I began my series on Goldhill’s Catastrophic Care by characterizing the health system as unresponsive to consumers and evidence. I’m on board with the idea that increasing patient cost sharing (but in a smart way) could help make the system more patient friendly, more convenient, and reduce (some) prices. John Goodman convinced me of that and Goldhill reinforces it. At the same time, the experience in other industrialized nations illustrates it is not the only way. Nevertheless, increased cost sharing seems to be the U.S. trend, so I do hope it is a helpful step. I also hope that patients who want evidence-based therapies will be able to find them more easily in a market more oriented to serve patients as opposed to third party payers. However, evidence-based is a much harder thing for a patient to discern than convenience. So, I worry about this.
In any case, what’s to be done about the care that is covered by third-party payers even in a more consumer-directed market? After all, nobody is talking about not having insurance at all. Goldhill is talking about retaining insurance for catastrophic, random events. Wouldn’t cancer fall in that category? Yet, from Chapter 3,
when Medicare cut reimbursements in 2005 on chemotherapy drugs, it saved almost 20 percent of the previously billed costs. But Medicare’s cancer treatment costs actually rose in this period, as the total number of treatments ordered by doctors rose to compensate for lost income from the lower reimbursement rates.
This strongly suggests a lack of evidence-based care. All other things being equal, following the evidence should lead to the same amount of cancer treatments. Reimbursement rates shouldn’t matter. But of course they do, and that’s not surprising. Wouldn’t the same issue arise under catastrophic coverage? Why not? Lower prices are lower prices. How do we achieve lower prices without getting up-sold by a provider attempting to maintain his income level? The answer isn’t “patient cost sharing” when we’re talking about random, super-expensive cancer care, is it? That falls in the insured, catastrophic range, right?
Moving on, I can’t resist also sharing this passage from Chapter 3:
My wife grew up in the former Soviet Union, where there was no pointless multiplicity of brands of toilet paper, no class differentiation of thickness of tissue, no wasteful spending on attractive packaging and useless marketing. There was just toilet paper. Sadly, it was expensive, often in short supply, and uniformly rough. The United States has more than fifteen brands of toilet paper. In the grand scheme of things, it truly doesn’t matter whose paper is the thickest, the softest, the most absorbent, or even the cheapest. But providing those choices—allowing toilet paper manufacturers to chase consumers on whatever basis they choose–has resulted in all toilet paper (even the unbranded generic product) being thicker, softer, more absorbent, and cheaper than the soviet one-size-fits-all solution.
I think we can make some distinctions between toilet paper and health care. Or narrow it to cancer care, if you wish. I’m very happy with our toilet paper choices in the U.S. If my favorite brand changes the nature of its product, as happened recently, it’s not hard to find another option. At worst, I am out the cost of a package of toilet paper I don’t like.
What happens if, on the other hand, I’m one of those patients suddenly told I need cancer treatment only because my (catastrophic) insurer cut payment rates, not because my condition actually warrants it? The loss is potentially much, much larger. This is not to suggest that consumer-directedness cannot help. I think it can. (Though I still think some patients could be harmed, but many are harmed now too.) What I’m suggesting is that consumer-directedness is not the whole solution. Once catastrophic coverage is involved, we are back to the standard problems of third-party payment.
All posts in this series are tagged with Catastrophic Care.