Health care not quite affordable
November 15, 2015
At DocSpot, our mission is to connect people with the right health care by helping them navigate publicly available information. We believe the first step of that mission is to help connect people with an appropriate medical provider, and we look forward to helping people navigate other aspects of their care as the opportunities arise. We are just at the start of that mission, so we hope you will come back often to see how things are developing.
An underlying philosophy of our work is that right care means different things to different people. We also recognize that doctors are multidimensional people. So, instead of trying to determine which doctors are "better" than others, we offer a variety of filter options that individuals can apply to more quickly discover providers that fit their needs.
November 15, 2015
Open enrollment season is upon us and many people are reviewing their options for health insurance. The New York Times reported that many consumers feel that they still cannot afford health care. The twist in this article is that the people mentioned weren't complaining about insurance premiums, but rather their deductibles (the dollar amount that a patient is responsible for paying before the insurer starts contributing, excepting certain things such as preventative care). Understandably, there's a tradeoff between saving money upfront (lower insurance premium) and saving money later if something happens (lower deductible). The same tradeoff applies in automobile insurance.
The current administration has been touting how affordable health insurance is under the Affordable Care Act. Indeed, many who literally were previously unable to purchase health insurance on their own can now do so. However, as the article points out, this type of catastrophic health insurance isn't what many had in mind, leading some to drop their insurance policies. To some extent, this points to the marketplace perhaps inadequately informing consumers about the implications of their choice. To a greater extent, that health care is either too expensive in the premiums or in the deductible points to medical costs themselves being expensive. One person was quoted as saying, "I'm better off not purchasing that insurance and saving the money in case something bad happens." That statement suggests a lack of understanding that if something truly catastrophic happens (e.g. cancer requiring treatment), the savings in monthly premiums -- even when added up over a lifetime -- would not be sufficient to cover the current costs of standard treatment.
The premium versus deductible tradeoff gives people a chance to guess how they will come out ahead, but it doesn't actually address the underlying cost structure of health care (discussed, for example, in Steven Brill's "Bitter Pill"). I don't think there will be an easy answer to that problem (e.g. regulating physician fee schedules comes with its own undesired side effects), but I think that problem is one that will need to be addressed. The Affordable Care Act is only one step -- albeit a big one -- in America's journey to resolve its health care issues.
November 08, 2015
Preferred provider organization plans (known as PPOs) generally cover a bigger portion of the cost of medical care if a patient sees a doctor who is out-of-network (the major alternative, known as health maintenance organization plans -- or HMO plans -- often do not cover out-of-network medical expenses, except for emergency care). Understandably, many consumers prefer the breadth of choice that PPO plans offer compared to HMO plans. However, that choice comes at a financial cost, especially since out-of-network doctors can charge much higher prices. That financial cost would be seen in the monthly insurance premiums. When the financial difference is heavily subsidized (e.g. by an employer), healthcare consumers might choose either. On the health insurance exchanges, however, it appears that in many cases, not enough consumers are selecting PPO plans for insurers to find it worthwhile to continue offering the plans.
It's possible that people who shop on insurance marketplaces tend to be more price-sensitive than those who don't and as a result, PPO plans are less likely to survive in that context. Regardless, that PPO plans seem to be in decline on health insurance exchanges suggest that the industry itself is subject to change as healthcare consumers become more value-conscious. Perhaps at some point in the future, insurance plans that offer narrow provider networks will become more popular, forcing more providers to also compete on price.
October 30, 2015
We're just a couple of days away from open enrollment on HealthCare.gov and there have been a number of news articles about the expected price increases in insurance premiums. Unfortunately, it seems that insurance premiums in individual marketplaces are set to increase dramatically in a number of states. The New York Times reports that Minnesota will see an average increase of 49 percent for Blue Cross and Blue Shield of Minnesota plans. Alaskans apparently will also face tremendous increases, although that seems to due to how few people live in that state.
Health Care Cost Institute issued an interesting report about health care costs and utilization. It found that health care spending for individuals younger than 65 on employer-sponsored insurance plans grew by 3.4% in 2014, even though utilization for every subservice category fell, except for use of generic drugs. Meanwhile, the average price paid rose in every service category. In other words, people are using health care less and paying more for it overall. Of special note is that the expensive new drugs used to treat Hepatitis C accounted for about two-thirds of the increased spending per capita for brand medications.
Overall, this suggests that payers generally haven't yet figured out how to reign in unit prices for medical services to be in line with inflation. After enough consumers select high-deductible plans and sufficiently useful tools roll out to support comparison shopping, I would expect the growth in prices of medical services to slow.
October 22, 2015
One of the goals of the Affordable Care Act (colloquially known as "Obamacare") was to make health insurance affordable to everyone. This was an important part of the legislation since insurers could no longer deny insurance coverage to people (or charge more) simply because those individuals have pre-existing conditions. To make it financially viable for insurance plans, large numbers of people without medical conditions would need to enroll in the plans in order to offset the known costs of many individuals who had expensive pre-existing conditions. Otherwise, the insurance premium could spiral upwards as smaller insurance pools raise premiums to cover some pre-existing conditions, causing some people who don't have pre-existing conditions to drop out for financial reasons, which in turn, might cause the premiums to rise even more. The legislation, however, did very little to directly try and control costs.
Unfortunately, it appears that health insurance is still out of reach for many lower-income individuals. The tax for not having adequate insurance starts small and is legislated to increase over the years, causing insurance to look more attractive over time. Merely increasing the penalty may simply apply more financial pressure on those who cannot afford insurance. Instead, one long-term trend that is more likely to be helpful is the development and adoption of tools that help consumers better evaluate value when considering medical procedures. If consumers are able to increasingly choose higher value options, then the underlying costs might actually become mitigated, resulting in lower insurance premiums.
October 18, 2015
As medical providers have experienced declining revenues over the last decade or so, some have turned to various ways of recouping lost revenues. One practice that has garnered attention in the last year has been the practice of balance billing for out-of-network providers. Earlier in the year, media outlets have reported on people being surprised by out-of-network bills, even after they verified that their places of medical care accept their insurance plans.
Such practices fly against purchasing conventions: in what other industries do customers routinely find out how much they owe only after the procedure has been done? Earlier, New York passed legislation to prevent patients from being saddled with these surprised bills and now, their attorney general has gone after four urgent care center chains to get them to clarify whether they would be considered in-network for the plans listed on their websites. Apparently, some centers had depicted themselves as accepting specific insurance plans, even when they were considered out-of-network by those plans. Hopefully, transaction details like these will be increasingly cleared up so that consumers can more easily make decisions about where to be treated.