AP Photo/Paul Sakuma
'Tis the season for health care reforms. Everyone is talking about it. Or at least, every policy geek is talking about it. While most are focusing on the battle royale between Democrats and Republicans over whose ideology will produce the healthiest Americans, others are rolling up their sleeves and taking a look at the nuts and bolts problems we need to fix.
Anti trust reforms
When Congress passed the Sherman Antitrust Act of 1890, it was intended to curb the market abuses of companies that had grown too large. Apparently, the invisible hand of the market was not invisible where these companies were concerned: it was just not there. So much for Libertarianism and Laisse faire.
The act has been used countless times to reign in mega corporations who sat on a market preventing any innovation and keeping prices high, most notably with the breakup of Standard Oil and AT&T. A period of intense market development and competition followed these breakups.
However, some industries are exempt from anti-trust laws, including -- you guessed it -- insurance companies. While these exemption was justified to allow them to share actuarial data, it has resulted in market-splitting, pricing fixing and all of the other nasty behaviors that the Antitrust laws are meant to prevent. For instance, even though there are no state laws prohibiting insurance companies from selling across state lines, none sell in all 50 states. It seems these markets have been nearly divided by mere chance.
There are two bills before congress to repeal the insurance company exemptions. Predictably, the insurance companies are against them. Predictably, they predict higher premiums and fewer choices if they are forced to compete.
Educating Consumers
A recent Pew study found that while 63% of patients felt there was unnessary testing and duplication in medical procedures, only 16% felt that their procedures were duplicative and wasteful. We are conditioned to trust our doctors, and all too often our doctors are covering their backsides as carefully as they are checking out vital signs. Insurance companies have long known that as much as 40% of all health care dollars are spent on unnessary procedures, and yet they to little to clamp down on this.
Aetna in 1994 tried to do this and found themselves the target of countless letter writing campaigns, villified as literal demons. It turned out to be such a bad experience they backed off and decided that raising rates would be less traumatic.
We as consumers forget that when it comes to costs, the insurance companies are on our side. When they keep costs down, it results in lower premiums for all of us. Of course, it seems we only want them to keep costs down for everyone else.
The answer is an informed patient, informed by their doctors, pharmacists, nurse practitioners and yes, insurance representatives. For example, the male prostate test PSA has been shown to result in 43 false positives for every cancerous growth caught. The vast majority of prostate tumors are benign. 43 men go through painful biopsy procedures for every cancer caught, with all of the attendant complications.
There really is no "right answer", and yet doctors routinely advise patients to get the PSA. Doctors who have practiced evidence based medicine and informed their patients of the risk/reward statistics are sued when the one patient who decides that 43:1 odds look pretty good actually ends up with cancer. Once sued... twice shy. And we all end up paying more.
Let's start by requiring fully informed patients. We should require caregivers to advise us of all of the risk statistics so we can make up our own minds.
Transparent hospital pricing
Can you think of any other industry in America where you are not told the prices of the things you are buying? Yet hospitals, one of the largest market segments in our economy do not inform patients of the costs. Primarily this is because patients are not the ones paying for it. Insurance companies negotiate the price for procedures with groups of hospitals.
But this lack of transparency leads to abuse, with hospitals charging cash patients $58,000 for a single night stay. Hospitals should be forced to disclose the prices they charge for procedures not only to cash patients to but to all classes of customers. Hospitals are de-facto monopolies in more than one way. Not only is there never a hospital across the street you can go to if you dislike the prices or service, but no patient having a heart attack is going to worry about price anyway.
This de-facto monopoly status means it is justified to impose the same pricing and profit controls upon hospitals that we impost upon electric utilities.
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