Skyrocketing Cost of Health Care Shifts to Individuals
Several recent articles drive home two key trends that are unlikely to change direction any time soon:
- Health care costs continue to spiral upward.
- More of these costs are being borne by individuals (you).
Runaway Costs
The first article (Health Care as if Costs Didn’t Matter) in the NY Times, highlights the large differences in care depending on geographic location.
In Idaho Falls, Idaho, anyone suffering from the sort of lower back pain that may conceivably be helped by the fusing of two vertebrae is quite likely to have the surgery. It’s known as lumbar fusion, and the rate at which it is performed in Idaho Falls is almost five times the national average. The rate in Idaho Falls is 20 times that in Bangor, Me., where lumbar fusion is less common than anywhere else …
… But it’s not clear that their patients are any better off. The evidence for lumbar fusion is incredibly mixed. It seems to help people with certain kinds of pain, but many others recover just as well without the surgery. Of course, doctors are almost always better off if the surgery is done: The typical hospital bill for lumbar fusion is roughly $50,000.
This is about as good an example as you can find of the health care mess. The number of lumbar fusions performed in this country has more than tripled since the early 1990s, and Medicare now spends more than $600 million a year on the procedure. It’s one reason your health insurance bill has gone up.
The article’s author notes that the call for universal health care may be a good idea, but that without dealing with the key cost driver (increasing usage of the system, especially expensive procedures), such an approach will be infeasible.
If we are really at the start of a once-in-a-generation push to fix health care, we need to be clear about the true problem. The main reason so many people lack health insurance is because of its cost. And a big reason for that cost is the explosion of expensive, medically questionable care, be it knee replacement, preventive angioplasty or lumbar fusion. The route to an affordable health insurance solution runs straight through this thicket.
Several individuals, including politicians on both the left and right and even the head of the Congressional Budget Office, have suggested that a cost-effectiveness institute needs to be established to figure out which kind of health care services really work.
This institute would sort through the scientific research on, say, spinal fusion and help people understand when it may make sense and when it’s likely to be just another big medical expense that doesn’t solve anything.
Medicare and private insurers could then use the research findings to determine when a procedure or a drug would be covered. There would be room for exceptions, based on a doctor’s judgment. In general, though, a doctor and a patient could proceed with dubious treatment only if they didn’t stick the rest of us with the bill.
Of course, not everyone would be happy with such a system.
[W]e shouldn’t be naïve: a lot of people would lose if medical care came to be based more on what actually worked. Right now, drug companies and medical device makers can go to the Food and Drug Administration and get approval for an expensive new product so long as they show that it’s as effective as its predecessor. They can then turn around and suggest to doctors that the new product is more effective than its predecessor. The doctors often profit, too. And many patients demand the latest, most expensive procedure, regardless of the evidence.
Ultimately, we have to make choices. To say we should just cover everyone for everything isn’t financially realistic.
Shifting Costs
Increasingly, choices and costs are being shifted to individuals through both high-deductible insurance plans and greater managing and monitoring of employee health by employers.
The LA Times recently had an interesting article on high-deductible plans (High Deductibles a Pain for Some Insured). The article notes that although high deductible plans are a good fit for relatively healthy people with some financial means, people who don’t fit this profile are increasingly choosing such plans because they’re the only plans they can afford. If/when an unexpected accident or major illness occurs, things can quickly go wrong.
When Nancy Warrington became pregnant five years ago, she quit her job to become a full-time mom. With that, she lost the family’s employer-subsidized health benefits.
Shopping for individual health insurance on their own, Warrington and her husband, Todd, settled on a plan with a $2,500 annual deductible and a $335 monthly premium.
“We were just looking for something [with a premium] we could afford,” said Warrington, 35. “The high deductible didn’t even dawn on me.”
The insurance was a mixed blessing. Although it covered Nancy’s appendicitis, Todd’s back injury and an assortment of other medical needs over the years, the annual deductible also saddled the San Diego couple with more than $10,000 in debt.
That’s the direction health insurance is headed, though. Today, there are approximately 10 million people with high deductible plans. By 2009, it’s estimated there will be 30 million people with such coverage.
Encouraging Healthy Employees
Even those people fortunate enough to have health insurance through their employers are seeing a greater focus on cost management.
Another recent NY Times article (Health Costs Push Companies to Set Targets for Workers) discusses the incentives employers are putting into place to encourage workers to adopt healthier habits, with the goals of reducing insurance premiums and health care costs.
The BB&T Corporation, a bank holding company with a big presence in the Southeast, allows workers to save 20 percent on their premiums by filling out an annual health questionnaire, allowing blood to be drawn for a medical work-up and taking a fitness test on a stationary bike.
“We have a lot of sedentary employees,” said Steve Reeder, BB&T’s benefits manager, who said more than 90 percent of the 24,000 workers with health coverage participate in the program.
If the health test finds that a BB&T employee does not meet the medical norms for his or her age and sex, the worker is assigned to a nurse who helps the person set healthy living targets and then meets with the employee periodically to see how things are going.
“If the nurse feels they are not making sufficient progress, they do have the ability to drop them from the program,” Mr. Reeder said, in which case the employee would lose the insurance discount.
Such voluntary programs have their critics (corporation as Big Brother), but they do help reduce health care usage and costs, while improving employee health.
With its testing, BB&T says it has beat its competitors on medical expenses. The $193 million that BB&T and its workers expect to spend on health care this year works out to about $8,042 an employee. The company calculates that to be about $1,100 less per person than what comparable banking companies and their workers will typically spend.
If employers have to incentivize employees to manage their own health, so be it, if it helps to improve employee health and reduce health care costs for society overall.
What You Can Do
As health care costs continue to rise and shift to the individual, nutrition is the biggest factor under your control that can reduce your risk of developing expensive chronic conditions.
The goal: Avoid the need to use health care services in the first place (except for regular preventive care).
You can learn more about nutrition, environmental, and lifestyle factors for different chronic conditions on both this blog and my main site.
You can also sign up on my main site for individualized assistance putting together an organized, comprehensive plan to prevent and deal with these conditions — and keep your long-term health care costs low.
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Healthy Lifestyle - Good Intentions, But Follow-through Lags
(Image: The New York Times)
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