Yves here. On the one hand, the direct primary care would solve a lot of the problems of the US healthcare system, the biggest being the bad incentives created by a “pay for procedure” model. And if nothing else, be sure to read how high the costs of insurance-imposed admin are on primary care doctors. Eliminating that is also a big boon. Another bennie is this sort of practice is well suited to treating chronic conditions like diabetes. And if more and more patients go this route, it will hollow out the health insurance industry, making it easier to restructure the provision of health care in other ways.
However, these practices lack the advantages of single payer, like bargaining power, and of course keep the model of private provision of health care services going. And with Americans having job tenures of only a bit over four years on average, you’d need to have this sort of approach used on a widespread basis for it not to wind up limiting geographic mobility. It’s also not clear what happens to people who need to see specialists like ob-gyns or nephrologists or orthopedists for less than catastrophic needs.
By Rochaun Meadows-Fernandez, a writer who specializes in sociology, health and parenting. Her work has appeared in Healthline, Yes! Magazine, HuffPost, Allure, and many other publications. Originally published at Alternet
“I avoid the hospital and doctor at all costs,” says Alicia Woods, who is expecting her second child. Woods, 25, is one of more than 40 percent of Americans who are dissatisfied with their health care cost, according to a recent study done by Gallup.
“I look for natural home remedies whenever I can to cure my ailments,” she says. “I’m new to my current job so I don’t qualify for my company’s insurance plan. But what concerns me the most is if they decide to end Medicaid. That means pregnant women like myself who can’t qualify for their own insurance or haven’t worked at a job long enough to receive benefits will not have affordable access to health care,” she continues.
Dissatisfaction is particularly high among those with private insurance, and lack of assistance from employers is one of the key causes. Issues with health care are so significant that many have to choose between forgoing necessary surgeries versus affordable health care. And those are just the issues among those who have coverage. In much of the country, millions of people fall into what’s known as the “coverage gap”—they make too much for Medicaid assistance, and too little for affordable health insurance. People of color and the working poor are significantly more likely to be without coverage, as they are more likely to have employers that do not provide company health insurance.
Matters of health insurance are further complicated by the Trump administration’s push to repeal the Affordable Care Act, or Obamacare. If they are successful, things will get worse for the majority of American citizens. Woods’ pregnancy would be considered a pre-existing condition under the GOP’s proposed health care bill. In addition, she lives in Texas, where many fall into the coverage gap due to the state’s decision not to expand Medicaid.
Cost sharing subsidies, which help lower-income ACA customers afford private insurance, are a large cause of the repeal. Even insurance companies are speaking out. The uncertainty on the continuation of subsidies is affecting states that allow early enrollment. As a result, the insurance industry’s main trade organization, America’s Health Insurance Plans, sprang into action. AHIP sent out letters to senators who were considering an ACA-destroying house bill, saying it stands to negatively affect coverage for millions.
Each year, the United States spends 3.3 trillion on health care and in 2016, a family could expect their premiums to cost around $18,142 according to the Kaiser Family Foundation. With the rising cost of insurance, more and more people are saving visits to the doctor for emergencies only. The consequences of our state of health care uncertainty is a decrease in preventative care. Millions die from preventable diseases each year, despite the United States having one of the most expensive health care systems in the world. Both physicians and patients cite issues with the state of medical care. Patients are fed up with high insurance cost, long appointment waits, and short doctor visits. Physicians are retiring at astronomical rates due to high insurance cuts and overwhelming workloads.
A recent survey of 5,000 physicians reveals 43 percent of doctors are considering retiring in the next five years, according to the Doctors Company. Much of this is due to feeling “extremely overtaxed, overrun, and overburdened.” Thanks to third-party interference, many doctors find themselves overbooking patients to retain a profit. Forty percent of all primary care profits go to claims processing and profit insurance companies, according to the Direct Primary Care Coalition. The doctor/patient relationship began to deteriorate after the rise of insurance in the 1940s. Workloads became larger, true costs of services became hidden, and appointments became shorter.
With the nation in a period of health care transitions, a few places are trying a unique approach that might help revolutionize health care. That model is direct primary care, an approach that involves cutting third-party interactions in the doctor/patient relationship. A recent article in Business Insider provides a perfect analogy for how DPC:
“To describe how coverage functions under Direct Primary Care, doctors use the example of car insurance: You don’t use your car insurance for small transactions like oil changes, but it’s there for you if you get in a car accident. Likewise, health-insurance plans—especially those with high deductibles—can be there if you require health care beyond primary care.”
Dr. Phil Eskew has kept track of the history of DPC on his website, Direct Primary Care Frontier. According to Eskew, a DPC-like model started around the late ’90s to early 2000s, when three doctors decided they wanted to open a cost-sharing facility to reduce paperwork and free up time for doctors to interact with patients. DPC involves patients paying a monthly or yearly fee for access to around-the-clock doctor visits. With the decreased frustrations that come with billing insurances, DPC physicians are able to give longer and more personalized visits to patients.
Eskew believes patients play a huge part in DPC advocacy. “Keep the conversation going. DPC typically has bipartisan support. It was promoted in the Affordable Care Act, and it usually has bipartisan support in state legislative discussions too. This bipartisan support is a rare thing in today’s political climate. We need more patients to ask their physician common sense questions, such as, how much does my medication cost? Why am I not able to email or text you after-hours? Why are we not able to discuss my lab results via phone rather than interrupting my workday for three hours in your waiting room?”
According to Direct Primary Care Frontier, there are three main requirements for a medical practice to qualify as a direct primary care practice: Charge a periodic fee, not bill any third parties on a fee-for-service basis, and any per visit charge must be less than the monthly equivalent of the periodic fee.
Iora Health is a DPC model that follows a heavy customer service-driven model and has opened 11 practices across the United States. To ensure providers are able to put patient needs first, they start each day with a “huddle” meeting to discuss patients’ “worry scores,” and post-visit surveys to track satisfaction. The way locations operate is left to the staff, but things like consultation room set-up, daily huddles and personalized member benefits like yoga or mindfulness classes are required by company culture.
Rushika Fernandopulle, the chief executive of Iora, believes one of the biggest issues with our health care system is that it focuses on hospital treatment—which is very expensive.
Many DPCs, like Iora, give patients electronic access to staff members around the clock and use electronic filing, which Fernandopulle believes is better suited for health care. Another unique aspect is the use of health coaches, non-medically trained professionals who deal with the customer service aspect of health care such as diet changes, helping those in need of transportation to and from visits, and finding health care items like supportive socks. DPC gives patients access to prescriptions and lab services at a wholesale cost, as opposed to copays and fees hidden by insurance companies. For this reason, it has a lot to offer to those who require long-term condition surveillance.
DPC has a significant effect on the lives of patients. “Thanks to DPC, chronic conditions are finally controlled, urgent care visits are avoided and patients feel like they have a doctor in the family. This causes patients to lose weight, feel better, and return to work when they never thought it would be possible,” Eskew asserts.
“Patients with chronic conditions benefit the most from an ongoing DPC relationship, and elderly patients are more likely to suffer from chronic conditions,” Eskew continues.
Chronic diseases are the most common, most costly, and most preventable of all health issues according to the Centers for Disease Control. The prevalence of diabetes is on the rise and expected to multiply in the next couple of decades. The cost of uncontrolled diabetes is two to eight times more expensive than when the disease is managed effectively. In 2012, the total cost of diabetes was more than $245 billion, according to research by the American Diabetes Association.
But the long-term personalized care DPC can offer could make diabetes more manageable and save the nation money. Uncontrolled diabetes and short-term complications cost between $2.3 billion and $2.8 billion per year. According to this same study, 49 percent of preventable hospital admissions were Medicare or Medicaid patients.
Unfortunately, research on DPCs is scarce; however, a limited five states had enough data to measure its benefits. The study conducted by researchers in the American Journal of Managed Care compiled data from New York, Florida, Virginia, Arizona, and Nevada. The result showed $119.4 million savings in hospital use cost with over $109.2 million of that being Medicare savings in one year. It’s estimated that the $2,551 annual savings per patient was greater than the cost for a yearly membership, with an average range of $1,500-$1,800.
The financial benefits weren’t the best part. Patients’ health outcomes improved as well. The patients in a 2010 study reported 56 percent fewer emergency admissions, 49 percent fewer avoidable admissions, and 63 percent fewer non-avoidable admissions than rates of the traditional model. It was also observed that members of the study “were readmitted 97 percent, 95 percent, and 91 percent less frequently for acute myocardial infarction, congestive heart failure, and pneumonia, respectively.”
Though DPCs will not solve all the issues with the United States health care system, numbers reveal we owe them a solid attempt.
“I would be happy if patients kept demanding more DPC options. If you want to have a DPC practice but there is not one listed nearby in the DPC Mapper, then they should ask their primary care physician why they have not switched to DPC. If they keep the demand for DPC high we will have wider and faster adoption of the model,” Eskew says.
With data revealing so much promise, one wonders why the DPC model isn’t more widespread. Eskew believes a large part of the reason is lack of correct information:
“Misinformation is the most important obstacle holding back wider adoption of DPC. There are too many physicians, patients, and policymakers confuse DPC with concierge. There are too many physicians that are complacent with the status quo even though it does not provide the best care to their patients, and too few patients seek out/demand better access.”
There are currently 615 practices that meet Eskew’s three-point criteria in the United States, and it seems they have a lot to offer. One of the best parts is practices don’t have to be one or the other. Many are hybrids, combining DPC principles with traditional ones. Due to unclear state and federal regulations for DPC, many physicians are hesitant to try the model. We’ve tried the traditional way, and the result is patients and physicians getting a poor deal. Perhaps it’s time we do things the direct way.
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The number of doctors in the US has doubled in the last 30 years. The number of healthcare administrators has gone up 3000% in the same time period. Direct primary care — and direct surgery care — helps cut out the healthcare administrators and reduces the cost of care tremendously.
“DPC involves patients paying a monthly or yearly fee for access to around-the-clock doctor visits.”
Public-funded Direct Primary Care is used in a number of countries, often in parallel with private-funded care. In the US context, DPC would cut visits to the Emergency Room for what should have been routine care.
Add in some other features — subsidized prescription drugs; limits on malpractice suits — and the US could actually have a viable, functional network of public clinics at the same low cost and high efficiency as other countries do.
Such clinics exist now in US cities, but they are mostly volunteer efforts that at best offer spotty coverage on particular days at particular temporary locations.
Hey Jim, do you have empirical data on that? I’d be curious to see it. My understanding is that the three primary reasons people go to the ER for routine care are some combination of 1) they can’t afford the primary care office visit, 2) the primary care office is closed (or not accessible in a reasonable time frame), and/or 3) believing that it’s not a routine care issue, either based on a personal judgment or because they have been referred to the ER by another medical provider.
I thought DPC clinics claim to prevent chronic diseases and thus reduce legitimate ER visits by making patients healthier, not preventing healthy patients from needlessly seeking hospital treatment.
Massachusetts is experimenting with this in its Medicaid program (MassHealth). I know someone who’s on it. It’s a limited network and you need to stay within it, but there’s no bills and they seem to focus on prevention. Seems promising.
I think Governor Patrick’s administration made noises about doing an overhaul on fee-for-service, but backed down under pressure from the big hospitals.
Sorry I’m light on details on this, wish I had more.
While not strictly on-topic, as a health care trend, the following (posted in the Debt Rattle over at The Automatic Earth) bears watching:
http://www.ekathimerini.com/219027/article/ekathimerini/news/greece-says-colombian-gangs-plundering-hospitals-europe-wide
DPC sounds a little like Tredegar, the forerunner to the NHS. https://en.wikipedia.org/wiki/Tredegar_Medical_Aid_Society
Single payer Medicare does nothing to prevent the financialization of medicine. I just read Suskind’s Confidence Men — 900 pages about the financialization of American enterprise. Then started Rosenthal’s American Sickness. 100 pages in it was the exact same story — story went on for hundreds of more pages.
As long as there is no countervailing force, the proliferation of the financialization of medicine — and of every other American enterprise — will continue unabated. Countervailing force? High labor union density.
Chose any medical system you want from any country you like: 6% union density in the private economy equates to 20/10 blood pressure: it will continue to starve every healthy process.
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Nobody would argue I think that when 1935 Congress passed the NLRA(a) it consciously left criminal prosecution of union busting blank because it desired states to individually take that up in their localities. Conversely, I don’t think anybody thinks Congress deliberately left out criminal sanctions because it objected to such.
Congress left criminal sanctions blank in US labor law because it thought it had done enough. States disagree? States are perfectly free to fill in the blanks protecting not just union organizing but any kind of collective bargaining more generally — without worrying about federal preemption. Don’t see why even Trump USC judge would find fault with that.
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The column below gives me hope that Krugman may (finally) be catching on to the centrality of re-building union density.
https://krugman.blogs.nytimes.com/2017/05/23/trucking-and-blue-collar-woes/
You heard it here first (maybe): a quick fix. Was thinking one way to break the cultural log jam on the way to criminalizing union busting (think social inertia biggest block) might be doing ballot initiatives in states where applicable (OR, CA, MO, Mi, OH, OK, CO, NE ND, SD, MT). Some states initiatives go to legislature first for approval — back to voters to decide if not approved. In most states initiatives need 5% of the number of voters in the last governor’s election.
Then the brainstorm. Only 400,000 signatures needed in California. Workforce there something like 16 million. Nationally, 45% of workforce under $15/hr. Maybe 6 million California employees would line up around the block (!) to sign a petition to make union busting a felony.
We might get 400,000 people collecting signatures!
I’m all for anything that will get more people unionized and we absolutely need more attention to union busting. And I do think states need to test the limits of federal pre-emption. But I’m not optimistic that any state could put stricter sanctions on employer behavior in private sector union organizing without Congress, the NLRB or the Justice Dept screaming pre-emption. I am not aware of any state action with regard to private sector worker unionization that has been able to get around federal pre-emption. Especially with the current Congress and WH.
I’m not hopeful about Krugman:
Yeah, because a neoliberal like Hillary Clinton would’ve done so much more for our decimated union force than Trump. *rolleyes*
Interesting concept. I rather like it. To quote Yves from a couple of days ago:
In addition to significantly reducing the paperwork burden on doctors, direct primary care could also promote more direct discussions of cost and more honest and transparent pricing practices. Many healthcare providers charge list prices (or “chargemaster” prices) that are wildly inflated. If you have insurance and benefit from pre-negotiated prices, you pay much less (even before you’ve met your deductible). If you don’t have insurance (or your insurer turns down a particular claim, like I experienced with a Vitamin D test last year), you pay a LOT. Under the DPC model, most routine healthcare spending would be uninsured, and providers would be forced to provide more realistic pricing.
And to continue with the car analogy, DPC might inhibit the practice of having patients sign a generic form stating that they’ll pay for all charges that insurance doesn’t cover, even before prices are discussed. [Can you imagine buying a car this way? That’d be crazy.]
I do see a big downside, though… What happens to people who are broke? People who can’t afford even the fairer prices that I believe DPC would encourage? How would they obtain healthcare? In a DPC-dominated healthcare system, we’d need some sort of fallback here. State-operated clinics, perhaps?
I grew up with the notion that price shouldn’t dictate one’s choice of doctor, rich or poor.
It’s an ideal, I realize, but why should someone go to a less-than-reliable physician just because it’s cheaper (though not necessarily so – the less-than-reliable doctor might in fact charge more)?
I definitely agree with your point, but I’d also frame the bigger issue as being that “routine healthcare spending” comprises so little of that $3.3 trillion as to be basically irrelevant if we are talking pricing transparency at the macro level of the system. To a certain extent, we already have this anyway in other small areas like vision, dental, and OTC drugs. The fact that a consumer knows the price of a bottle of Tylenol at Walgreens creates exactly zero shame for large hospital chains engaging in price gouging when they administer drugs.
I’m curious about your thoughts on the transparent pricing bit. My understanding is that DPC is based on paying periodic fees rather than paying for specific services. So in terms of pricing info for consumers, that seems to create another layer of ambiguity (like cable packages vs. a la carte channels) rather than more clarity.
It also creates another transparency problem from a consumer perspective: where does the periodic fee coverage end and other forms of coverage (and thus payment) begin? From a consumer perspective, insurance is relatively helpful here because it’s the insurer’s job to navigate across different parts of the system rather than the patient’s; all the patient has to worry about is staying within the overall system. That’s still a lot to worry about given how terrible our current system is, but I’m not following how DPC makes that better for most non-affluent, non-government-insured people.
I mean, the price range quoted in the article of $1,500 – $1,800 per year is far more than most people spend on primary care. And if what we are really talking about are the basics of chronic disease prevention – nutrition, smoking cessation, etc. – why use doctors at all as the model for delivering that public service? Doctors (given our current system of higher education) are very expensive relative to the typical employee.
Based on my cursory reading, it sounds like the DPC outfits charge both a periodic fee plus a modest fee for service. And notably, they don’t “bill any third parties on a fee for service basis” (per http://www.dpcfrontier.com/defined), which means that they skip the whole “filing with the insurance company” thing. This means a lot less paperwork. And without “chargemaster” vs. negotiated prices (with the occasional denial of coverage) and differing repayment rates during periods of “before deductible met”, “after deductible met”, and “out-of-pocket limit hit”, I’d expect that people’s healthcare spending would be a lot more predictable. That sounds more transparent to me.
Having everything funneled through insurance companies obscures true costs because people tend to focus solely on their immediate out-of-pocket cost. As long as the insurance company covers it, they typically don’t care if their doctor prescribes them a terribly expensive medicine when a cheaper one would do, or orders far more tests than are necessary. When out-of-pocket expenses are covered, why should people care?
Alas, they end up caring when next year’s insurance premiums are announced. The money that the insurance company paid out for that terribly expensive medicine and those unnecessary tests had to come from somewhere, and that somewhere is insurance premium revenue.
DPC fees of $1500 to $1800 per year do seem fairly steep, though. Not everybody can afford that.
On tests and medicine, that isn’t generally considered primary care, is it? That’s the pricing question for me. Most healthcare spending isn’t an annual physical or consult with your family doctor. It’s specialist referrals, hospital stays, prescription drugs, assisted living, home healthcare, medical devices, etc. Paying for primary care outside of insurance just creates more variables for patients to track. That may benefit some people, and I certainly wouldn’t propose banning DPC. I just don’t see how that materially impacts the overall cost structure of the over $3 trillion we spend on healthcare annually?
I agree insurance (and direct government provision) creates some price distortion by lowering the marginal cost of service provision to patients, but there’s no empirical evidence this creates a major problem. Patients primarily seek care they need, not excessive care. The US stands as an outlier, a much more expensive system relative to our peers who have varying models of state-delivered and insurance-funded systems.
I just looked up DPC’s in my area, the Kansas City Metro region. For a man in my age range (60-70, but at the lower end), the monthly fees range from $60.00 to $110.00/month. My crapulous insurance through my employer costs $90.00/month, and has ridiculously high deductibles and co-pays. I think $60.00/month + a catastrophic insurance policy+HSA monies might be the best way to get through the next few years until I can hop on Medicare.
Do you think it’s efficient to have consumers shopping for health insurance like this every 12 months? Can people adequately understand the terms of those offers? Do you know exactly what you get for that $60/month?
I think your comment of “until I can hop on Medicare” shows the real answer. Let’s just implement universal, national health insurance. (Or a nationally run health system.)
The analogy does have some weakness. You don’t insure for the operation of your car because there is a warranty of useability and “lemon laws” protecting against deliberate mechanical utility. (All manner of goods used to operate a car have to meet certain standards: oil, gas, tires, etc.) Folks insure against accidents because that’s also the law.
Maybe what’s needed is a “warranty” on US citizens that would provide them reasonable, preventive medical care as a means to reducing “catastrophic” costs to them and society later.
The analogy certainly does have weaknesses.
Routine car maintenance is rarely an acute “emergency.” The diagnosis of the problem–needing new tires, windshield wipers, tires or an oil change–can be easily done by the owner, and some can even perform the operation themselves. In general, there’s plenty of time to shop for necessary items, look for sales and compare prices, and no special credentials are needed to either evaluate the situation or purchase the required supplies.
Contrast that with a medical problem requiring immediate attention. No time or guidance for self-diagnosis or price shopping, if that were even possible in a system assiduously built on the lack of price transparency.
It doesn’t take much thought to come up with plenty more examples of this analogy’s weaknesses, not the least of which is that a human being can live a pretty good life never even owning a car at all.
My parents live in a Canadian province. That single-payer health care system uses the primary care doctors to keep the patients out of the hospital. They really care about that because the healthcare system runs the hospitals, which is where the really big costs get incurred. They are using the big data developed population-wide over the past 50 years to identify areas where care outside the hospitals can be improved to keep people out of the hospital.
For example, the normal doctor visit has a time limit of about 20 minutes and targets one question to be worked through. They found that for some elderly and chronic illnesses, that upping each visit to 2 questions with a longer time limit resulted in better care, so those people have been identified based on their medical histories and the system pays the doctor accordingly.
The patients are happier because they get to deal with the primary care doctor they know and trust and they don’t have to go much longer distances to the hospital as frequently. The doctors prefer it because they feel they can do more to help than just be a mill turning unresolved issues back out the door. And the payment system likes it, because it cuts down on the system-wide total costs.
So routine medical care is used as a cost-saver in these systems as they understand their populations better. That is why their healthcare costs are not mushrooming despite an aging population. Its not an accident that total Canadian per capita healthcare costs are half of the US’s with higher average lifespans.
Wow! To live in a place where that much rationality prevails in the health care system…boggles the mind.
The primary care physician group they see has about 20 doctors and one billing person. Another way to cut costs.
The system also controls duplication of services. For a knee replacement, my mom used a doctor and hospital that required a 2-hr ferry trip. The system paid for the ferry trip for my parents and a night stay for doctor visits and the surgery. This actually saves the system money because it saves all the costs of setting up duplicate services at another hospital.
Similarly, the system does a lot of telemedicine for remote communities with extensive air ambulance services (helicopter and airplane, often float planes). This reduces the number of large fixed facilities and their associated costs. So if you live near a hospital in most Canadian cities, expect to see a lot of helicopter traffic overhead as people get brought in from rural areas. One of my kids lived near one for a while and it was almost like the TV show MASH at times.
Ah yes, let’s try one more solution to our health care crisis .and perhaps then we can agree with Churchill “You can always count on Americans to do the right thing – after they’ve tried everything else”
Healthcare isn’t going to be fixed until people want to be healthy more than they want to forget how bad their lives suck.
Thanks very much for this post, it’s very useful information for me and my partner. How fortunate that there are two DPC physicians in both areas where I reside, I’ll be contacting them shortly as I have been without access to primary care for over 10 years.
I think it’s worth pointing out here that the primary problem isn’t insurance. Rather, it is the consolidation of large providers using their market power to employ large numbers of administrators and to emphasize expensive specialties over primary care and prevention. Several other industrialized nations use insurance as part of their systems at much lower overall per capita cost.
Also, car insurance is an awkward comparison: the market works due to three important factors. First, not everyone has a car. Second, of people who own cars, some choose basic coverage while others choose more comprehensive coverage. These decisions are made based on willingness to pay, not mechanical need. Third, there is a very clear legal and moral distinction between your car and other types of property. This last one is especially difficult. Primary care providers (and even urgent care facilities) can do very little for people needing medical attention, from surgery to psychiatry to prenatal care to assisted living.
Paying a monthly or annual fee to cover a tiny percentage of overall health care activity would be so impractical that we are essentially either talking about government subsidy (in which case, why not just do single payer) or we are talking about a niche product for relatively stable and affluent households.
Then what service do Primary care providers offer? They are the First
Responders of the doctor world. They diagnose ailments and determine if more specialized treatment is necessary. They refer appropriate patients to appropriate specialists, after diagnosis. (I thought I needed surgery on my left arm, but the Doc said it’s just tennis elbow (no surgery needed). Foolish me.
The Canadian system uses the primary care physicians as the first line of care for chronic illnesses. They are the people monitoring your blood, drug usage etc. They often check with the specialists to tweak dosages etc. If something isn’t getting resolved that way, then you go see the specialist. The concept is to keep specialist and hospital visits to only necessary visits.
How does DPC differ from capitation, a healthcare experiment that was tried a number of years ago and turned out to be, frankly, a fairly spectacular failure?
From Wikipedia:
Capitation is a payment arrangement for health care service providers such as physicians or nurse practitioners. It pays a physician or group of physicians a set amount for each enrolled person assigned to them, per period of time, whether or not that person seeks care.
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Under capitation, physicians are given incentive to consider the cost of treatment. Pure capitation pays a set fee per patient, regardless of their degree of infirmity, and gives physicians an incentive to avoid the most costly patients.[2]
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Providers who work under such plans focus on preventive health care, as there is a greater financial reward in the prevention of illness than in the treatment of the ill. Such plans divert providers from the use of expensive treatment options.
https://en.wikipedia.org/wiki/Capitation_(healthcare)#cite_note-BetterWays-2
The Kaiser Family Foundation according to the article, states a family pays $18,000 in premiums
Add $2,000 for the deductible, and $20,000 is paid before significant benefits occur
If one makes a $40,000 claim, his payout is 2 to 1
The chance of a $40,000 claim is 1 out of 13?
How do you like those odds?
The idea that “pay for procedure” — aka fee for service — is a reason US healthcare costs are high is total nonsense. It’s an ideological shiny object that economists, reporters and politicians rub because it means not having to tackle the prices charged for hospital, physician and pharmacy care; the private insurance industry’s utter failure to control them, and; the insane administrative costs — mostly private — engendered by our payment system.
Universal, far less costly systems in Canada, France, Australia and other places reimburse doctors and/or hospitals on a “pay for procedure” basis.
Overutilization is simply not a problem in the United States. The US has by far, as an outlier, the highest per capita health care costs in the world, and the second highest, again as an outlier along with the Swiss, out of pocket costs in the world. But we go to the hospital and see the doctor LESS OFTEN than either the OECD average or the average for any smaller subset of wealthy countries that you can compare us to.
btw, the last time the U.S. tried to shift away from fee for service medicine, it triggered torch and pitchfork parties in state capitals and the passage of a series of managed care bills of rights. cf Katniss Everdeen and “capitation” upthread.
It’s not about how payments are made. It’s about who is paying whom how much for what.
I tend to agree with you. Canada, France, and Australia have patient populations that are far less obese, less sick, have fewer poor health habits like smoking and have a far less costly medicolegal environment than the USA. Most of the cost of care in this country is driven by 1. entirely preventable diet and lifestyle driven diseases and their sequelae, and 2. futile end of life “care” delivered through an ICU in the final month of life.
Eliminating FFS simply forces all physicians to become employees of the hospitals/health systems to be paid for what they do. It’s about the MBAs finally getting those pesky doctors into a compromised position where they’ll be forced to do as they’re told by their administrative overlords and accept whatever crappy work conditions they dictate.
Nope. Just nope. It’s not lifestyle and it’s not end of life care any more than it’s fee for service. Most Western European countries that have health care systems that are much cheaper than ours have higher smoking rates — Canada, Spain, Netherlands, Denmark, Japan, etc.
And all wealthy countries have plenty of expensive technology for end of life care.
It’s
1. the prices charged by monopoly hospitals (and yes, hospitals that now own and employ most of the doctors) and drug companies
2. The fact that the organizations paying don’t give a shit. Private insurers would rather take 20% off top of $2 trillion than $1 trillion, and;
3. The fact that all the effort that insurers put into denying health care and avoiding sick people jacks up their own internal administrative costs, and that providers have to deal with dozens of insurers and the hundreds of individual health plan products those insurers use. US hospitals spend a quarter of their revenues on administration, Canadian hospitals half that much.
It’s not how it’s paid, it what is paid by whom. Fee for service, capitation, whatever, are more or less ok in the hands of democratically accountable institutions. In the hands of profit minded entities? Not so much. Just pure rent-seeking.
Please write more and more often! Your knowledge of this is superb
I have been baffled in the US why the Fortune 500 employers and government employers have not banded together and forced the insurance companies to do their jobs in managing medical costs at the provider level. Instead, they are allowing the providers to pillage their insurance plans and the insurance companies focus on denial of service for cost-savings.
This is the major increasing labor cost in the economic system over the past decade. Given the amount of stupid minor cost-cutting measures we experience in the work-place everyday, it has been astonishing that this big ticket item just sits there on every companies bottom line with barely a glance.
Did you actually read the article? It says primary care doctors spend 40% of their time fighting insurers to get paid, and the hassle and stress has led nearly 50% to say they’ll quit in the next five years. Insurers have made costs worse. And they’ve made no effort whatsoever to pressure Big Pharma to lower prices. Their argument might be (a la CalPERS in private equity) that working with other insurers to do so would be illegal collusion under anti-trust rules.
If you’re curious, the “why” question does have some substantive answers. Leaders in Fortune 500 and government roles are not, generally speaking, idiots. They are acting from relatively straightforward strategic and ideological viewpoints. We can agree or disagree based on our own preferences, but I don’t think it’s particularly baffling once you understand their motives and preferences.
On the corporate side, large organizations may suffer in absolute terms, but relatively speaking, inefficient systems that are hard to navigate actually serve as competitive advantages, barriers to entry against smaller firms. Large organizations can staff up support roles in a way that is not economically viable for smaller ones, and they can also buy in bulk. Large organizations may pay a lot for health insurance in the US, but the per employee cost is much lower than for smaller orgs, and that relative comparison is what matters. It’s why large organizations support a wide variety of regulations, tax breaks, and so forth. The more complicated, the better, both for purposes of hiding the subsidy from the general public and for purposes of making it harder for small orgs to compete against them.
On the government side, the answer is pretty simple. We have the system that our political class wants to have. In periods like the New Deal and the Great Society, political leaders expanded the Social Security Act and related legislation to provide more types of social insurance to more people. In periods like the Reagan-Obama era, our political class amends SSA and related legislation to give the appearance of expansion of coverage while actually entrenching a system that benefits the wealthiest doctors, administrators, professors, and other technocrats at the top of the income scale. It all depends on perspective. One person’s bloated, wasteful healthcare system is another person’s six or seven figure salary. The political power of hospital franchises and medical schools and drug makers and so forth is enormous in the US. Michelle Obama herself earned a six figure compensation package from a hospital system (Chicago).
Agreed. But rent seeking goes beyond the health sector. The food sector seems designed to produce sick people with a lot of heart disease and diabetes. Omega-6 from subsidized soy and corn, fructose from processed sugars and pesticides tied to GMOs protected by the gov’t all appear to produce these problems at higher incidence than other parts of the world.
The rent seekers in the US are highly sophisticated and have developed integrated approaches to enslave global populations. Private central banks with fractional reserve banking systems are at the heart of all of it. Find something with inelastic demand (you really need it) and there is a government enforced racket to farm your wealth and labor.
Will people start having the courage to recognize and label these machines for what they are? Murder, extortion and racketeering all come to mind. Mafia seems to kind.
Amen! I wish more people would understand that this shiny object is being foisted on us for reasons that have nothing to do with improved health
Fee for service vs pay for procedure has no difference!
Fee for service includes the procedures in USA.
Fee for service is the problem where it has been abused or gamed! Can write a book or two about that!
I am glad, I am retired!
Been there, seen that!
Nilavar.M.D.
I’m sure it has been gamed.
The main point is the insurance middleman is removed for the majority of preventative maintenance. We don’t seem to be capable of achieving that any other way, which does seem a little weird.
Better primary care will help but it’s worse than you think. Most chronic conditions in America are invented. Corporate fraud manufactures and exports disease and a better bandaid earlier in the process won’t stop the fact that, say, diabetes is a product of damage to gut ecology and malnutrition. We’re not allowed to talk about that in public spaces (the same spaces paid for by the fraud) even though the evidence is a decade old now. We are right where we were with cigarettes when doctors were endorsing them. Who cares if you’re getting better primary care earlier in the process if it’s still malpractice and voodoo from pad-scribbling gate-keepers of corporate rent-seeking? How about evidence-based reality for a change?
Agreed Yves.
The only way to win is not to play the game. In this instance the only way to beat the insurance monopoly is to not play their game. “No insurance accepted” practices are the alternative. Whether this direct primary care fixed rate system or just going to practices that don’t accept any insurance, like my Chiropractor.
That being the case. None of the establishment that is bought and paid for will let this get enough traction before the they kill it off with “NextPresidentCare” (I outta trademark that) that makes obtaining health care without insurance a federal offense.
This is another in the series of happenings called “people opting out of the system.” Medical tourism is the other one in the healthcare industry (word choice is deliberate). When enough people opt out, the system collapses.
I am a medical specialist who takes Medicare and all major PPO’s. I have been in practice for about 10 years now, and have become increasingly disillusioned with the increasing bureaucracy that has come with increasing financialization of medical care. Examples include:
1. We collect “copayment” of $70 for each follow-up office visit for one major provider, but still have to submit paperwork, and wait 1-2 months, with follow-up documentation often needed, to collect the balance (of ~$9) which is left over after the copayment. This $9 may be paid by the insurance if the patient has met their deductible for the year, but will otherwise then be allowed, but ultimately have to be billed back to the patient.
2. There are a multitude of companies that act as middle-men between the physicians, the pharmacy, and the insurance company. They will deny insurance payment for a medication without a prior authorization request, and often will require an appeal to get it covered. Some of these are denied, with no clear reason, after review by an unnamed, an untraceable “specialist reviewer”. Even after spending 2 hours on hold, getting transferred from department to department, and repeating the same info about the patient’s group number, member ID, etc, one cannot get an answer. These middle-men companies have no incentive to higher more staff to reduce wait times, or hire medically trained staff to review the requests and appeals, because doing so would cost them money, and not doing so costs the doctor’s office time, which is uncompensated. If the doctor gives up along the way, then they have “saved” the insurance company some money, so their numbers look better, which allows them to contract with more insurance companies (they can say “look how much we saved you in medication costs / radiology test costs / etc last year”).
3. I have to get pre-authorization from these third party companies for simple tests. These pre-authorizations take anywhere from 5 minutes online to 30 minutes on hold/ on the phone. Sometimes they respond instantly, sometimes may take 1 week or more to get back to us. Even with these pre-authorizations, the insurance company may decide not to pay, or may allow the charges, but will ultimately pass them on to the patient (who has not met their deductible). These pre-authorizations suck up staff time, and slow down care. The patient sometimes stands around to see if pre-auth can take place instantly, so they don’t have to come back another day for the test (and have to take more time off from work, travel to the office again, pay for parking, etc), but if they third party may take a week or more, then they will have to, even though ultimately, they will end up paying the fee for the test (unless the deductible has been met).
4. Small practices like ours have minimal leverage to negotiate rates with insurance companies. My only option if I don’t like the 5% reduction in payment rates from PPO X that is planned for the next year is to go out of network. Large groups, especially those affiliated with large hospital systems can push back (they can tell the insurance company “where else can your patients go for heart surgery within miles of here), and they can (an do) place full page ads in every newspaper asking patients to make sure that their hospital system is in network when they go for open enrollment each year). As a result, when I have a patient come in for an office visit, test, or procedure, the PPOs allowable payment to our practice is often anywhere from 20% to 80% less than what the same PPO will pay a practice that is part of, or inside the big hospital group down the street for the same thing. Of course, if the patient has not met their deductible, the patient ends up having to pay that whole amount.
5. Pharmaceutical companies often provide copay discount coupons for doctors offices to give to patients, or the patients can get them easily online. These copay discount coupons allow the patient to pay very little out of pocket, even if the company jacks up the prices to the insurance company. Of course, patients end up paying later, as everyone’s insurance premiums rise year after year, but this is legal, and makes it easy in the short term for the patient to not consider prices of medications when they fill their prescription.
6. Since health insurance premiums go up, most people who sign up for Obamacare pick the least expensive bronze plans. These have very high deductibles, so the plan does not pay much (or anything) until more than $6,000 has been spent by the patient in medical expenses each calendar year. Therefore, a lot of our time is spent billing, filling out forms for pre-auth, prior-auth, appeals, etc. when the patient will still end up getting billed.
These issues and more make me think that direct pay for day to day healthcare is a reasonable way to go. There should be a mandate for catastrophic health insurance coverage, so that if a person has a major accident, heart attack, cancer, etc. they can have coverage for large unforseen expenses. However, if the premiums that were needed for coverage for such a policy were lower than what our current health insurance premiums are today, that should leave some money on the table for people to spend for their day to day doctor’s or specialists visit (~$75 for follow-up, $150 for new visit), or stress test or MRI (~$300). It would allow providers to post prices (since there would be one price for everyone). It would free up a lot of administrative burden. It would lower pharmaceutical costs for day to day medication (do I really need brand name Crestor, when generic lovastatin will probably work just as well, at a much lower cost). There could (and should) be a safety net for indigent care, covered with state/ federal dollars, that is administered through medical schools with resident and fellow staffed clinics that provide good quality care (without fancy lobbies, sky-high atria, and multi-million dollar ceo salaries). There could even be a federal loan -repayment program for newly graduated doctors to staff these clinics for a few years after they finish their residency that would be a win-win for those with high student loan burdens, and indigent care clinics to have adequate staff without much overhead.
Lastly, I know that there are other models of healthcare in other countries, such as England, Canada, Switzerland, Singapore, that deliver care to citizens of those countries at a much lower % GDP. In theory, I would support switching to one of those models. In practice, I am not sure they would work in this country without first having some serious reform of our political process, since I am sure that our “single payor model” would end up being covered by taxes/ debt, and administered via existing /entrenched insurance companies, who would have every incentive to keep adding layers of complexity / cost / delay / price -opacity (or whatever the opposite of price-transparency is) in the delivery of healthcare. Prime example of this: when we did get Medicare coverage for prescription medications approved, it forbade Medicare from negotiating with drug companies, had multiple different companies with different formularies that change from year to year involved, had a donut-hole provision (where patients end up paying all of the costs of their medications if they go beyond $3700 in medication costs per year, until they reach a higher amount of spending, when the coverage kicks in again). Billy Tauzin, who was one of the Republican congressmen who pushed for the approval of the Medicare drug plan then left congress to become the head of PhRMA (the pharmaceutical industry’s chief lobbying group). Coincidence?
Real world experience beats the heck out of an industry analyst every day. Thank you for posting.
Sounds as if you’re an independent provider. Unless you plan on joining the local hospital system, DPC is probably your only option going forward. Or retirement or career change.
‘it forbade Medicare from negotiating with drug companies’
But the VA system can negotiate with them!
Go figure.
I have been part of this medical train wreck for 40 years. The only solution is to put doctors on salary with no incentive for production of anything. Let the doctors determine what medical care is necessary and let them provide it. Don`t let doctors contract with insurance companies, instrument or drug companies or anything else that would modify their credibility. Let the government provide the facilities which, as a practical matter, the government is doing now. Doctors went to medical school to learn how to examine and treat patients. Quality measures such as patient satisfaction are always gamed and pointless. Patients did not go to medical school and they cannot be expected to know what they need. Our first line of medical care at this time is the Fire Department and paramedics. They are on salary. Why should the payment model change when the patient hits the ER? Does the problem change? An argument could be raised that if doctors were all on salary that they would not work. Do we burn down buildings so firemen do more work? Wouldn`t one be thankful that the local doctor just plays golf…….I suppose that would suggest that his patients are doing pretty well. Aren`t we happy to let firemen play volleyball and watch movies in the firehouse? That means that there are no emergencies or buildings burning down. Less medical care just might be better than what we have. It is estimated that 50% of the surgeries in the US are unnecessary. Many of the medicines prescribed at great expense are useless or worse than useless. We need to treat based on what works and that is what doctors should learn in medical school and focus on. Many treatments are not useful. If patients want useless treatment set up a parallel private system for useless treatment.
Yes, people should pay out of pocket for primary care and no, they should not pay a monthly maintenance fee to a general practitioner any more than they pay one to their dentist.
This whole idea just exposes the fact that primary care is always subsidized by insurance use and abuse or by a national health service.
If you have a serious chronic condition, you are seeing a specialist (and maybe more than one).