Healthcare Cost Containment Part III: Tort Reform Is Not Healthcare Reform

Interspersed with posts about what is happening now, I have been posting a several part history of healthcare cost containment efforts and how it has essentially amounted to creating one straw villain after another in our attempts to find a quick fix. Part I dealt with the focus on Doctors overcharging insurance companies. Part II dealt with blaming the consumer.

As frightening as it is to think of doctors making mistakes with impunity, we find something distasteful about making money off those mistakes. It is like putting a price, or worse, getting rich off the death or injury of a loved one. There is also a sense that by expecting doctors to perform these risky procedures it's a bit unfair to "punish" them when something goes wrong. After all, we all make mistakes at work, only our mistakes usually aren't life and death matters. And now, these frivolous lawsuits for "every little thing" are driving up our healthcare costs and in my state of Pennsylvania, so they claim, driving doctors out of business.

It sounds to many of us like the payouts on some of these malpractice suits are ludicrous, and we are often told that the bigger the payout the more the lawyer gets out of it. Law, especially litigation, is not my field so whether these payouts are "ludicrous" and whether most malpractice suits are "frivolous," I don't know. I do know that in a country where it so easy to end up without coverage for your medical costs, we are putting the cart before the horse when we ask people not to sue over an illness or injury caused by their physician or hospital that could end up costing them millions of dollars in healthcare costs.

If you suffer an illness or injury due to malpractice that forces you to leave your job, you are without coverage just like anyone else. You also now have a pre-existing condition. If you are able to hold onto your medical coverage, your costs could very likely exceed the lifetime cap and you could end up paying the rest out of pocket. All because your doctor made a mistake.

The American College of Obstetrics and Gynecology estimates that "obstetricians can expect an average of 2.53 medical malpractice lawsuits to be filed against them during their career." We always need to be careful with such statistics. That doesn't mean that every obstetrician will be sued at least twice in his career. Two or three could be sued 100 times and it would skew the average. Be that as it may, I have read that doctors who deliver babies are at far more risk of being sued and many have stopped doing it.

In the article I link to in the above paragraph they imply that the reason for so many suits is that everyone wants a healthy baby and normal delivery. When this can't happen we want answers, in other words, people sue out of anger and perhaps grief. Knowing intimately a family with a child who was severely brain damaged at birth I can give you another reason. Raising a severely disabled child can be difficult and expensive. Just the red tape of getting necessary services usually requires one parent to stay home full-time. Both those injured at birth and in later years by malpractice may have to purchase a new home that is more accessible, and even then it will require certain renovations. Special vans will be required for transportation, and while most of us assume our financial obligations to our children will end at some point when they go out on their own, these parents' physical and financial obligation never ends, not even at their death, when they must have some plan in place for the child's continued care.

Of the two people I know who filed a major lawsuit, one for malpractice and one due to an accident caused by an uninsured motorist, neither did it to get rich––and neither of them did get rich. They sued as a last resort to pay the bills. While I can't quote statistics, I'd bet that more often than not, whether it's a man who fell from his ladder while painting or a woman given the wrong medication in the hospital, the story behind the story, the story that will not be reported on CNN or Fox News or screamed about on the blogs, is that these people had medical bills they couldn't pay and suing to get someone else to pay was their only choice.

Certainly all the malpractice suits have had a detrimental effect on our healthcare. Some question how much they actually add to cost, but they have caused doctors and hospitals to cover their mistakes. If we recognize that mistakes will happen, it would behoove us to encourage healthcare providers to come forward with their mistakes as a way to eliminate them. However, until we live in a society where the victims will not be punished by huge costs, tort reform before healthcare reform is putting the cart before the horse.

Single Payer Advocates: Why You Should Support ObamaCare

The problem with polls, or at least the way they are usually reported in the media is that they require a yes or no answer. With regard to healthcare reform, many of the contacts I've made through meetings and organizations don't support any of the current reform options, because they don't believe they go far enough. Many feel that a single payer plan is the only way to truly reform the system.

Until a few weeks ago, I was one of them, and I continue to prefer single payer and remain appalled that it was never even considered as an option. A single payer system involves more than the government simply picking up the tab for healthcare. At its best it would be an overhaul that would lead to an integrated system of healthcare delivery with oversight by a cabinet office or government agency. I still fear that anything less will not contain run away healthcare inflation or ensure delivery to under-served communities. Without cost containment and without the requisite number of doctors (particularly General Practioners) and hospitals to serve all those new insureds, I see a strong possibility for failure.

So it may sound odd that I am exhorting supporters of single payer to get on board with the Obama plan. The reason is what I stated in the beginning of this post. This is being cast both by opponents and our famously no-nuance media as a "for us" or "agin us" issue. If health reform goes down this time, no one is going to re-visit it and push for single payer. Congress will be only too glad to let this drop, hiding behind the excuse that the American people once again decided they weren't ready for change.

Real healthcare reform isn't one of those feel-good issues everyone can get behind, like just telling insurers to cover everybody. Real reform is complicated and requires major concessions from everyone involved (including consumers). Even a half-way measure like a public option means facing contentious issues like denying certain services and reconsidering end-of-life expenditures. Members of Congress today see their job more as a popularity contest and with Americans having notoriously short memories, they'd rather err on the side of doing nothing––which voters will soon forget––than facing the merest chance of a failure that could still be hanging over their heads at re-election time.

While I have my fears that the simple addition of a public option won't be enough, there's still the possibility it could turn into the opponents' greatest nightmare–– a success that will lead to even more changes. If, with the public plan, premiums are lowered and outcomes improved, individuals as well as businesses will vote with their premium dollars and we may achieve single payer by evolution rather than revolution. Once all the dust settles and citizens take the public option for granted as they do Medicare and no member of Congress worth his/her salt would threaten it, maybe it ccould be used as a platform for the next step.

If the public option fails now or eight years from now, it means the end of major healthcare reform, but if we let it fail now, we'll never know if it could have worked or at least served as a stepping stone. That is why it is extremely important for those who prefer single payer to step up and support the public option. Call your senators and representatives, show up at rallies, attend town hall meetings, and make your voice heard. If you are asked in a poll or on the street if you support the president's healthcare reform plan, say yes instead of no.

Don't let the perfect become the enemy of the possibly good.

Healthcare Cost Containment: A Short History Part I––The Doctors

When it comes to current events, Americans lack a sense of history. In the past 30 years I've seen run away healthcare inflation blamed first on the doctors, then on consumers, then lawyers, and then on the insurance industry, as though there can exist only one villain at a time, and forgetting that the prior set of issues were never remedied before we moved on to the next set. I'm now realizing that my career in medical benefits followed the trajectory of cost containment efforts. So here's a little bit of history on what brought us to this point.

In his book, Dr. Howard Dean makes the interesting point that most of the existing healthcare systems of the industrialized nations hearken back to the situations they found themselves in post-WW II. The UK, for example, had no remaining healthcare infrastructure while citizens were in dire need of medical care. The government had no choice but to take over the healthcare system, which they have since continued, not just out of tradition but because they made it work. In the US employers began offering healthcare coverage as a free benefit when wage controls prevented salary increases. Unfortunately for us, what seemed like a good idea at the time has turned into a failure.

When I began working as a medical claims examiner in the late 70s, first with New York Life and then John Hancock, the system that had been in place for some 30-plus years was just beginning to show signs of unraveling. With the exception of Blue Cross-Blue Shield, most employer healthcare products at the time were sold by life insurance companies. As they were not big money-makers they were bundled with more lucrative group life insurance plans.

Back then there were generally only two types of plans. One was straight "Major Medical," a plan with a deductible (standardly $100). After meeting that deductible (which sounds ludicrously low, but remember with lower costs it could take quite some time to meet), the insurer paid 80% of the charge, the insured, 20%. The second type of plan was a mix of "Basic" and "Major Med." Under these plans basic flat fees were paid for certain services according a schedule. E.g. an office visit might qualify for $15. Charges over that amount then fell into the Major Med portion subject to deductibles and coinsurance. Attesting to the vast changes in medical care in just three decades, we actually had a schedule listing a fee for just about every medical service, test, or procedure offered at the time. We rarely received a claim for anything not on the schedule, and the majority of services and procedures recurred so frequently that we were able to memorize the payments. The most important thing to note here, however, is that while the payments might be divided between insurer and insured, the provider always received 100% of the charge, usually without question.

Toward the end of the 70s, several factors came together causing insurance companies and the Carter administration to start looking for ways to contain medical costs.

• A new generation of doctors didn't know what it was to charge patients directly or wonder if they could pay. With faceless insurance companies picking up the tab, there was no reason for providers––doctors or hospitals––not to pad the bills a little here and there.
• With the growing use of antibiotics, development of vaccines, and new drugs and procedures being discovered every day, the public began to see doctors and hospitals as a way to a cure rather than pronouncers of imminent death. Consumers visited their doctors more regularly, underwent more surgeries, and became more demanding of services.
• New developments led to an explosion of new specialities, and more and more young med students began choosing the more lucrative and generally less demanding specialties (and in fairness, they were probably more mentally challenging as well), over general practice.

Employers' cheap added benefit was quickly turning into a very expensive one and they began leaning on insurance companies to do something about it. Thus were born the first "reasonable and customary" restrictions, complicated formulas imposed on charges––usually physicians' charges––to determine if they were too high. The problem was, it didn't have teeth. Only Blue Cross-Blue Shield required doctors to accept the reasonable and customary fee for assigned benefits (benefits paid directly rather than reimbursed to the patient), and many physicians began pulling out of the Blues because of it. Most insurers would simply send statements to the doctor and patient stating what charges were excluded.

I suppose the notion was that the insured would get wise to the physicians and call them out on it. Only, in those days arguing with doctors was like arguing with the Pope. They were considered infallible and they were not beyond excommunication. So patients usually picked up the charge after giving poor claims examiners like myself an earful. Or else the doctor would send some twenty-five page medical report to dazzle us with detail and get us to to reconsider, which, more often than not, is what occurred.

And that, my children, is how the first feeble attempts at healthcare cost containment failed. It is also why a favor a managed care or at least an outcomes-based component of any new reform plan.

Part II will be about the healthcare consumer as villain. However, in between I may not be able to resist focusing on some of the wild lies out there meant to scare people off reform.