With Private Health Insurance, Waste Is Revenue

[eridani]

http://www.counterpunch.org/2015/03/02/five-years-in-hows-the-affordable-care-act-doing/

In addition, the complexity of plans, each with its own marketing, paperwork, enrollment, premiums, rules and regulations, also contributes to an enormous administrative cost overhead.

I spoke about this with James G. Kahn, M.D., MPH, who is a researcher at the Philip R. Lee Institute of Health Policy at the Univ. of Cal., SF, and senior author of a recent study analyzing grotesquely excessive administrative costs of insurance companies and how it diverts several hundred billions of dollars annually from actual hands-on medical treatment.

What appears as wasteful to the normal person such as the enormous resources devoted to complicated billing and other insurance related activities (BIR), as documented by Dr. Kahn, is considered as income and revenue by insurance companies because they charge for these excesses.

Thus, extravagant squandering of funds and resources is endemic to the business model of insurance companies and precisely because it adds to their bottom line, there is no incentive to eliminate the bureaucratic discombobulation.

Healthcare economics scholar Uwe Reinhardt expressed his exasperation even before ACA in his Nov. 19, 2008 testimony to U.S. Senate Finance Committee: “900 billing clerks at Duke with 900 beds. Not sure we have a nurse for each hospital bed but we have a billing clerk. It’s obscene.”

This chronic problem has grown with ACA.

[Hoyt]

1. Yes it is, and a big part of the problem is health care providers who insist on being paid for all

the tests and stuff than can order and profit from. The government and insurers have been trying to move the reimbursement system to payment for episodes of illness and outcomes. Providers won't have it and even a number of folks here don't see it as a better way.

[JayhawkSD]

2. "...payment for episodes of illness and outcomes."

I have had pneumonia three times in the past four years. (I have severe emphysemas, so...) One time it was resolved with two weeks of antibiotics and rest at home. One time it required a week in the hospital and IV antibiotics. The last time it required more than two weeks in the hospital with IV antibiotics.

Should my health care cost have been the same for all three episodes? Each time I had the same diagnosis; pneumonia. Each time I had the same outcome; the pneumonia was resolved. So each time the cost should have been the same, whether it was no hospitalization, one week hospitalization or almost three weeks hospitalization. Right?

We want payment to be based on "episodes of illness and outcomes," and I had three episodes of identical illness and the same outcome.

[eridani]

3. Yes--your health care should have cost the same each time, that is ZERO at the point of service

Works like the fire department--everybody pays, though only a few people have fires in any given year.

[JayhawkSD]

4. Well, yes, that is a very good point.

But that is not "payment based on illness episode and outcome," which is the proposition to which I was responding. It is simply the provision of health care service and it is, indeed, what our society should be doing. (I was actually responding to comment #1.)

Your example is particularly apt, because at one time there was no general provision of fire protection service. Fire protection was by subscription only and was carried only by those who could afford it. The system was a spectacular failure for our social order, and we went to general provesion of fire protection service for the good of society.

Your suggestion would have doctors working for a salary, which is what pretty much everyone else does, so I'm not certain why they should not.

[Doctor_J]

5. a travesty. And now permanent. And costing me 15 times as much as before.

The only thing I can say on my behalf is that I voted for a presidential candidate who promised that people would not have to depend on those blood suckers any more. But that candidate never took office. A look alike corporate concubine was sworn in.

[Zorra]

6. Yes. Big K&R, thanks! nt