Cost, not access, is underlying problem facing American healthcare

May 6, 2017

The current conversation fails because it does not address the fundamental barrier to healthcare access - which is not insurance coverage, but rather the cost of healthcare coverage.

Editor’s Note: Welcome to Medical Economics' blog section which features contributions from members of the medical community. These blogs are an opportunity for bloggers to engage with readers about a topic that is top of mind, whether it is practice management, experiences with patients, the industry, medicine in general, or healthcare reform. The series continues with this blog by Anish Koka, a cardiologist in private practice in Philadelphia. The views expressed in these blogs are those of their respective contributors and do not represent the views of Medical Economics or UBM Medica.

 

The House of Representatives vote to pass the American Health Care Act-the Republican attempt to replace the Affordable Care Act--has received much attention.  The coverage has focused on technical details of projections from healthcare analysts regarding the number of people that would lose insurance coverage with any attempted changes to the status quo.  While I am sympathetic to the plight of those who benefited greatly from the Affordable Care Act, I remain unconvinced that the current conversation does anything to reach the goal shared by the vast majority of Americans regardless of political party affiliation: Make basic healthcare affordable to the maximum number of Americans.

 

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The current conversation fails because it does not address the fundamental barrier to healthcare access - which is not insurance coverage, but rather the cost of healthcare coverage.

Anish Koka, MD

Consider the bill a friend of mine who has health insurance through her employer recently received after her daughter had an echocardiogram and an ECG done - $4800 for the echocardiogram, $1200 for the ECG.  Last I looked, Medicare pays about $12 for an ECG, and about $140 for an echocardiogram.  The facility was out of network, so the insurance company paid about 80%, leaving the remainder of approximately $1000 as the patient's balance.

This raises the interesting question: Are insurance companies forced to pay what hospitals charge, or do hospitals charge what insurance companies will pay?

 

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The truth is somewhere in between: both parties are complicit.  Insurance companies turn out to be very poor stewards of your money.  Hospitals, emboldened and strengthened by consolidation that reduces competition, are more than happy to set outlandish charges that insurance companies will pay.  It is  a cruel irony lost on most that the Democrats, who were supposed to be the party of 'adults', the party of technocrats, the party that traditionally speaks for the common man has a platform built on an individual mandate to buy health insurance and support this hospital-insurance nexus.

Next: Healthcare's access problem is its cost problem

 

Simply put, those attempting to preserve the current system want to force Americans to pay a monthly premium to health insurance companies attached to deductibles that are high enough to ensure that the $1200 ECG will be subsidized by your bank account.  The current solution proffered for those that don't have this type of cash lying around is to have the taxpayer pick up the exorbitant bill.

 

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Currently, low-income patients qualify for tax credits that amount to subsidies from the federal government to insurance companies to keep costs low.  While this is laudable and certainly a good deal for sick patients that are poor, the path is one that is unsustainable even for the richest country on the planet.  Perhaps even more damning, this approach still leaves around 20 million patients without healthcare.

Healthcare's access problem is its cost problem.  Lower the unit price of care, and the path to universal access to healthcare becomes much easier.   Interesting things happen in healthcare arenas free of third-party payers.  One such example is coronary calcium scans - low dose CT scans of the chest that demonstrate the presence of calcium in the coronary arteries.  Using this tool to screen patients is a controversial topic among cardiologists, and insurance companies have refused to pay for this since its inception.

 

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 Remarkably, all this has done is make a coronary calcium scan affordable to almost everyone.   Indeed, in any given city almost every hospital offers this scan. (In Philadelphia, for example, the cost runs from roughly $50 to $185).  Hospitals understand in this case that you can't sell what the buyer can't afford to buy.

The effects of the deep pockets of third-party payers that are poor negotiators is even more profound. It trickles down to affect the very cost of goods.  Sellers of stress test machines, for instance, know all too well what Medicare pays for stress tests, and set their charges accordingly.

Next: This is the wrong thing to do

 

In 2010 Medicare chose to reduce reimbursements for stress nuclear imaging studies by 36%.  Many practices fled to join hospitals which had been spared these cuts - but nuclear imaging in the outpatient setting never actually died as feared.  The cost of doing imaging simply got lower, leaving the cardiologists who survived with lower, but still manageable margins.

 

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There are at least two approaches to lowering healthcare costs- either have an authority set prices (the government of India recently started setting a ceiling for the price of coronary stents), or reduce the imprint of deep-pocketed third-party payers in the healthcare market.

The wrong thing to do is to listen to the supposed defenders of patients seeking to preserve the right of Americans to keep paying into a broken system that enriches a precious few, bankrupts the nation and keeps healthcare out of reach for millions of Americans.

 

Dr. Koka is a cardiologist in private practice in Philadelphia.