U.S. health insurance is a complex nightmare

boing
41

Well said, and very much agreed!

My past life was working data analytics and doing ad-hoc work on Wisconsin’s various programs (Medicaid, Medicare/Badger Care, etc.).

It really sucked when I tried to proactively expand our ability to do trending and run some algorithms on more complicated datasets. I couldn’t accurately control for health outcomes by condition combination and socioeconomic factors, even when comparing variance vs. well documented sample sets. . . and that was in one of the areas that we actually had all the data needed to make the analysis (do NOT get me started there!)

I basically just had to calculate a ‘sick factor’ ratio and keep resampling it so I didn’t end up with decision trees where ‘Are they American?’ was always the first branch sigh

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42

The vast majority of doctor visits are not emergencies. The vast majority of surgeries are not for immediately life threatening problems. The fact is, you actually do have the time to shop around for most medical services, but no one does and there is very little reason why anyone insured would.

As long as it is overly complicated to get a price quote for a service, there is lack of transparency around a given hospital or doctor’s performance and the average person is insulated from the actual cost of procedures by insurance, there is nothing approaching a workable free market.

Even if you had all these things, I’m not sure someone needing a hip replacement is going to travel, possibly long distances, to go to a cheaper hospitals. Then again, medical tourism does exist and there are people flying to Brazil and India for cheap procedures right now…

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43

Your section on insurers turning evil was instigated by competition. GASP. Competition caused a problem in the bestest of the best of Capitalist lands?!? Well, yes it did. Here is how it works, in a nutshell.

There is a finite pool of health risk. If you went person-by-person in the country and assessed their health, you could categorize everyone into various levels of risk, as in how much that person would ultimately cost the insurer. In the Disneyland fantasy of health insurance in the 1950s, there was no competition. As soon as there were two or more big players in the state arenas, going head-to-head for customers, they started playing with their respective risk pools. They began doing whatever they could to push the high risk individuals OUT of their risk pools, what is called decreasing moral hazard. In other words, the competition increased their incentive to guard against risk, to maximize profits in a finite market.

Insurance guards against risk by careful selection of the insured, so that they have many more healthy people paying premiums than they have profoundly sick, sucking them dry.

You did address this, but you didn’t state the root cause. The root cause of the cherry picking and immoral behavior is competition in this specific market. Not all markets are the same. In THIS one, POPULATION HEALTH, competition is a bane.

And to make things worse, we are currently in an era where the powerful insurers are hellbent on proving that competition is good, because it leads to their maximum extraction of money from the population, for minimal services.

It is a paradoxical thing, because competition between care delivery systems and health research CAN be useful. But competition regarding who is insured and who isn’t is counterproductive. People can’t keep this cognitive dissonance straight in their heads. People who value their freedom and ability to make money in our free market system are supposed to believe that removing competition among insurers would enable cost reductions and better care? They get totally enraged, irrationally enraged. They can’t compute it.

But the system itself isn’t rational. You cannot compete for risk in a finite risk pool for profit and still ensure maximum health. The two ideas are simply incompatible.

I could go on, but I am getting enraged.

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44

You are correct; it’s awful. It happened because the plan was to make sure all individuals are covered, and therefore the entire risk pool is accounted for, one way or another. But rather than forcing insurers to insure everybody, they put the onus back on the consumer to get insured. It’s just one more flavor of the irrationality that has gripped the nation regarding health insurance.

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45

Btw, they already do “collude”. It already is a perfect storm of high prices. Every procedure is negotiated between the providers and payers. These lists are haggled over continually, and prices jack up up up because insurers pay out at less than 100% but hospitals know that some procedures are higher margin than others at their facility, and use that as leverage to negotiate the prices for each item in the list. It’s an active arms race. This is why you can get the exact same surgery in two different parts of the country and the billing is COMPLETELY different, sometimes off by tens of thousands, because of the perfect storm.

46

Can you say more about this? You have my attention.

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47

Oh man, where do I start?

I kind of swam in the Data Warehouse, and it was really important to me to get an ability to get as much of a ‘story of Joe’ as I could, because . . . well, that’s a LOT of data, and there’s a lot to weed out, each claim can be coded differently depending on what type of claim it was, and facilities use ICD-9/10 codes differently and the like, it’s a really big mess.

So, after learning what I could and stealing from some giants (like pulling the tables out of the CDPS grouper) and starting to do a general translation to simpler language I thought it would be a good idea to get in front of the ICD-9 to ICD-10 conversion. In case you haven’t guessed, ICD-10 is the newer one, and guess what country is slow to adopt new things? There were better de-identified data sources over in Europe and I figured ‘hey! I can use these to help trend things!’ I’d been particularly frustrated by how incomplete some of our data was, so I was hoping I could come up with a system where I could do good predictions.

Long story short, in a whole lot of realms it seemed like ‘Being in America’ kept bubbling up to the top when it came to most forms of poor outcome analysis. . .even generic decision trees in tools like Rapid-i found that one in no time flat, and I was frustrated because it made this massive repository of great info useless, you know? So I basically set up a little factor value that I’d run against combinations of conditions (+diabetes II, +CHF, -High Lipids and so on) so I at least wouldn’t have all my baselines be totally out of whack.

I ran into a similarly exasperating problem searching for root causes for high cost and problem pregnancies, where by far the strongest predictor of a high cost childbirth was that I HAD NO DATA ON THEM! I mean, we didn’t always get everything right away from private insurers, but pattern was strong going back, too . . . which kind of pointed to people needing prenatal care but not getting it because of our healthcare system, but obviously I wasn’t able to get any headway on that (Scott Walker got elected and hooo-boy did things get political!).

So, yeah. . . pretty questionably efficient system. I was less than pleased. I suspect mental health may also be a factor in the original variance, because I’d find some pretty strong correlations between physical outcomes and even some forms of depression (much less more consistently diagnosed conditions like our poor bipolar and schizophrenic folks had to deal with), but our history documentation and the difficulty in lower income folks getting to see a psychiatrist for anything other than meds do indicate a slightly different pattern.

I have no real idea what the roots are behind the drop I saw here in the US, probably a combination of it being a stressful place to live (with uncertainty about our future being treated as if it was a good thing) and a generally messed up and crappy system. Either way, outcomes are crap despite spending an insane amount of money.

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48

Aren’t the UK tax rates much higher than the US though?

Actually, doesn’t look terribly different in those charts, though the numbers are from 2000. Also, holy hell, check out Hong Kong for low taxes.

49

One of those really hilarious misinformation things. Here in Canada we pay less taxes at almost every level, and yet have much, much better health care. I pay about C$65/month for my family because I’m in one of the 3 provinces that make us pay anything at all. (My employer pays the other $65). Dental is private and less wonderful. Drugs are private up to (I think) $2000, after which we are covered.

Over the past 8 years my kids have been to the ER a total of 8 times, any one of which could have broken my bank account. I personally have had 3 significant procedures, none of which cost me a penny.

In the waiting room of the ER there is a sign listing the costs for non-residents to use the services. I had always assumed that they were artificially inflated to boost revenues for the hospital etc. Now I realize they actually are something of a bargain for people from the US. Seriously, only $2500/day for a private room? Only $1000/hr for the OR? Laughable in your system.

We are definitely not socialist - far from it. But if this is socialized medicine I’ll take it.

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50

The US government currently spends about $1T/year on health-care, mostly through Medicare and Medicaid.

In the UK, the NHS costs about $3k/person/year. There are a bit over 300m people in the US. Multiplying the two together, we get a total cost of a bit over $900b/year. In round figures, $1T/year. The same,

The amount of money the US government is currently spending on health-care would pay for an NHS equivalent. No additional taxes or spending required, everyone covered.

The other $1T which is currently spent on health privately, mostly through insurance, would get used for other things.

The gross health outcomes for the NHS are slightly better than the current US system, or the same. For instance, the UK with the NHS achieves a child mortality of 5.1 (US: 7.5) while the life expectancy is pretty much the same (UK: 80, US: 79).

The real problem is that no politician wants to be associated with “slashing health by 50% or $1T/year”.

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51

Right, because actually solving problems is an anathema to our political system.

Why is this true?

53

Short answer: because there’s no effective large-scale organized resistance to the political system in the US.

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54

That’s never going to happen. The system plays to the strengths of the unreasonable.

IMHO the only solution is to exploit other constructs, turn something else into citizenship and start throwing up actual options. A democracy that people never choose to be part of was never going to work anyway.

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55

I disagree. It’s reasonable to work with the conventional political paradigm. The challenge is to come up with a new paradigm, and begin to realize it. Then it starts to become reasonable for more people to switch from one paradigm to another.

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56

Oh, it’s not about avoiding solving problems — the key is in the subtle difference between “slashing health costs” and “slashing health”. It’s too easy for a politician’s opponents to blur the borders between the two concepts, aided by people who have genuine concerns that the government will slash the wrong half.

Then there are the people who are currently pocketing the extra $1T/year and would prefer to continue doing so. $1T/year buys a lot of hot air and misdirection.

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57

Right, so let’s get on that, then!

Too few of us have been working on this for too long, it should raise the bar a little, right? Our health care system was the seed of this thing. . .help us figure out how to make it work for enough people to kick it into gear, or show me something better to throw my heart into.

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58

RCA on health costs/outcomes is definitely a tricky business. You might be interested in a book called Tracking Medicine, by Wennberg. He has followed many different analytic paths to arrive at a good way to understand root causes of our messed up health care system… I know the guy. He’s solid. Good job for trying!

59

I used to work in medical device engineering. It’s true that the parts and such are not that much more expensive than those used in regular equipment, but there is a ton of hoops you have to jump through, for good reason, that add to the cost. So, for example, we had to be able to track every single part in every single device in case any one of those parts were ever recalled or found to be defective. We also had to have a really tight chain of control over ever part so we could document exactly who had had it when. The devices had to be tested by UL to make sure that they met requirements for electrical emissions and fire hazard. We had to use components that met European safety standards in order to sell in Europe. We had to have the plant inspected to make sure that we were following the standards required by the FDA - our plant could actually be shut down immediately if we were found to not be. So, there were extra people who made sure all these requirements were met, and UL testing is insanely expensive plus adds a ton of time into the process. Mostly I felt like all those things were really good things to have; probably of all we did, the UL testing is the one that really was just a huge racket. Although it’s great to make sure things don’t catch on fire, the cost was ridiculous and the people were just super petty about stuff for no reason.

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60

Of course, here in Great Britain we solved this very problem decades ago. But the mess reminds me of a Radio 4 programme here:


… in which it turns out the City of London’s main aim in the pensions and share trading markets is to enrich its operators, not the investors. They do this using excessive complexity, confusing pricing schemes, and simply lying about what they want you to pay. When you invest in a pension, a suprising amount of it is leeched out by what seem on the surface to be reasonable charges. But they add up to ensure you barely get out what you put in, and the balance goes to various shadowy (but rich) brokers.
The service providers like your health care industry ensure they stay rich by preventing you from knowing what they’re doing, and lobbying government to make sure you never find out or change their priviliged position.

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61

I agree with the statement that getting the information is overly complicated, but I disagree with the idea that you have time to shop around for “most” medical services. That assumes that the patient either has the depth of knowledge or an ability to get the knowledge to determine how long they can let a condition go before it becomes life-threatening or causes irreversible damage. Say I get a lingering cough. Is it bronchitis? Pneumonia? Something worse? How long should I “shop” before I seek help? If it requires treatment other than rest and letting it run its course, how much suffering and discomfort is it “reasonable” for me to endure while shopping? One day? Two? A week?

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