the US or will go down in flames on their own (much like Freddie Mac and Fannie Mae of the housing industry).  Which leads me to point 3.
3. If the government is truly concerned about the uninsured or those who cannot afford it, bite the bullet and make the US and two tiered health care system.  Have government run clinics and hospitals where every one can get rationed but free care.  Let the private sector be unregulated, so those can afford to and want private healthcare can do so without any government restrictions.  The obvious criticism of this proposal is that the government run system will provide second rate care.  I agree that it will, but  that that second rate care is better, and cheaper, than being uninsured in the present system and having common ailments taken care of in the emergency room.
4. There is a lot of talk about changing physician reimbursement from fee-for-service to pay for success.  I suspect the basis of this lies in the false notion that doctors may too much money.  In fact, general physicians in the US earn 3.7 times the average national wage, compared to 4.2 in UK.  Specialists in the US earn 5.6 times, whereas in Denmark they earn 7.6 times (source: OECD).  So the problem is not that US physicians earn too much – they, and their patients, consume too much.  This is addressed in the first and last installment of this series.  But, to change physician reimbursement to pay-for-success is fraught with difficulties.  I can see physicians abandoning oncology en masse to become endrocrinologists and dermatologists, where the success rates are much higher.  This proposal is easier said than done.
5. For medical malpractice insurance, I think it is time to reform tort laws, which is the subject of the following, third article.

About The Author

Ketan Desai, MD, PhD, is the Founder and Chief Executive Officer of International Medical Consultants, a healthcare and pharmaceutical consulting company (http://www.intmedc.com). In addition, he is the Founder and Chief Executive Officer of IMC Radiology, the founder of a biotechnology company focusing on TBI, oncology, and inflammation, and a practicing physician. His areas of expertise include development of drugs in anti-infectives, oncology, rheumatology, pulmonary and immunology, vaccines, and metabolism. Dr. Desai was the Chief Medical Officer of Biothera, the Vice President of Pre-clinical and Clinical Research at Neose Technologies, the Global Clinical Director of Rheumatology at Aventis Pharmaceuticals and Director of Rheumatology and Oncology at SmithKline Beecham. Dr. Desai is a published author (Germs of War).