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Thursday, February 18, 2010

reforming health care at the state level

This keeps coming back to me: federal level health care reform is stalled, related to massive dysfunction in the legislative branch of government in Washington D.C.  Add to that the fact that we have a huge and incredibly diverse country, and it is not too surprising that we haven’t come up with an acceptable health care reform bill.

But what about Massachusetts? They managed to pass health care reform, and though it is not perfect, it beats the heck out of what they have in Washington and Idaho, the states in which I practice medicine.
Just today I read an article in the New England Journal of Medicine about the way the medicaid system is administered in Oregon. They use cost effectiveness research to determine a basic health care package, and then budget to allow as many people as possible to be covered by the state Medicaid system.  This is the article:

I would very much like to see Idaho, where we spend 20% of our state budget on health care, combine intelligent “rationing” with creative payment schemes (prepaid health care aimed at encouraging appropriate health care utilization) to extend coverage to state residents who can’t afford to pay for private insurance.
In fact I would very much like to see every state design location appropriate health care reform to take care of citizens who don’t have access. The huge crisis of medicare costs still needs to be dealt with at a federal level because medicare is a federal program and is much of the federal budget. Much of the house health care bill focused on making medicare more efficient and more effective. Reciprocity would also be an issue if health care reform was done by the states, but that is hardly a deal breaker.


Kevin Carson said...

I couldn't find a contact email for your blog, so I decided to ask you a question in the comment.

The other day I saw Sanjay Gupta talking about a bag of saline that cost almost $300, an incision stapler that cost hundreds of dollars, and so on.

I'd like to know why this stuff is so expensive.

Given the institutional culture of hospitals, I'm sure it's probably the same kind of cost-plus markup that leads to $600 toilet seats at military contractors. I wonder, in particular, if patents and proprietary design standards interact with government mandated product specifications to prevent cost competition.

In a field I'm more familiar with, machine tools, I've seen open-source hardware hackers come up with homebrew CNC routers, cutting tables, 3-D printers, lathes, etc., that can be built for a few hundred dollars--compared to tens of thousands of dollars for commercial versions with proprietary designs. Simply stripping prices of rents on "intellectual property," and resorting to expedients like modular design for ease of repair, can result in a Factor Twenty cost reduction.

Can you suggest any leads on the mechanisms that are responsible for the high cost of medical supplies and equipment? What, exactly, is protecting them from competition, or imposing entry barriers?

Janice said...

I think it's the unintended results of insurance billing. The costs of things in medicine are based on what insurance can be expected to pay, and they are never billed lower than what the highest payer will pay. The billed amounts do not have much to do with the actual value of the good or services. I don't know how the bag of saline got to be $300, and I bet that most insurance payers will not pay that much for it. Unfortunately, because it is billed at the highest imaginable cost, that will be the bill that an uninsured patient will see and they will not have a contractual adjustment like the insurance companies do to automatically lower that cost.

Many medical goods an services, including medications and office visits could actually be provided for very affordable fees. See Walmart's $4 plans for basic medicines and my $25 plan. Neither of these are based on charity. The products just aren't that expensive when the barrier of insurance payments is removed from the picture.