Narrow networks, specialty hospitals and stable suboptimal equilibria

Most exchange plans are narrow network plans. This means hospitals and doctors are excluded from the plan due to either pricing or corporate strategy. Expensive providers are culled if there are nearby options that are cheaper. This is leading to really good premiums as comparable Exchange plans are coming in under group health insurance premiums. The trade-off is restricting choice to only providers that are willing to reduce their prices.

Washington State starkly illustrates this trade-off as the Seattle Children’s Hospital was excluded from all  most of the narrow network plans on the Washington State Exchange initially.

The Monterey Herald has a good explainer:

Left out are hospitals such as Seattle Children’s, excluded from five of seven plans on Washington’s state insurance exchange.

The hospital, which has sued the state to be included in more plans, is struggling to get paid for care given to about 125 children since Jan. 1…

Seattle Children’s Hospital, for instance, sued the Washington Office of the Insurance Commissioner…

 the state responded that “nothing in the law dictates inclusion of a specific provider, regardless of their preeminence or sympathetic patient base. So long as issuers meet the legal standards for adequacy and covered services, the OIC does not manage their business arrangements for them….”

The hospital, meanwhile, counters that the uniqueness of its services and the training required by its doctors to carry out patient care deserve more compensation.

“We take care of a very unique group of children, and the amount of resources we need to have is very expensive,” Melzer said. “We do 100 percent of transplant care and 70 percent of cancer and cardiac care in the state….

“The cost of Children’s non-unique inpatient services is 100 percent higher than such services at other hospitals in our statewide network,” he [Earling, Insurance Company spokesman ]said.

A pediatric appendectomy, which cost $23,300 at Seattle Children’s, is priced at $14,100 at Premera’s other in-network hospitals, Earling said, adding: “The issue, at the end of the day, is access at a more affordable price. That’s why their non-unique services are not covered.”

Rebekah Blankers [mother of child with unique diagnosis that can be treated at Seattle Childrens’]  isn’t waiting to find out what Premera considers unique or non-unique. She has switched Gabriella to a …plan that will cover all care done at Seattle Children’s. ..the rest of the family…will stay on the less-expensive LifeWise plan.

There are a lot of issues going on here which we’ll take a look at below the fold:

When an insurance company creates a new product, it has to file a network with the state regulating entity.  That regulating entity is supposed to review the network and verify that there is sufficient adequacy of access.  “Adequacy” varies by state and location in a state.  Washington State has reasonably tight urban adequacy standards.  Health plans can meet adequacy by either having a lot of the right types of doctors and facilities in a network, or by issuing waivers saying that out of network treatment for medically neccessary services that can not be provided in network will be paid as if they were in network from the member point of view.  If the numbers or waiver system works out correctly, the state regulators don’t care too much how the network meets adequacy.  Evidently, the Washington State Exchange plans met adequacy by excluding most services at Seattle Children’s Hospital.

Why would insurers want to avoid flagship specialty hospitals?  Wouldn’t that be a unique selling point that a plan offers full in-network access to the flagship academic and specialty medical centers in the region.  It would be a differentiator that a place that can do seven organ transplants can also take care of basic care better.  That would be the immediate logic, but there is a significant amount of research that shows more expensive flagship hospitals aren’t significantly better on routine care.  Instead, they specialize in one-off and low probability cases that require very high end care, and use the lower intensity patients as a means to cover the capital and open the door costs required by the highest end care. 

For instance, when I got my vascectomy, I chose a regional academic medical center because it was on my bus line, not for quality.  That decision cost the insurance company several hundred additional dollars than if I had gotten snipped at either a community hospital or an outpatient ambulatory surgical center.  Some of that cost increase was due to cross-subsidization of medical provider training, but a signficant portion of the increase was the academic medical center could charge more because there was significant demand for the perceived quality bonus that it had compared to community hospitals.  That perceived bonus is directly built from the regional medical center’s world class reputation for a certain class of transplants and another class of highly complex surgeries. But statistically, the high reputation and high costs hospitals don’t have a particular quality differential for routine care. 

Seattle Children’s Hospital is an excellent hospital that is designed to handle the extremely unusual and intensive pediatric care patients.  For those cases, paying a lot makes sense.  Including the hospital in network makes sense as the insurance companies will be paying for those services anyways on a waiver basis.  However, the insurance companies are now competing primarily on price and minimally on network in the Exchange world.  With that proviso, the insurance companies don’t want to pay for the care of a simple fracture at Seattle Children’s prices, they don’t want to pay Seattle Children’s prices for non-complicated appendicitis, they don’t want to cross subsidize the extremely high end care.

Ideally, the insurance companies that want to mimize their claims pay-outs want to have Seattle Children’s or any other high cost specialty hospital in network for a la carte services such as organ transplant and regional trauma centers of excellence, but out of network for pneumonia or routine elective surgery or setting broken ankles.  Most of the specialty hosptials don’t want to go to a la carte contracting as that cuts the cross subsidization that they need to cover fixed costs. 

The mother of the child with an intensive pediatric diagnosis that requires high end specialty care is responding rationally to the current situation. She is moving her expensive and sick kid to a plan that includes the hospital she needs while keeping her healthier kids on the cheaper and more limited network plans.  As a side note, this behavior is being observed elsewhere.  Narrow networks that don’t have leading specialty and academic medical centers in the networks are cheaper than networks that have the specialty and academic medical centers.  The skinnier plans sell well to people who don’t have known current medical needs, while the more comprehensive networks are selling to people with pre-exisiting conditions and pre-exisiting treatment relationships. 

This individually rational response will lead to the risk pools for the two plans that offer general in-network access to Seattle Children’s to be sicker than average for kids than the five plans that don’t offer in-network access to Childrens. The risk corridors and re-insurance system will mitigate most of the local adverse selection, but adverse selection will be at play.  This leads to a rationale where the two offering insurers should be tempted to exclude Childrens in the next filing.

At that point, a stable, sub-optimal equilibrium will be achieved with no insurance plan offering full in-network access to a specialty hospital.  No plan would have the incentive to offer in-network access as they know that they’ll just collect all the sick kids from the other plans.  The risk moderating factors will help absorb some of the shock but not all. 

So what are the policy options?

1) Do nothing and allow a stable, sub-optimal equilibrium to persist.

2) Have the state mandate a la carte contracting for unique services for  specialty hospitals

3) Have the state mandate full in-network access for all qualified health plans at certain high end and high cost specialty hospitals for routine and unique services

4) Do nothing on the network side, but have the feds aggressively make risk adjustment transfers to compensate the in-network networks from the lower risk plans that don’t have specialty hospitals in network. 

5) Go for full repeal of Obamacare and neglect the fact that this problem has nothing to do with Obamacare per se, but it produces really sympathetic and telegenic victims who will cry on TV. 

 

 






75 replies
  1. 1
    Cyan says:

    Typo in the title: “equilibirums”

    (I prefer “equilibria” FWIW.)

  2. 2
    LanceThruster says:

    Be prepared to find a good hiding spot to take cover under when Viking Pundit gets here to rhetorically pillage with his “Mighty Battle Axe of Reason[tm]!”

  3. 3
    Richard Mayhew says:

    @LanceThruster: I have no idea what you mean

  4. 4
    jl says:

    Thanks for a very clear explanation of the situation. I was whining a long while back about the ACA having too much variety in plans, which still permitted too much adverse selection working through the insurance contracts to provider contracts. Seems to me if we want a ‘market system’, need to go Swiss: one mandatory basic plan, serious comparative effectiveness analysis (aka ‘death panels’) to ensure efficient provision of care, and government audits for insurers and providers whose prices are out of line.

    I am curious what RM thinks the best practical solution would be? I assume it is not numbers 1 and 5, but not sure.

    @LanceThruster: If that is who I think you mean, I guess it will be my fault. I will take my ‘time out’ with grace and patience.

  5. 5
    randomworker says:

    Good read.

    So specialty hospitals will overbill for routine care, in order to subsidize the extremely unusual events that cost a lot of money. Obviously people don’t understand this very well. When nobody cared, every metro area could have a “Children’s Hospital” cost be damned. Now that people care, they are casting their votes for the narrow networks and throwing the high-cost hospital overboard. You are right, this is rational behavior. My guess, though, is the crying babies will win, and you will see us do #3.

  6. 6
    jl says:

    @Richard Mayhew: I think he means that a conservative anti ACA commenter named Erick Lindblohm or something similar showed up yesterday to test the BJ comenter community on whether we’re capable of ‘dialog’ on health care reform.

    I invited him to read your series of posts (which he never did and had no idea that you were a front poster)

    I think we all funked his test. But, he may show up.

    Edit: I took out the word ‘maniac’ for civility’s sake.

  7. 7
    maximiliano furtive, formerly known as dr. bloor says:

    At that point, a stable, sub-optimal equilibrium will be achieved with no insurance plan offering full in-network access to a specialty hospital.

    Another way of saying this is that kids in Washington are fucked if they need a transplant or surgical repair of an ASD.

  8. 8
    Richard Mayhew says:

    @jl: #2 and #4 from a wonk perspective. I have posts on Exchange managed vs. unmanaged competition as well as a post on cross subsidization in general on the provision of services side.

  9. 9
    Richard Mayhew says:

    @maximiliano furtive, formerly known as dr. bloor: No — they are not fucked for truly unique services like transplant or high end cancer care, those kids get waivered into Childrens. The kids who will be impacted the most are the kids with unusual but not really outlier diagnosises where Childrens may have a center of excellence, but there are other options available in the metro area that meet regulation but may not be the best option available.

  10. 10
    maximiliano furtive, formerly known as dr. bloor says:

    @Richard Mayhew: In what universe does Children’s get to hang around and stay open for business if they’re only getting carve-out business? If nothing else, the transplant guys will be out of there thisfast when the MBAs start telling them to pinch pennies.

  11. 11
    jl says:

    @Richard Mayhew: But, in the long run, under that scenario, the issue is whether Children’s can stay open, without charging truly amazing prices for their unique care. And the amazing prices will be necessary to cover actual costs, not just a bargaining chip in price finding for price discrimination.

    So, a rock will find a hard place to bump into. Is that take on it in the right ballpark?

    @maximiliano furtive, formerly known as dr. bloor: Yeah, what you said. I wonder about that too.

  12. 12
    Richard Mayhew says:

    @maximiliano furtive, formerly known as dr. bloor: They get to stay in business as the group employer market, CHIP and Medicaid still keep them in network. The Exchange products aren’t that big

  13. 13
    Jay S says:

    @Richard Mayhew: I don’t see how option 2 keeps places like Children’s in business. It would seem that they might end up consolidating with a large non specialty hospital as one solution to even out revenues. Is there another solution for these providers? [ETA I see I was too slow]

  14. 14
    jl says:

    @Richard Mayhew: Thanks. I keep forgetting that group policies will dominate the market for quite awhile. So it is not an immediate issue.

    But a long run goal of many wonks and policy makers is to get rid of employer sponsored group insurance. Will there be a group market without them? If so, in the long run, isn’t this still an issue?

    Though, true, that day is probably beyond any practical planning horizon, and can be left to scribblers and academic maniacs for now.

  15. 15
    CaliMatt says:

    Curious to know which of those five choices RM thinks would provide for sustainable doctor training as well. My guess is only #4, correct? I work at an AMC that is only included in higher-end exchange plans…I know our ppl do a lot of whining (and as noted, the outcomes for routine care don’t justify the prices), but there is a real issue with being a place where Drs. train. It’s expensive!! And from what I understand CMS covers less and less of the costs of training every year. I guess #3 would work if it included all AMC’s but I don’t see that happening. Specialty hospitals (sick kids, cancer ctrs, etc…) would get political cover and AMCs wouldn’t make it into the tent, right?

  16. 16
    Jay S says:

    @Jay S: To revise and extend my question, I don’t see the patchwork of Medicaid, CHIP, Exchanges, Employer provided insurance and Medicare holding together indefinitely. In fact I see whatever cost saving the Exchanges achieve will be adopted in other plans.

  17. 17
    Richard Mayhew says:

    @CaliMatt: partially #4, but realistically, we need to disintermediate training from operations and make it an even more explicit stand-alone subsidy (and then do plenty of other things to provider training)… this is yet another couple of posts that I need to write :)

  18. 18
    Cephalus Max says:

    @Richard Mayhew: Richard, thanks again for all these posts. I have a friend who works for BCBS who has been routinely astonished that I have some idea what the hell she’s talking about during our discussions about health care reform, and it is only due to your posts here.

    Were BJ a “legitimate news organization” I can’t help but think you (and therefore also our beloved, injury-prone Cranky Cole) would be a candidate for a Pulitzer. I’m thinking maybe the Kaiser folks would be your only competition. Even folks like the much-vaunted Wonkblog aren’t doing what you are. BJers, amirite?

  19. 19
    Richard Mayhew says:

    @Cephalus Max: Don’t tell the Wonk blog refugees that; I’m thinking of applying for a job with that crew

  20. 20
    kindness says:

    It seems to me that cases that are unique/complicated in the Seattle area would eventually get a referral to Seattle Children’s Hospital because they may be the only ones who do the special services. So it isn’t as if a referral wouldn’t be generated. The issue is more that the person would face bigger co-pays for an out of network provider.

  21. 21
    cat says:

    This is the Halo effect. Which is a sign of a non-rational/inefficient market.

    I don’t know which is the worse failure of our system, the expectation that everyone should get luxury class care for commodity prices or average skilled doctors expect luxury lifestyles due to forced scarcity.

  22. 22
    catclub says:

    @Richard Mayhew: Lucky you.

  23. 23
    jl says:

    @cat: Not sure what you mean by ‘Halo effect’ here. You mean the fact that parents want their kids in Seattle Children’s before the insurer authorizes a referral?

  24. 24
    Richard Mayhew says:

    @kindness: If they get a referral/prior authorization for services at an out of network provider because that is the only place to get medically neccessary services, the patient pays as if they are in-network. The provider most likely gets paid a lot more, but the patient is de facto in network for those services.

    “Medically necessary”, “Only Place” those are phrases left to the legal department to define.

  25. 25
    catclub says:

    @CaliMatt: “It’s expensive!!”
    My question as usual, is how do they do it in France – or Canada? Part of the cost is that our doctors are overpaid relative to other nations ( and as you note, the excess cost is not justified by superior results). Killing of the power of the AMA to constrain the supply of (licensed) doctors is a long term
    need.

    Can you tell I read Dean Baker?

  26. 26
    askew says:

    @Richard Mayhew:

    You should definitely apply for a job with them. You do a great job of explaining the ins and outs of Obamacare and don’t have an axe to grind unlike Ezra.

  27. 27
    LanceThruster says:

    @Richard Mayhew:

    Sorry.

    I had very much fun watching from the sidelines in an earlier thread.

  28. 28
    Richard Mayhew says:

    @jl: Halo effect — the reason why I was able to date as much as I did in college as I did not play Halo while most of my dorm mates did —

    Or more realistically Wikipedia has a good answer:

    The halo effect is a cognitive bias in which one’s judgments of a person’s character can be influenced by one’s overall impression of him or her. For instance if we like a person we think what attributes that person is having are favorable even if there is actually little knowledge about the individual.

    change individual to institution and change judgment to willingness to pay and that is what is happening here.

  29. 29
    LanceThruster says:

    @jl:

    Thx, jl.

    I love a good snarkfest but it’s really fun to watch someone get slapped around what hard facts as well.

  30. 30
    jl says:

    @Richard Mayhew: But I’m not sure how it is being applied to a place like Seattle Childrens. I take it in the enrollees in individual policies want their kids at Childrens even without a referral for a particular high class tertiary treatment because they think their kids will get overall better care, or just to be safe.

  31. 31
    Mnemosyne says:

    @catclub:

    The only children’s hospital I know about outside of the US is the Great Ormond Street Hospital in London. They are funded by the NHS for ordinary care, but they also have a charity foundation that raises funds for extraordinary care and to help fund the doctor training that they do. So I guess you would call it a public/private partnership. ;-)

  32. 32
    Richard Mayhew says:

    @jl: Exactly.

    Seattle’s Children, or most other specialty care hospitals specialize in doing a few things very, very, very well. In this case, it looks like they do pediatric cancer and pediatric transplants really well. People make the judgement that if they do those things very well (a good impression), they also have to be way better at treating appendicitis or a gastric ulcer when compared to a community hospital that charges half as much. There is little evidence to support that supposition in general, but the specialty hospital benefits from its sterling reputation at doing a couple of unique/high end things very well.

  33. 33
    cat says:

    @jl: Theoretically Seattle Children’s is 10x ‘better’ hospital for 10 unique procedures, provides 3x ‘better’ care for a different 30 procedures, and an other different 60 procedures are average.

    When patients are paying 5x,3x,and 2x the market cost for those procedures respectively patients are getting a great deals, fair deals, and terrible deals. However 99% of SC patients will only every use the bottom 90% of the procedures offered and are using SC services because of the reputation of its top 10% practitioners because the only knowledge they have is usually marketing material where the best doctors are highlighted.

  34. 34
    Cephalus Max says:

    @Richard Mayhew: Go for it! But I think we ought to be doing just the opposite of what you said — shouting it to the rooftops (and to the Wonkblog people). You’d fill a huge gap in the national discourse on this topic.

    On a more meta level, the informational gap between what’s been reported in the MSM and what we’ve learned from you has been really shocking. I know that in 2014 I really should no longer be remotely surprised by this — that’s obviously been one of the main conclusions to draw from the age of the Intertubes and it’s something that many of the front-pagers at sites like BJ have been pointing out for years — but I think the disparity in reporting on this particular topic has been the most telling and illustrative example yet. My read of the Wonkblog-refugee mission plan is that this is, in part, something that they want to address. IMHO they weren’t getting even close while at the WP …we’ll see what they can accomplish with their new venture.

  35. 35
    Ruckus says:

    It seems to me that long term we will have to change the way the entire health care industry does business. A lot of people are not going to like some of those changes, like seeing that average care is over priced at some places to make up for way higher priced options for some. But that is the way insurance is supposed to work. We all pay a little for those that need extra, instead of some paying drastically more or just not getting care. But the system currently is biased towards money, specifically taking it away from those with and not load sharing the effect of the total take. To have realistic health care that has to change. Getting there will be hard fought by those that in the end stand to lose the most income.

  36. 36
    Mnemosyne says:

    @Ruckus:

    It’s the profit. Many people don’t realize that our entire healthcare system is now profit-based, from top to bottom. It’s not just the doctors and hospitals, it’s every step that expects to make a profit. Durable medical equipment? Home infusion? All those guys are for-profit companies.

    That’s why our system is simultaneously the most expensive and covers the least number of people — every player has their hand out and expects to make a profit on their part of medical care. It’s insane.

  37. 37
    Valdivia says:

    A quick question–I have presently an unofficial plan with CareFirst in DC. They offer something similar (10$ cheaper) on the exchange. How do I know if it’s the same hospital choice or a narrow network?

    Sorry if you already answered this. Been a but out of the loop last couple of weeks.

  38. 38
    Cephalus Max says:

    @Ruckus:

    But that is the way insurance is supposed to work. We all pay a little for those that need extra, instead of some paying drastically more or just not getting care.

    Exactly. What’s puzzling is that even the most lunatic winger is OK with this for vehicle or property insurance. Insurance is insurance. Properly done (which admittedly is a complicated undertaking for our health care system, but we’re up to it), it does exactly what it is supposed to.

  39. 39
    Valdivia says:

    that should read individual plan, not unofficial. Hate autocorrect!

  40. 40
    aimai says:

    I know this is crazy talk but it seems like every state and/or high density region needs a speciality hospital like a Children’s that does cancer treatment and transplants and just speciality care generally. I don’t see why that kind of speciality care shouldn’t be subsidized by the state, and the hospital enabled to charge a “true price” for its services and get reimbursed appropriately without having to gouge patients for lower level/non speciality care and q-tips or what have you.

    I’ve been to my local hospital ER for a children’s emergency and been seen and booted directly to Children’s in Boston for more appropriate care. Pediatric beds and treatment simply aren’t the same as regular care. I had no more time to check my insurance network or my provider list than anyone else at midnight with a gasping child.

    Its inefficient not to carve out certain specalities, localize them, and try to create the best teams possible for children (and possibly for other medical specialities for adults). If insurance companies are going to have to pay for this stuff–because don’t we want insurance to cover children’s cancers and transplants?–it makes more fiscal sense to force all the insurers to pool their money and pay for access to the speciality hospital for specific cases than to try to gerrymander the choice of patients in everything in advance. You can’t know as a parent whether your child is going to need a transplant or cancer care when you sign up for these networks so the uncertainty is going to force people to either choose the broadest network because they can’t risk gambling, or to choose the narrow network for cost and then cross their fingers and hope they never need the speciality services.

    Why not just have cities/states buy and own the speciality hospitals, put the doctors on staff, and accept all needy kids in the geographic region?

  41. 41
    cat says:

    @Richard Mayhew:

    There is little evidence to support that supposition in general, but the specialty hospital benefits from its sterling reputation at doing a couple of unique/high end things very well.

    Is there little evidence? I believe there is probably a plenty evidence its just that nobody wants to talk about it because it threatens their egos/income or there is way to much evidence to sift through for a single person and we need some 3rd party to monitor/rate/enforce the conclusions…

    Case in point: Debulking in Stage 3-4 Ovarian cancer. Studies show its ineffective at increasing survival rates or its only effective at increasing survival rates if done by a skilled Oncology OB/GYN surgeon. Yet its being paid for.

  42. 42
    David M says:

    In many cases these narrow network offerings are not limited to the exchange. All the individual BCBS plans in Washington State use the narrower “Heritage Signature” network, not just the exchange plans.

  43. 43
    Ruckus says:

    @Mnemosyne:
    Exactly.
    A business that should not be about profit but about the product, is all about profit. To get that aligned is going to take a huge change on all sides. And given our history, especially over the last 60-100 yrs I see a huge protracted fight and the real probability of reform not happening at all. There are too many places/people/procedures that will have to change, in ways they will not want to do. This is not to say that individuals in the system are not trying to provide care or are all selfish but that the system is broken and fixing the entire system is going to be hard and take way too long and will fail unless the government runs the entire thing. And even then there will be problems. I like the VA, I feel I get great care there. But it is far from perfect. But then nothing accomplished by humans is.

  44. 44
    cat says:

    @aimai:

    Why not just have cities/states buy and own the speciality hospitals, put the doctors on staff, and accept all needy kids in the geographic region?

    Because “FREEDOM!(tm)” means the state is there just to punish people not help them. How is the invisible hand of the free market to smack down those lazy gov’t doctors earning their pensions and 8 week vacations and 40 hour work weeks helping need kids when other people have to pay to get their kid’s tonsils out.

  45. 45
    Mnemosyne says:

    @cat:

    I have a bit of counter anecdote: my mom was seeing a cardiologist at Mayo Clinic in Scottsdale. She frequently complained to him about heartburn and other digestive problems, but he just told her to take antacids and watch her diet. Then she had to be rushed to the ER with a heart attack, because digestive problems are a common warning signs of a heart attack in women, but he completely ignored it.

    Let’s just say I don’t have quite the faith in “excellent” hospitals that I used to.

  46. 46
    Richard Mayhew says:

    @Valdivia: Find the directory for your plan — count the number of hospitals in the directory. Look at the directory for a couple of other plans. Count the number of hospitals in those directories. Whichever one has the fewest Tier 1 hospitals is the narrowest network (usually)

  47. 47
    cat says:

    @David M:

    All the individual BCBS plans in Washington State use the narrower “Heritage Signature” network, not just the exchange plans.

    Oh the irony of using the “signature” moniker on their cheapo plans. BCBS signature is screw the consumer so it makes sense, but I don’t think that was BCBS intent.

  48. 48
    Richard Mayhew says:

    @cat: There is little evidence that on the non-OhMyGod stuff, that the very expensive/high prestige hospitals are significantly better at doing the routine things. That is what I wrote, and I believe you violently agree with me.

  49. 49
    Ruckus says:

    @Cephalus Max:
    I think the answer to your question is hate. A car or a house is an object. In the abstract it is neither good nor bad. We need them both, we need them to work at least reasonably, we pay insurance(that frequently doesn’t work as well as we’d like) to ensure that. But health care for all means that someone hated(for not logical reasoning whatsoever) still gets the same level of care as the hater. Same symptom as having a black president. “If I as an uneducated white man can’t be president then no black man is capable” It’s bullshit of course but we see a lot of bullshit hate in this country. Other countries do this too so it’s probably a human condition, not just an american condition. Our country was supposed to be different(american exceptionalism!!!) but of course it isn’t.

  50. 50
    Valdivia says:

    @Richard Mayhew: thank you! Will check to see the exchange one has more or less the same as the ones I’m on now.

  51. 51
    cat says:

    @Mnemosyne:

    Let’s just say I don’t have quite the faith in “excellent” hospitals that I used to.

    Never having dealt with a major healthcare issue before my wife’s cancer I realize I had given Dr’s way more credit then they deserved. There majority of Dr’s are a net benefit to society, but the artificial scarcity has reduced the number of Dr’s available by a minimum of 10x if not more. Which is good for Doctor’s as it keeps the illusion alive they are all highly trained experts when most of them are narrow specialists like everyone else.

  52. 52
    rikyrah says:

    See, this is chickenshyt about it not being a Democratic or Republican issue.

    It sure is hell is.

    You keep on voting for muthafuckas that are plain and simple that your asses don’t deserve to have healthcare.

    Your unicorn nonsense that it’s ‘ not a Democratic or Republican’ issue is just another bullshyt way of saying,

    ” I don’t want to sound stupid for voting for people that want to take away my healthcare.”

    …………………..

    ‘It isn’t a Democrat or Republican issue’
    02/14/14 02:30 PM—Updated 02/14/14 02:34 PM
    By Steve Benen

    The longer the Affordable Care Act exists, the more Americans there will be who are thankful that it does.

    The University of South Florida’s news outlet ran a piece this week, for example, quoting a number of local Republicans who’ve embraced the law. “I did not vote for Obama,” Irene Jacusis said. “But I am so in love with this plan.” Jacusis said she knows her party is committed to destroying the health care law she loves, but she doesn’t think Republicans will actually repeal the ACA because “there are too many people out there who need this and require it.”

    The same report quoted another local woman named Mary Fallon who, after learning her monthly premiums would drop from $768 to $150, cried with joy: “I just held my hands up in the air. Thank you, god. Finally, some relief. I couldn’t do it anymore.” She intends to spend the extra money in her pocked to “restart the economic engine.”

    Another local woman, Peggy Arvanitas, literally takes it upon herself to drive Republican voters to the polls on Election Day, but now that she’s paying just $10 a month for coverage, she’s decided she loves the Affordable Care Act. “It isn’t a Democrat or Republican issue,” she said. “It’s a health care issue.”

    And then there’s the dramatic story of Mike O’Dell, who’s alive today in part because of “Obamacare.”

    http://www.msnbc.com/rachel-ma.....ican-issue

  53. 53

    @Richard Mayhew: “They get to stay in business as the group employer market, CHIP and Medicaid still keep them in network. The Exchange products aren’t that big.”

    And when the “Cadillac plan” tax kicks in?

    I think we’re scrod, or some other fish.

  54. 54
    cat says:

    @Richard Mayhew:

    There is little evidence that on the non-OhMyGod stuff, that the very expensive/high prestige hospitals are significantly better at doing the routine things

    You are right. My experience is healthcare very limited so I used the wrong definition of routine. You obviously meant procedures the average person is likely to use in their lifetimes.

  55. 55
    Richard Mayhew says:

    @aimai: Agreed, and to some degree, that is what the risk corridors and the risk adjustment models do on the back end of PPACA. If all the sick kids are in the 2 plans that have access to Seattle Childrens’ the plans that don’t have sick kids in them, pay those 2 plans a risk fee.

  56. 56
    dr. bloor says:

    @jl:

    But a long run goal of many wonks and policy makers is to get rid of employer sponsored group insurance. Will there be a group market without them? If so, in the long run, isn’t this still an issue?

    It’ll be an issue when HR managers start realizing they can save their companies some money by offering similar narrow plans to their employees. Which should be pretty soon.

  57. 57
    Calouste says:

    @Mnemosyne:

    Another source of incoming for Great Ormond Street hospital are the rights on Peter Pan, which were bequeathed by John M. Barrie and extended in perpetuity (as a special exception to copyright law) by Parliament.

    Oh, and there are more specialist children’s hospitals around the world, it’s not just an Anglo-Saxon thing.

  58. 58
    cat says:

    @The Raven on the Hill:

    And when the “Cadillac plan” tax kicks in?

    I don’t think most American’s have access to the ‘Cadillac plans’. Most people won’t see any changes. Your upper classes will be howling like mad dogs and threatening to start voting Republican when they realize they are just wage slaves like everyone else as their companies force a huge compensation cut on them, find a reduced surplus income as they have to pay more for healthcare, and their bosses get nice bonuses for reducing ‘costs’.

  59. 59
    dr. bloor says:

    @Richard Mayhew:

    Seattle’s Children, or most other specialty care hospitals specialize in doing a few things very, very, very well. In this case, it looks like they do pediatric cancer and pediatric transplants really well. People make the judgement that if they do those things very well (a good impression), they also have to be way better at treating appendicitis or a gastric ulcer when compared to a community hospital that charges half as much. There is little evidence to support that supposition in general, but the specialty hospital benefits from its sterling reputation at doing a couple of unique/high end things very well.

    They’re fooling a hell of a lot of people a hell of a lot of the time.

    https://www.seattlechildrens.org/Press-Releases/2012/Seattle-Children’s-Ranked-6th-Among-Nation’s-Best-Children’s-Hospitals-According-to-U-S–News—World-Report/

  60. 60
    Richard Mayhew says:

    @dr. bloor: they have been offering them for a while

  61. 61
    cat says:

    @dr. bloor:

    It’ll be an issue when HR managers start realizing they can save their companies some money by offering similar narrow plans to their employees. Which should be pretty soon.

    This is happening right now. I have a friend whose tea party owner went to a narrow plan for all employees with no option of buying into a ‘Cadillac plan’ and he’s livid since several of his healthcare providers aren’t in network anymore and has to pay some obscene amount more out of pocket now. Which he does pay, it just means less toys.

    Since my friend is a closet glibertarian, I know get better friends, its of course Obamacare’s fault. I mean really can a company thats doing so well it can pay low 6 figure salaries to the majority of its workforce and pay out millions in bonuses can’t afford to eat the new ‘tax’ which is around 5%-10% increase in the healthcare benefit. Inconceivable!

  62. 62
    gelfling545 says:

    @Mnemosyne: Had a similar experience when my Mom was alive. She had an new procedure done at a well known hospital out of state. She was supposed to be there for 2 days. After a week in the hospital she was complaining daily of shortness of breath which she was told was anxiety. Finally she begged us to take her home & we got her discharged, took her to the local er without even stopping by the house. As we brought her into the er the security guard looked at her & started shouting “Cardiac trouble. Get someone out here.” She was treated successfully. My feeling is the local er saw this kind of thing daily whereas the big research hospital was not used to looking for the more mundane & was focused on their procedure only though even today I shudder at the risk we took of driving her back through 3 states to get her “simple” cardiac issue treated.

  63. 63
    cat says:

    @dr. bloor:

    U.S. News surveyed 179 pediatric centers to obtain clinical data in 10 specialties and asked 150 pediatric specialists in each specialty where they would send the sickest children.

    I don’t know if you are refuting or confirming the position the SC Hospital is a poor choice for routine health care?

    Some obvious problems with trying to use the USNew report in this debate. The methodology of picking the 150 individual respondents, the question of “where you would send the sickest children” is not constructed very well, and the weighting of the subjective data vs the objective data isn’t known.

    This goes back to Richard’s point, there is lots of evidence around the quality of live-saving/critical care but very little about anything else.

  64. 64
    Ruckus says:

    @cat:
    Corps have been cutting benefits and paying more for a long time. The ACA just gives them an excuse to do what they have been doing anyway and not get blamed for it. There is an opportunity to educate at least some of the people that the ACA has started the ball rolling in exposing how, I’m not sure of the proper word but the first one I thought of is corrupt, the health care system is. That it works at all is amazing, that it screws large portions of the people it is nominally supposed to serve is not. Compare it to the banking/financial industry or the petroleum industry.

  65. 65
    cat says:

    @gelfling545:

    My feeling is the local er saw this kind of thing daily whereas the big research hospital was not used to looking for the more mundane & was focused on their procedure only…

    This is the little discussed fact of the medical profession IMO. The majority of Doctors are very narrow specialists and not the wide knowledge experts that justifies their artificial scarcity. This hurts everyone as it has the tendency to harm patients who let Dr’s give opinions out of their specialty and it hurts Doctor’s in that they get sued for outcomes they couldn’t have predicted.

  66. 66
    Mnemosyne says:

    @Calouste:

    I just know of Great Ormond Street because of my employer. Some of the royalty issues that had ended up in court are being handled with “voluntary” donations since the lawyers finally figured out that the Giant Evil Corporation doesn’t want to be perceived as taking money away from a children’s hospital.

  67. 67
    Ruckus says:

    @gelfling545:
    Even more a shame that the security guard recognized the problem and the specialty Dr did not. A most likely untrained but probably quite experienced person is frequently a better observer than the opposite. That’s why Dr are supposed to go through rigorous experience exposure as well as book and lab work.

  68. 68
    MomSense says:

    Thanks, Richard for this post. All of your posts have been really helpful for me in choosing an insurance plan for my family and also for answering friends’ questions.

  69. 69
    Pete Mack says:

    Seattle Children’s hospital isn’t the only one with limited ACA coverage. Virginia Mason also has only 2 Gold plans covering it. For this reason, my PCP is now Harborview Medical…

  70. 70
    texasdoc says:

    @catclub: “killing the power of the AMA to constrain the supply of doctors”–I think you overestimate the influence of the AMA on medical school class size. I agree that we pay more for health care and get less than other first world countries, but doctors’ salaries are not a major part of that. It’s been said that the most expensive tool in medicine is the doctor’s pen, with which we order tests and other treatment. There are wide regional variations in how any particular condition is treated, and it is seldom the most expensive region which has the best results.

    As an aside, if you reduce physician compensation significantly, you will also need to look at the cost of becoming a physician. When I went to med school, my education was subsidized by the state (Texas, of all places!) and I graduated with very little debt. Now, finishing training at age 30/32/35 depending on specialty, a new physician may have several hundred thousand dollars in debt. Such high debt burdens push people into specialties rather than primary care, and skew overall healthcare costs higher.

  71. 71
    pseudonymous in nc says:

    @texasdoc:

    if you reduce physician compensation significantly, you will also need to look at the cost of becoming a physician.

    Of course, but if that’s going to happen, it needs to be done in a way that shapes the graduating med school classes’ career decisions. An actual health care system relies upon family/general practice, and the American system has for too long priced med students out of becoming GPs and treated primary care as a loser’s option.

  72. 72
    Mnemosyne says:

    @texasdoc:

    As an aside, if you reduce physician compensation significantly, you will also need to look at the cost of becoming a physician.

    I have no problem with that at all. There’s a reason why countries with strong universal healthcare systems also usually have free or a nominal fee for higher education.

    My proposal would be a sliding scale of fees for medical school, with primary care physicians (internists, general practitioners, family practitioners, etc.) getting essentially free education, while doctors who chose to specialize would have more loans, depending on their expected future earnings. But even, say, doctors who chose plastic surgery as a specialty could reduce those loans by showing they did X amount of charity care at Y Hospital every year and get a refund or reduction of the loan. Nurses and physicians assistants would also get free education.

  73. 73

    @jl: “I took out the word ‘maniac’ for civility’s sake.” Awww…thanks, JL, you’re a peach.

    Actually I love this post because it talks about kids getting kicked out of hospitals. (This is being offered as a time-saving measure for the inevitable, baseless stereotyping offered by most BJ commenters.)

    Isn’t this post the very essence of the criticism against Obamacare that you can’t keep your doctor? That’s what happened to poor Zoe and her family:

    “But as a result, families like Jeffrey Blank’s, which has relied on Seattle Children’s since his daughter, Zoe, received a diagnosis of a rare bone disorder, face difficult decisions. Under some of the new law’s health plans, the family would no longer be able to take Zoe to Children’s for her routine checkups, or it could count as an “out-of-network” visit, saddling the family with huge bills.”

    I think you agree since, in your conclusion, you call the insurance companies cutting out hospitals (kindly) as “suboptimal.” But then your policy options are all variants of “more government coercion.” Well, except for this one: “Go for full repeal of Obamacare and neglect the fact that this problem has nothing to do with Obamacare per se...”

    Really? Obamacare is incidental to this? That’s odd since that not what the article you link says:

    “The insurers’ strategy, outlined in a report last month by the McKinsey Center for U.S. Health System Reform, is an unexpected consequence as the 2010 Patient Protection and Affordable Care Act, also known as Obamacare, kicks into gear.”

    There’s a lot of unexpected consequences goin’ on around here.

    Respectfully yours – VP

  74. 74
    Mnemosyne says:

    @Eric Lindholm:

    But then your policy options are all variants of “more government coercion.”

    Wait, you think narrow networks and insurance companies dropping expensive hospitals or doctors from their networks didn’t happen before Obamacare?

    Is this like that myth you guys adore that claims that no one got dropped by their insurance companies before Obamacare, except for all the people who were?

    Read a few stories about the shenanigans of Blue Cross Anthem in California and tell me again that they don’t need a little more “government coercion” to stop ripping off their customers.

  75. 75
    Fred Fnord says:

    This leads to a rationale where the two offering insurers should be tempted to exclude Childrens in the next filing.

    At least some people will pay for a plan that has access to those hospitals if they have been going there, or if they think that big schmancy hospitals are by definition better than smaller ones. Enough? I dunno.

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