Sunday, June 11, 2017

U.S. Healthcare Reform 101

This post relates to an excellent podcast dealing with healthcare in the United Stated:

Podcast:  Blunt Force Truth
Episode: 256
Title:      Who Really Benefits from the Healthcare System? – an Interview with David Berg
Link:      BFT Episode 256

In this episode, Blunt Force Truth interviews David Berg a Canadian physician who moved to the United States to practice and was perplexed by how healthcare works (or doesn't work) in the United States.

Canada VS the US - No Winners

In Canada, it was a fairly simple, government system where access is denied via lack of resources or supply. In this system, one does not make money particularly if one is wasteful.

In contrast, the US system was complex and denied access via this complexity and expense. It is a system where the only way to make money is via waste and administration.

Dr Berg does not think the Canadian system is the answer, While the Canadian system gets glowing reviews in their press, this is more propaganda than reality. In Canada, it is not cool (politically correct) to trash their system and the media is protective of it instead of being an objective critic of it. He points out that the current Canadian system lacks resources to adequately care for patients in a timely manner and that paying for private services out of your own pocket is illegal.

Dr Berg is also not a fan of the current US system. He feels that it is rigged against those who use or pay for it in favor of insurance companies, drug companies, healthcare providers and politicians. In terms of those who use are pay for it:
  • It is not designed to work in their favor.
  • It does not benefit them.
  • It is not optimized for patient care or outcome.

In fact the system was designed or evolved in favor of the owners (shareholders) of insurance companies, drug companies , healthcare providers and politicians who get contributions from them.

Critical Thinking 101

Berg posits those that currently game the system (Insurance, Healthcare, Drug companies) also control the narrative, a false narrative, that hinders users and payers from thinking clearly about the subject and finding solutions that benefit users and payers.

Affordable Care Act - Under a Critical Lens

Berg uses the Affordable Care Act to demonstrate how the narrative works against users and payers. The very name of the act is misleading. It was not affordable and did not result in better care for the vast majority of people so who did it benefit. What was its purpose?

We know that it did not really benefit most users or payers but, if one looks at whom it did benefit, it was actually a great success:

  • It was a great rallying tool for the Democrat base.
  • It showed their power in office.
  • It also greatly benefited their insurance and drug company donors.
This is a great obstacle to reforming the current system. Most people assume that healthcare is set up for the benefit of the users (patients) and people paying for it but this is not the case in the United States. This leads to people assuming that any reform is also designed to benefit these two groups which is also not the case. To make any headway, we first need to understand who is currently benefiting from the system and how they control the narrative.

Shareholder Bonanza

As an example of how the current system is benefiting shareholders rather at the expense of users and payers of healthcare, Berg uses United Healthcare as an example. While the US stock marketed as whole has rocketed up in recent years many healthcare related stocks like UNH have risen exponentially against it. So while in his words the DOW roughly doubled over a fairly short period of time, UNH stock rocketed up almost ten times.

Controlling the Narrative

Yet, we do not hear about these huge financial gains in the media. The media instead bombards us with stories about how healthcare providers are not making money and dropping coverage:

NYT - Sorry We Don't Take Obamacare, 2016-05-15 Sunday Review

The healthcare, drug and insurance companies benefiting from the system control the narrative and only want us to focus on where they are losing money not on the vast overall gains that they are making.

Profits as the #1 Problem

Most drug, healthcare and insurance is controlled by private companies who are legally required to maximize shareholder profit. The number 1 problem that these companies are trying to solve is how to make more money for their shareholders not provide better or more affordable care. When one looks at things via this perspective it explains why user and payers for healthcare are not benefiting from the current system.

Explaining the $80 Aspirin 

A good example of how this perception vs reality gap works is the Medical Loss Ratios implemented under the Obama Administration. The stated purpose of this was to raise the amount spent on patient care vs administrative costs by mandating that 80% of costs should be spent on care and limiting administrative costs to 20%.

Both critics on the right and left have acknowledged that all this did was to dramatically raise costs:

Here is criticism on the right:

National Center for Policy Analysis - Medical Loss Ratio Could Raise Insurer Profits

Here is similar criticism on the left:

Physicians for National Healthcare - Insurers use ‘medical loss ratios’ to cheat us

This situation has led to obvious questions from consumer like:

  • Why can I pay $300 cash for an MRI but insurance companies pay $3,000?
  • How does that make money for insurance companies?

The simple answer is that,if they are obligate to pay 85% towards patient care,then their incentive is to drive up costs in order to drive up costs.

A big way to drive up costs is to determine where healthcare occurs. Costs at a hospital can be up to 5 to 30 times higher at a hospital versus a general care facility so this has led to hospitals buy up imaging and testing where higher hospital rates are then applied.

When you get a bill from the insurance company they often show a negotiated rate that is still many times higher than what you would have paid cash to receive from a non hospital facility. This negotiated rate is another attempt to control the narrative and make you feel that somehow they have saved you money.

The $30 aspirin from a hospital is still the same 1 cent aspirin that we all can buy at the corner drug store, it just has a $29.99 hospital rent attached to it.

Mining CPT Codes

The real business of US healthcare is not providing patient care but mining CPT codes for profit. Hospitals focus on mining medical records (the raw material) for CPT (medical billing codes) that they can use to bill for services. This is their business and they are legally responsible for mining the most profit for their shareholders.

Free Market vs Healthcare

Is there a perfect correlation between the free market and health care? No because there is not a direct relationship between supply and demand. For example, a sale on appendectomies will not result in a rush on them. There is also the vast complexity of the current US system that hides its true cost. In general, we need to deal with the complexity that hides the true costs.

Right vs Privilege

Dr. Berg does not feel it is helpful debating whether healthcare is a right or a privilege. This is because everyone could obtain adequate health care if the waste and inefficiency of the current system caused by the current system is addressed. When pressed, he leans in the direction that healthcare is a privilege that all people should have access to once shortfalls of the current systems are fixed.

Not Working for You

There is the perception that healthcare in the US is not working only for the less well off but this is not true. The system is not working well for virtually anyone that uses it or pays for it.

Berg points out that 51% of workers make 15 thousand dollars or less and 38% of workers make 10 thousand or less. This means that healthcare not going to work for them

The current solution not working because it has not identified problem correctly. People who most need access have the least ability. Individuals are unable to access in any manner other than in a manner that benefits shareholders

We need to think about problem correctly. Most people start out throwing solutions out without identifying problem. Politicians are concerned with polls and their base, which is a valid concern for them, but does not solve problem for payers or users

Seven Step Process to Fix Healthcare

Dr Berg has identified a seven step process to reform healthcare. He has added and removed steps along the way but his main rule is to not add steps unless it overall adds benefit over complexity.

proactive, identify people with most needs and use it to anticipate needs to lower

steve jobs 1,000 songs in your pocket
just the ones you want

Step #1 Collect Data

Collecting data is just as important for health patient health and reducing costs not just collecting money. You can use it to create a patient plan to reduce costs. For example, if someone has asthma, you can use this knowledge to provide them with a ton of cheap inhalers to avoid emergencies.

#2 Engineer the Logistics

There are many things that prevent people from receiving healthcare such as lack of transportation, money issues, fear, language difficulties. One of the biggest issues is that most people cannot take off a day for a doctor visit and most jobs will not let you take just a few hours off at a time. Approximately 70% of medical problems can be taken care of over the phone and it is easy to provide 24 hours phone service for people.

#3 Routine Visits

Nobody should step into facility with being fully aware of what is needed. They should get tests and prescriptions ahead of time. Having an entity work with the patient and doctor in a collaboration can dramatically reduce costs by avoiding repeated exams and tests that are wasteful.

#4 Specialists

Partner with specialist to make sure they know what they are treating and have all the tests in place and a conservative plan that can be ramped up.

#5 Get Fair Price

Price needs to be negotiated based on the fair price not the typical insurance or hospital rate. The fair price is the price that an individual would pay cash for at a non hospital facility.

#6 Payment Assistance

You then need to work with vendors to qualify for their payment assistance programs. Most vendors offer payment assistance for services even for wealthy individuals. This payment assistance programs are based on the fair price which makes it doubly important to make sure that you have negotiated for a fair price.

#7 use insurance for any remaining cost

Universal Problem

Most insurance is not the appropriate kind. For example, high deductible insurance has been foisted onto most workers but it is not appropriate unless you are making an upper income.

Most people to not realize it but the number one cause of bankruptcy in the US is healthcare and most of the people going bankrupt have health insurance.

It is a critical error to assume that we need insurance for healthcare as it is one of the worst ways to pay for it. We assume that we need it for healthcare when we do not.

Dr Berg stresses that we all have a problem with the current system not just the poor. No one is equipped with the skills to navigate the current system, not just people with low IQ's.

Insurance companies, drugs manufacturers and hospitals have power to lay the blame elsewhere. It does not make sense for them to lower costs since does not benefit shareholders.

We need to understand these things before we can solve the problem.

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