EVIDENTLY, IN THE MOOD FOR RISK TAKING

I DID SOMETHING NEW THIS WEEK.venturing once more into the breech of health care, I went to my first Town Meeting. Town Meetings are much more the thing here in the NE than I recall them being in the NW. On Monday, in the auditorium of a local high school, Congressman Massa (Corning-D) met with some 800 local folk to discuss health care reform issues. I was impressed by several things. One was the size of the auditorium; high schools here in the US are really big. About half the attendees were Medicare recipients (by show of hands) but there were also quite a few young folk present.

More significantly, I was impressed at the way the Congressman ran the meeting; he spoke for several minutes, then the rest of the two hours was open for questions. As you may have read, some of these across-the-nation public meetings have been marked by outbursts of ill-tempered excitement. Predictably, there were plenty of placards and slogans, but everyone kept their temper and maintained a polite approach.

One of the big issues is the cost of care. The US spends about twice as much per person on health services as do other developed countries but falls short of universal health care. It is useful to look at come of the components of cost. At the bottom is the cost of doing business for a medical practice. Billing is a considerable part of the cost of care. In the US, billing is based on the extremely complex CPT coding system and medical practices must purchase expensive electronic billing systems to submit claims. This is a fertile arena for disputing claims from the viewpoint of the insurer. Challenging disputed claims involves additional expensive software, often vended by subsidiaries of the insurance companies. The physician I see has observed that up to 40% of his day may be given over to negotiating treatments for patients with insurers. A pity, as this raises the per patient per day cost of care.

Not that one can particularly take issue with the health insurers. They compete for insurance contracts with other companies and often have to pare premiums to the penny to get the business. They then must control claims so as to stay inside the total premium income. The point of this is that the considerable cost of doing business has to be included in the per treatment cost of health care, thus raising the price a doctor must charge in order to stay in business. This has been well summarized by Paul Krugman, "So it’s an arms race between insurers, who deploy software and manpower trying to find claims they can reject, and doctors and hospitals, who deploy their own forces in an effort to outsmart or challenge the insurers. And the cost of this arms race ends up being borne by the public, in the form of higher health care prices and higher insurance premiums." The cost of this 'arms race' has been estimated to add upwards of $US 45 billion to the cost of health care.

It has been argued that the cost of malpractice insurance can be very considerable and that a practitioner may order multiple and possible unnecessary lab tests to guard against possible malpractice suit, adding to the total cost of health care. However, the report of a recent study suggests this is relatively slight. A more likely villain is the marketing practices of the larger drug companies.

For example, the considerable effect of advertising by drug companies encouraging you to 'ask your doctor' or 'tell your doctor' about some new medication or test. This adds significantly to the cost of care. Very few developed countries permit this type of advertising. A review of rising costs in the Canadian health system some 20 years ago showed that the main cause was unnecessary tests and procedures.

As to the costs of medications (much dearer in the US than elsewhere), consider the effect of the cost of marketing by drug companies to the medical profession. This week a large company was fined $US 2.3 billion for fraudulent marketing and was labeled a 'repeat offender'. It is illuminating to read how this company went about marketing drugs to doctors. Consider how the fine plus the cost of the actual marketing practices adds to the cost of the prescription pills you buy. As one doctor remarked to me, 'You don't know how much money there is in the world until you meet the drug companies; they have more money than God!'. Collectively, the drug companies and health insurers spend amazingly large amounts on lobbying politicians. Here a little, there a little, all this adds to the cost of care. According to a 2005 analysis by McKinsey & C0, the costs of important components of health care are between 2.2 and 4 times higher in the US than in peer developed countries, despite that we use fewer medications and spend less time in hospital.

The cost of care in the US is quite a tangled web and therefore not amenable to an easy fix. The Town Hall meeting got me going, as you can tell, pulling together numerous threads I have encountered these last two years. Therefore, I like the Congressman's proposition that, instead of one piece of legislation passed in relative haste, it may be better by far to understand this web and bite off pieces of the apple one important bit a a time. In the meantime I keep in mind that there are several players of influence whose interest it is to keep things pretty much as they are. Unfortunately, this is at the very considerable expense of the rest of us.

Coincidentally, I received in the mail today from my health insurance company the latest one inch (2.54 cm) thick directory of the practitioners who are in the network. Goodness know what it cost to prepare, print, and post. I never would have received such a publication in Australia, when I lived there, as I was free to see any practitioner, usually on the same or the next day. Well, that is 'socialized medicine' for you.

Now, where is that chap with the sign?