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  • Some thoughts on what health care reform could look like.

    Posted by Michael Kennedy on April 1st, 2019 (All posts by )

    I have previously posted some articles on the French healthcare system, which is the best in Europe.

    Here is an article on the French system.

    The French citizen or resident joins Caisse Nationale d’Assurance Maladie deTravailleurs Salariés (CNAMTS)—health insurance organisation for salaried workers. That covers about 80% of the population now and it pays 80% (often more like 70%) of a fee schedule for the doctor visit although specialists are allowed to charge more. French doctors are divided for payment and fee schedule purposes into three “sectors” after 1980. Sector 1 doctors agreed to abide by the fee schedule established in 1960, modified for inflation and technological changes. They are mostly primary care doctors although some had waivers from the fee schedule prior to 1971 because they were more experienced or had great reputations. Few are still practicing. Sector 2 doctors could set their own fees but reimbursement was still determined by the fee schedule. These two categories correspond roughly to Medicare assignment in the US. If you accept assignment, you agree to accept Medicare payment as the full payment (or 80% of it plus the Medi-Gap payment).

    The French have private insurance that acts like US “Medi-Gap” polices but for all.

    It seems unlikely to me that Democrats would accept a health plan that allowed balance billing, which is the only way to control costs, short of pure rationing. The French basically provide a fee schedule that is the same for everyone but which allows doctors to charge more if the patient is willing to pay. For example, I called the office of a new internist last week to schedule an appointment. The clerk required that I submit all my insurance information, not my health status, and the doctor would decide if he would see me. If he is that busy, perhaps he could justify charging more.

    Here is another article from that series explaining the French system.

    French primary care physicians are paid less than American but medical school in France does not require a college degree and is free. I suspect that system might be more attractive in the US than many realize.

    Unfortunately, such a radical reform is unlikely. There are other options under consideration.

    Here is one from an Arkansas Congressman.

    Title 1: Private Sector Health Insurance Reforms

    Data show that a small percentage of the insured population accounts for most healthcare expenditures. This bill creates an Invisible High-Risk Pool Reinsurance Program to pay medical costs of the highest risk individuals in insured populations. It does not affect patients or the services they receive—it just shifts some of the risk of paying for care to the government, allowing insurers to charge less for all private insurance coverage.

    Title 2: Medicare and Medicaid Reforms that Promote Solvency and Increase Access to Health Insurance Plans

    This portion of the bill preserves Medicare while fulfilling obligations to people who have funded the program for decades. It also allows Medicaid to fulfill its original purpose of providing for aged and disabled individuals while providing able-bodied, working-age adults private insurance plans through exchanges.

    Title 3: Promote Transparency and Competition to Lower Prescription Drug Costs

    It’s clear that the red tape surrounding experimental drugs and prescription drugs in general needs to be addressed. Patients with severe illnesses deserve access to medicine that could save their lives. That’s why the bill eliminates delays surrounding generic drugs and biosimilar products by providing more efficient processes.

    Title 4: Increase Competition and Lower Costs by Discouraging Provider Monopolies

    These provisions center on hospitals, providing incentives to promote hospital and provider competition and encouraging hospitals to reduce costs. Medical clinics and hospitals are the healthcare system’s first line of defense. Patients in rural and urban areas should have access to the best care at a fair cost.

    Title 5: Digital Health Care Reforms

    This section establishes policy allowing for increased use of innovative technologies—options in telemedicine, for example. Rural areas often struggle to attract providers. When facilities can use video messaging services to provide certain types of care, they essentially eliminate geographic and time zone constraints. Policies in Titles 3, 4, and 5 work together to promote a healthcare delivery system that works for all while allowing innovators freedom to take our healthcare to the next level.

    Here is a key provision.

    This bill creates an Invisible High-Risk Pool Reinsurance Program to pay medical costs of the highest risk individuals in insured populations.ection establishes policy allowing for increased use of innovative technologies—options in telemedicine, for example. Rural areas often struggle to attract providers. When facilities can use video messaging services to provide certain types of care, they essentially eliminate geographic and time zone constraints. Policies in Titles 3, 4, and 5 work together to promote a healthcare delivery system that works for all while allowing innovators freedom to take our healthcare to the next level.

    We had risk pools before for the uninsurable. Democrats insisted that “pre-existing conditions” be included in standard policies, which made the policies unaffordable without huge deductibles. People with pre-existing health problems are uninsurable. No one sells fire insurance to a person whose house is burning down. Risk Pools are the answer. The French system excludes the pre-existing condition, but allows standard coverage for unrelated conditions. If a cancer patient gets appendicitis, that is covered while the cancer goes to the risk pool.

    There are other reform proposals. Another comes from the Heritage Foundation.

    Association health plans (AHPs). AHPs allow businesses, especially small businesses, to band together as a group for the purpose of purchasing health insurance for themselves and their employees. By banding together, small businesses and the self-employed will be able to avoid costly federal insurance mandates that Obamacare imposed on the individual and small-group markets. In June 2018, the Administration issued major regulatory changes to ease the formation of such associations for these purposes

    This would restore the small group option eliminated by Obamacare.

    Short-term, limited-duration insurance (STLDI). STLDI offers individuals a coverage option that is not subject to the costly insurance regulations of Obamacare. In February 2018, the Administration proposed restoring long-standing rules of operation for such short-term plans, undone by the previous Administration, and proposed consideration for extending the terms of such arrangements as well.

    This could restore the high deductible catastrophic plans for young adults that were ended by Obamacare.

    Health reimbursement arrangements (HRAs). HRAs are an employer-based health care financing arrangement that provide employees with greater access and flexibility for financing their health care. The Administration is expected to release a proposed rule to expand the flexibility of these arrangements, including consideration of using them with non-group coverage.

    This continues employer based plans but there needs to be some cost control. The McCain health plan in 2008 had some provisions but the candidate did not understand them or could not explain them.

    Provide block grants to the states. In lieu of the Obamacare spending scheme, the proposal would provide states with a fixed allotment of federal funding. The funding would be based on current state ACA funding and would be gradually rebalanced based on each state’s number of low-income residents, bringing greater equity between the states. The states would adhere to the following guidelines in using their allotments:

    This is a way to control Medicaid spending. Obamacare is mostly an expanded Medicaid with private insurance being cost shifted into paying for it. Reforms, such as work requirements, are best left to the states.

    Breaking the insurance company-hospital iron axis is important. French doctors and hospitals are required to post charges. This could be done online as many medical practices and hospitals have web sites. The charges need to be cash prices as pricing has been badly distorted for many years, first by Blue Cross and more recently by insurance companies which conceal payments and charges as “trade secrets.”

    What we need is a cash medical system, with charges clearly disclosed and insurance for those items that are “insurable,” meaning those that can be underwritten by actuaries. Other conditions that are not “insurable” like trauma and critical care must have transparent accounting for charges.

     

    19 Responses to “Some thoughts on what health care reform could look like.”

    1. Brian Says:

      People don’t want health insurance. They just want someone else to pay for their health care.

      The Democrats want medical workers to be unionized government employees.

      There isn’t really a constituency to move the system in a sane direction.

    2. Mike K Says:

      They just want someone else to pay for their health care.

      Until they see the taxes. France is different because, at least until unemployment got so high, the health plan was largely funded by payroll deductions.

      They have had a problem with high unemployment and with British retirees who apply for the program intended for the poor. It is called CMU or Couverture Maladie Universale .

      British expatriates living in France can apply for CMU and the rules are described here. That site is one for advice to British retirees living in France and is interesting for other aspects of life in France.

      The system is not foolproof as this message board for British retirees shows.

      Here is more timely information about enrollment, again from the point of view of British retirees moving to France. This is a very large group and some areas in the southeast have completely English-speaking villages.

      Here is info on how to join.

      Nevertheless, the system is under severe financial pressure, there is a growing shortage of suitable staff in many regions, and a higher proportion of the running costs are having to be picked up by patients.

      At an institutional level the organisation and financing of the system is complex and is often characterised by high levels of tension between the various parts of the system.

      Most health professionals who work outside of hospitals are self-employed and depend for their income on fee paying patients whose costs are reimbursed by the social security and voluntary health insurance systems.

      Patients, in turn, have been allowed to have unrestricted access to doctors and specialists with the result that no-one in the health system has had any particular incentive to keep down costs.

      Over the past few years the government has introduced a series of reforms, the whole purpose of which is to increase efficiency and drive down costs. These reforms are on-going.

      There is more at the link. The British have no interest in going home for care in the NHS.

    3. Gavin Longmuir Says:

      It is interesting that talk about health care is almost never about actual health care — it is about getting someone else to pay, as Brian notes.

      A friend in the Philippines described how a lady she knows was facing a difficult birth and did not have money to pay for hospitalization. A charity hospital provided free care, but required a commitment that the lady would not sue if anything went wrong with the birth. That sounds like a plan! Eliminate the lawyers and outlaw malpractice lawsuits which enrich lawyers and drive down the quality of actual health care; in the event of malpractice, the doctor loses his license permanently — no monetary compensation for the patient who willing underwent the unsuccessful treatment. We have to accept that life is full of risks.

      Another factor was pointed out in a book Ben Stein wrote years ago — about 50% of the average lifetime health care costs in the US are spent in the last 6 months of life. We need a cultural change — a realistic acceptance of the fact of our own mortality. We need to make it socially unacceptable to prolong low-quality life at high cost when we recognize that the end is coming. Keep the patient out of pain, and let nature take its course.

    4. Mike K Says:

      about 50% of the average lifetime health care costs in the US are spent in the last 6 months of life.

      That’s true but a bit misleading. The usually assumption is that most health care expense is on the very elderly who would be better off being allowed to die.

      In fact, health care spending peaks at about age 75 and declines. Beyond that age, most people don’t to want to go through painful expensive care ,like joint replacements, the usual example.

      That may change as we live longer and stay healthier. I did a study in 1995, or tried to, I should say, on the concept that the very elderly could be “tuned up” a bit and the cost of their care would be less. Many have chronic problems that could the dealt with and they would require less care.

      The proposal is here. The doctors of the faculty medical group were enthusiastic to participate as it was based on experience elsewhere, and would have been a chance to really improve care for a vulnerable group. The university hospital administrators killed it.

      I’m not sure it has ever been done by anyone else. It would have required UCI to acquire/develop an electronic medical record, which would have improved care and cut cost.

    5. Susan Stroud Says:

      I lived in France. For routing care IF YOU’RE HEALTHY – French Healthcare is fine. Rashes. Sore throats. But if you have, let’s say appendicitis as one of my American friends did, you’re likely to be mis-diagnosed and sent home – as my friend was. The favorite diagnosis for any midsection pain was a “crise de foie” – liver attack.

      We bundled my friend up and took her to the American Hospital in Paris where she was diagnosed correctly and operated on immediately.

      When I was last there a few years ago, the headlines were about how poor healthcare is in the rural areas because there are so few doctors.

    6. Grurray Says:

      Eliminate the lawyers and outlaw malpractice lawsuits which enrich lawyers and drive down the quality of actual health care

      The way the laws work now doctors are incentivized to prescribe and over-prescribe medications in order to offload the liabilities to the pharmaceutical companies. You can get sued for your actions and for your inactions, so it becomes a tightrope act.

      Another thing we’ve noticed with billing is the negotiating dance between hospitals and the insurance company. The hospital will charge seemingly arbitrary, exorbitant amounts for care and then the insurance company will talk them down back to earth. There may be a few rounds before the final bill is hammered out. And much of the time is spent trying to agree which service will match up with which bureaucratic code. It’s insane to watch. No wonder no one wants to deal with it.

    7. Jonathan Says:

      Re: “The last 6 months of life”.

      How do you know when you are in that period? Saying that we can cut medical costs by not overtreating during patients’ last six months is like saying we can increase investment returns by only buying stocks at the low of the day.

      Better to err in favor of not requiring someone other than patients or their immediate families to decide how much treatment is justified when. The focus on “overtreatment” is symptomatic of a question-begging public-health-type framing of medical-cost issues, which assumes that a central authority gets to make the decisions. It might be better if we started by asking who should decide and why.

      If the individual gets to decide, what kinds of reforms are likely to work best? Perhaps the elimination of the deductibility of employer-paid health-insurance premiums, coupled with a deregulation of the health-insurance industry so that insurers could offer a wide variety of insurance plans directly to individuals on a national basis. Much of the high cost of the current system comes down to a combination of third-party payment and mandated first-dollar coverage. Better to let individuals choose and pay for the coverage they want, and to subsidize indigent people directly.

    8. Brian Says:

      “Better to err in favor of not requiring someone other than patients or their immediate families to decide how much treatment is justified when.”
      The problem, of course, is that we let the patients decide, but don’t make them pay.

      “Perhaps the elimination of the deductibility of employer-paid health-insurance premiums”
      McCain clumsily proposed doing this in 2008, and Obama and the media crushed him for wanting to “tax your health benefits for the first time ever” and he backed down. This move would be insanely unpopular, because while people will say the insurance system is bad, they in general like their own employer-based coverage (in large part because they think they’re getting a “free” benefit, when it’s actually massively reducing what their employer can pay them in salary.)

      “a deregulation of the health-insurance industry so that insurers could offer a wide variety of insurance plans directly to individuals on a national basis”
      Just last week a judge ruled the Trump admin couldn’t grant waivers to states to try this sort of thing out. (Recall, of course, that Obama gave out waivers left and right for just about every single aspect of Obamacare.)

      The health system is broken. The political system is even more broken. We (conservatives) aren’t allowed to do anything without going through years of delays and obstruction, and there’s no symmetrical barriers for the left.

    9. Mike K Says:

      Jonathan, the “last 6 months of life” is, of course, assuming you know when your goose is cooked. There are plenty of children whose health care costs peak in “The last 6 months of life,” like every fatal illness.

      One trend that has arisen since Obamacare is doctors, usually older ones with no student loans or kids to send to college, who simply drop Medicare and all insurance and practice for cash. Insurance companies have been using contracts for years to keep medical “retail” prices high but “wholesale prices” low.

      If you charge a Medicare patient less than the “profile” fee, you are breaking the law. Medicare, by law, is supposed to get “the best price.” If you charge an insured patient cash, you are breaking the contract you signed.

      I was at a national geriatric care convention about ten years ago, when I met a young woman physician from Iowa. She was the only board certified Geriatrician in central Iowa. Geriatrics is a specialty seen only in academic departments where it can be subsidized. It is a money loser as Medicare fees are low. This young woman had been getting harassed by Medicare because she was seeing her home-bound Medicare patients “too frequently.” They were at home and not in assisted living but that was not Medicare’s concern. A pain medicine specialist in Maryland went to prison a few years ago because she refused to follow guidelines in her pain patients.

      Anyway, this young woman doc had dropped all Medicare ! She was practicing for cash and credit card and making a living.

      Cash practice requires some law changes. Primary care docs have about 75% overhead in just collecting Medicare and insurance payments. Having insurance pay for routine care is just insane. The cost of processing a claim for a $25 office visa is more than the service. I talked to a pediatrician a few years ago who was getting $11 an office visit from insurance.

    10. Jonathan Says:

      The problem, of course, is that we let the patients decide, but don’t make them pay.

      Yes, and the response of most reformers is to propose taking choice from patients and giving it to the specific classes of third parties favored by the reformers. The better alternative would be for patients to retain choice and be responsible for payment. Then the focus of discussion could shift – from picking the least destructive centralized system, to picking the most efficient ways to insure the poor and people who have exhausted their means due to outlier medical expenses.

    11. Jonathan Says:

      We (conservatives) aren’t allowed to do anything without going through years of delays and obstruction, and there’s no symmetrical barriers for the left.

      That’s a big problem. However, by abusing the courts and bureaucracies the Left has taken the easy route. It may be they will have much more difficulty in blocking conservative initiatives once conservatives appoint more conservative judges and block bureaucratic abuses, as appears to be starting to happen.

    12. billrla Says:

      America was founded specifically not to be like Europe. France is not the U.S. I am responsible for my own healthcare. I do not want government solutions. This includes French government solutions.

    13. Gavin Longmuir Says:

      “How do you know when you are in that [last 6 months] period? Saying that we can cut medical costs by not overtreating during patients’ last six months is like saying we can increase investment returns by only buying stocks at the low of the day.”

      Let’s not be obtuse. A better analogy would saying be that we can increase investment returns by buying shares in companies on the verge of bankruptcy. Some investors have indeed been able to do that, but only by being very, very careful about which near-bankrupt companies they invest in. Buy stock in every failing company and we would lose our shirts — which is a little like where we stand on paying for medical treatment.

      Paying for a shot of penicillin for an 18-year old with pneumonia is clearly a good investment; the treatment is highly likely to be successful, and that young man can go on being productive and paying taxes for decades. Paying for an organ transplant or open-heart surgery for a 65-year old is less likely to be successful, and the 65-year old is unlikely to pay enough taxes in the remainder of his life to justify the cost. Recognizing our own mortality is tough for people in these post-religious days … especially when someone else is paying the costs for desperate life extension.

      It seems that most of the issues around “health care” actually revolve around excessive government intervention, excessive bureaucracy, and excessive lawyering. People should clearly be able to spend as much of their own money on health treatment as they chose. For the rest of it, we would be better served by a government that stuck to doing just a few things, and doing those carefully selected things supremely well.

    14. Jonathan Says:

      Recognizing our own mortality is tough for people in these post-religious days … especially when someone else is paying the costs for desperate life extension.

      Indeed. What I object to is question-begging arguments that frame the issue as optimizing govt rationing of medical treatment rather than as maximizing individual choice. Of course real-world maximization of individual choice means individuals have to be responsible for payment. And of course real-world optimization of govt rationing of care means giving a great deal of power to govt functionaries. If giving power to govt functionaries isn’t your main goal, giving more choice and payment responsibility to individuals might look like a better alternative.

    15. Mike K Says:

      I do not want government solutions. This includes French government solutions.

      It might be useful for you to read the articles on the French system since it is a way to allow market forces to replace rationing and still provide some basic benefits for the poor.

      Democrats always seem to want ONE BIG SYSTEM to solve every problem. That is not the way free enterprise works.

      People who want pure cash medical care should be able to do so. There has been a theory of “Free Riders” as an excuse to require insurance. The real instances are rare. I spent 30 years taking ER call. We took all comers and nobody was turned away. You could overwhelm the system if too many were free riders. The illegal aliens are overloading the system. The solution to that, as we have used before, is big charity hospitals.

      Another solution is cash medical practice plus catastrophic insurance for accidents or acute illness. We used to have that for the young until Obamacare.

      If you want full insurance, you should pay the cost and not cost shift.

      There is not ONE BIG SOLUTION.

    16. Mike K Says:

      An interesting up date on Britain’s National Health Service,.

      Nearly a quarter of a million British patients have been waiting more than six months to receive planned medical treatment from the National Health Service, according to a recent report from the Royal College of Surgeons. More than 36,000 have been in treatment queues for nine months or more.

      Long waits for care are endemic to government-run, single-payer systems like the NHS. Yet some U.S. lawmakers want to import that model from across the pond. That would be a massive blunder.

      Consider how long it takes to get care at the emergency room in Britain. Government data show that hospitals in England only saw 84.2% of patients within four hours in February. That’s well below the country’s goal of treating 95% of patients within four hours — a target the NHS hasn’t hit since 2015.

      They tried the rule that ER patients had to be seen in 4 hours. That resulted in ambulances parking in the “car park” until the ER was emptied out.

    17. GWB Says:

      First thing you do is make ALL medical expenses – including premiums, not just employer-provided benefits – tax-free (also eliminating the 2% floor).
      Then you allow true insurance (catastrophic claims and pre-payment of long-term care).
      Then you allow anyone to band together as a risk pool in any way they (and a company) desire.
      Lastly, you require pricing transparency.

      With those free-market reforms, you:
      – eliminate the healthcare “only for the employed” canard
      – allow self-employed, unemployed, and the employed to all spend their money as they see fit
      – allow people to choose their risk pools
      – return health care to a relationship between the doctor and the patient, rather than a third party

    18. GWB Says:

      Mike K Says:
      … The illegal aliens are overloading the system. The solution to that, as we have used before, is big charity hospitals.

      Actually, the solution to that is to kick out the illegal aliens.

    19. GWB Says:

      GWB Says:
      April 4th, 2019 at 9:27 am

      I forgot:
      Eliminate gov’t mandates for coverage.