Friday, May 01, 2009

Quote of the Day, Part Two:

IMO, one of the things wrong with the high price of health care is the overhead involved; an awful lot of that appears to be CYA and direct costs involved in malpractice insurance, thanks in part to a quirk of our legal system that turns physicians, hospitals and related businesses into a sort of low-risk pinata filled with money.
"Low-risk pinata..." I LOL'ed. Go read the whole thing...

14 comments:

nguyenhm16 said...

Well, in Texas, we implemented "tort reform" and surprise, surprise, health care hasn't gotten any cheaper. They health care industry charges what they do because they can, i.e. insurance companies and the government will pay it. The latter two are actually in charge, in that they control reimbursements.

Anonymous said...

The other problem is that there isn't really any consumer oriented market for insurance. The end user doesn't buy insurance, it's a "benefit" provided by employers.

Bram said...

Health Insurance is expensive because we pay a battalion of lawyers and programmers to keep up with ever changing mandated benefits from 50 states.

alath said...

I've practiced in two states without tort reform and one state with. Tort reform does work to limit costs and waste. In particular, the difference in unnecessary procedures is dramatic. However, this is not the only dynamic that makes health care expensive, and tort reform is only a small part of the solution.

Two other parts of the solution relate to one dynamic: the separation of use from cost. Most of us are only vaguely aware of our insurance premium cost as one of a bunch of confusing lines on a pay stub. If we bother to look, we can see how much our part of the whole health care system costs. But we don't see how much being overweight and sedentary for 20 years added to our personal cost, because for the most part, it doesn't.

We also don't see how much the components of our care cost. If we went to our auto mechanic and said, "Let's go ahead and throw in a fiddledygibbet test," we would immediately ask how much it costs and what the consequences of an undetected fiddledygibbet failure would be. However, nobody does anything like that when a health provider says "let's go ahead and get another ultrasound to check on the baby." Partly this is because many patients lack the confidence to question doctors, but mostly it's because we don't see the costs directly. We're buying a share in a pool, but we don't feel the costs of how much we personally take out of the pool.

Another kind of cost that's hidden from us is the demand for quality regardless of cost. In every other walk of life, we make rational decisions about cost versus quality. Here's an AR that's 99.91% reliable, and it costs $1500. Here's one that's 99.92% reliable, and it costs $15,000. Most of us will opt for the $1500 AR, because the quality difference is small and the cost difference is large. In health care, everyone wants the equivalent of the $15,000 AR because we don't make realistic evaluations of marginal differences in quality and the costs are mostly invisible to us.

My brother is a mechanical engineer who makes surgical devices. He estimates the cost difference of a surgical tool versus the same tool for a non-medical application as a factor of 20-30x. This is mostly due to insane regulatory and liability costs.

We spend ridiculous amounts of resources in the very last part of the dying process. Terminally ill people die in intensive care units, often at the cost of hundreds of thousands of dollars to prolong their lives another few days or a week. Again, nobody would spend $10,000 with a gunsmith to make a hopelessly broken gun shoot one more time. But we will pay half a million dollars to keep Uncle Edgel alive another week. If we do this same procedure with every dying baby boomer, we will leave our children in literally perpetual debt.

Until we can figure out a way to make the people doing the purchasing of health care feel the costs of their decisions, health care costs will continue to grow astronomically.

Anonymous said...

"the cost difference of a surgical tool versus the same tool for a non-medical application as a factor of 20-30x. This is mostly due to insane regulatory and liability costs."

That^^...

"We spend ridiculous amounts of resources in the very last part of the dying process. Terminally ill people die in intensive care units, often at the cost of hundreds of thousands of dollars to prolong their lives another few days or a week."

...and that^^...

...plus frivolous malpractice lawsuits are the reasons behind the obscene costs of medical care.

Tam said...

alath and nguyemhm13,

"However, this is not the only dynamic that makes health care expensive...Was the very first sentence of the linked quote.

RTWT and you might see other dynamics mentioned... ;)

karrde said...

I've heard several doctors say that insurance companies have become very effective at paying for only the part of health care that fits into the Insurance Company's form of Approved Costs for a particular malady.

Worse, Medicare routinely pays at 50% or less of the cost of medical care, forcing doctors to raise prices so that paying patients (usually paying via the aforementioned Insurance Companies) make up the difference.

But that's just a long-winded way of blaming the separation between use and payment.

alath said...

Tam,
What's RTWT?
What linked quote are you talking about?

Anonymous said...

"pinata filled with money."

That's how they view all of us in the productive (i.e. private) sector. -- Lyle

Tam said...

Sorry, alath,

"RTWT" = "Read The Whole Thing"

The linked quote in my post leads to a longer passage at my roomie's blog.

alath said...

OK, I see where the misunderstanding arises. I did read Roberta's post and I knew she wasn't trying to argue that tort is the only problem. I was more responding to nguyhem13, who noted that health care prices in Texas didn't drop appreciably after tort reform - hence my 'lots of factors' reply (don't expect major improvement after fixing just one of a bunch of problems).

Just this week we have been discussing a "solution" to a non-problem that will add about $2-300 to the cost of each baby delivered. Seems someone somewhere left a sponge inside a mom (an extremely rare occurrence) and she got an infection (a rare complication of an extremely rare occurrence). So now we are getting all our surgical sponges with little RFID chips in them, and a wand that detects the chips. Every time you catch a baby, you wand the mom afterwards to demonstrate you didn't leave any sponges in. The wands have to be thrown away each time and cost over a hundred bucks. The wand has to be plugged in to an expensive machine that buzzes when the wand is near a chip. The machine has to be built and maintained according to arcane health care industry procedures. The machine has to be tested on a regular schedule. The guy who tests the machine has to be certified (and annually re-certified) to demonstrate he knows how to test the machine. Every nurse who assists with deliveries has to be trained and credentialed on the procedure for wanding and documenting the results (and recredentialed annually, of course). Needless to say, all this adds up.

So, multiply the $2-300 for this nonsense times all the arcane procedures we have to institute every time some freak maloccurence happens somewhere, and pretty soon you're talking about real money.

Tam said...

Oh.

My.

Gawd.

If you put that in a book, people would think it was satire...

staghounds said...

We ARE going to pay a half a million dollars to keep every boomer alive an extra week. It's their right to make us!

#$%^&* boomers.

I have a worse story than that. When my dam was dying in the hospital, the nurse had to irrigate her throat with a long swab. She got the swabs out of sealed boxes that contained some kind of kit, with other throaty looking plastic gewgaws. The rest of the box and contents went in the bioha2ard bin.

There were two swabs in each box. I watched her open four of them in the space of an hour.

I bothered to research- the kits were $47 and change each.

That's right, $22 apiece for q tips.

If you think it's expensive now, wait until it's free.

English gas was $8 a gallon when ours was $1.25.

As to the basic phenomenon, people selling the service deciding how much of it we need, it is AMA2ING how quickly the old woman's essential care needs decreased after I told the doctor we wouldn't pay for anything else.

staghounds said...

And the cost difference applies to drugs- compare the price of Medical with Veterinary examples of the exact same compound.