Health care thoughts from Bill Waites

Via email from Bill Waites:

I usually avoid the Health Care discussions, mostly because it takes so long to explain the answers because it takes so long to explain the causes. I realize that I don’t have the entire answer, and that some of the causes are more complex than I delineate, but I can give a good basis for the problems. This is long, so stop now if you get bored easily!

First, a little background. I began my professional life as a Special Agent for Nationwide Insurance. Most of us in the West see Nationwide advertisements and say, “who are they?” Nationwide is one of largest property casualty insurers in the world, at one point I think they were the largest fire insurance company provider in the world. When I worked for them, there were only about 12 other employees with my position, while Nationwide had 18-20,000 employees, a large percentage of them in Columbus, Ohio. We sold to a very targeted audience, farmers and very small business, where the owner and his family were the only employees. We had a joint marketing agreement with Cenex, and with most of the wheat, potato, and apple Co-Ops in Washington, Idaho, and Oregon.

I basically sold health insurance for them, as a company employee. When I left, I started my own agency, continuing to sell health insurance, but also selling “special risk” insurance, (an industry category for things like adult football games, sports camps, and activities like Boomershoot, that didn’t fit into the “normal” categories). I continued to sell Nationwide, but also Blue Cross, Blue Shield, Aetna, and others.

When I left the business, I went into health care, first running the insurance computer system for a small hospital, then returned to school. After graduating, I initially worked as an RN, working med-surg units, ER’s, public health clinics, and nursing homes. Finally, I returned to school once again, became a Physician Assistant, and after 12 years in a busy Internal Medicine office, I now run a small rural clinic, where I am the only provider 4 1/2 days a week. We accept all insurance plans, Medicaid, and Medicare.

The short version of the health insurance crisis starts here. The first modern plans began in the 1920’s, with Blue Cross covering hospital visits and Blue Shield covering Physician costs. Eventually, most large employers offered insurance, but Bell Telephone is often used as a prototype of how those plans developed. Their initial plan had a $200 deductible, when the average lineman made about $200/month. Over the years, that $200 deductible became locked in stone, and it really is only in the last couple years that deductibles have changed much at all. I think someone told me the current wages for an AT&T lineman are in the $4-5000/month range to start.

Anyone see any problems with that?

As the years passed, more and more people had coverage, and fewer and fewer were willing to take any responsibility for their own care, but they still used those health insurance benefits. Unfortunately, now that the costs were such a small percentage of their income, they used them more and more.

When I was growing up, I, just like all my friends, went to the doctor when something was broken, or when I needed vaccinations. I honestly don’t remember a visit because I was sick. My sister had a few visits because of fainting spells, and my brother had chronic ear infections and ended up having multiple ear surgeries, but for colds, coughs, nausea, and vomiting, my parents, and the parents of all my friends, believed in the “3 day rule”. In other words, wait 3 days, and if you aren’t getting better, then we’ll talk about going to the doctor. I never could manage to stay sick that long!

About half the patients I see now have been sick for less than 24 hours, and most of those have nothing that 3 days won’t fix.

Of the remaining 50%, most have self induced illnesses, like lung disease from smoking, heart disease, diabetes, etc.

AT LEAST 50% of all primary care doctors visits are just like my office, where education, and patient compliance, would solve most problems.

Unfortunately, there is no incentive for education, and there is no way to fund it under the current policies.

In the early 1980’s, in an effort to curb the ever increasing costs of Medicare, the Federal government created  DRG’s, (Diagnostic Related Groups). These new laws forced medical providers, (initially only hospitals were affected), to accept flat fees for services that were all part of any particular group. If you refused to do so, you couldn’t be a Medicare provider, and few, if any, hospitals could see themselves surviving without those Medicare patients. Since that time, at least 7 different DRG programs have evolved to cover all the different problems faced by anyone having to bill for medical services.

Anyone see any problems with that?

Insurance companies didn’t waste much time adopting the DRG model, and soon hospitals and doctors were faced with new contracts demanding discounts on virtually every procedure.

Doctors and hospitals soon realized that they had problems, but no way to resolve it. If you refused the discounts, they simply decertified you as a provider. Watching 50% of your patients walk away because you are not accepted as a provider by their insurance company has a sobering effect upon even the most independent of doctors.

During this entire time, though, medical technology was growing at a pace unheard of previously. As computer power became cheaper, all kinds of digital image devices became more and more common, but they were all incredibly expensive. First ultrasound, then CT, then MRI, then MRA, then PET scans became the rage. It wasn’t just patients or doctors that demanded them, it was the insurance companies, trying to avoid the expensive hospital stay. Where before a surgeon might do an exploratory surgery to take out an appendix that was acting up, now a CT showed if it was actually inflamed before surgery was considered. Where virtually any orthopedic surgeon could correctly diagnose a torn ACL, now an MRI was required before surgery to make sure that was the cause.

More and more expensive tests were available, and if they are available, why not use them? Doctors rapidly grew tired of being sued, and if one of those new tests might lower that risk, you can be sure they would order it!

So we had 3 huge contributing factors contributing to the rising cost:

1) Poor education and compliance, leading people to seek medical care when it wasn’t necessary.
2) Increasingly stringent billing requirements which required larger and larger staffs to ensure compliance.
3) Increasingly sophisticated (and expensive) testing.

Factor 1 is exacerbated by those who have no idea what health care costs actually are. As an example, along with my regular job, I occasionally work in an Urgent Care owned and operated by a community hospital.  I recently saw a carpenter injured on the job. He had a fairly complex laceration that needed to be repaired, as well as a severe contusion and muscle strain. He liked his job and his employer (a small businessman), and he initially refused to complete an accident form to be filed with Labor and Industries. When I and the nurse both tried to get him to understand that if his injury caused him to lose work time his only income would come from the L&I claim, he still refused. His injury was significant, but wouldn’t probably cause long term disability. However, he said, “I’ll just pay it myself, the basic visit is only about $30 or so, right?” Both the nurse and I burst out laughing. This was a hard working guy, who probably hasn’t seen a doctor in 20 years. He had no idea that the cost of the visit would probably be closer to $400 than $40.

Another group who has no idea about costs are those insured by the government on Medicaid. They never see a bill, so why should they? I honestly believe that most of them are good people caught in tough situations, like young married students, or single moms whose spouses have disappeared, but I recognize that some of them are permanent scammers. They are the ones with Medicaid and the Cadillac Escalade in the parking lot! 

I have deliberately left out Malpractice Insurance as a contributing factor, but it does play a part also. I have also left out the impact of an aging population, because we can’t change that, (unless we decide it is patriotic to actually encourage early end of life options, a morally repugnant idea to me!)

All of these problems were exacerbated by increasingly large groups of people receiving health care from State and Federal funded programming. Why does that make it worse? Because those agencies only pay 20-60% of the actual charges. If they didn’t cover it, who did?

Well, that happened courtesy of a little ploy called “cost shifting”.

Cost shifting occurs when one or more of your insured groups doesn’t pay the entire amount due. At that point, you raise the cost of that particular issue to everyone else paying for it. So if my appendix removal cost $1000, and my State coverage paid $200, the hospital would raise the cost of my neighbors appendectomy to $1800 to cover the difference. But since my neighbors insurance only paid $1500, (because of his insurance companies demanded discount, remember?) then that $300 was tacked onto the $1800 the next guy paid. Since he didn’t have the discounted insurance plan, his entire bill of $2100 was due. He either paid it, or hoped that his insurance company would. So that initial $1000 procedure costs someone else $2100 for the same procedure!

Now, some of you are statisticians and actuaries, and I’ll readily admit that this was a gross simplification, but it is what happened and continues to happen.

Those same 3 factors continue to cause today’s problems.

The system is undoubtedly broken, and it is broken because we don’t have the guts to fix it.

So I’ve made all these simplifications and pointed out the problems, what are the solutions?

Well, there isn’t one, but there may be several things that will help to allow necessary changes that will allow access to more people, and especially to allow critical access. The fact is that each of the problems is on its face simple, but the solutions are incredibly complex, because we as country refuse to acknowledge that there will always be some rationing of care. Too many of us seem to think that if there were enough money we could fix the problem. Unfortunately, there isn’t enough money in the world to provide the very best care to everyone in the United States. Currently the care is rationed by the simple expedient of cost. If you are wealthy enough, or if you have employer provided health insurance, you have access to the most advanced medical system in the world. (Ignore ANYONE who says otherwise. Americas system is the best, bar none. Why does anyone who examines the system think otherwise? If it wasn’t the best in the world, all those wealthy Saudis, Indonesians, Kuwaitis, etc. would be going elsewhere. They aren’t!)

At this juncture someone will point out that if we have the best care, we should have the best infant mortality rates, and we should live longer than anyone else. The problem is that ACCESS does not equal results. Americans are, by nature, individualists. We don’t always want to be told what to do. Thus, our vaccination rates aren’t as high as some Third World countries because some of us CHOOSE to not vaccinate our kids. We COULD, but we don’t! The same is true for all kinds of other issues regarding health care. We COULD improve, be we are too busy, or something else has a higher priority, or there is some other problem that we deem more important, and we don’t get the care that is available.

Now back to access for a minute. You also have access to the system if you qualify for Medicare or Medicaid. Yep, that’s right, the poorest of the poor, and virtually every child has access to the system because of Medicaid. The only children that fall through the cracks are the ones with lazy, drunk, or drug addicted parents. They fall through not because coverage isn’t available, but because the adults they should be able to depend on are irresponsible. The most vulnerable of our society, it’s children and its very old, are invariably covered by some type of plan.

Let’s look at the 3 problems and see what we CAN do for them.

1) Education is critical. However, education is not covered to any extent by any plan. Getting education for diabetes, congestive heart failure, Emphysema, or any other medical condition is almost impossible on any plan. There is a reason for that. It is impossible to actually get statistical data that verifies that it improves outcomes! The system isn’t currently designed to follow up with people who receive education and see if their outcomes are better than those of people who don’t receive the counseling and education. (Dirty secret number one: Contrary to what they say, no insurance company really cares what the outcomes are! The reason is simple. You aren’t going to statistically affect their bottom line! You are going to have your greatest expenses in the last couple years of your life, and that won’t happen on their plan. It will happen on Medicare’s dime! This is how insurance companies work, they analyze the risk, determine the actuarial costs, and then charge the premiums required to cover the costs. They are VERY good at it! They got burned in the 80’s and early 90’s because the rapid advance and cost of technology screwed the tables, but they have it figured out now.) Here is an example of how good they are: I prescribed a once daily medicine for a patient. It was less expensive than most similar medicines, and in a rare twist, it was actually cheaper than the twice daily version of the same medicine. From my view that is a win/win/win. It has been proven that patients are more compliant with once daily medicines, so I win. The patient wins because he feels better and has only one pill and the insurance company wins because it is cheaper, right? Wrong! The insurance company approved only the twice daily version. I finally got an honest answer from a pharmacist I had known for years at the company. The company had examined their refill data. On the once daily medicine, refills happened every 33 days on average. On the twice daily medicine, refills happened every 46 days. The insurance company benefitted because people forgot to take their medicine! So, any plan that actually will improve long term outcomes must provide for education AND a way to track outcomes after that education.

2) In the last 30 years the number of claims people, analysts, customer service reps, management for those people, and management for the managers at insurance companies have skyrocketed. All those people have to justify their jobs. How do they do it? Just like all good bureaucrats! They request more and more paperwork. Most offices have a 4 or 5 to 1 ratio of employees to Doctor or provider. One of those is the nurse, all the rest are paper pushers. If there are two or more providers in an office, you can bet that there will be at least one nurse whose job is making sure that all the requested tests, Xrays, referrals and other paperwork is completed so that all the insurance companies are happy. On average, every insurance company has twice the number of staff that the office has. All those people provide absolutely NOTHING to the care of the patient, but they all have to be paid! If we are to have any hope of improving the system, we have to cut out all the middlemen and women who just handle paper.

3) This one is tough! All those tests do have their place, but they must be used wisely. Unfortunately, they aren’t. They are used as “shark repellant”. Medical providers no longer order them because they will actually help us, (though sometimes they do), they are ordered because it keeps the lawyers at bay. “See, I ordered all the appropriate tests and they were all negative. I had nothing to go on that might have indicated that Mr. Smith had appendicitis.” Unfortunately, what Mr. Smith had was a gall bladder attack, and none of the tests actually showed that! Of course a good exam might have triggered that as the cause for his complaint, but since insurance companies demand tests, sometimes the exam is underappreciated. Doctors, PA’s, and NP’s, are trained to do good exams and to ask questions, but that information doesn’t always fit into what insurance companies want. Providers are paid for their judgment, why not actually listen to it? We don’t treat tests, we treat patients!! In all my time in practice, I have yet to run across an appendicitis that I didn’t diagnose BEFORE the CT was done, but we added that $1000 cost just to be sure, for the insurance company. In all my time in practice, I’ve never found an ACL tear on MRI that I wasn’t sure was an ACL tear before the MRI, but we added $1500 to the bill to prove it. IF a PA like myself can do it, it is a certainty that surgeons and orthopedics specialists will be even better!

So my solutions:

1) Make education a requirement for patients, and then pay for it. No education, no medicine, no treatment. Make patients responsible for their care.
2) Make paperwork less burdensome. The vast majority of paper pushing employees can be done away with.
3) Make all these high tech tests less important and rely on judgment more. That’s why we spent all those years in school. Those tests help a lot when we are unsure, but doing them for everyone isn’t the best way to solve the problem, trained judgment is!

The final answer is this: Patients MUST be made accountable for their own care. Financial responsibility is the first leg of that table. Quit allowing people to get care with no out of pocket cost. EVERY adult should have to pay something for every visit. Children are more vulnerable, so that rule can’t apply to them. NO adult should be insulated from the costs of healthcare. Not knowing the costs leads to abuse. People that abuse the system should be punished in some way. The biggest fraud being perpetrated is by people with government benefits who use the system inappropriately. As I stated earlier, most of them need the care. However, far too many simply abuse the access given to them by the government.

Ok, this got much longer than intended, I told you it was tough to summarize!!

It appears we are in a bad situation because we have a very strong tendency to apply small tweaks to the system rather than do a complete rewrite.

I keep thinking, “The road to Hell is paved with good intentions”, and we are on the fraking Freeway of the Reich to hell with the pedal to the metal, no speed limit, and the exits require you slow down to 10 MPH in order to even see them.


6 thoughts on “Health care thoughts from Bill Waites

  1. Personally I’d like to see a medical policy that only covered catastrophic illnesses. Everything up to 10K or so would be out of pocket. That’s what I’ve pretty much done all my life with my “employer” provided insurance. Insurance which I might add was costing me $300-400/month + the cost to my employer – which was usually more.

    The only time I collected for anything significant was a $3K bill back in the ’70’s for outpatient surgery for my wife. Otherwise I just paid the bill and didn’t bother filing a claim.

    But until very recently employers usually didn’t offer an “opt-out” option for medical insurance.

  2. This just further cements my intention to die next time I get catastrophically sick.

  3. Thanks for that insightful information.

    I do have one thing to add:

    At this juncture someone will point out that if we have the best care, we should have the best infant mortality rates

    First of all, that’s a false dichotomy. Infant mortality rates do not necessarily reflect the quality of care patients receive. Infant mortality is as much a function of the health and lifestyle of the mother during pregnancy as the quality of care. Basically, the same ignorance and apathy to which Bill Waites alluded comes into play in infant mortality rates. Mothers who don’t care for themselves while pregnant tend to have unhealthy babies…sometimes disastrously so.

    Another factor in our world ranking in infant mortality rates: We try to save them all.

    I recently read an article on that very subject. It was e-mailed to me from my best friend, who’s wife is a pediatric research physician at Methodist Hospital in Indianapolis. I can’t seem to find the article that was sent to me (I’ll keep looking), but a quick google search turn up this academic paper exploring some aspects of the issue

    Anyway, the basic premise is that infant mortality rates in the US are artifically inflated with respect to other countries. No other country in the world tries so hard to keep EVERY baby alive, regardless of congenital defects, birthweight or level of prematurity. The US basically uses heroic efforts to save every child born that is even remotely viable.

    In the US, in accordance with WHO standards, each of those births is counted as a live birth…even if the baby takes one breath or has one heartbeat.

    No other country even TRIES to save most of the babies that we save in the US…in most countries, they are not even counted as live births unless they lived for some arbitrary amount of time, if they have certain congenital defects, if they are below a particular birthweight, or didn’t reach some minimum gestational period.

    Our infant mortality rates are not lower because we have inferior care, they are lower because our care is good enough that even the most improbable cases are given a chance…combined with the apathy and ignorance endemic to certain demographics of our society that result in a high percentage of those “improbable cases”.

  4. Not mentioned is one of the major government distortions of the marketplace that occurred during WWII. With wage controls in place, employer-offered health insurance became a powerful bidding factor when looking for workers. Health insurance was NOT covered under the wage controls. As a result, more and more companies started offering it, knowing that it was a work-around on the wage controls.

    By the time the war was over, it had become an expected perquisite of many employees, and even today is counted as “pre-tax” dollars, as though it weren’t a major component of the total compensation offered as part of employment.

  5. I’ll simplify it for everyone;

    You feel you need professional medical advice or treatment. You go to a reputable doctor. He/she dispenses said advice or treatment. You pay said doctor. No one else gets their snotty nose or their sticky fingers in it (most especially not any politician).

    That’s the ideal we should strive for in all matters large and small.

    Sometimes there can be catastrophic illness or injury. Therefore it may be a good idea, as with your home or car, or business, to shop for reputable insurance to minimize the risk of financial ruin. This is financial planning. It is not “healthcare” per se. If you feel sorry for poor people, start a charity. There are many already, but no one will stop you from starting your very own.

    “Yeah but, yeah but, yeah but….”

    Nope. No “buts”. This is America. You have no right to fiddle with people’s lives. Take your butt elsewhere for all the socialism you can stomach. You have lots of choices and there’s no wall keeping you in.

    Problem solved. Now go do something productive.

    Carry on.

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