Saturday, October 24, 2009

Insurers and Health Care Costs

In a recent interview, Senator Olympia Snowe commented - "We need a lever to force the [insurance] industry to drive down prices." This is a common view. Unfortunately, it's a view that contributes to public misunderstanding of the drivers of health care costs.

Single payer advocates point to insurance-driven administrative overhead - within insurance companies themselves and at provider sites to cope with the complexities of billing - as the source of runaway costs and the key potential source of savings. Single payer advocates anticipate savings from eliminating insurance companies. But these aren't the savings Senator Snowe is talking about. She, along with many other legislators, are counting on market mechanisms and competition between insurers to drive expenditures down more than on administrative savings.

Here's where the problem comes in. Insurers can only achieve non-administrative savings in two ways. Decrease the volume of services or decrease provider prices. But by putting insurers in the doghouse we've made it next to impossible for them to get a grip on either volume or prices.

We clinicians know that the U.S. buys much more medical care than than we need. As individual clinicians we may believe our own care patterns are fine, and the problem is with our colleagues. But I've never met a clinician who didn't see lots of opportunity to reduce the volume of interventions we provide, without any loss of health. But the time between any proposal to reduce the scope of what we offer and an eruption of death panel nonsense would be nanoseconds! And since insurers have been so vigorously portrayed as "villains," they can't expect much support if they try to reduce Dr. Kildare's charges.

Portraying "health reform" as "health insurance reform" may be effective politics, but we can't expect "villainous" insurers to deal effectively with our bloated care system. For the moment we've created a no-win situation with regard to cost containment. We reject reject the single payer alternative, vilify insurance companies, and then expect those "villainous" companies to carry out the delicate function of reforming the U.S. delivery system. Locking horns with providers and convincing the public that we currently purchase vast quantities of unnecessary, and often harmful, care, requires trust. And we've systematically portrayed insurers as untrustworthy.

I don't expect this impasse to be solved in the current legislative process. We've barely mentioned delivery system reform in a way the public understands. Policy wonks understand the importance of the Dartmouth Atlas and recognize that high quality systems like Geisinger, Kaiser Permanente, Mayo Clinic and Harvard Vanguard can provide better care at a lower cost. But the public doesn't get it yet, and won't until there has been a substantial educative process.

The real work of health reform will happen after whatever legislation emerges from the Congressional struggles we're still in the midst of.


GhostOfTyrone said...

Hi Jim,

Excellent post.

Almost 2 years back, I commented on a different post - and I think part of that post is relevant to this topic. It's unfortunate that in these last 2 years, not much has changed.

"This brings us to what I feel is the crux of the health care policy debate: Many Americans are too quick to equate “health care reform” with “health insurance reform.” There is a responsibility to define, establish and maintain an optimal American health care system that falls to every American, not only those in the insurance industry. If we consider the origins of what we, as Americans, consider to be “typical” health insurance – that is, employer or state provided, premium-based coverage, we can then grasp the full extent, and full limitations of such a system. In 1956, E.J. Faulkner, then-president of the Health Insurance Association of America, summed this up perfectly when he wrote “No one group or organization can claim credit for fulfilling-or approaching fulfillment-of all the public's needs for protection against the cost of ill health.”

Health insurance is just part of the equation in the movement towards true and lasting health care reform. Just as then President Clinton said in 1998, and his wife continues to echo today on the campaign trail: true success in the endeavors towards health care reform will be achieved only through a willing and committed partnership between all entities and institutions of the collected health care fields and industries. This must include leadership from the medical science community that is unadulterated by profit, and seeks only to realistically set the medical parameters of what the world’s best health care delivery system could ultimately provide to every American citizen."

The comment also alluded to a speech given by President Clinton in 1998 – one that President Obama may want to refer to as he seeks to inject, as he should, a clear, concise and moving message as to why sweeping reform is so desperately needed:

“Our job, representing all the American people, is not to abolish managed care. Our job is to restore managed care to its proper role in American life, which is to give us the most efficient and cost-effective system possible consistent with our first goal, which is -- managed care or regular care, the first goal is quality health care for the American people. That is our job.”

Jim Sabin said...

Hi Ian -

Thank you for reincarnating your previous comment. I agree that (a) it is still on target and (b) that's too bad, because it means that we - the body politic - have not learned much in the intervening time.

In psychiatry since Freud's era there has been a lot of reflection on the impediments to change. Freud developed the concept of "working through" - the idea that problematic areas often have to be approached repeatedly, and from different angles, to bring about change. That's how I think about the issues you've pointed to.

If Congress passes legislation and the President signs it we'll have a long and complex period of implementation. That process will give lots of opportunity to legislators and the public for better understanding of what needs to be done in health care. And, once the legislative battles are over, we can hope that the amount of demagoguery and disinformation will diminish!

As always, it's good to hear from you!