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US Healthcare - ".....another nice mess."
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| | The $3.6 trillion US Healthcare, considered as an economy, would be the fifth largest in the world. It is imperative that costs be lowered but even the Affordable Care Act (ACA) did not make care affordable. Here are two of the many reasons why this happened. First, instead of reducing healthcare costs first and later increase enrollment, the Federal Government, at the urging of insurers, reversed the order of implementation. Once the insurers enjoyed federal subsidies to boost enrollment, they were loath to reduce costs. Second, ACA invested $25 billion in fancy new initiatives to lower costs - value-based insurance, shared savings, evidence-based medicine and comparative effectiveness - but without any performance guarantees. These exotic programs added more regulations and shuffled money amongst stakeholders, while healthcare costs continued to rise unabated. |
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| | Our company's focus for the last thirty years has been on providers, self-insured organizations and healthplans. In 2004 we launched a new project, to systematically study costs in healthcare by adopting methods used by economists - specifically, by developing a model of populations. More than 75% of all healthcare costs go for the treatment of chronic and cancer patients and so, modeling chronic and cancer populations became our starting point. Our model, completed in 2009, was awarded a patent in 2014. CareMaps is the product developed based on the patent, and it is a powerful cost reduction tool. |
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| | Premiums are a puzzle wrapped in a mystery |
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| | There is a national trend to move away from fee for service, where providers are paid for every procedure rendered, to managed care, where providers are paid a fixed monthly premium to treat patients, no matter what the costs. The hope was that once the incentive for performing unnecessary procedures disappeared, the treatment costs will also drop. But premiums continued to rise - due to an embarrassing reason that is rarely discussed. |
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| | Details of premium calculations are treated as trade secrets by actuaries and so there is no easy way to decide if they are reasonable or not. Comparison shopping is impossible and we pay what is demanded. |
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| | Tandem concerns of managed care: Costs and outcomes of treatments |
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| | Paying less without a reason is not prudent either. For example, most Medicaid enrollees are in managed care programs, and states contract with healthplans to deliver care. If a state opts to pay lower premiums then healthplans can lower their costs by denying care or not offering optimal care. In managed care, costs and quality of care must be in balance. This also explains why tools used in fee for service to lower costs, like the Dartmouth Atlas, may help healthplans lower their treatment costs , but will not work in managed care because treatment outcomes are missing. CareMaps is designed to address the dual concerns of managed care. |
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| Copyright 2006, 2011, 2019. Physmark, Inc. Corrales, NM. |
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