Sorry for more political talk, but this is good here. Written by Gregg Easterbrook:
"Why Not Standard Pricing? I don't really understand what's in the congressional health care plan at the moment -- and since it changes daily, I bet most members of the House and Senate don't really understand either. Health care is only the single largest segment of the U.S. economy, so surely there is no risk in passing a 1,000-page health care bill no one understands! Universal access to health insurance is a moral imperative. But huge cost increases are likely to be triggered: Extending coverage will create more demand for services, and rising demand means rising price.
If reform eliminates the dreaded "pre-existing condition" basis for denial of coverage -- which makes sense for individual insurers and is nonsensical for society as a whole -- that will be significant. Denying coverage to people with medical conditions is not only unjust, it causes insurers to waste money engaging in wars with their own customers. If health insurers must sell to anyone who wishes to buy, then their resources can be better invested in providing care. There needs to be a standard-price rule imposed, too, so insurers can't effectively bar pre-existing conditions by saying, "Sure we will insure you, the price is $100,000 per year." My impression is that so much lobbying attention has focused on the handouts, giveaways and interest-group demands for a gigantic new civil-service bureaucracy that not enough attention has gone to a simple change that would remove much of the injustice from health insurance -- standard rates with no denials for existing conditions. This is the key to the successful health care system of the Netherlands.
So far as I know, health care proposals now in the Senate are so utterly fixated on handouts and giveaways that they don't even address a core problem -- the inability of individuals to buy at insurer's prices. This is the PPO problem, and is serious. Most health insurance now operates through some variation on the Preferred Provider Organization. Physicians and clinics sign up with some insurers but not others; they agree to discount their list prices; if the patient goes to someone within the PPO, the provider gets business while the patient and insurer pay less. Sensible? The system is full of crazy disincentives.
Recently, a family member needed an MRI. The clinic had a list price of $1,500 for the scan but was in the insurer's PPO, and so discounted ("adjusted") the price to $690, of which we paid 10 percent and the insurer paid the rest. Clearly, that $690 price allows the MRI clinic to do business, pay its technicians and radiologists, etc., or else the clinic would not participate in the PPO. Yet if I'd walked in off the street and said, "I will buy this MRI myself," the price would have been $1,500. Meanwhile, if the clinic had not been a member of my PPO, the insurer would have paid the same $621 it pays within the PPO, and I would have been on the hook for the rest, $879. The benefits sections of insurance manuals make it appear that if you use a PPO you pay 10 percent and if you go outside the PPO you pay 20 or 30 percent. Not mentioned, or stated in legalese, is that outside the PPO, the insurer only pays its "adjusted" amount -- you pay 20 or 30 percent plus the balance of the list price.
The distinction between list prices and "adjusted" prices prevents health care services from functioning as a rational marketplace. It's not just that many physicians refuse to speak about dollar figures. ("We don't discuss prices over the phone," a doctor's office told me a few months ago when I had the gall to ask what something would cost, adding, "after the doctor has seen you, then we will tell you what the visit cost.") It's not just that many physicians' offices and clinics do not have anyone authorized to discuss prices: They have minimum-wage receptionists and Mercedes-driving docs who expect the max under all conditions, but no one who will talk price with patients. The larger issue is that the system prevents the consumer from seeking the best price. If an MRI makes money for the clinic at $690, any customer should be able to buy at that price. The theory of the PPO from the provider's prospective is that the provider grants a discount in order to get business: The self-pay customer represents business, just like the PPO customer. But the self-pay customer can't get the PPO price, and the PPO price is the true price of the service. This prevents the bargaining-for-a-good-deal seen in the parts of the free-market system that function smoothly and hold down prices.
That the typical person cannot get the best price for health services is the big obstacle to transitioning away from the pass-along mentality that dominates health care. Right now Americans gripe about health insurance costs, but as this fascinating article by Ron Haskins shows, don't directly pay most of the cost -- most is paid by employers or government (which, in the latter case, means billed to the young via deficit spending). If you're not directly paying most of the costs, you have little incentive to make smart consumer decisions. And if you can't buy at the best price, you can't make smart consumer decisions.
Think about a radically different way to attain health care -- in which most people carry only catastrophic-cost insurance, then pay other health costs themselves. No one can budget for a severe illness or injury; every family will always need insurance against catastrophic medical expense. Suppose insurance covered only catastrophes, and you paid the rest. You might think, "No way I am paying some doctor hundreds of dollars to set a broken arm." But today a typical family's health care policy that appears to cost the family $5,000 a year actually costs $15,000, it's just that much of the money is hidden as employer's costs -- and thus, as higher wages the employer can't pay. If you spent $5,000 a year for catastrophic coverage but earned an additional $10,000 a year, you could cover those strep-throat and broken-arm bills yourself, and probably come out ahead. Plus you'd have a keen incentive to comparison shop. Doctors could no longer loftily say, "We don't discuss prices."
Homeowner's insurance is catastrophe insurance. It pays if the house burns down -- the kind of thing no one can budget for. It doesn't cover all costs of maintaining a home; you pay most ownership costs and you comparison shop. If homeowner's insurance worked like American health insurance, it would not only pay for fires but also cover utility bills, replacing broken appliances, baseballs hit into the window and all the food, drink and paper towels that pass through the kitchen. Certainly, a company could offer an insurance product that covered absolutely every expense of living in a home. But such insurance would be phenomenally expensive and full of ultra-complex rules; the insurer would also acquire an incentive to dream up excuses to deny payment. Just like American health care insurance!
Gradually transitioning to a system in which most people carry catastrophic-cost medical insurance but pay the rest themselves could rationalize health care economics while restraining costs, because the wasteful paperwork aspect of the system would decline. The first step would be a standard-price rule -- specifying that providers must offer the same price to all comers, whether insured patients, self-pay or Medicare. And the standard price must be published to allow comparison shopping. Good physicians and hospitals could still distinguish themselves through quality of care; in most of the free market, prices are similar, and quality is the basis of sales appeal. Stipulating that health care providers offer standard, published prices would lay the groundwork for an informed free market in health care delivery -- and free markets control costs. They do it on their own, without layers of agencies and regulations. We've got to control health care costs or the future doesn't work. Yet the current health-care reform plan is to add more agencies and regulations."
Wow, I-M-A-G-I-N-E, Free market health care, the government won't let this happen, conflicts with the more for us, and god complex they suffer from! Not to mention the crainial rectal inversion
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We all have our blonde moments, I'm living in mine! DK SCTR l 010
Sector tenners check these guys out, they can do about anything auto! www.speedwaremotorsports.com
Hmm an interesting Idea. I've heard of this before.
Im torn on the subject though because ive heard this explained different ways. Some of it (not this article in particular) seems a little like its written by Michael Moore without a fat annoying guy trying to be funny.
Pre-existing conditions is a little sickening but this can be expected when dealing with private companies. I wouldn't go as far as to say its unjust. Obviously they dont want to be in a position for inevitable loss of capital. This is the choice as a free enterprise and as an insurance company people transfer risk to the company by definition, no need to take unnecessary risks right?
With that being said there needs to at least be a provision for people with "pre-existing conditions" and theres no doubt about that.
Now what is a little fuzzy to me is the main point of this article and the standard prices. The way I took his argument is that there is some magic price discount that happens within these PPO's. He makes the arguement that If an MRI costs $1500 regularly and $690 for a PPO then the latter is obviously enough to support the business. Yes I guess this would be true if the physicians clientel was solely based on PPO customers, then the price would be based on how many members were in the plan and the price of care might be based on the expected customers from the network. The whole point of the discount price is based on an agreement between the physicians and the insurance provider. Basically "you bring us the customers we will give you the discount." To me its like any other member discount.
Now im not saying that health prices aren't extremely inflated but health care is always in demand so all physicians have to do is stay competitive.
Theres a lot going on in this article and I think its going to take a few reads to understand fully. This was my intial reaction to it though.
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Luccini...It pours from the sky and encourages one to get Rich.
Hmm an interesting Idea. I've heard of this before.
Im torn on the subject though because ive heard this explained different ways. Some of it (not this article in particular) seems a little like its written by Michael Moore without a fat annoying guy trying to be funny.
Pre-existing conditions is a little sickening but this can be expected when dealing with private companies. I wouldn't go as far as to say its unjust. Obviously they dont want to be in a position for inevitable loss of capital. This is the choice as a free enterprise and as an insurance company people transfer risk to the company by definition, no need to take unnecessary risks right?
With that being said there needs to at least be a provision for people with "pre-existing conditions" and theres no doubt about that.
Now what is a little fuzzy to me is the main point of this article and the standard prices. The way I took his argument is that there is some magic price discount that happens within these PPO's. He makes the arguement that If an MRI costs $1500 regularly and $690 for a PPO then the latter is obviously enough to support the business. Yes I guess this would be true if the physicians clientel was solely based on PPO customers, then the price would be based on how many members were in the plan and the price of care might be based on the expected customers from the network. The whole point of the discount price is based on an agreement between the physicians and the insurance provider. Basically "you bring us the customers we will give you the discount." To me its like any other member discount.
Now im not saying that health prices aren't extremely inflated but health care is always in demand so all physicians have to do is stay competitive.
Theres a lot going on in this article and I think its going to take a few reads to understand fully. This was my intial reaction to it though.
Unnecessary risks? , How does government run sound?!
__________________
We all have our blonde moments, I'm living in mine! DK SCTR l 010
Sector tenners check these guys out, they can do about anything auto! www.speedwaremotorsports.com
Health care plan.
, conflicts with the more for us, and god complex they suffer from! Not to mention the crainial rectal inversion 
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