5 ms·

How to reduce healthcare costs and improve quality

12 points by pseale 17y ago

RyanMcGreal 17y ago
1 idea to reduce healthcare costs and improve quality: * Institute a national, single-payer health insurance program.
- tptacek 17y ago
  I think he's saying the same thing, but his proposed program is a high-deductable+HSA plan.
- pwnstigator 17y ago
  One second-order benefit of universal healthcare is that countries with such plans view health problems as a social cost, so there's more regulation of food production, industrial practices, et cetera. Consequently, Western Europe is a safer and environmentally cleaner place, in many ways, to live.
- yummyfajitas 17y ago
  This will help how? There are few economies of scale to be gained by going national [1], and single-payer gives consumers no incentive to consume less. [1] You save a bit of money by having the IRS collect payments, but the billing department is not a major component of healthcare costs.
  - abstractbill 17y ago
    It seems to be working rather well in a large number of other first-world countries (I'm speaking from experience - I'm British, and my wife is half-French and grew up in France. Now we live in the US where we enjoy just about everything except for the healthcare system). "single-payer gives consumers no incentive to consume less" Having been fortunate enough to live in a country with a single-payer system, I never saw the kind of over-consumption you're hinting at.
    - RyanMcGreal 17y ago
      I live in Canada, and have to laugh at free market fundamentalists who claim that single payer monopsonies encourage over-consumption. When it's pointed out that Canadians actually see doctors less frequently than Americans, they turn around and conclude that Canadians can't get access to doctors.
      - pwnstigator 17y ago
        Mouth-breathing teabagger reasoning: It's soshullism, therefore it must suck. Also, Canada's cold and Europe can't decide on a common language, so no point taking those people seriously. I also find it odd that these people can focus on the comparably miniscule problem with the Canadian and British systems, while completely ignoring the glaring faults of ours.
    - yummyfajitas 17y ago
      I didn't say it couldn't work. I said that there are minimal (if any) benefits to a national health care system, as opposed to city, state or private systems. The economies of scale just aren't there. As for overconsumption, the RAND experiment (as well as plenty of other statistical studies) shows that consumers will consume up to 40% more health care than they need if it is free (but not if they must pay out of pocket for it). Most likely your country either prevents this via other rationing mechanisms (which are politically infeasible in the US) or else you observed it but were unaware of it.
  - Retric 17y ago
    I have seen numbers anywhere between 15 to 30% as the overhead / billing cost of healthcare in the USA. It depends on what you call overhead, but pre approval for a procedure is not free. Neither is 3 or 4 letters back and forth between the healthcare provider and the insurance company. PS: Many small doctors’ offices have 1/3 of their staff devoted to dealing with insurance and billing issues.
    - yummyfajitas 17y ago
      A pre-approval may cost $10-20. An unnecessary procedure may cost $1000. If you cut admin costs by $100 at the expense of $1000 in unnecessary procedures, you will lower the percentage of overhead quite nicely. You will also be wasting $900. Is there any reason to believe the (highly competitive) health insurance market is far from the optimum overhead/healthcare ratio? If you know better, why don't you build a startup to exploit this and get rich?
      - Retric 17y ago
        Insurance companies don't directly pay for the total costs of pre-approval so they optimize to minimize personal costs independent from the total cost to the system. In other words doctor's offices don't bill them for the time a sectary spends filling out their forms. Which means doctors include that overhead cost as part of the cost of procedures. Also while each insurance company's internal system is streamlined each doctor's office needs to deal with several companies’ which increases their overhead costs even more. It's like a large game of Prisoner's dilemma where several people have already defected. http://en.wikipedia.org/wiki/Prisoners_dilemma http://en.wikipedia.org/wiki/Prisoners_dilemma PS: A doctor making 200k/year spending 5 minutes on a pre aproval cost's someone more than 10$. The patent needs to show up which costs them even more money etc.
        yummyfajitas 17y ago
        How large is the cost of a secretary filling out a form compared to an MRI? You are talking about adding a few dollars to the cost of an a procedure priced at $400 or more (I don't need preapproval below $400). A doctor only needs to get involved in the case that a preapproval is not granted, i.e. when the procedure appears unnecessary.
  - tptacek 17y ago
    Uh, isn't this --- respectfully --- ass backwards? The benefit of going national is that you greatly expand the risk pool. All I know about insurance I got from listening to Robert Schiller's financial markets class on iTunes, but, I'm pretty sure that's how insurance is supposed to work.
    - yummyfajitas 17y ago
      Work out the numbers and you'll see why it isn't. The variance in health care payouts over a pool of N people is proportional to sqrt(N), whereas the mean is proportional to N (see the central limit theorem). For a family of N=1 to N=4, sqrt(N) is of the same order of magnitude as N. This is bad, since you can't reasonably predict how much you need to pay. This is why insurance makes sense for me (N=1) or a family of N=4. Once N=10,000, sqrt(N) = 100, so the variance is only 1/100 of the mean. At N=100,000, it's only 3/1000 of the mean. Every factor of 10 increase in the insured pool lowers the standard deviation by a factor of 0.316=1/sqrt(10).
      - tptacek 17y ago
        That's a good point. But you've ignored adverse selection. Many of the people commenting here have no insurance coverage, because they're 22 and it is irrational for them to pay for coverage they're not mandated to have. I see that if people were i.i.d., the difference between BCBS's risk pool and Medicare's risk pool would be irrelevant. But they aren't.
        yummyfajitas 17y ago
        I don't need people to be i.i.d. Statistical independence along with some minor technical conditions are sufficient. http://en.wikipedia.org/wiki/Lyapunov_condition http://en.wikipedia.org/wiki/Lyapunov_condition http://en.wikipedia.org/wiki/Lindeberg%27s_condition http://en.wikipedia.org/wiki/Lindeberg%27s_condition Lumping in seniors with 22 year olds does not reduce the variance any more than lumping in 22 year olds with more 22 year olds does. Statistical variance is not a major contributor to the cost of health insurance. You are simply wrong on this point. Additionally, adverse selection has nothing to do with a variable risk pool. Adverse selection is a problem caused by asymmetrical information: if you know you are sick, you might lie to your insurance company about preexisting conditions to gain insurance. Adverse selection also has nothing to do with a variable risk pool.
mattmaroon 17y ago
I like almost all of those, but it fails to address issue #1 which is the employer-funded health care system (which itself is an artifact of salary restrictions that were part of WWII rationing). Right now most people get what appears to them to be unlimited health care at a fixed price and thus have no incentive to strive for cost-effectiveness. Imagine your employer said "We made a deal with Safeway. We'll take $30/mo out of your paycheck, and you can go to Safeway and all of your groceries are free." You'd be eating Filet Mignon washed down with a bottle of '82 Margaux every night. That's effectively the way our health care system works. It won't become truly efficient until the people consuming the service are paying for it too.
- Retric 17y ago
  Single payer systems don't just write blank checks. The real issue with US healthcare is it's become a game where the players spend money to lower their percentage of the healthcare burden without lowering the total costs. The net effect of which is the average person pays a lot more for zero average gain. With a small number of people get a free ride and everyone doing a lot of extra paperwork.
- pwnstigator 17y ago
  Somehow, I think there's a difference between eating filet mignon and being treated for cancer. I could eat a good steak every day, but I wouldn't want chemotherapy unless I was pretty sure I had cancer in the first place. Most people are just trying to get the treatment necessary to keep them at a high level of function. Why should anyone be denied that? Almost no one goes into a hospital and demands thousands of dollars worth of unnecessary tests for diseases they couldn't possibly have-- and those who do are often mentally ill hypochondriacs, given inappropriate treatment because (surprise!) health insurers are generally shitty about MH issues.
  - mattmaroon 17y ago
    You completely and totally missed the point.
    - 17y ago
3pt14159 17y ago
These 4 would lower costs the most: ---- Tort reform. Cap every state as has been done in California and Texas. Eliminate doctors’ malpractice costs for patients who demand free care. If the government insists that ED docs see every patient (through EMTALA), they are de facto government employees for those patients and should receive government indemnification. Give needles to addicts, along with access to treatment. Strongly consider legalizing and decriminalizing drugs. ---- I would also add: Make it legal to see anyone for healthcare. If I want to have my veterinarian cousin administer 5 stitches, then I should be allowed to. Make it legal to OPTIONALLY sign away your right to sue.
- tptacek 17y ago
  If you make it legal to optionally sign away your right to sue, then everyone will lose their right to sue, except for the few adverse venues of last resort (public-funded hospital emergency rooms, perhaps) that won't be able to decline services. The same thing happens with the "let people shop interstate for insurance" idea. If you look just a couple moves ahead into that game, you see that that proposal is just cover for "adopt the lowest common denominator of insurance regulation nationwide", because every rational insurance company will simply move to Alaska or Wyoming or wherever regulations are least onerous. The exact same thing happens in banking, which is why Charlotte is a US banking hub.
  - 3pt14159 17y ago
    The probability of the event happening * the loss = the premium of the surgery. That is it. If you would rather pay 1000 dollars for a surgery than 3000 then that is your business. I certainly wouldn't sign away my right to sue when I'm under back surgery.
- evgen 17y ago
  > Tort reform. Cap every state as has been done in California and Texas. Most studies show this claim to be specious at best. Tort reform has almost no impact on quality of care or cost of that care. The only real impact of tort reform in the realm of medical malpractice is to transfer money from the pockets of wealthy litigators to the pockets of wealthy insurance executives.
pwnstigator 17y ago
Some good ideas, but mostly revolting. He's basically trying to preserve a system where the wealthy get better treatment than the rest. (See items #3, 9, 14, and 15.) Realize that screening doesn’t save money for society. Um, link? Although current screening practices may be overly aggressive-- I have no idea-- this is different from saying that screening is an unconditional money-loser, which is what the OP strongly implies. Notice this, as well: Dan Field is a physician with The Permanente Medical Group. So, at least he discloses the pocket he's in.
- tsuraan 17y ago
  Yeah, the bit about name-brand drugs being only for those who an afford them out of pocket is especially bad. Drug patents are 20 years, so the peasants would be getting 20-year-old cancer treatments, while the select few would be getting actual modern medicine. Besides the ethics, though, what would the cost of modern medicines be for those few thousand who can actually afford them? Today, plenty of middle-class people get modern drugs because their insurance pays for it, so the cost of research, clinical trials, manufacturing, etc is distributed among a large population. What would the price of a pill be if only the richest of the rich could afford treatment?
johnl 17y ago
Socialize the judicial portion with flat rates for doctor/hospital boo-boos and a government panel to oversee and "punish". 3 strikes and you loose your license, back to school. No lawyers, reduced insurance, speeder payment processes. = Reduced rates for us.

12 points by pseale 17y ago

RyanMcGreal 17y ago

1 idea to reduce healthcare costs and improve quality: * Institute a national, single-payer health insurance program.

tptacek 17y ago
I think he's saying the same thing, but his proposed program is a high-deductable+HSA plan.
pwnstigator 17y ago
One second-order benefit of universal healthcare is that countries with such plans view health problems as a social cost, so there's more regulation of food production, industrial practices, et cetera. Consequently, Western Europe is a safer and environmentally cleaner place, in many ways, to live.
yummyfajitas 17y ago
This will help how? There are few economies of scale to be gained by going national [1], and single-payer gives consumers no incentive to consume less. [1] You save a bit of money by having the IRS collect payments, but the billing department is not a major component of healthcare costs.
- abstractbill 17y ago
  It seems to be working rather well in a large number of other first-world countries (I'm speaking from experience - I'm British, and my wife is half-French and grew up in France. Now we live in the US where we enjoy just about everything except for the healthcare system). "single-payer gives consumers no incentive to consume less" Having been fortunate enough to live in a country with a single-payer system, I never saw the kind of over-consumption you're hinting at.
  - RyanMcGreal 17y ago
    I live in Canada, and have to laugh at free market fundamentalists who claim that single payer monopsonies encourage over-consumption. When it's pointed out that Canadians actually see doctors less frequently than Americans, they turn around and conclude that Canadians can't get access to doctors.
    - pwnstigator 17y ago
      Mouth-breathing teabagger reasoning: It's soshullism, therefore it must suck. Also, Canada's cold and Europe can't decide on a common language, so no point taking those people seriously. I also find it odd that these people can focus on the comparably miniscule problem with the Canadian and British systems, while completely ignoring the glaring faults of ours.
  - yummyfajitas 17y ago
    I didn't say it couldn't work. I said that there are minimal (if any) benefits to a national health care system, as opposed to city, state or private systems. The economies of scale just aren't there. As for overconsumption, the RAND experiment (as well as plenty of other statistical studies) shows that consumers will consume up to 40% more health care than they need if it is free (but not if they must pay out of pocket for it). Most likely your country either prevents this via other rationing mechanisms (which are politically infeasible in the US) or else you observed it but were unaware of it.
- Retric 17y ago
  I have seen numbers anywhere between 15 to 30% as the overhead / billing cost of healthcare in the USA. It depends on what you call overhead, but pre approval for a procedure is not free. Neither is 3 or 4 letters back and forth between the healthcare provider and the insurance company. PS: Many small doctors’ offices have 1/3 of their staff devoted to dealing with insurance and billing issues.
  - yummyfajitas 17y ago
    A pre-approval may cost $10-20. An unnecessary procedure may cost $1000. If you cut admin costs by $100 at the expense of $1000 in unnecessary procedures, you will lower the percentage of overhead quite nicely. You will also be wasting $900. Is there any reason to believe the (highly competitive) health insurance market is far from the optimum overhead/healthcare ratio? If you know better, why don't you build a startup to exploit this and get rich?
    - Retric 17y ago
      Insurance companies don't directly pay for the total costs of pre-approval so they optimize to minimize personal costs independent from the total cost to the system. In other words doctor's offices don't bill them for the time a sectary spends filling out their forms. Which means doctors include that overhead cost as part of the cost of procedures. Also while each insurance company's internal system is streamlined each doctor's office needs to deal with several companies’ which increases their overhead costs even more. It's like a large game of Prisoner's dilemma where several people have already defected. http://en.wikipedia.org/wiki/Prisoners_dilemma http://en.wikipedia.org/wiki/Prisoners_dilemma PS: A doctor making 200k/year spending 5 minutes on a pre aproval cost's someone more than 10$. The patent needs to show up which costs them even more money etc.
      - yummyfajitas 17y ago
        How large is the cost of a secretary filling out a form compared to an MRI? You are talking about adding a few dollars to the cost of an a procedure priced at $400 or more (I don't need preapproval below $400). A doctor only needs to get involved in the case that a preapproval is not granted, i.e. when the procedure appears unnecessary.
- tptacek 17y ago
  Uh, isn't this --- respectfully --- ass backwards? The benefit of going national is that you greatly expand the risk pool. All I know about insurance I got from listening to Robert Schiller's financial markets class on iTunes, but, I'm pretty sure that's how insurance is supposed to work.
  - yummyfajitas 17y ago
    Work out the numbers and you'll see why it isn't. The variance in health care payouts over a pool of N people is proportional to sqrt(N), whereas the mean is proportional to N (see the central limit theorem). For a family of N=1 to N=4, sqrt(N) is of the same order of magnitude as N. This is bad, since you can't reasonably predict how much you need to pay. This is why insurance makes sense for me (N=1) or a family of N=4. Once N=10,000, sqrt(N) = 100, so the variance is only 1/100 of the mean. At N=100,000, it's only 3/1000 of the mean. Every factor of 10 increase in the insured pool lowers the standard deviation by a factor of 0.316=1/sqrt(10).
    - tptacek 17y ago
      That's a good point. But you've ignored adverse selection. Many of the people commenting here have no insurance coverage, because they're 22 and it is irrational for them to pay for coverage they're not mandated to have. I see that if people were i.i.d., the difference between BCBS's risk pool and Medicare's risk pool would be irrelevant. But they aren't.
      - yummyfajitas 17y ago
        I don't need people to be i.i.d. Statistical independence along with some minor technical conditions are sufficient. http://en.wikipedia.org/wiki/Lyapunov_condition http://en.wikipedia.org/wiki/Lyapunov_condition http://en.wikipedia.org/wiki/Lindeberg%27s_condition http://en.wikipedia.org/wiki/Lindeberg%27s_condition Lumping in seniors with 22 year olds does not reduce the variance any more than lumping in 22 year olds with more 22 year olds does. Statistical variance is not a major contributor to the cost of health insurance. You are simply wrong on this point. Additionally, adverse selection has nothing to do with a variable risk pool. Adverse selection is a problem caused by asymmetrical information: if you know you are sick, you might lie to your insurance company about preexisting conditions to gain insurance. Adverse selection also has nothing to do with a variable risk pool.

mattmaroon 17y ago

I like almost all of those, but it fails to address issue #1 which is the employer-funded health care system (which itself is an artifact of salary restrictions that were part of WWII rationing). Right now most people get what appears to them to be unlimited health care at a fixed price and thus have no incentive to strive for cost-effectiveness. Imagine your employer said "We made a deal with Safeway. We'll take $30/mo out of your paycheck, and you can go to Safeway and all of your groceries are free." You'd be eating Filet Mignon washed down with a bottle of '82 Margaux every night. That's effectively the way our health care system works. It won't become truly efficient until the people consuming the service are paying for it too.

Retric 17y ago
Single payer systems don't just write blank checks. The real issue with US healthcare is it's become a game where the players spend money to lower their percentage of the healthcare burden without lowering the total costs. The net effect of which is the average person pays a lot more for zero average gain. With a small number of people get a free ride and everyone doing a lot of extra paperwork.
pwnstigator 17y ago
Somehow, I think there's a difference between eating filet mignon and being treated for cancer. I could eat a good steak every day, but I wouldn't want chemotherapy unless I was pretty sure I had cancer in the first place. Most people are just trying to get the treatment necessary to keep them at a high level of function. Why should anyone be denied that? Almost no one goes into a hospital and demands thousands of dollars worth of unnecessary tests for diseases they couldn't possibly have-- and those who do are often mentally ill hypochondriacs, given inappropriate treatment because (surprise!) health insurers are generally shitty about MH issues.
- mattmaroon 17y ago
  You completely and totally missed the point.
  - 17y ago

3pt14159 17y ago

These 4 would lower costs the most: ---- Tort reform. Cap every state as has been done in California and Texas. Eliminate doctors’ malpractice costs for patients who demand free care. If the government insists that ED docs see every patient (through EMTALA), they are de facto government employees for those patients and should receive government indemnification. Give needles to addicts, along with access to treatment. Strongly consider legalizing and decriminalizing drugs. ---- I would also add: Make it legal to see anyone for healthcare. If I want to have my veterinarian cousin administer 5 stitches, then I should be allowed to. Make it legal to OPTIONALLY sign away your right to sue.

tptacek 17y ago
If you make it legal to optionally sign away your right to sue, then everyone will lose their right to sue, except for the few adverse venues of last resort (public-funded hospital emergency rooms, perhaps) that won't be able to decline services. The same thing happens with the "let people shop interstate for insurance" idea. If you look just a couple moves ahead into that game, you see that that proposal is just cover for "adopt the lowest common denominator of insurance regulation nationwide", because every rational insurance company will simply move to Alaska or Wyoming or wherever regulations are least onerous. The exact same thing happens in banking, which is why Charlotte is a US banking hub.
- 3pt14159 17y ago
  The probability of the event happening * the loss = the premium of the surgery. That is it. If you would rather pay 1000 dollars for a surgery than 3000 then that is your business. I certainly wouldn't sign away my right to sue when I'm under back surgery.
evgen 17y ago
> Tort reform. Cap every state as has been done in California and Texas. Most studies show this claim to be specious at best. Tort reform has almost no impact on quality of care or cost of that care. The only real impact of tort reform in the realm of medical malpractice is to transfer money from the pockets of wealthy litigators to the pockets of wealthy insurance executives.

pwnstigator 17y ago

Some good ideas, but mostly revolting. He's basically trying to preserve a system where the wealthy get better treatment than the rest. (See items #3, 9, 14, and 15.) Realize that screening doesn’t save money for society. Um, link? Although current screening practices may be overly aggressive-- I have no idea-- this is different from saying that screening is an unconditional money-loser, which is what the OP strongly implies. Notice this, as well: Dan Field is a physician with The Permanente Medical Group. So, at least he discloses the pocket he's in.

tsuraan 17y ago
Yeah, the bit about name-brand drugs being only for those who an afford them out of pocket is especially bad. Drug patents are 20 years, so the peasants would be getting 20-year-old cancer treatments, while the select few would be getting actual modern medicine. Besides the ethics, though, what would the cost of modern medicines be for those few thousand who can actually afford them? Today, plenty of middle-class people get modern drugs because their insurance pays for it, so the cost of research, clinical trials, manufacturing, etc is distributed among a large population. What would the price of a pill be if only the richest of the rich could afford treatment?

johnl 17y ago

Socialize the judicial portion with flat rates for doctor/hospital boo-boos and a government panel to oversee and "punish". 3 strikes and you loose your license, back to school. No lawyers, reduced insurance, speeder payment processes. = Reduced rates for us.