Health care in America is a mess, and the presidential candidates offer a variety of ways to fix the problem, but they all seem to leave out one thing: putting consumers back in charge of making their own decisions about medical care. Right now, in large part it is the medical insurers who control health care.
In conversations with family practitioners, I have learned two things. The first is that reimbursement rates for their services have stayed the same for the past five years, while the cost of doing business (staff compensation, rent, etc.) has risen.
My primary-care physician says he has to discount his rates by about 30 percent to be a preferred provider for most insurers, and he has to cooperate with them to stay in business. Patients will leave in a heartbeat if he is not on their preferred provider list.
Second, reimbursement rates for diagnostic services — X-rays, lab services, etc. — have decreased every year. The discount demanded by many insurers is about 80 percent.
I’ve experienced a pricing system that makes no sense. Some years back, I needed an MRI. Because it was not covered by my medical plan, I called ahead to inquire about the price and was quoted $2,500. Hoping for a price break, I asked what the price would be if it were covered by insurance. I couldn’t get a straight answer; too many different insurers and plans, I was told, to make possible an answer.
After explaining that the MRI was not covered by my insurer, the price went down to $1,600. So, why the somewhat secretive pricing structure? What’s the real cost of an MRI for a left knee, and what happens to uninsured people who don’t think about questioning the price?
After changing insurers, I underwent an evaluation that required tests. The invoice of $128 for the testing was discounted by my insurer to $20. Funny, but when my prior medical plan did not cover testing and I tried to get a price break, the best I could do was a 15 percent discount. What’s up with that?
The common factor to all this is that our health-care system does not reflect a free market: It is not controlled by supply and demand but by insurers. They determine the premiums we pay, the reimbursement rates for health-care providers and, based on their preferred provider lists, they lead us to the doctors we should visit.
To stay in business, providers — doctors in most cases — are compelled to be on the preferred lists, and consumers are reluctant to seek care from anyone not on the lists. The consequences are unfair reimbursement rates for providers and elusive pricing schedules for uninsured consumers.
Cost controls exerted by insurers mean that providers, especially primary-care physicians, are forced to see more patients in less time. The result is that quality of care suffers as physicians are reduced to factory-like piece workers. The focus on cost- cutting by ancillary-service providers leads to degraded evaluations. At what point does cost-cutting outweigh competent care and service?
In fairness to the insurers, they have valid concerns. They don’t want to pay invoices that are out of line with the market; some decree of predictability is necessary for insurers to stay in business. Consumers, on the other hand, want reasonable coverage and the ability to make choices in the care they receive. There is a natural conflict between what both groups want.
One way to address the problem, at least in part, is to minimize the insurer’s role and move the system in the direction of giving consumers more control. We should think about insurance plans that provide consumers with a certain dollar amount each year, to be spent on whatever care the consumer chooses, whether it be unscheduled examinations for illness, annual physicals, outpatient services, etc. Preferred-provider lists should go out the window, allowing people to choose their own providers. Some insurers are already headed in this direction by offering reduced premiums for consumers paying a larger share of the costs incurred for these services.
Consumers need to change their mind-set, as well. Forty years or so ago, people fully paid their medical expenses. Now, if we have insurance, we think we are entitled to a $20 co-pay for most everything. Where else do we get away with paying such modest amounts for the services we receive? Want a new roof? You pay the entire cost. Need new tires? No co-pay there.
For everything other than medical care, we shop around for the best price, and sometimes we choose to do without. Being tied to a list of preferred providers may no longer be the working model. We need to start thinking about cost-benefit choices for medical care, just as we do for other things. We should be allowed to make our own decisions on what treatment we get and who provides it, just like Americans did not all that long ago.
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