• Quote: Medicaid Reform – a response

    Austin wrote this:


    about this post. Basically, he’s looking for a response to Reihan and Avik’s proposal that we couple concierge care with a catastrophic plan for Medicaid.

    I think this misses a huge part of care. Physician time shouldn’t be minimized. But this plan would involve a huge deductible for everything else. So how would preventive care get paid for? Things like colonoscopies, mammograms, and laboratory panels aren’t cheap. How would maternity care get paid for? One third of births occur on Medicaid.

    Would we expect people below the poverty line to have thousands of dollars to pay for deductibles for this stuff? Cause they won’t have it. A baby will bankrupt them. They’ll avoid necessary care because they can’t pay the deductible. And if you start adding in preventive care and maternity care and deductibles they can afford back into the plans, you’ve got… traditional Medicaid.

    There’s a reason things are the way they are. If it were easy to “innovate” our way out of this, we would have done it already.


    • I like Esther Dyson’s description of our system – it’s a calcified hairball.

      The primary reason Avik’s idea won’t work isn’t economic – it’s clinical. The idea of real health is to avoid it’s use – and a team based approach with that goal is the best model.

      What we need is a system that reverses the incentive – not just make episodic (or triage) care more accessible.

    • Aaron is so on target. Here’s a (long) video of Epiphany’s founder explaining how his concierge care works:


      Some preventive care care (like mammograms, pap smears) are included.

      What’s not included: hospital care, pharmacy, imaging, outside labs, specialty care, physical therapy. These services are available at steep, negotiated discounts (e.g. $1000 for a colonscopy).

      Roy’s proposal calls for a $2500 deductible plan that would cover these other services.

      It is not a stroke of genuis, nor even a surprise, that you can cut the costs of Medicaid by requiring desperately poor people to cover the first $2500 of these needed services. They’ll just go without. But really, is that what we want?

    • I think you’re ignoring that most people don’t need ‘preventive’ care. I know it’s apostasy for many to even think about, but the average person walking around on the street doesn’t need to regularly be seen by a doctor. So to me that means that even direct-primary care isn’t a necessity for much of the medicaid population (that’s what they mean, not concierge care).

      A simpler way to handle this would be to get primary care out of Medicaid altogether other than providing some HSA-like funding for use for primary care needs, along with maybe some targeted reference-based funding for vaccines, dental care, etc. A subset of the population would need more structure and support (those with serious emotional or cognitive disabilities), but most people really are able to handle just going to the doctor’s office (or convenient care clinic) and then paying the bill at the end of the visit, basically the same way they manage to fill their car with gas for $45.

      Also, ‘on Medicaid’ is not the same as ‘utterly destitute.’ With a primary care visit costing as little as $30 if you just pay cash (http://theselfpaypatient.com/2013/09/11/for-less-than-many-insurance-co-pays-this-doctor-in-austin-texas-will-see-you/), it’s time to abandon the idea that health care is just completely unaffordable without insurance. Yes, insurance or something like it has it’s place, but by moving as many Medicaid recipients into the self-pay market for primary care you not only reduce costs, you increase access to care because doctors who are cash-only don’t really care whether your $30 comes from a Medicaid-funded HSA-like account or from a recent sale of your stock portfolio Goldman Sachs.

      • 30 dollars may not seem like much to you but when the median wage in America is around 26k for the majority of people it is. Think about that: somewhere around half or more of Americans live on less than 26k a year. That is before taxes. There are very few places where you can live on that and pay all your expenses. The fact is most Americans are one to two paychecks away from bankruptcy and possible homelessness if a costly problem emerges.

        This is at a time when the top ten per cent and especially the top 1 percent have gained astronomical wealth. The problem (and I will say it forever) is not that we don’t have enough money in America; the problem is it is concentrated in so few hands. When the six Walmart kids have as much wealth as 100 million Americans (partly due to the fact btw, that we pay for their workers in welfare/Medicaid costs) then, Houston, we have a problem. when 50 percent of the population shares about 1 percent of the wealth of this country, asking that 50 percent to pay anything for health care is immoral and economically insane and unfair.

        Unless, of course, you are willing to close the ER to them and prohibit them from medical care unless they can pay the cost and/or have insurance. Are you?

        One more point: the biggest generator of medical costs in this country is the group of 5 percent or so of the population that incurs 50 percent or so of all costs. If you want to cut costs- there is your area to attack. The rest of us are not overusing the system and are paying far more for what we will use. That 5 percent, if you look it up, is mostly older, poorer, and sicker. So, what do we do with them? Let them die? Let them suffer?

        Or do we ration care? Does a 65 year old need a new hip? Does an 80 year old near that coronary bypass? Does that 67 year old need the mastectomy? Does that 70 year old need expensive drugs for Alzheimer’s? Do we bother to save the 90 year old stroke victim?

        What do we do?

        Economically, we know what to do, but are you willing to do that? No? Why not? Maybe because you know it is immoral to do that when so few have so much in this country and so many have so little? The question about money is a false one. The rich will always get their medical care- the rest of us? Who knows…

    • Market-based reform advocates are arguing that things like colonoscopies, mammograms, lab panels, and deliveries will be much cheaper _tomorrow_ when you add consumer choice. You’re arguing that it won’t work because those things are expensive _today_. You’re talking past each other.

    • “So how would preventive care get paid for?”

      Income indexed transfers into HSA accounts in which unused balances can accumulate over time and which are transferable between family members. Mix some VBPD for chronic conditions. Done.

      “And if you start adding in preventive care and maternity care and deductibles they can afford back into the plans, you’ve got… traditional Medicaid.”

      Not even close. In a plan that incorporates traditional HSA balances, you’ve got a personal bank account filled with money that you have multiple overlapping incentives to use judiciously. In traditional medicaid you’ve got no incentive whatsoever to care about either the price or the value of any the services that you consume.

    • I guess the plan is a sort of HMO on the cheap plus “skin in the game” for the poor. It wouldn’t work. In California a lot of counties use a capitated HMO plan, but they pay a whole lot more than $80 a month, my ex-employer had a large contract with CalOptima (Orange County Medicaid HMO) so that Medicaid was a chunk of our population ( and despite what has been implied on another thread, they were treated just like the rest of the patients). Unfortunately, the poor are really poor. They aren’t trying to decide between purchasing a new Cadillac and steaks or a colonoscopy. They’re actually having trouble finding enough money to buy an unexpected bottle of Tylenol sometimes. A colonoscopy just would not be possible, much less high deductible colon cancer surgery. CalOptima is considered very cost-effective, I believe.

      HMOs also shift the risk from the insurer to the medical group. Unless a medical group is very, very large, they are foolish to take on an HMO. One or two bone marrow transplants and it’s time to call the bankruptcy attorneys. In smaller markets, HMOs just won’t work.

      I spent several years trying to maintain a guy with a severely diminished EF and no insurance. His employer fired him because he couldn’t work leaving him without insurance, but he didn’t want to apply for SSI because he thought that he could find another job which left me trying to monitor his cardiac status and find him meds. I got a token payment out of the deal, but he couldn’t swing a cardiologist. It was eye-rollingly anxiety inducing for me. He finally got Medicare (disability insurance for which he had been paying his entire life!) and I was ever so happy to send him off to the cardiologist. Although most PCPs would benefit from being pushed a little to go beyond triage care, it’s not fair to either the docs or the patients to expect performance outside of the scope of primary care.

    • In general, I like the proposal that Avik and Reihan propose and would prefer it over the current system. However, I would prefer a simpler model of Medicaid that involved catastrophic coverage combined with a subsidy that can be used to finance an HSA.

      I would go through all the arguments for more direct consumer purchase of health care and less third party payment, as I’m sure everyone here has heard them many times. However, these arguments are, in my view, very strong. This Medicaid model would also be less “one size fits all”, which is another benefit of consumer based care in general.

      Of course, the catastrophic care plus HSA subsidy model give poor individuals a way to finance the type of care that Aaron mentions without bankrupting them, which is why I prefer it over the catastrophic care plus concierge care model.

    • Any discussion of reforming Medicaid has to account for where the bulk of Medicaid expenditures are: long term care. I haven’t read Roy’s book, but based of this discussion it appears that it mostly focuses on the use of health services generally, and getting more “skin in the game” for Medicaid recipients. What does having more “skin in the game” look like for individuals with multiple disabilities requiring nursing home care or home and community based services?

      • You are exactly right. 40% of Medicaid pays for nursing home care. That’s around $160 billion (Federal + State) this year, due to rise quickly as the boomers need long term care. This not health insurance; this is a government benefit. You can argue about whether the benefit should be given or not, but it cannot be replaced by any sort of health insurance.

    • It seems that the main point of discussion has been that colonoscopies, lab panels, etc., would be too expensive (where did the $1000 estimate for a colonoscopy come from?) for the poor. If this were the case, the question should be “why are these things so expensive?” For example, the cost of gene sequencing has decreased dramatically (to a few thousand dollars) over the years, so for something like routine lab panels (which can be done by someone with an undergrad biology degree… I have a friend who does just that) the cost should be incredibly low. For a colonoscopy, I see no reason that a nurse could not just use a fiber optic camera (which cost just a few hundred dollars) and send video to someone who specializes in reviewing colonoscopy videos (this is essentially what radiologists do with MRI, X-rays, etc.). The cost of a colonoscopy would then be very low. If the response is that the law does not allow these things, you have made the point of those who promote a more market oriented view of health care market. It is not that entrepreneurs have run out of innovative ideas; it is that they are not allowed to act on those innovative ideas.