Tue 4 Sep 2007
A couple of months ago, I was sitting in a webinar about coding for outpatient medical and nursing procedures billed to Medicare. As I was led through the maze of arcane formulas and requirements, I got to thinking about how much Medicare has inflated the costs of health care. Here I was, being paid $40 an hour, as were seven or eight of my nurse colleagues, to listen to consultants (who were surely getting paid way more than I), quote from other consultants (more $$$) about how to fill out papers to maximize the amount of reimbursement the hospital I work for can receive from Medicare. And this is all because the people who work for Medicare ($$$) issue coding guidelines that are vague and open to interpretation, so that bills are constantly bounced back to providers for more processing ($$$) to justify or explain the charges so they can be re-billed. What a ridiculously expensive and inefficient process.
But this experience served to demonstrate to me once again that though there are clearly problems in the way American health care is consumed, provided, and paid for, advocates of increased government involvement are taking the wrong approach. The state is already a key player in regulating and financing the system and has only served to exacerbate the few problems which it did not create or facilitate in the first place.
The feds and lower levels of government license providers, thus granting monopoly status to doctors, nurse, therapists, and so on. They control the number of training programs by picking and choosing which ones can receive government-provided scholarships and grants. They legislate or otherwise dictate which drugs can be used, and by whom, by allowing or prohibiting the sale and use of specific drugs and granting health professional the exclusive right to write prescriptions for most medicines. These controls by the state are the basic reason why the pool of providers is small, and, as in any other oligopoly situation, the product is expensive and often of lesser quality than one would hope.
In addition to this infrastructure of control, the government exerts its influence on the health care system in many other, and equally destructive, ways, but perhaps the primary mechanism through which the feds influence, and damage, the provision of medical services in the united states, is Medicare.
Medicare was created as part of the social security system to provide health insurance for old people. It has never worked well and gets worse and worse with time. It is riddled with restrictive rules that often make it hard for old people to get adequate primary care. This leads to people getting treatment later in the course of an illness, which results in more hardship to the patient, more likelihood of a bad outcome, and more expensive treatment than would otherwise have been needed.
The reason that primary care is becoming less available for Medicare patients is that Medicare reimbursement is inadequate to cover the costs of providing this care. When providers agree to accept Medicare, they are prohibited from billing for or accepting payment for covered services other than that provided by the government, and thus have no way of making caring for Medicare patients affordable. So, as reimbursement to providers lags further and further behind costs, fewer and fewer doctors or other practitioners will agree to take on new Medicare patients. It is a money-losing proposition and leads those who do care for Medicare patient to charge their other patients more than they otherwise would in order to make ends meet, increasing the costs to insurers and those they insure. Not only are non-Medicare patients subsidizing Medicare recipients with the taxes they are forced to pay, but they are also subsidizing them with their steadily rising insurance premiums.
Then, when those who have been unable to get primary care get ill, they show up in hospital emergency rooms, where costs are significantly higher than those in a doctor’s office. And, being older, these people tend to have multiple health problems, and commonly end up being hospitalized, again, a more expensive setting in which to receive treatment. Besides being costly, treatment in a hospital exposes patients, especially old ones, to additional health risks. Medicare breeds expensive, inefficient health care, while masquerading as the guardian of old peoples’ health.
The Pharmacy Benefit
The more the politicians try to manipulate and improve Medicare, the worse they make it. Under the guise of providing beneficiaries with less expensive access to prescription medicines, the new Medicare Part D serves only to confuse those it allegedly helps and aggrandize the companies who provide pharmacy services. It provides partial payment for prescriptions up to a total of $2400 worth of drugs per year, then provides no coverage for additional prescriptions up to $3850 in a year (the so-called donut hole), and then starts paying again, covering most of any costs above $3850 annually.
This is progress? Recipients are required to choose between a large number of pharmacy service providers, who offer different formularies and have different charges for medications. They are allowed to choose only from among these government-authorized companies and cannot shop where they like. Additionally this program provides inadequate coverage for many poor old people and results in people not taking their medications, or taking partial, and inadequate, doses of them. Basically, Part D takes taxpayers’ stolen money, redistributes it among various favored pharmacies, and leaves many ill old people inadequately treated. But this is not so different from how Medicare has operated all along.
The JCAHO Scam
As noted above, besides providing lousy care for old people, Medicare also drives up the costs of care for everyone else. In addition to soaking insured patients to subsidize the primary care of those on Medicare, it has created a system of oversight of hospitals that is riddled with corruption and very expensive, but which does little to improve care.
Medicare authorizes the Joint Commission for the Accreditation of Healthcare Organizations (JCAHO) to “certify” that hospitals and other providers of health services are eligible to receive reimbursement from Medicare. Since upwards of 40% of a typical hospital’s revenue comes from Medicare and Medicaid (another government health insurance plan), both of which require JCAHO certification, virtually all large hospitals in the country participate in this scheme. Purportedly, JCAHO monitors hospitals for the quality and safety of patient care, but many of its rules are arbitrary and have nothing to do with either. When they inspect a hospital they spend some time checking to see if processes are in place to minimize harm to patients and maximize safe and effective care, but they also spend a significant amount of time and effort on nonsense such as checking that employees can parrot the hospital’s mission statement, seeing that nothing is stored under sinks, and making sure that patient food and staff food is kept in separate refrigerators (I kid you not). In addition they survey records with a fine tooth comb, searching for variations from their prescribed requirements for documentation, many of which, like much of the rest of JCAHO’s standards, have nothing to do with taking care of people, but instead cause staff to spend lots of time “charting to standard” rather than actually caring for sick people.
This whole certification charade wastes more than time, however. Like the coding system I discussed earlier, JCAHO inspections create jobs for many parasites. First are the JCAHO staff, including the inspectors, who add nothing to the care of patients, but all draw salaries for their trouble. Then there are the consultants hired by the hospitals to interpret the ever-changing JCAHO rules and help them create an idyllic, but phony, picture of how the hospital operates for the benefit of the inspectors. Then there is the money wasted on procedures and charting mandated by JCAHO but having nothing to do with curing or caring for ill people. And, not unlike the federal government and the industries it regulates and/or funds, people switch back and forth between jobs at JCAHO, the hospitals, and the consultancies, creating fertile ground for corruption. The whole structure is a scam designed to maintain bureaucratic control of health care provision and transfer wealth into the pockets of insiders under the guise of assuring and improving health care.
Health Care Reform
Given how badly the government manages the parts of the health care system it already controls, it surprises me to hear critics of the often sorry state of American health care advocate further political intervention as the way to reform the system. One hears stories about how wonderful medical care is in Canada or the united kingdom, and some form of universal “single-payer” (read state-run) health care is supported by many politicians, businesspeople, and even unions. It makes sense for politicians to support such proposals, since it would increase their power, and businesses like it since they could save money by no longer having to subsidize insurance for employees.
Unions and other working people, however, would do well to be careful what they ask for. Besides exacerbating such problems as mismanagement of resources and bureaucratic corruption, a medical system more completely controlled by the state will allow consumers much less latitude in managing their own use of providers, medications, and institutions.
Most working Americans have employer-subsidized private health plans, and a frequent complaint I hear from my co-workers in my role as a union activist is that they don’t have enough choice in what providers they can see, what hospitals they can utilize, and what drugs they can purchase on their insurance plans. They don’t seem to realize that they will have even fewer choices if the United States goes the route of Canada or Britain. These countries have much tighter rules than those of American private insurance plans, and appeals are at least as difficult. In addition, waiting periods for procedures easily available to the insured in the US are months and years long in countries with single-payer or nationalized health care. Is this what these folks really want?
Making Matters Worse
The American health care system as it currently exists is largely a creature of government. The problems with access and expense that those advocating reform show such concern about are directly related to rules and regulations forced on providers and customers by the state as it strives to control people’s lives and put our money into the pockets of favored clients, like the bureaucrats and drug company executives and stockholders. Americans will face a rude awakening if they believe that expanding the role of the state in supervising and funding health care will do anything but increase costs, graft, the lengths of the lines people already wait in when seeking care, and the number of hoops they have to jump through to get procedures and medicines they want.