Speaking Notes

PADM 5971

March 31, 2010

Dr. Neubauer

 

Chapter 10 -- The Triumph of Incrementalism: From Managed Care to Consumer-Driven Health Care

 

It is not so much the triumph of incrementalism as the failure to pass compressive policy, at least prior to recently.

 

There are two major parts of the chapter -- Managed Care followed by Consumer-Driven Health Care.  These notes focus on managed care.  We can address consumer-driven health care next week.

 

Managed care in fact has the ability to reduce health care expenditures in the aggregate.

 

http://en.wikipedia.org/wiki/Managed_care

Notice this statement in particular: "Managed care is now nearly ubiquitous in the U.S, but has attracted controversy because it has largely failed in the overall goal of controlling medical costs. Proponents and critics are also sharply divided on managed care's overall impact on the quality of U.S. health care delivery."

 

 

The content of this is very good, regardless of your reaction to the means of presentation.

http://www.pinkyshow.org/archives/episodes/060110/060110_healthcare.html

 

This is the transcript of the video above.

http://www.pinkyshow.org/archives/episodes/060110/060110_credits.html

 

Managed Healthcare Executive online magazine

http://managedhealthcareexecutive.modernmedicine.com/

 

Basic "pillars" of managed care:

 

·        The provision of medical care is a business with a profit motive.

·        Physicians often (but not always) are employed by the HMO or other business entity.  Sometimes the physicians just "join" the organization in which case they may be required NOT to provide medical services except through the organization/association.

·        The businesses may or may not themselves be insurers.  The problem with their being both an insurer and a provider is that the size of their service population is likely to be too small to effectively estimate their likely expenditures to service their service population.

·        Assuming the provider business works with an insurer the insurer competes with other insurers to work with employers to insure at least some of the employer's employees.

·        Large employers usually offer their employees multiple options with the understanding that what the employer pays into the play per employee is the same regardless of the plan selected.  If an employee selects a more expensive plan the employee must pay part of the premium to the insurer.  What is covered, deductibles and copayments will vary among plans.

·        Small employers (and self-employed people) are not very attractive to the insurers.

·        Employees tend to choose relatively less expensive plans but if they are not happy with services provided have the option of changing plans once a year.

·        Physicians and hospitals (and other providers) can join plans realizing that by so doing they agree to be "managed" by business executives.  The idea is that they will apply standardized protocols of care and discourage/prevent possible "over treatments."  They are likely to be told not to encourage patients to see specialists.

·        Pre-authorizations for expensive treatments are likely to be required.  Expensive treatments are likely to be delayed and may be denied.

·        If patients go outside of the plan for care the plan may or may not pay part of the costs the patient incurs.

·        Physicians in time learn to think of themselves as employees and may decide to join unions.

·        Costly treatments and procedures are likely to be done in locations that can do the work for lower costs regardless of the objective quality of care.

·        The challenge for the provider(s) is to provide good enough services that the employee/patient will stay with the plan in the following year(s), while keeping costs low and avoiding the medical business (and the individual physician) getting sued.

·        When insurance companies negotiate with provider businesses they are not interested in paying rates that will allow the provider business a level of profits that can be used to treat other (indigent) patients.  Therefore, the options available for indigent patients become fewer.

·        The business-provider has a contract with the insurer to treat these employees for a set amount of money (usually a per-capita rate per year).  Therefore, the business-provider takes a risk.  The real service provided by the insurers is working with multiple employers to create large service pools and then distributing those large service pools across multiple business-providers.  The insurance companies, of course, have costs/overhead and need to make a decent margin of profit.  If the business-providers were larger they could possible "disinter mediate" the insurance companies. 

·        So, the insurance companies "interface with" the employers and the business-providers.  The business-providers "interface with" the insurance companies and the patients.

·        There is some incentive for the business-providers to provide preventive services in order to avoid high future costs.  But this assumes that particular patients remain in the plan long enough so that the present business-provider eventually reaps the benefit of having provided the preventive care.

·        Insurance companies try to work with employers of relatively healthy populations of employees.  If an employer is in a "bad" industry its rates are going to be high.  This is likely, indirectly to work to the disadvantage of older (and less healthy) people seeking employment.

 

So, what is the result?

 

·        Most people in the United States who have medical insurance are reasonably satisfied with what they have.

·        A relatively few people have very high levels of needs.

·        There are many "horror stories" of people whose care has been delayed or denied under managed care.

·        There is some evidence that some kinds of cancer have been identified earlier under managed care.

·        Uninsured people tend to be pushed out of the system under managed care.

·        There may be less money available for medical research and teaching under managed care systems.

·        Physicians may or may not find their professional lives more satisfactory under managed care.

·        It would seem that as various managed care systems become similar to one another, three tiers of service will emerge -- those who receive relatively little care for lack of insurance/ those with insurance working within the constraints of managed care / those who can afford more and better services

 

So, what will change as a result of the newly passed legislation?

http://www.cbsnews.com/8301-503544_162-20000846-503544.html

 

 

Existing system

 

Value added by employers: work with employees to allow employees to select a plan and send premiums to insurance companies regularly

 

Value added by insurance companies: assemble large pools of insured persons and negotiate with managed care providers for capitation rates and coverage agreements to be offered to employees through employers

 

Value added by managed care providers: actually deliver medical services to insured employees

 

 

 

Incentives of employees:

 

 

Incentives of employers:

 

 

Incentives of managed care providers:

 

 

 

New system?

 

The change does in fact look with a Triumph of Incrementalism.