Articles by JCS

Better Mousetrap

Better Mousetrap

by

JC Smith, DC

 

Have you ever wondered why the Health Care Reform and managed care isn’t working? Medical costs are now as outrageously high as they were before HMOs, PPOs, capitation and managed care began, and patient services are worse now than ever before. When Congress had to pass a federal law to allow birthing women to have an extra day recuperating in the hospital, you know managed care is extremely miserly.

It appears that more money is in the healthcare pot than ever before, but it’s not going to patient care or providers as it once did—now the insurance executives are taking more of the pie for themselves than ever before—all in the name of “managed” care when, in fact, it should be called managed “costs.”

Furthermore managed care is not living up to its purported expectations to improve outcomes at lower costs. According to a recent announcement by the World Health Organization, the US ranked 37th in quality medical care at a cost over $1.2 trillion. Obviously Americans are not getting much bang for their buck in healthcare despite the fact that healthcare insurance premiums are at an all-time high.

Why does America rank 37th in the world in healthcare? Here in America we have more doctors, hospitals, drugs, and insurance companies than any other country of the world. Yet, we lead the world in every category of chronic degenerative diseases and we pay more for healthcare than any other country of the world. So, what’s wrong with this picture?

This situation may stymie many, but there are a few fundamental problems that may explain this paradox. First of all, America is the only industrialized nation that still has a “for-profit” healthcare system. Unlike Europe, the UK and Canada which have socialized their healthcare delivery system, America is still clinging to a quasi-capitalistic for-profit system. I say “quasi” because there are a few elements of American healthcare that don’t exist anywhere else in our free enterprise system.

1)     No free market in healthcare: While the rest of our economy enjoys open competition on a level playing field, this is not the case in healthcare. Some experts refer to healthcare as a medical monopoly empowered by the federal and state governments which subsidize and regulate their operations, but basically there’s no competition to drive down prices. In effect, we have a one-party system in healthcare. Others refer to it as the fourth branch of government, but in this case, the officials are un-elected, self-appointed and anti-competitive. Some consider it as a public “utility” like the police and fire departments since public taxes support the public hospitals and social health programs. But, unlike the police and fire departments, the physicians and hospitals charge ungodly prices for their “public” services (imagine a fire department charging thousands of dollars for putting out a house fire). Without any real competition, the one-party system in the healthcare world is a virtual medial monopoly sanctioned by the government, and leads to the “distributive injustice” that Dr. Pran Manga mentioned in his analysis of chiropractic.

2)     Perverse motivation: In a free economy, whoever produces the best mousetrap at the lowest price prevails. That’s been the rallying call of free enterprise advocates for years—to foster more competition to produce better goods and services at the lowest possible prices. But in healthcare, this type of free enterprise doesn’t exist. In fact, if insurance companies pay out more, then they can charge higher premiums. In this light, there’s really no motivation to lower unnecessary costs such as unnecessary surgeries, expensive drugs or extended hospital stays. Consequently, using Complementary and Alternative Medicine (CAM) like chiropractic, nutrition, acupuncture, among other natural treatments is out of the question because they’re too cheap to interest the insurance industry. So this “perverse” motivation to escalate costs for services actually profits the insurance industry—the more they spend, the more they can charge and the more money they have to invest.

3)     Limited Access to Providers: Whereas indemnity health insurance programs allow patients to visit the doctor of their choice, HMOs and PPOs limit this choice to a panel of physicians, thereby limiting access to many health providers who are out-of-network. Only in healthcare are consumers restricted in their choice of providers. Ironically, during Clinton’s Health Care Reform Act, the insurance industry sponsored their “Harry and Louise” TV ads depicting a couple reading the 1,500 page Reform Act, exclaiming, “But Harry, if they do this Reform, we can’t go to our favorite doctors any more.” After successfully scaring the public and encouraging legislators against this Reform Act, the insurance companies immediately implemented the same concept with their own version—HMOs and PPOs. Ironic at the least, and deceptive at its worse.

 

Imagine anywhere else where you were forced into buying just one brand of merchandise, or were forced to buy it from just one retailer, and were forced to pay an outrageous price since there was no competition to drive down prices. The outcry would be humongous, to say the least. But in healthcare, it’s standard practice nowadays for people to be told which doctor they can see, what pre-determined treatments they can and cannot have done, and what price will be paid. And you have no choice in the matter.

Only in healthcare is a better mousetrap discouraged--being better and
cheaper is not encouraged, especially if it comes from outside the medical world of drugs and surgery. After working as a chiropractor for 20+ years, I’ve concluded that being more clinical and cost-effective is a hindrance rather than a blessing in the present medical system. Ironically in the same economy that slaps MicroSoft for monopolizing the computer world, it actually supports the medical system with subsidies and empowers them to monopolize the healthcare industry exclusively.

As Sen. Ted Kennedy wrote over 30 years ago, the basic problem with American healthcare is the simple fact that the government turned the healthcare delivery system over to the medical society to run, and that they have to their exclusive profit. That would be equivalent to turning our nation’s highways over to Ford Motor Company to operate. So, if you drive up in a Chevy, forget about driving on their roads. Or imagine if Delta were given the exclusive management of Hartsfield Airport, only to watch all other airlines be excluded. Of course, the public and business outcry wouldn’t tolerate such monopolistic actions, but when it happens in healthcare, nothing is said.

Not only are patients in managed care plans denied a freedom of choice, but CAM providers are also routinely denied open competition. Ironically, while public interest in CAM is growing rapidly according to surveys, MCOs are limiting access to CAM providers and limiting fees paid to these providers. From the November, 1999 edition of “The Integrator” are listed the various strategies used by MCOs:

1)     Fee Schedules: Providers are forced to accept lowered fee schedules in the range of 30-50% off the usual fees.

2)     Prior Authorization: Difficulty in gaining authorization for initial treatment or extended visits may shift depending on financial pressures rather than on medical necessity.

3)     Withholds: Use by networks may push providers to limit services in the hopes of recouping 20-30% of their pay (the “withhold”).

4)     Co-payment levels: Significant co-pays ($15-$20 to 50%) may limit patient access.

5)     Network limits: Smaller networks may not include a patient’s favored CAM provider and access to services may be geographically difficult.

6)     Maximizing profits from new benefits: The highest profit year for a new benefit is often the first before the covered benefit is well-known, and first-time contracts may be set very high to capture as much income as possible.

7)     Gatekeeping: An actuarial firm states that chiropractic utilization may decrease by as much as 75%. Use of chiropractic in managed Medicare was found to be about 1/10 of fee for service use. A Washington state study found direct access use of CAM at 100% more than a gatekeeper plan.

           

Oddly, these limits on CAM use and fee reductions to CAM providers is strange in that these CAM services are not the ones killing the golden goose. Chiropractic comprises only 4% of the entire $1.2 trillion, yet where are the same strict restrictions for medical services? If the MCOs wanted to save money, they might consider cutting back on the 78-90% of unnecessary surgeries done every year, or the $1,000/day hospital costs, or the $1,000 for a simple MRI exam, just for starters. Indeed, the “pounds of medical cure” seem the likely place to cut costs, but with the perverse motivation intact, they prefer limited the “ounces of prevention” instead in a sham attempt to reduce costs when it’s actually the MD bureaucrats effort to reduce competition.

Just one look at the mess with ASHP is enough to make any DC scream. First of all, if you’re on their panel, they will pay only $30 for the initial exam and a mere $20 for subsequent exams which will also require authorization. Plus they pay only a $26 “global” fee for any and all office treatments. Isn’t that strange in light of the fact that most MCOs pay PTs $40 for just one hot pack, which does a whole lot of nothin’. And this mess comes from a company that had a net profit last year of $37, 097,673, and a net income of over $8 million. Who says managed care sucks when you’re on their end?

So, what’s the answer? As a proponent of free enterprise, I would say simply let market forces prevail in an open marketplace for any licensed healthcare provider. But, realistically, the medical-insurance special interests along with the blessing of governmental agencies controlled by MD bureaucrats would never allow that. Special interests profiting by the closed marketplace and perverse motivation in healthcare have too much to lose by having any changes, especially ones that might lower their ungodly incomes. Since AHSP, for example, has a lot more money to spend on lobbyists and legislators, their influence far exceeds anything our split profession can muster up. And when you combine all the MCOs together, that’s a formidable foe to fight.

Although free enterprise fuels this economy, in healthcare we seem to be playing by a new set of rules. Oddly, the government busted MicroSoft for anti-competitive measures to insure a level playing field in cyberspace industry, but taking on the AMA and insurance industry which outnumbers MicroSoft and Bill Gates in political pull, if not money, is not on the government’s agenda, or so it seems.

On the other hand, the past editor of the New England Journal of Medicine, Dr. Marcia Angell, suggested to dump managed care and institute a single-payer system like Canada—a Medicare system for everyone. She contends it will be cheaper to have the government manage healthcare due to lower administrative fees, it would give universal healthcare coverage to all Americans, and it would allow patients to gain access to any provider they choose, unlike the present PPO system that discriminates against certain providers.

When the editor of the NEJM is crying foul by MCOs, you know something’s amiss in the medical world. After all, our medical colleagues aren’t use to anyone telling them what to do with their carte blanche mentality of doing any exam, any treatment at an exorbitant price at any time to anyone. As we chiropractors might like to tell these MDs, “welcome to the world of economic sanctions.”

Just as the powers-to-be killed Clinton’s Health Care Reform Act in 1994, any reform in either direction would meet strong resistance from the same insurance cartel. I imagine until the Baby Boomers enter their senior years and the cash reserves for the huge medical costs that await them are depleted, we will not see much change. When the MCOs finally crash due to the lack of cash reserves to cover the huge costs from the multitude of medical procedures awaiting most health-negligent patients, the government may be forced into a Medicare single-payer system for everyone similar to Canada.

Until then, the MCOs will continue to bleed the golden goose of medical insurance revenues with more restrictions on care, lowered payments to providers, fewer choices of providers and higher costs on premiums for more profit for themselves.

On the other hand, there will always be those health-conscious people who value a good doctor of any type, and they will pay cash to gain access to their services. These health “fanatics” may pay more out-of-pocket as they now do, but they value their good health as their major asset. Just as they now pay cash for vitamins and other “ounces of prevention,” chiropractic patients in the past have paid cash for their spinal care before health insurance ever covered it.

Perhaps the key for chiropractic will be to promote the wellness concept of natural health care to attract these value-conscious people willing to spend money on healthcare despite what their catastrophic insurance doesn’t want to cover. I’m not certain that the public views chiropractic as “wellness” care however. Is there any proof other than philosophical hyperbole that an adjustment alone keeps one healthy? If chiropractic embraces a wholistic CAM approach as NCC and LACC have done, perhaps DCs will emerge as the leaders in CAM.

But if people are paying thousands of dollars a year on healthcare insurance, they shouldn’t also have to pay for the right to see the doctor of their own choosing, or be forced to pay cash for CAM methods. A Patients’ Bill of Rights should simply allow the same rights in the rest of our free market economy. People ideally should be able to seek healthcare from any licensed provider of any type, and may the best mousetrap at the best price prevail.

But, what do I know? I’m just a country chiropractor watching our profession slowly wither on the insurance vine, wondering what it will take to restore some sanity to this mess.

 

 

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