This NPR article has been sitting in my browser so long that the newly passed reform bill may have made it obsolete, but I am finally motivated to discuss it. Only one collective is described. Members pay a modest annual fee to cover administrative expenses, then write monthly checks to other members as directed by the administrators. There is what appears to be a co-pay or per-need deductible of $300 (for lack of more specific terminology), and it is waived after a household pays it three times within 12 months for the remainder of the 12-month period. Members can voluntarily choose to help people whose needs exceed $100,000, or who have been injured in motor vehicle accidents.
This is an interesting experiment. It frighteningly mimics only basic catastrophic coverage, and payments are not assured. Pre-existing conditions are generally not covered, including most pregnancy costs. Is this a good idea?
Advantages:
It's easy to understand. There are about 30 pages of straightforward rules and instructions. There is one deductible rule. There is only one type of plan (not counting the two optional add-ons for motor vehicles and >$100,000 needs). The organization is compassionate. Membership in the collective is not exclusive of having other insurance, so the collective may end up being helpful to someone who is "underinsured".
Disadvantages:
With about 14,000 households spread across the United States, the collective lacks strong negotiating leverage to demand lower prices from care providers. Members who rely on the collective are self-pay patients, so they will be charged much more money than a large insurance company would be charged, increasing the burden to members via premiums (the premium to need ratio is less efficient for a small collective than a large insurance company, which is also why single-payer systems are so good at keeping costs low).
Payments are not assured, and would become less likely as needs increase. Small groups are more likely than larger groups to experience significant variance in needs from time to time. Large companies tend to have reserves that they can tap if there is a spike in health care consumption, but the collective is set up rigidly. The NPR article mentions that a vote of the membership is needed to increase premiums, reducing flexibility and security.
Health economics studies have consistently shown that people tend to gravitate towards plans with the lowest premiums, despite their risks or needs. Neuroeconomics has shown us that most people are terrible at making decisions when there is a lot of confusing information and a lot of choices, and they tend to focus on select pieces of information to the exclusion of other important factors. Keep that in mind: more choice is not necessarily better, and is often very bad, especially for the more ignorant and less intelligent who are also at higher risk for other problems in their lives. When shopping for health insurance, with all the many complicated plans, people tend to focus on premiums to make the decision easier. The collective has such a low premium (2/3 of what I pay for my bare bones plan) that it may attract people for whom joining is a terrible decision, and who are more likely to incur greater costs for the collective.
Finally, what are the effects of only including devout Christians? Very generally, when you ignore factors like church attendance, self-identified Christians are more likely to have health problems and engage in dangerous or criminal behaviors than atheists. Samaritan Ministries seems to have some decent safeguards up to protect itself, though. Members' pastors are involved in their membership, and the collective simply does not cover many things (substance abuse, STDs may be difficult) that are out of line with their stated values. I wonder if there are also impacts due to changes in the age composition of devout church-attenders. I wonder if the collective attracts a disproportionate number of elderly who use it to supplement Medicare, and how that affects the risks.
Summary:
I like experimentation and innovation. I am curious to see how a project like this works over time. I also think it is very risky, and may need additional safeguards. Ideally, risk would be shared in a national plan that assures some basic levels of coverage to everyone, and collectives like this or private companies would sell supplemental plans.
Showing posts with label third-party payer. Show all posts
Showing posts with label third-party payer. Show all posts
Friday, March 26, 2010
Sunday, May 24, 2009
Mandatory Private Insurance - Why It's Stupid
The Washington Post has a very flattering article about Senator Baucus today. I am going to just focus on one sentence, though.
If he's considering an individual mandate, he is clearly not committed to getting more and better care from health dollars. This is very similar to McCain's proposal. Let's start with the setting. We have now about 50,000,000 people with no insurance, almost entirely because it is too expensive. We have tens of millions more people with inadequate insurance, who still go bankrupt if a major health complication occurs. We have companies offering less and less in the way of health benefits because prices are rising so much.
* Making health insurance mandatory for people who can't really afford it is going to require spending federal money on subsidies. It is flat out less efficient to give this federal money to private insurance companies with their high overhead than to just expand Medicare or Medicaid. This is just Congress's way of unnecessarily giving our tax dollars to insurance company stakeholders as a "thank you" for all the campaign contributions.
* Individual insurance customers have no negotiating leverage. Large employers get discounts on insurance prices because they can pool risk and threaten to take their big group contract to a competing insurer. Individuals can't negotiate to reduce insurer's profits, so they get gouged. Unless the government is going to really meddle with private insurance rates and practices, making private insurance mandatory is going to lead to an even higher percentage of health dollars going to profits instead of care. Depending on how the subsidies are worked out, this will either unnecessarily hurt the lower class, unnecessarily rip off taxpayers, or both.
* We will still have huge problems with underinsurance. Even with subsidies, even when it's mandatory, consumers with lower incomes are going to get the insurance plans with the lowest premiums. These plans may have high copays, high deductables, and poor coverage. We are still going to see bankruptcies due to medical costs. Unless the government meddles extensively with what insurance plans are offered, but that doesn't seem to be on the table.
* Regarding taxing health insurance from employers, that will result in a further reduction of coverage by employers, higher costs to individuals, poorer coverage overall, and further weakening of our ability to compete in the global market. What would eliminate all of these problems is a public, single-payer option, which would reduce everyone's costs, increase coverage, and let our industries be more competitive.
"Baucus is committed to delivering universal coverage and getting more and better care from health dollars, and he is seriously considering an individual mandate -- requiring adults to have health insurance -- and taxing employer-provided health insurance."
If he's considering an individual mandate, he is clearly not committed to getting more and better care from health dollars. This is very similar to McCain's proposal. Let's start with the setting. We have now about 50,000,000 people with no insurance, almost entirely because it is too expensive. We have tens of millions more people with inadequate insurance, who still go bankrupt if a major health complication occurs. We have companies offering less and less in the way of health benefits because prices are rising so much.
* Making health insurance mandatory for people who can't really afford it is going to require spending federal money on subsidies. It is flat out less efficient to give this federal money to private insurance companies with their high overhead than to just expand Medicare or Medicaid. This is just Congress's way of unnecessarily giving our tax dollars to insurance company stakeholders as a "thank you" for all the campaign contributions.
* Individual insurance customers have no negotiating leverage. Large employers get discounts on insurance prices because they can pool risk and threaten to take their big group contract to a competing insurer. Individuals can't negotiate to reduce insurer's profits, so they get gouged. Unless the government is going to really meddle with private insurance rates and practices, making private insurance mandatory is going to lead to an even higher percentage of health dollars going to profits instead of care. Depending on how the subsidies are worked out, this will either unnecessarily hurt the lower class, unnecessarily rip off taxpayers, or both.
* We will still have huge problems with underinsurance. Even with subsidies, even when it's mandatory, consumers with lower incomes are going to get the insurance plans with the lowest premiums. These plans may have high copays, high deductables, and poor coverage. We are still going to see bankruptcies due to medical costs. Unless the government meddles extensively with what insurance plans are offered, but that doesn't seem to be on the table.
* Regarding taxing health insurance from employers, that will result in a further reduction of coverage by employers, higher costs to individuals, poorer coverage overall, and further weakening of our ability to compete in the global market. What would eliminate all of these problems is a public, single-payer option, which would reduce everyone's costs, increase coverage, and let our industries be more competitive.
Tuesday, May 12, 2009
Acupuncture - A Study with Toothpicks
I came across this article today reporting on a study comparing four types of lower back pain treatment over 7 weeks: individualized acupuncture, standardized acupuncture, "sham" acupuncture using toothpicks, and a control group that just used painkillers and anti-inflammatories (all groups were allowed to use drugs). Though I don't have the original journal article (May 11 Archives of Internal Medicine), the sample size seems large enough that the effect size mentioned should be statistically significant. 40% of the control group reported "significant improvement in disabilities brought on by back pain", and 60% of each of the other three groups reported the same. What might this mean for recommended treatments and third-party payment?
First, keep in mind that the participants all knew that this was a study on acupuncture treatment in order for the study to get informed consent. Only people willing to receive acupuncture were involved, which means the study had self-selection biases. Then they were randomly assigned to the four groups. So, the control group knew it was not getting the treatment that the study was testing. This would definitely have led to expectation biases in reporting disability. This study compared people willing to try acupuncture who got what they were told was acupuncture to people willing to try acupuncture who were then not given it. The chances that the effect seen is due to the placebo effect are very high.
The placebo effect is real and practically significant. It is really amazing how thoughts and beliefs, activity in the pre-frontal cortex, affect other parts of our brains and bodies, stimulating immune response (or inhibiting it) among other phenomena. What is also nifty is that we can intentionally generate these effects in ourselves without being tricked. Once we understand that a placebo effect exists, we can mimic the effect on purpose through mindful concentration or meditation. Recent studies using MRI, PET, and SPECT scans have revealed many brain processes that we can harness to benefit ourselves.
Jonah Lehrer, in How We Decide, cited research that reported that 90% of cases of non-specific lower back pain go away with just 7 weeks of rest. That would make rest far more effective than acupuncture or drugs. Perhaps having an active treatment encouraged these participants to continue physical activities that aggravated their back problems. With the expectation that they would be better with acupuncture or drugs, maybe they pushed themselves harder than they should have.
Based on this information, and in the interest of best practices, it seems that the answers to our questions are that Doctors should prescribe seven weeks of rest before moving on to other treatments, and that third-party payers still have little to no call to reimburse for acupuncture. The evidence is not compelling that acupuncture works according to its theories, and the high likelihood of a placebo effect suggests that similar benefits could be achieved through optimism, which is free.
I am interested in any well-done, valid, peer-reviewed studies demonstrating real benefits to acupuncture beyond a placebo effect. Since one in twenty studies may fall prey to a type I error (alpha is usually 0.05), meta-analyses are preferred. Send them my way if you've got 'em.
First, keep in mind that the participants all knew that this was a study on acupuncture treatment in order for the study to get informed consent. Only people willing to receive acupuncture were involved, which means the study had self-selection biases. Then they were randomly assigned to the four groups. So, the control group knew it was not getting the treatment that the study was testing. This would definitely have led to expectation biases in reporting disability. This study compared people willing to try acupuncture who got what they were told was acupuncture to people willing to try acupuncture who were then not given it. The chances that the effect seen is due to the placebo effect are very high.
The placebo effect is real and practically significant. It is really amazing how thoughts and beliefs, activity in the pre-frontal cortex, affect other parts of our brains and bodies, stimulating immune response (or inhibiting it) among other phenomena. What is also nifty is that we can intentionally generate these effects in ourselves without being tricked. Once we understand that a placebo effect exists, we can mimic the effect on purpose through mindful concentration or meditation. Recent studies using MRI, PET, and SPECT scans have revealed many brain processes that we can harness to benefit ourselves.
Jonah Lehrer, in How We Decide, cited research that reported that 90% of cases of non-specific lower back pain go away with just 7 weeks of rest. That would make rest far more effective than acupuncture or drugs. Perhaps having an active treatment encouraged these participants to continue physical activities that aggravated their back problems. With the expectation that they would be better with acupuncture or drugs, maybe they pushed themselves harder than they should have.
Based on this information, and in the interest of best practices, it seems that the answers to our questions are that Doctors should prescribe seven weeks of rest before moving on to other treatments, and that third-party payers still have little to no call to reimburse for acupuncture. The evidence is not compelling that acupuncture works according to its theories, and the high likelihood of a placebo effect suggests that similar benefits could be achieved through optimism, which is free.
I am interested in any well-done, valid, peer-reviewed studies demonstrating real benefits to acupuncture beyond a placebo effect. Since one in twenty studies may fall prey to a type I error (alpha is usually 0.05), meta-analyses are preferred. Send them my way if you've got 'em.
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