We can’t fix our health care system unless we do so based on facts … and that’s not happening

When supposedly credible advocacy groups post this kind of nonsense, we get nowhere and Americans are mislead. None of the above is true!

All of the above processes have been applied to health plans for more than fifty years. I first processed claims for an employer plan with deductibles and co-pays in 1961. The deductible of $100 in 1961 would be $2,173 in 2019 just reflecting medical inflation ($4,346 for a family). All prescriptions drugs were subject to the deductible with a 20% coinsurance on the retail price.

Self-insured employers typically initiate the changes in health benefits. Under such plans there is no profit motive or financial risk for the insurance or other company administering the plan and paying claims. The goal is to manage costs. To the extent this is effective it is reflected in premiums and employee payroll deductions.

No insurance company has a policy of denying valid claims to increase profits. Of course errors occur in provider billing and claim processing sometimes resulting in denial of a valid claim. All plans by law must include a claim appeal process, included expedited appeals when necessary and required independent review.

Deductibles and co-pays are designed to assure the insured have some involvement in cost sharing. Congress recently changed Medigap policies to prevent coverage for Part B co-pays for the same reason.

Preauthorizations are designed to minimize unnecessary health care spending and often have the benefit of questioning procedures, despite how it is perceived by patients and physicians.

Networks are intended to manage costs by negotiating lower fee allowances. It is a concept that goes back to the start of health benefits in the 1940s.

Bottom line; you can’t run any health plan, public or private without employing these strategies in one form or another and also keep the program affordable.

3 comments

  1. I guess the person who wrote that must be a youngster. In the 1980’s I was offered an HMO. The HMO was billed as a way of reducing costs by making it easier to go to your primary care physician instead of going to the emergency room to be treated because you waited too long. I guess that HMOs work too well because people went to the doctors and the HMOs became expensive, sort of. I say sort of because it is true that they are more expensive up front (monthly premiums) vs high deductible plans but they are a predictable cost each month with much smaller co-pays. High deductible plans have small payments but you can pay several thousands of dollars every year exceeding the total cost of the HMOs plus co-pays. It all depends on your medical pre-existing situation.

    My guess is that HMOs worked too well for access since costs for employers went up. Patients did not care what test or pill they were given because they had a very small co-pay and no incentive to keep cost low and neither did the doctors at first. HMOs have mostly disappeared or became very limited and expensive for a reason.

    Unlimited and unrestricted access M4A will cause it to destroy itself like it is currently doing in the UK. Healthcare was one of the big issues in the UK elections yesterday. That should be our warning.

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    1. Hi Dwayne:

      Just a word or two on the Brexit/British NHS thing going on now …

      I lived in England from mid-1977 to mid-1979 – some 4-6 years after England joined the EU (1973). At that time, the “price of admission” for England was a 6% Value Added Tax (VAT – essentially a “sales tax”), paid to Brussels by “high-producing EU members” to offset the lesser productive economies of the EU. Pure redistribution.

      Today, or at least as of 2 years ago when I went back to the UK, the VAT was 18%, and climbing. THAT is a major reason for the British people wanting to leave the EU – they’ve grown weary of paying to support crippled economies of the southern EU, AND having to limit the productive capacity of their own economy based on the dictates from Brussels. Their own form of “no taxation without representation”, as it were.

      But much of the “news” you read about the NHS system “problems” is related to Brexit only insofar as the NHS system is “lobbying” for a good bit of that no-longer-required VAT to Brussels result of Brexit. It’s “posturing” for the UK government to maintain at least a part of the VAT, but have it diverted to NHS instead. If you check the BBC News, and other sources, you’ll see that the British government funded school/education system is also crying “catastrophe” as well.

      Point being, you and Mr. Quinn (and I) are fundamentally correct – an M4A system, or any type of “national” health care system implemented here, will have the same result: A health care system subject to the grossly un-lovely political process, and all the taxes associated therewith.

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  2. Mr. Quinn:

    “Deductibles and co-pays are designed to assure the insured have some involvement in cost sharing.”

    I strongly endorse that concept. I would very much like to see the health care financing system modified to incentivize individuals – rather than Government/Insurance companies – to be the Payer-of-FIRST-Resort for actual delivered health care. But the health care financing system that has evolved has made Insurers and Government the Payers-of-First (or only)-Resort – complete with their “negotiated” prices/limits/constraints/networks/administration/add-on costs/etc.

    Where are the INDIVIDUAL income tax deductions for out-of-pocket medical costs/co-pays/insurance premiums/insurance deductibles/etc.???

    Why is there such INDIVIDUAL income tax deductions ONLY if they exceed 10% of income, then ONLY if the individual taxpayer Itemizes deductions rather than taking the Standard Deduction, AND THEN ONLY for a select few medical expenses paid for THEIR OWN benefit only????

    If I (or Warren Buffet, Jeff Bezos, Elizabeth Warren, my next door neighbor, etc., etc.) divert part or all of my (their) income to pay for either my (their) own, or ANYBODY ELSE’S actual incurred health care costs – to include health insurance premiums – WHY DOES THE GOVERNMENT INSIST ON TAXING MY (Their) INCOME BEFORE IT CAN BE DIVERTED TO THAT HEALTH CARE PURPOSE???

    (The obvious exception is the “untaxed” Employer-Paid health insurance premiums. But why does someone need to be employed, or even employed by the “right” employer, in order to receive that “tax benefit”? And why shouldn’t the “new” increased insurance deductibles/co-pays/out-of-pocket-costs/etc. also receive that “tax benefit” – even for those who do have Employer-Paid plans???)

    Is actual Health Care delivery and fair compensation to the Health Care Providers the IMPERATIVE in this country, or is Government Taxation the ONLY REAL IMPERATIVE????

    Might want to start asking your CongressCritters – and the Democrat AND Republican campaigners – these questions. Might also want to ask them if they will support the President’s Heath Care Price Transparency Executive Orders recently announced.

    There are proper and optimal roles for Individuals, Insurance, AND Government in the U.S. Health Care and Health Care Financing systems. Just NOT the roles currently defined OR “projected” by the M4A crowd and their ilk.

    First and foremost Role for Government is INCENTIVIZING Individuals to provide more of their own health care, from within the INDIVIDUAL INCOME TAX CODE!
    Second Role for Government is breaking up the “Cartels” of top-secret “Price/Provider Negotiations” between Insurers and Health Care Providers – by enforcing PRICE TRANSPARENCY in Health Care!

    The optimal Role for Insurers is just that – providing financial protection/insurance against catastrophic costs of unanticipated health problems.

    OR …

    We can just sit back and watch as Health Care and Health Insurance costs continue to grow at 3+ times the rate of general inflation – until a majority of people in this country come to the conclusion that the only way to stop that is …. M4A!!!

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