[EMAIL PROTECTED] writes:
>Sorry, for my ignorance, but would someone explain how the US health care
>system works. And please spell out the names of organizations, the
>initials
>are meaningless to us outsiders.
>
>Rod Hay
>
What an excellent way to avoid working!
I. Providers:
(a) private non-profit and for-profit hospitals plus a few state- or
city-run hospitals. All hospitals are required to treat (or stabilize)
emergency patients, whether or not they can pay. Many not-for profit
hospitals operate free-care pools, to care for indigent patients. Some
states operate free-care pools as well and compensate hospitals for care
of indigent patients.
Physicians who staff hospitals are rarely salaried employees of the
hospital. Except for interns and residents (who are in training at the
hospital), emergency room doctors and department chiefs, US physicians
make most of their money by directly billing patients and/or their
insurers. When you are billed by a hospital in the US, the charges are
for room and board, use of surgical and medical equipment, nursing care,
medications and tests. Physician charges (except for interns and
residents) are always extra.
(b) Private physician practices and group practices for outpatient care.
These are generally run by physicians, though recently there has been a
move by corporations to buy these up and merge them, the better to
negotiate with insurance companies. Solo and small group practices are
disappearing in recent years. Many large group practices are owned by
doctor-investors who are making fortunes this way.
(c) Specialty clinics and laboratories (for blood tests, X-rays and
other high-tech tests, sleep clinics, clinics to fit orthopedic devices,
etc). When a patient goes to a private physician with, say, a bad cough
and needs an x-ray, they will generally be sent to another office run by a
private business that specializes in performing and interpreting X-rays.
Similarly, their blood work will be sent out to a laboratory that
specializes in running blood tests. These clinics are owned, usually, by
doctor-investors (often by radiologists and pathologists) and
self-referral, kickbacks, etc. are a big source of physician income here.
Recently, larger corporations have taken an interest in these clinics and
there are companies buying up multiple clinics - like all the MRI clinics
in an area - to monopolize service. Also vertical integration is going on
here, as hospitals and HMOs (see below) buy up these clinics. Since
almost all of these clinics were originally formed by doctor-investors,
doctors are the immediate beneficiaries when the clinics are sold, often
realizing huge gains on their investments.
(d) The drug companies. Multi-national, Fortune 500 companies. Need I
say more? Drug companies have also been buying up specialty clinics in
recent years where they can peddle their own wares. Fertility clinics,
cancer treatment clinics, and so on.
The Health Maintenance Organizations (HMOs). Some are
non-profit, some for-profit, some doctor owned. Although most HMOs on the
east coast of the states are really just insurers (below), HMO’s on the
west coast often maintain outpatient offices and testing equipment.
Generally, however, the physicians who staff these facilities are
contractors, not salaried employees. In fact, it is very unusual for
physicians in the US to work on salary. Few east coast HMO’s own
hospitals, but that is changing.
(f) Chronic and rehabilitative care facilities. Most are privately
owned, for-
profit firms, but some are owned by churches and other non-profits.
Charges at nursing home generally run upwards of $3000 per month and are
not usually covered by insurance. The industry has a horrific labor
record and faces constant accusations of skimping on or withholding care,
and of over-billing Medicaid patients (below). For many old folks, there
is nothing so frightening as the prospect of ending up in one of these
“nursing homes.” Earlier this year, an 80-something year-old woman pulled
out a shotgun and shot her middle-aged daughter, paralyzing her from the
neck down, after overhearing the daughter make plans to place her in a
nursing home.
Home health care. Small firms, largely, many are not-for-profit but the
for-
profit segment is rising and is again, owned often by doctor-investors.
Provides at-home nursing care to acutely and chronically ill patients -
dressing surgical wounds, assisting patients with disabilities or dementia
in daily living tasks. Services are prescribed by physicians and paid for
by whoever (see “payers” below).
Dental care. A completely separate sector. Dentists operate
independently
of the rest of the health industry, still organized largely in solo and
small-group practices. Separate payer system also, save for Medicaid
(below).
(2) THE PAYERS. In the US, health bills are paid by third parties, unless
the patient is rich or the service is cosmetic (plastic surgery). What,
you may wonder, of the 43 million uninsured? People who have neither
wealth nor health coverage either do without; beg for free or reduced-rate
care; or try to pay and end up bankrupt. Small services like visiting a
doctor to treat a strep throat (penicillin can’t be purchased without a
doctor’s prescription in the US) can be managed out-of-pocket - about $75
- $100 bucks. But anything serious is unaffordable. A few years back, I
spent four days in the hospital with pneumonia and the bill was $12,000 -
not including doctor’s fees - for a very run-of-the-mill problem. A
nephew was in a serious car accident and spent two weeks in the hospital,
some in surgery and intensive care. The bill was over $200,000.
Who pays?
Insurance Companies. There used to be a large state-subsidized non-profit
sector of traditional insurers, called “blue cross.” This sector has been
mostly, perhaps completely, privatized.
There is also a sizable sector of “self-insurers” internal insurance
funds set up by large firms to pool insurance risks among their employees.
Big employers find this cheaper than contracting with a for-profit
insurer.
For the most part, though insurers are pretty much all for-profit
businesses. Health insurance comes in two flavors:
(1) “Traditional” fee-for-service. Under these plans, the insurance
company pays some percentage (usually 80%) of all doctor, hospital, and
other provider bills. Sometimes policies carry high-deductibles - $5000
or $10,000 - in which case they are called “catastrophic care” policies.
These plans usually allow consumers to go to the provider of their choice,
to get second and third opinions and so on. For consumers, they offer the
most freedom of choice. On the other hand, given the dollars involved, a
20% co-payment can quickly add up to some pretty big bucks. When my
mother was dying of cancer, the 20% co-payments nearly broke my family.
(2) Managed Care. Most insurers now prefer to sell these policies, the
brainchild of such luminaries as Uwe Reinhardt. Under managed care,
consumers can only use providers in the insurers “preferred-provider
network” or PPN. PPN providers have contracted with the insurer to sell
services at discounted rates. Since different providers belong to
different networks, this limits consumer choice. Moreover, managed care
programs - and this is the infuriating part for patients - utilize
“gatekeepers” also known as “primary care physicians.” (PCPs)
Say you have a suspicious mole on your back.. You want to see a
dermatologist, but you must first call your PCP to get a referral. The
PCP then finds a dermatologist in your PPN and sends you there. And
here’s a neat trick. If you go to the dermatologist and it turns out that
your PCP didn’t sent the proper referral form to the insurer, YOU are
responsible for the bill, which will be double (at least) the discounted
rate negotiated between the dermatologist and the insurer. When the
dermatologist does a biopsy of the mole, s/he sends it to a pathology lab
also in the PPN. If you need laser treatment, you will go to a laser lab
in the PPN.
What if you’re getting chemotherapy and the oncologist drops out of your
PPN? Time to find a new oncologist. When I was pregnant, I went through
4 obstetricians in 6 months because they kept dropping out of my PPN. I
have lots of stories and I hardly ever even get sick.
The Wall Street Journal article that set off this discussion on
Pen-l was about the problem of gatekeepers who can’t be reached after
hours. Let’s say you step on a nail and need a tetanus booster on a
holiday weekend. You call your PCP, but s/he’s on vacation. The on-call
doctor doesn’t return your calls. So you take yourself to the emergency
room, wait four hours, go home. Then get a bill for $500. Why? You
didn’t get the proper referral!
(b) Health Maintenance Organizations. These are for-profit (though some
are
not-for profit) firms that sprang up on the west coast and created the
model for managed care. They generally run their own clinics and labs.
Doctors have offices in their facilities. Hospital services are usually
contracted out, though less on the west coast than the east. Otherwise,
they are identical to managed care insurers. Consumers join, pay a
monthly premium and go through the same rigmarole with PPNs and PCPs that
they do with an ordinary insurer. In fact, insurance companies have been
buying up HMOs and vice versa like crazy. The only reason HMOs continue
to exist as an independent entity is that, back in the 1970s, Nixon became
convinced that these were the solution to our rising health cost problem -
managed competition, an idea revived by Clinton. To encourage the rapid
expansion of managed competition, HMOs were given legal protection from
lawsuits.
Consumers can sue insurance companies for denying needed care, but
they cannot sue an HMO. This was the issue in dispute last week when
Congress was deliberating on a “patient bill-of-rights.”
One more thing about managed care and HMOs. Physicians claim that
managed care interferes with their ability to determine needed treatment.
Had physicians not dipped their own arms so deep in the health care candy
bowl over the years, people would be more sympathetic.
A very serious concern is with “capitation” and this speaks more to the
avarice of physicians as the problems of the HMO industry. Under
“capitation” agreements, doctors are paid a fixed dollar amount for each
patient claiming him/her as their PCP. All costs associated with the care
of the patient come out of that fixed fee - payments for home health care
agencies, specialists, clinics, prescription medicines. Moreover,
according to radical doctors like Woolhandler and Himmelstein (mentioned
in previous posts) physicians must generally sign confidentiality
agreements, promising not to divulge the details of the capitation
agreement to patients. Many people worry (and given the history of the US
medical profession, they have good reason to worry) that doctors will
withhold treatment to line their own pockets.
(c.) Medicare. The largest single payer in the US, Medicare is available
only to Social Security recipients and is run by the federal government.
Medicare is financed by a tax of 2.5% on wages and salaries and an
additional $55 monthly premium paid by recipients. Regular Medicare is
run on a fee-for-service basis and, like other fee-for-service schemes,
covers only 80% of provider bills (except hospital stays, which are
covered at 100%) . In addition to the 20% co-pay, a killer for the
elderly, there are gaping holes in coverage. Prescription medicines, for
example, are not covered. Nor are eyeglasses, dental care, prosthetic
devices. Home care coverage has been spotty until recently. Long-term
and rehabilitative care are not covered. Thus, most elderly households
are driven to purchase “Medi-gap” coverage -- private insurance policies
which cover the “gaps” in Medicare coverage. These are quite pricey and
get more expensive the older and sicker the consumer, though I have no
numbers handy.
Rarely do I hear the word Medicare without free-associating “fraud.”
Advocates of universal health care love to point out the percentage of
Medicare costs that go to administration are only a fraction of that of
private insurers. What they don’t tell you is that over-billing by
providers is rampant and Medicare’s administration is too under-staffed to
catch or prosecute most of it. As a result, costs rise and rise and rise.
Rather than capitate providers or allocate funds to prosecute fraudulent
billing, Congress and Clinton are trying to introduce the benefits (sic)
of managed competition to the elderly by contracting out the insurance
function to HMOs and other insurers, which tells you everything you need
to know about the sorry state of US health policy.
Medicaid. Medicaid is run partly by the federal government and partly by
the states to provide care to the indigent. It used to be an entitlement
- available to anyone whose income was low enough to qualify. But welfare
reform changed that. When people think of Medicaid, they think of poor
children. In fact, more than two-thirds of Medicaid expenditures go to
nursing homes for care of the elderly and disabled. This is because
Medicaid, though it covers nothing well, is the only health payment system
that covers everything - dental care, drugs, long-term care, the works.
To pay for nursing homes, the elderly must spend down their assets until
they are indigent (a working-class home, owned outright, will cover a
couple of years in a nursing home. The clever middle-classes prepare for
this by having dad sell the house to his son-in-law before he becomes ill)
then they can apply for Medicaid, which will cover the bills until they
die.
Nursing homes and Medicaid are also virtually synonymous with fraud and
over-billing. As for the regular services for the poor non-elderly,
unfortunately many doctors, dentists and other providers refuse to accept
Medicaid patients. They claim the compensation is too stingy.
So there you have it. The US health care system in a nutshell. Next
time someone gripes about the national health service, hand them a copy of
this. That’ll shut em up.
Ellen Frank
