Tag Archives: healthcare

The Argument Against Selling Health Insurance Across State Lines

A popular idea tossed around in the search for effective healthcare/insurance reform is the notion of selling insurance across state lines.   Along with malpractice reform, this often tops the list of solutions, especially from Republicans, even as the main culprit, unnecessary third-party payment, is not even mentioned.  At a recent debate for an open seat in the US House in the district where I live all five GOP candidates spoke in favor of this concept.  Yet is it a good idea or possibly the source of more trouble, and are there other means to attack the existing problem?

On the surface it would seem like a fantastic idea and with good reason.  The argument goes that more competition would bring down prices.  After all, the opportunity to purchase a health plan from a company not doing business in a particular state would now be available.  More importantly, because insurance is separately regulated state by state, it would now be possible to circumvent excessive mandates and regulations that much more dramatically affect price than the number of company choices available.  Both the number of coverage mandates and the nature of them varies greatly from one state to another.  In a few states simply requirements for community rating and guaranteed issue have made the individual market so expensive as to all but destroy it.  In this sense, so long as there are at least three or four company choices anyway, the ability to purchase insurance regulated and approved in another state would change the nature of the competition from one of price to that of determining the least amount of expensive regulation and mandates the buyer felt was needed for their protection.  So far, so good.  What is not to like?

The problem and basis for the argument against what would seem like such a good idea on its surface is the Commerce Clause of the US Constitution, or rather more correctly, the modern perverted interpretation of it.  What began as a provision to facilitate exchange among the states has over time become an excuse for the Federal Government to impose all manner of meddling and micro-management to anything bought or sold across state lines.  The fact that insurance is not bought and sold across state lines should serve as a defense against such federal meddling and against the imposition of Obamacare itself.  In this regard, providing for such interstate commerce would open the door to the legitimate intrusion of the federal government and surrender of the defense that exists without it.

The origin of state control of insurance was the McCarran-Furgeson Act of 1945 which exempted insurance from federal anti-trust laws and left regulation to the states.  Right up to today this has kept federal regulators mostly out of the picture, with the exception being health insurance.  Even there federal intrusions have been few and limited until the passage of Obamacare.  The fact that they went unchallenged by the states was absolutely a mistake by the states, but the extent and nature of the intrusions was of limited scope and never sparked challenges that should have occurred.  Now with the passage of Obamacare the federal government has become the bull in the china shop, seeing no limit to its authority, even though a reasonable defense against it still remains so long as we do not move to purchase across state lines.

Two possible alternative solutions come to mind.  The first makes the most sense and leaves little doubt as to its effectiveness.  Those states that have ruined their health insurance market by excessive and abusive mandates and regulation need to fix their problem internally.  Rolling back that which has caused the problem will eliminate it and do for its citizens exactly what providing the opportunity for circumvention would do.  The second solution is more problematic and questionable.  That would be to possibly keep the federal government out by the formation of compacts among states that want to provide for the purchase of each other’s health insurance plans.  Since compacts must be approved by congress and the internal solution would work as well, this approach would not be suggested.

The bottom line here is that what seems like a great idea to solve a known problem may simply cause even more trouble, give away a reasonable defense, and end up being in the category of “be careful what you wish for”.

Cost Shifting, Defensive Medicine, or Simply Waste, Fraud, and Abuse?

My father died in September of 2009 from Alzheimer dementia.  In the last year of his life there were three separate occurrences of others cashing in on Medicare by virtue of his situation, that I contend would not have happened under different circumstances.

Let’s look at these situations starting with September 2008 when my father still had a year to live.  The assisted living facility where he resided called me one morning to say that dad was really in poor shape, not responding well and should go see his doctor as soon as possible and I should take him there.

They were certainly right.  I found him unable to walk on his own.  Wheelchair to the car to wheelchair to the doctor’s office, I got him there.  The doctor examined the old man and concluded that the end was fast approaching and I should get hospice involved.  He added that all medications would be stopped and he would not be seeing him again, that the end would come quickly.   OK, so I returned dad to the facility and contacted hospice as instructed.

Four days later and having been off all medication something amazing happened.  There my father was, able to carry on a conversation and better than I had seen him in at least 6 months.  It sure looked like the medications were to blame, and in itself, is another story.  This vastly improved condition lasted several more months and it quickly became apparent that he was not about to die anytime soon.

The problem is that hospice, now engaged and entitled to six months worth of payments from Medicare did not remove themselves from the equation.  They still sent staff around but largely were not needed.  This continued for the entire six month period.

Time went on and as dad’s condition deteriorated toward the real end of his life the connection between the brain and the muscles weakened and he became a fall risk.  Since government regulation forbids strapping him into his wheelchair, he fell.  Twice when he fell he must have said “ouch” and he was whisked off to a local hospital and I was notified and met him there.

On each of these two occasions, upon examination, no reaction of pain whatever could be found.  The man was clearly not injured but highly stressed due to the deepening dementia and the strange surroundings.  Yet each time, with no discussion whatever, dad was wheeled down the hall for an MRI for which the hospital collected $1150 from Medicare.

So there it is, the first instance being rather clear, but what about those last two?  Cost shifting, defensive medicine, or simply waste, fraud, and abuse?  I’ve wondered about that since, but I do know the one thing that would have gotten in the way of any of the nonsense I witnessed.  And that would be paying directly rather than through a third-party.  Questions of necessity would have been asked.  Would a simple x-ray be sufficient for the circumstances?  A requirement to check off on declined services may have occurred, but they would not have happened.  This is just one example of the waste via overuse caused by unnecessary third-party payment.  With the illusion of free, no one was asking questions.  No one cared.

The lack of scrutiny on the part of Medicare is also a question.  Does it matter that claims may be processed cheaper if the eyes are shut?  Indeed it is the  profit motive itself that serves to apply the brakes to such behavior in the private sector.  Fear of loss, the other side of the profit coin, demands forces for efficiency that are not there without it.  Three occurrences in one year with one patient begs the question, “how many times is this repeated day after day after day after dollar?”  Isolated instance?  Of course not.  Advocating for single payer government (Medicare for all) is a recipe for disaster.

Can Covering Preventative Healthcare Services WASTE Money?

As I study and think about the healthcare issue, I’ve had this feeling that one thing simply could not be right.  Proponents of Obamacare have argued, and many Americans seem convinced, that preventative medicine, those checkups, tests and procedures designed to find something wrong can save money by nipping problems in the bud, saving tons of money down the road after a situation has become more serious.  This thinking is so strong that even in high deductible health plans preventative services often do not conform to the deductible and are covered in full or part on a first dollar basis to encourage their use to save others lots of money and reduce premium costs in the long run.  Is this actually a fact or more fallacious nanny state thinking?

Let’s say a checkup does find something wrong, even in someone with no symptoms at the time.  Then what?  When available, treatments would be applied, medications or even surgery would be administered to address the issue.  Yet these treatments themselves are often very expensive and that cost must be spread across all insured.  Whereas, had the condition not been discovered early, by the time the patient experiences symptoms treatment may no longer be an option and expensive end of life treatments may be incurred followed by an early death.  Yet even in this situation, treatments (expenses) that could have prolonged life have not been incurred, and while expensive end of life treatment did occur, it occurs for everyone not experiencing a sudden death sooner or later.  Then too, at the moment of death (which none of us will escape), medical expenses for that individual immediately drop to zero forever.  This all makes avoiding preventative care seem like it could be the cheaper, if even fatal, option.

None of this is to suggest that we do anything to discourage preventative care either, as there isn’t much argument that such steps and discoveries can prolong life, even if at great expense over time.  The point, it seems to me, is that in a society that subscribes to individual liberty what business is it of mine what the next person decides is the right approach for them, especially if it turns out that encouraging greater use of preventative care does not in reality save money as is so often claimed.

Another consideration is that preventative services are at the lower end of what is affordable and as such should never be included in insurance at all.  Doing so defies the purpose of insurance to begin with, that being limiting the risk of encountering the otherwise unaffordable.  Additionally, in a truly free market, with prices mutually agreed by the provider and consumer, preventative services would be the most likely to be heavily discounted as they are gateway transactions.  Any discovery that would require further intervention would often take place at the point of the exam.  This has not been lost on Pep Boys or recently Meineke when they advertise they will diagnose that check engine light in your car for FREE!  Of course in our convoluted system any physician who accepts Medicare or Medicaid would be committing fraud for extending such an offer.

This then leads to the question of what about the poor who want preventative care but may not be able to afford it on their own.  Even here allowing market forces to work is a preferable approach.  Funding Health Savings Accounts to provide for normal health related expenses and allowing participants to eventually keep funds not used encourages wise spending and respects the poor’s discretion and dignity in making their own choices.

Of course the no cost preventative care of eating a balanced diet and exercising regularly is probably the most effective approach in reducing costs aside from direct payment and is not dependent at all on economic status or situation.  Yet here again respect for the liberty of others precludes requirements to exercise or eat a certain diet.  It is simply, although wise, not the business of others in a free society respectful of liberty.

Now you may and should ask if there exist any studies to support my thoughts presented here.  A Google search “does preventative medicine save money” says “yes”.  In fact there are so many sources in agreement that I will simply challenge you to do the search for yourself.  I’ll only note that sources include the New England Journal of Medicine, the Wall Street Journal, and ABC News among others.

The Unspoken Barrier to Real Healthcare/Insurance Reform

I often say “I blame conservatives for Obamacare” or even write it on signs to provoke discussion.  Oh, it is not anything I’ve ever seen conservatives do.  This is purely an act of omission that is part of a much greater deception that has befallen perhaps three-quarters of our population.  There are two things that reveal the depth of the deception and provide the basis for the direction of my thoughts.

First, in the debate prior to Obamacare, one lame conservative rebuttal went like this: “Surveys show that >80% of Americans like the Healthcare they have!”.  In the first place they really meant Insurance.  This was repeated over and over, and was a major red flag of misunderstanding.  Second is the fact that adoption of High Deductible Health Plans with Health Savings Accounts remains only a small portion of the market share (<10%) after 9 years of availability, being another sign that the issue is poorly understood.

So just what is this deception or misunderstanding?  Quite simply we have embraced a product and approach that encourages massive overuse and benefits no one greater than whoever sold it to you.  Any attempt to “insure” the everyday, the expected , or that within the ability to pay otherwise is a fool’s game that always does insure one thing, that the incentivized overuse of others will be in your premium.  That most young people face a greater unexpected risk to their finances by a major car repair than health issues still does not make the purchase of recent attempts to sell car repair insurance a good idea for most who buy it.  Yet Obamacare seeks to build on this fallacious and flawed approach,  aided immensely by the many who’ve already bought into it by accepting low deductible, cover everything, third-party prepayment schemes and calling it insurance.

To this day the gold standard of research, a brilliant piece written in 1994 is as relevant today as it was then.  CATO Policy Analysis No 211 Why Healthcare Costs Too Much by Stan Liebowitz examines the effects of what happens when we create the illusion of free or almost free with low or non-existent deductibles or small copay amounts.  His study put a staggering estimate on the cost of the overuse this causes.  The amount was $300 billion in overuse plus $33 billion in associated administrative costs, for a whopping total of 1/3 of a Trillion Dollars in 1994!  Notably Liebowitz suggested as a remedy the greater use of high deductible insurance and health savings accounts.   In the time since 1994, into this toxic soup has been stirred more and more state mandated coverages providing even more opportunities to overuse.  Some of these are as silly as marriage counseling or massage therapy, things that should be questioned as whether they are healthcare at all, yet they are in our policies and premiums with billing codes to support them and schools to train the billing coders.  Where does it stop?

Conservatives need to recognize the powerful truths that have been hiding in plain sight and promote the simple solutions that are at our feet.  In addition to the Liebowitz study and others we have the results of a real world example in the state of Indiana that gets too little mention.  By only offering a choice to their 30,000 state employees and then getting behind it with education, Governor Mitch Daniels in his March 1 2010 op-ed in the Wall Street Journal revealed the results of getting >70% of their state employees to elect a high deductible health plan by their choice.  He said that Indiana in 2010 would save at least $20 million as satisfaction was high with only 3% switching back to the traditional PPO plan after having discovered the high deductible approach.

The times when Obama did provide an opening by saying he wanted to see better plans if they were out there, the ammunition was at hand.  Somehow we got caught up in their argument and never went full-bore into what does work and why it works.  It is no more difficult than the restoration of a functioning free market that comes from increasing direct payment and limiting third-party payment to its rightful place in the shadows of absolute necessity.  The low deductible cover almost everything approach is an expensive false comfort accepted by too many and why this illusion stands as a barrier to meaningful reform.  Folks do not like to admit how wrong they have been.  By peeling away politics and legalities and emotion and lately religion, and getting to basic choices on the Smart vs. Stupid Scale, based on facts and then the constant promotion of these truths, real reform may yet be achieved.  The role of education should be obvious.  Let’s get on with it.

Note: This post shared to WatchdogWire-Pennsylvania