Vermont is now taking steps to address problems that can arise from this opaque system, including rising health care costs. The state will soon implement an “all-payer” health care plan that requires Medicare, Medicaid, and private payers to reimburse health providers at the same rate, based on performance and patients’ recovery.
My prediction is that if this is implemented, health care costs will be higher than they would have been otherwise. Regulatory systems are made for gaming, and the more formulaic the system, the more effective the gaming.
Rather than thinking we are smart and coming up with the next brilliant idea, shouldn’t we look at similar and different systems that provide improving cost profiles and contrast that with medical service provision?
For example, I know that when I only have one auto mechanic I’m going to get expensive, poor-quality service.
I assume they assume that prices will tack toward the lowest reimbursement, but why not assume all prices will rise to the highest? Doctors already turn away the low reimbursers. My first guess is that they want them back at higher reimbursement rates.
So, you move from a fee-for-service model to a fee-for-outcome model; how do you account for the input condition?
I predict this will end in doctors being involuntarily being ‘assigned’ pools of patients by insurance companies / the state, instead of being able to pick and choose or even claim, “we are not accepting any new patients at this time.” In other words, an inch closer to government contractors / employees.
‘Capitation’ systems have been tried for years and American doctors have already gotten pretty good at telling which prospective patients are going to be outlier ‘whales’ and skunk their metrics via something like a Pareto principle: 10% of your set takes 90% of your resources.
Reforms like this will only increase the incentive to get even better at whale detection, perhaps now via ‘big data’ with algorithms that consider unlawful criteria, but which run through algorithms and data sets so complicated that they can’t be shown to be illegal in court.
And then in the ‘intervention-circumvention arms race’, the government will end up simply telling doctors who to treat, much like defense counsel in some jurisdictions are assigned trouble clients and have to stick with their cases whether they want to represent these problem defendants or not.
Kling should summarize his health care policy recommendations. Republicans have the power and the mandate to push real health care policy change, and all the vocal health policy thinkers have grown silent. I did read most of Kling’s, “Crisis of Abundance”. I hear Kling make good points and criticisms on health. But where are his policy recommendations? Now is the time to publicize them.
In addition to Kling, I’d like to hear Cochrane’s updated policy preferences and the Whole Food CEO guy who so vocally opposed ACA.
Naively I might suggest that:
1/ pay-for-outcome could be considerably superior to pay-for-service and,
2/ we should encourage states to try new models, regardless of whether we agree or disagree with the premise
How do you see it differently?
2=f (1)
Pay for outcome is notoriously hard to calculate, because the inputs are not equal. A healthy person that comes in with a minor problem is cheaper to cure than an unhealthy person that comes in with that same problem. I might require a course of antibiotics for pneumonia, while another person might die of it regardless of treatment offered. Fee for service seems much better in those sort of cases, because it simply costs too much to figure out how sick someone was before they came in for treatment.
Of course, forcing all doctors to charge the same rate is stupid. They are not all equal in ability. The trick is figuring out which ones are worth the extra cost. Having just 3 levels of service would be even better than what we have now. As it stands, with some doctors, it takes months to get an appointment. If there was more pricing flexibility, it would be possible to pay for expedited service.
“the more formulaic the system, the more effective the gaming.”
This quote seems out of place, considering many governmental reforms that libertarians support are to make things more “formulaic” (i.e., going from food stamps/U.S. welfare to a guaranteed minimum, or going from public education to a voucher system).
No. It is the amount you qualify for that would be determined by formula that is to be gamed, not the form of the payment.
Do private payers include individuals that pay the bill themselves?
Treating all healthcare dollars equally would be a good start. How much of medical expenses can you deduct from your taxes?
There are only about 141 accredited med schools in the USA — I know of none with problems in attracting high caliber students. There should be more med schools — maybe even immediately up to the 200 or so number of law schools (as of 2010). More schools, for more supply of trained doctors, is how supply increases reduce the cost.
Most law students are smart enough to become doctors, if they choose to study real science rather than mostly words. It would be better for society to have more doctors — and even to make it easier for immigrants with health training to be here in the USA legally.
What do you think of a regulation that says that doctors must charge all private insurance companies and individuals who pay out of pocket the same? Right now, insurance companies negotiate with medical providers, making some doctors ‘in-network’. This regulation might then encourage patients and insurance companies to take their business to whoever simply charged the least for a procedure and would eliminate the need for lawyers to negotiate the ‘in-network’ contracts. In addition, insurance companies pay way less than individuals who want to pay out-of-pocket, and this regulation may eliminate this advantage of medical insurance. Rich people perhaps could more easily forego insurance too.