Comments on: Titans of Healthcare Pledge to Reduce Healthcare Costs!

By: Ryan

Ryan — Thu, 14 May 2009 21:15:43 +0000

That's a good point about the threat of malpractice claims driving over-utilization and increasing hospital costs and insurance premiums. They are connected in that way. Malpractice issues are a huge factor. And if you talk to doctors about it, it will probably be the issue that's most commonly mentioned, because its the factor they're most conscious of. Certainly tort reform would help resolve many of these issues.

But It's definitely not the only factor involved, and it might not even be the largest. If you look at nationwide graphs of healthcare utilization per person in various states, you can see that states with tort reform in place are more efficient for the most part than others, but its certainly not a perfect association. Even after accounting for average age, weather, disease prevalence, violent crime rates, there are still several states that are somehow, someway, just doing things much more efficiently than others and are achieving equal health outcomes with fewer MRI's, CAT scans, fewer Prescriptions, etc. This could probably be another post in and of itself but the point is there are things that hospitals and doctors could be doing differently in many of these situations. Some of those inefficiencies have been identified, and some are yet to be rooted out.

As for insurance companies, I agree that the way they've been raising rates and simultaneously cutting benefits over the last several years has been very nearly criminal. Will they trim profits and cut prices on their own accord? That seems to be the commitment they've made. I can't imagine what else their involvement in this effort would mean. I don't think its entirely unlikely since it would be a smart move on their part in some ways. It might diffuse some of the anti-insurance company anger on capital hill and encourage lawmakers to draw up healthcare reform that was less antagonistic towards the existing insurance companies. I mean I don't think its any coincidence that they made this announcement right as healthcare reform talks were starting in the legislature. But I think it makes sense to be skeptical of their commitment until we start seeing some details, and some action.

By: Always more to learn

Always more to learn — Thu, 14 May 2009 19:29:55 +0000

Yes, it would be extremely refreshing to see insurance companies lower their premiums, just because they can, but at this point, I’m not holding my breath. I agree there probably are a lot of excessive tests, scans, prescriptions, etc. prescribed, however I think it is mostly due to the constant threat of a malpractice suit if you don’t do everything possible for a patient. Of course the flip side is that there are certain procedures that would be very helpful for a patient, however they can’t get it done because it’s an exclusion in their insurance policy and they certainly can’t afford to pay for it out of pocket. I’ve been noticing more and more exclusions in insurance policies recently. Insurance premiums probably wouldn’t feel so overpriced if you actually felt like you were being covered for everything you needed and didn’t have to worry about huge deductibles and/or copays (on top of your premium), not to mention all the non-covered services and exclusions that get passed on to the patient.

By: Ryan

Ryan — Wed, 13 May 2009 20:54:43 +0000

Definitely true. There are tons of issue affecting healthcare costs right now. I've been trying to get a handle on how it all fits together for years and I still feel like I'm only at the beginning.

But I think the type of healthcare costs they're looking at here are growth in insurance premiums and their drivers. My understanding is that usually doctors have a very limited ability to pass on costs of rising malpractice insurance, administrative costs from billings and adjustments, etc except over the very long term through lobbying. Which leads to financial distress for doctors in private practice, but I'm not sure if those things have a significant effect on premium costs. But like I said I'm still trying to get this all figured out so any insight you have on those issues would definitely be appreciated.

I would guess that the major issues they'll be addressing here are probably overuse/misuse of medical services and resources that raise costs to insurance companies (and hospitals, and the government) and malfunctioning market forces driving insurance premiums higher unnecessarily. Since hospital associations are heavily involved in this I would assume that there are going to be some kind of procedures or standards put in place that are designed to reduce unnecessary scans and prescriptions thus reducing insurance companies' costs. And then I would imagine, or at least I'd hope, that insurance companies are going to be slowing premium growth simply out of the goodness of their hearts. Because they can. Despite legitimately rising costs to them they're making record profits even though there's a high demand amongst consumers for lower premiums. Which shows you there is insufficient downward competitive pressure on their prices. So to some extent insurance companies are raising premiums higher than they need to just because they can. So hopefully part of this commitment is that they'll cut down on that.

I guess we'll find out!

By: Always more to learn

Always more to learn — Wed, 13 May 2009 17:31:35 +0000

It will be interesting to see exactly where the healthcare cost reductions will come from. It seems like doctors raise their prices in an attempt to make up for the huge adjustments that insurance companies force them to make (especially Medicaid). It seems like insurance companies are charging higher and higher premiums, yet paying for less and less. Doctors have to spend a fortune on malpractice insurance because of ambulance chasing lawyers. So many issues . . .