insurance

Congress has passed and President Obama signed the reauthorization of the Children's Health Insurance Program or CHIP. CHIP funds health care for families who don't qualify for Medicaid but still can't afford private insurance

A recent conversation reminded me of this 2006 story in Time Magazine on medical tourists and how some companies are even giving incentives to employees to adjust their health plans so more procedures can be done overseas.

Well, Newsweek has gotten on the band wagon as well with this more recent article. However, this article discusses that US hospital chains are also building hospitals outside the US to benefit local populations as well as cater to US clientele. Also, insurance companies are getting into the act, especially in border states such as Texas and California.

Some interesting quotes from the Newsweek article include:

• Procedures performed in CHRISTUS's Mexican locations cost a third to two-thirds less than they would in America.
• The industry [medical tourism] grossed an estimated $60 billion in 2006 and is expected to hit $100 billion by 2012

I doubt this means jobs in healthcare are no longer recession proof. However, there will be more competition as the world gets smaller.

Healthcare costs have risen dramatically in the past few years and one that has gotten a lot of scrutiny is the high cost of co-payments. What is different about co-pays is that they do not count towards out-of-pocket maximums on many insurance plans or specific services and/or prescriptions are not included. Many studies have shown that overall healthcare costs go down when some types of prescription drugs or medical procedures have lower co-pays.

What is often not talked about is how co-pays came about and how the idea behind co-pays is now being abused. Though the co-pay is often only a small portion of the actual cost of the medical service, it is thought to prevent people from seeking medical care that may not be necessary (eg: a common cold), which can result in substantial savings for insurance companies. This is to prevent the perception that medical care is "free" once insurance is obtained. The term often used is moral hazard:

the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk.

However, the co-pay is now being used as a means to reduce costs to the insurer and not as a means to ensure usage of the health service is required. That is not a plan with co-pays, but a co-insurance plan. If it is a means to reduce costs, it should be considered part of the out-of-pocket maximum and there should be variability in costs based upon the necessity of the service and who is issuing the service. I’ll give two examples to illustrate.

• If I visit my neurologist or my neurologist’s RN for a follow-up, I am charged the same co-pay. No offense to the RN, but she is not a neurologist and the reduced cost to the doctor’s office should be passed on to the insurance carrier and the patient. This would also encourage patients to use Physicians Assistants (PA) and RN’s, instead of insisting on seeing the doctor. It would also free up doctors to spend more time with patients who truly need to see an MD.
• In college I broke my leg and after getting the cast off, required weeks of Physical Therapy. In today’s market, each PT session would be charged a co-pay, oftentimes at Specialist’s rates. As co-pays go up, patients would be more apt to reduce or eliminate this cost and not heal fully or correctly. Future health care costs might then increase because of continuing pain or a reduction in abilities due to improper treatment. Having a separate, lower rate after a number of visits per year would ensure that the services are necessary and hopefully prevent abuses of the system, but would also ensure people get the services they require.

Some of this may seem naïve, but I hope it makes someone think.