Monday, October 26, 2009

Medicare vs. Private Plans


Robert Samuelson, whose prior commentary on healthcare reform issues is pretty atrocious, again takes on the subject. A brief response to a couple of his points:
The public plan's low costs would be artificial. Its main advantage would be the congressionally mandated requirement that hospitals and doctors be reimbursed at rates at or near Medicare's. These are as much as 30 percent lower than rates paid by private insurers, says the health-care consulting firm Lewin Group.
You know what I would love to see, and what people like Samuelson would probably hate to see? A full, public disclosure of private insurance company reimbursement rates. You see, Medicare reimbursement rates are public - anybody can access and review them. Health insurance companies keep their reimbursement rates under wraps. I'm really not convinced by the argument that "Medicare rates are 'as much as' 30% lower than our secret rates" - it's easy to cherry pick an outlier to make such an argument. Let's see the real numbers so we can determine for ourselves whether Medicare truly undercompensates the doctors... who voluntarily accept it... or if the insurance industry is again playing games with statistics or "making stuff up" to subvert the debate.
As for administrative expenses, any advantage for the public plan is exaggerated, say critics. Part of the gap between private insurers and Medicare is statistical illusion: Because Medicare recipients have higher average health expenses ($10,003 in 2007) than the under-65 population ($3,946), its administrative costs are a smaller share of total spending.
You see, administrative costs go up when plan members don't get sick and don't make claims. To enjoy cost savings in administration, you need to insure people who get sick a lot, go to lots of different doctors, hospitals, and other treatment facilities, and create an avalanche of claims for reimbursement each time. This is why private insurance companies were so eager to insure the elderly prior to Medicare, and why they complain so bitterly that the government excludes them from that market - or inadequately subsidizes their participation.
Likewise, Medicare has low marketing costs because it's a monopoly. But a non-monopoly public plan would have to sell itself and would incur higher marketing costs.
Medicare Advantage plans don't compete with Medicare? Private prescription plans for seniors don't compete with Medicare? Wow, when you ignore the facts and make stuff up, you can make all sorts of interesting arguments.
Even Hacker concedes that without reimbursement rates close to Medicare's, the public plan would founder. If it had to "negotiate rates directly with providers" -- do what private insurers do -- the public plan could have "a very hard time" making inroads, he writes. Hacker opposes such weakened versions of the public plan.
But wait a minute. Don't a lot of private insurance plans avoid the need for actual negotiation - or even a lot of the difficult, costly work in developing reimbursement rates - by tying the scope of their coverage and their reimbursement rates to Medicare rates? If Samuelson is deferring to Jacob Hacker as an authority on this subject, perhaps he should start by reading what Hacker has to say:
Over the last two decades, moreover, Medicare has increasingly emphasized improved payment methods and rigorous reviews of technology and treatment, and it has made increasing investments in quality monitoring and improvement. Revealingly, private plans generally use the public Medicare plan’s criteria for covering treatments as their standard of medical necessity, and they have adopted many of Medicare’s innovations in payment methods. As Robert Berenson and Bryan Dowd note in a recent Health Affairs article, “Traditional
As for "marketing expenses"....
In one study that assumed widespread eligibility, the Lewin Group estimated that 103 million people - half the number with private insurance - would switch to the public plan.
When half of people with private insurance say, "I don't know how much a public plan will cost or what it will cover, but it has to be better than this ****," why does Samuelson find it so troubling that the industry will face competition?

6 comments:

  1. your smoking crack

    ReplyDelete
    Replies
    1. Such clinically incisive insight, I cannot wait for you to utter your next syllable.

      Delete
  2. First, the proof that medicare pays less is clear, because most doctors DONT ACCEPT MEDICARE because it pays less, its not a myth. Second, State politicians WRITE the Medicare Reimbursement Schedule which like you said, "by tying the scope of their coverage and their reimbursement rates to Medicare rates", insurance follow Medicare as guide. In other words... POLITICIANS FIX THE PRICES OF ALL HEALTHC CARE PRODUCTS SERVICES PROCEDURES UTENSILS DRUGS. They they force you to be in state from 1-3 selected insurance companies, you are forbidden to buy from elsewhere, then they completely control the supply of major segments of healthcare, like hosputals, surgery centers, diagnostic centers, rehab centers, out patient centers, etc... they control it by severely limiting the amount of competing service centers that can open, or operate through State Laws and C.O.N. laws, then they fix prices for segments they control very high, and to doctors and everyone else, the inimum possible, creating a never ending high profit business for them, while we pay more and more and non politicaly tied companies and doctors struggle to survive. GET IT? GOOD.

    ReplyDelete
  3. Um, I appreciate strong sentiments and all, but this post was made a year ago. And perhaps your point would be more clear if you kept your temper in check and avoided semi-literate ad hominem. (Hint: "you are" contracts to "you're", not "your".)

    Your complaint that we must assume that Medicare rates are lower than undisclosed rates carried by insurers simply highlights the point I made - that insurance companies have no business asking us to take that on faith. If I go to a doctor's office and the office doesn't take a particular form of private insurance, should I assume that it offers reimbursement at a rate lower than Medicare? If not, why not?

    The rest of your rant makes even less sense. Perhaps when you've calmed down you could translate what sounds like a wild-eyed conspiracy theory into something coherent?

    ReplyDelete
  4. 2 years later- The previous poster didn't make some wild-eyed conspiracy theory. That's actually what happens. Have you ever been involved in the medical billing business or in medicine? The amount of regulations are atrocious in a state like New York for example.

    You can find out what insurance reimbursments are easily, just ask your doctor. Plenty of doctors are ready to vent about which insurance companies pay terribly and how they decide to make their choices in which companies they will or won't accept. Your doctor can easily tell you that he might not submit to a particular insurance because they make it a constant hassle to get paid(requesting medical records and consistently denying they received it once sent), or because they actually just pay a percentage of medicare rates.

    There are no mysteries here, do some real field-work and tell me what you find.

    ReplyDelete
    Replies
    1. I'll start by pretending that your quibble is relevant to the fact that private insurance companies don't publish their reimbursement rates. But only after noting up front, you have changed the subject from insurance companies to doctors, and still haven't make a valid point.

      Do you believe that if I want to know what a medical procedure will cost at my local hospitals - all costs from all providers that will be brought in along the way - all I have to do is ask my doctor and he'll give me an immediate, detailed breakdown so I can price compare? Obviously, even you know I won't get that type of information - my doctor doesn't even have that information.

      Okay, then, name the doctors that, upon request, are going to hand out their price sheets for every service that they offer, not only detailing their rack rates but also the various discounts they provide to each and every insurance companies they take. If it were that easy, the information would be public - and as you know, it's not. Because, as I stated three years ago, private insurance companies keep it under wraps.

      I'm sure we can agree, it's not difficult to go to a doctor's office and get his staff to state a fee for how much they charge to a person off the street for a physical or a tetanus shot, but that's not even close to what we were talking about.

      Delete