Campaign Desk

09:59 AM - May 2, 2011

Kudos to Remapping Debate

A refreshing take on a long-legged health reform story

By Trudy Lieberman

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Krugman made good points about this a few weeks ago, regarding the use of the word "consumer". One thing though, the word can be useful to describe people who technically are not patients, but who interact or could interact with health care in some way. Many are purchasers of health insurance, which is a type of product that people shop for when they don't have employer provided, Medicare, Medicaid, or veteran's coverage. The word can also be useful to describe the population that does not currently utilize services because they are well, but who could at any time either choose to do so (like for an annual exam) or be compelled to seek services due to illness or injury. Are there other words better at describing those situations? 'Dormant patient' is the only awkward alternative I can think of right now.

Are there any public health concerns that this wave of high cost out-of-pocket health insurance policies, which is about 5 yrs old at least for me, will show up later as a spike in preventable conditions presenting in advanced stages due to "consumers" avoiding health care as a way to limit out of pocket costs?

#1 Posted by MB, CJR on Mon 2 May 2011 at 01:54 PM

Let’s stipulate that these programs have produce mixed and in many cases disappointing results. Why not consider for a moment that it isn’t the mechanism that is flawed, but simply the environment in which that mechanism operates? In a previous post, you told the story of a man’s painstaking search for price and coverage information and jumped straight to the conclusion that this meant that high-deductible plans could never succeed. Instead, why not ask if the problem is not the fact that he had to shop, but that shopping was ridiculously hard? If we had the same information available to us about the price and quality of health care options as we do about, say, digital cameras, I think these stories would turn out much differently. Imagine for a moment a world where gas stations didn’t tell you their price until after you filled up, and prices were high and wildly variable. Most of us have to buy gas; it’s a critical non-luxury item, so the idea of socializing the costs and letting everyone pay a fixed price to fill up as much as they require sounds appealing in that environment, but no reasonable person will agree that it isn’t cheaper to just make stations post their prices, and let us fill up where we want.

But the article you praise above suggests that even with price transparency, people will make stupid decisions, therefore we must insulate patients from its costs to save us from ourselves. Of course the article doesn’t indict the basic idea that if people make choices based on price and quality, prices will go down and quality will go up. It simply presents a different slant on the previous argument – if we construct a market-oriented reform but introduce it into a screwed-up market, the reform might not work that well. The article doesn’t take the next step and consider whether common-sense improvements might address the concerns raised (such as requiring annual exams to get the employer contribution, or limiting the plans to employees at a certain salary level). The implicit assumption is that if there’s any problem, it's a fatal flaw and we must revert back to socializing the costs. To continue our gas analogy, imagine that we lived in that world where we were used to paying a fixed monthly price for all the gas we need, and then all of a sudden, we had to switch to the world where price were opaque, high and variable. Would it be shocking if we made stupid choices for awhile? Would there really be nothing we could do to that system to improve it short of going back to the old fixed price, all-you-can-eat model? We already know the answer to that question.

To make this short story long, there is quite a bit of throwing the baby out with the bathwater here, because it suits your narrative, I suppose.

On a personal note, I have one of these plans, and it works great. It also taught me a lot about the vast difference between prescription drug prices at Costco vs. Walgreens (60% for the same generic migraine medication in my case). If that doesn’t make the need for markets painfully obvious, nothing will - if the vast majority of people paid for their prescription drugs out of pocket, do you honestly believe that there would be a 60% difference in pricing between two pharmacies in the same city?

This is such an important story. It deserves better coverage than this.

#2 Posted by Steve, CJR on Tue 3 May 2011 at 07:04 AM

I'm glad to see some critical coverage of the "skin-in-the-game"
theory of controlling health care costs. Lardners piece is the
first such article I've read that explores the issue in any depth,
and frankly I think we need more, given what's at stake.

Trudy points out that "buying health care is not like buying canned peaches". True. There are many reasons. One, as Steve points out,
is lack of cost transparency. It's not like you can go online and
compare prices. Another reason is that health care is an extremely
complex subject. A substantial investment of time and research is
required to know what the relative trade-offs are between, say,
two surgical procedures designed to eliminate back pain; or between
two different drugs designed to moderate depression, etc, etc.
Many (perhaps most) lay people simply will not have the knowledge to
make these tradeoffs. The third, and most obvious reason is that
people cannot shop when they're sick. You have a heart attack.
You need immediate treatment. Are you really going to shop for
the most cost effective treatment centers?

Finally, much of what we do when we "shop for health care" is shop
for an insurance policy, which then places significant constraints
on what "health care" we can have, how it is delivered,
what will be reimbursed, and what won't. This is what I find most
confounding about the "skin-in-the-game" approach. How does this
work when an insurance company places so many constraints on the
process of "shopping"?

#3 Posted by Rick Sullivan, CJR on Tue 3 May 2011 at 12:45 PM

What IS it with these silly Lieberman hit pieces on high-deductible plans?

First Trudy told us of a poor man who had to endure the plain horror of making a few phone calls before his high deductible plan paid 100% of his expenses.. (Egad!)

Then Trudy revealed an even more sinister misdeed - an insurance company that maintained a slightly inaccurate cost estimator... And after misstating twelvefold the cost of a particular medication to make her point, Trudy then pointed out a terrifying case where the subject of the story (er, I mean the "victim of the predatory insurance companies") actually shopped for medical treatment after comparing costs, and made an individual choice with regard to her treatment choices. (How dare a civilized society endure such manifest injustice?!)

And now Trudy takes us to the Tenth Circle of Free Market Hell... Untold masses of insured people who don't go to the doctor often enough to suit Trudy's taste even though the insurance companies would pay for them to go if they wanted to - OBVIOUSLY because these people haven't been sufficiently compelled to visit their doctors!

An insurance plan that takes too long to pay 100% of a claim!
A cost estimator that doesn't give precise costs!
People shopping for medical care!
People choosing not to go to the doctor when they're not sick!

Stop the presses! There's a Pulitzer here somewhere... (And the sad thing is... there probably is one in store for this kind of nonsense)

#4 Posted by padikiller, CJR on Tue 3 May 2011 at 03:01 PM

Steve, excellent comments. The inability of consumers to get comparative pricing on health care, or indeed any kind of comparative ratings at all, argues for more transparency, not more government intervention.

#5 Posted by JLD, CJR on Tue 3 May 2011 at 11:37 PM

Actually, JLD, I think government intervention will be required in order to get more transparency!

#6 Posted by Rick Sullivan, CJR on Wed 4 May 2011 at 08:27 AM

Rick, you have a point there. The proper regulations could work wonders. But of course it doesn't mean you need to have government control of health care.

#7 Posted by JLD, CJR on Wed 4 May 2011 at 10:11 AM