The American Interest
The Middle East & Beyond
Published on September 23, 2013
Class-Stratified Healthcare Triage Is Here

I said in a recent post that juxtaposition can sometimes qualify as serendipity. It’s now just happened again.

Last week I got a letter from my doctor of the past dozen years informing me that he was changing his practice’s modus operandi.  He’s joining some new group that offers direct email and telephone access to patients, and more and better screening procedures for preventative healthcare in association with a highly respected clinic in Cleveland. He’s also limiting his practice to just 500 patients so he can spend more individual face-to-face time with them. But, to keep him as my doctor and get all these new services, I (and others) will have to pay a $1,650 fee a year, every year, for the privilege. At $1,650 per year and 500 patients that’s $825,000—not bad (not that I’m suggesting that all of that money will go directly into the doctor’s pocket).

No one suggests that insurance will cover that fee, and no one in his right mind expects the fee will stay the same as the years go by.

I told my doctor, who is also a friend (our children know one another….), that to me this sounded like a shakedown: Pay me more money or I dump you.  His reply was very polite and fetching, but in the end, yes, it’s a shakedown.

Hold that in mind while I convey the gist of a Robert Pear article on the front page of today’s New York Times: “Lower Premiums to Come at Cost of Fewer Choices.”  The essence here is that in the healthcare exchanges about to go into effect, lower-income people can buy health insurance for cheaper-than-otherwise prices (especially if they’re entitled to Federal subsidies), but will have to put up with much narrower networks of doctors and hospitals than are available in normal commercial arrangements. People with complex or pre-existent conditions cannot be excluded from these networks, but the networks can be so narrowly built that such people are forced to go “out of network” at very high costs. Networks can obviously be constructed, too, in such a way as to maximize the keep-out rate of such patients, so that they will not be breaking the letter of the law, only its spirit.

Moreover, the article notes that many medical providers will be paid at Medicare or lower rates in order to keep costs and premiums down. It is therefore inevitable that many higher-quality providers will simply opt out, especially, as the Pear article illustrates, if they have to supply services below their costs. So the exchange networks will not only be smaller, but they will also likely be limited both in the range of diagnostics and care they can provide and in the quality of that care.

It’s certainly better that lower-income Americans have limited insurance than no insurance, especially for their children. But this isn’t what people were told during what passed for a debate three and four years ago. And no one seems willing to call what is going on by its real name: class-based triage, or rationing, of medical care.

We can see this more clearly if we put these two data points together: We are slowly (or not-so-slowly) but surely moving toward a much more finely gradated class-based system of healthcare. Compared to where we were before Obamacare passed, the top is moving up and the bottom is moving down faster than ever, leaving a thinner middle where most Americans with employer-provided health insurance have typically been—somewhere in the murk between HMOs and PPOs of various descriptions. Now, those who can afford it will increasingly pay more and get more. Those who cannot afford it will pay less and get less.

Now, there is nothing surprising about this, and it’s what happens in most countries with some form of government-mandated universal health care. There are always private healthcare options in those countries, for people who can afford it, to detour around the public option. But it is not what Obamacare advertised.

Alas, this is what happens when political chicanery at the promising stage runs headlong into reality at the implementation stage.  Get used to it: there’s lots more of the same to come.

  • WigWag

    This is a very good development. What we want (I think) is to make sure that all Americans have access to affordable health care in much the same way that we want everyone to have affordable access to food. We don’t want Americans starving to death and we don’t want them dying of curable or treatable conditions because they can’t afford to visit a doctor.

    But just as we dont provide food stamps and expect that they can be used to defray the cost of a meal in Washington’s toniest restaurants, health insurance shouldn’t necessarily provide access to any doctor or any hospital just because that’s where you want to go. If you want more choice, you should be prepared to pay for it.

    By the way, the phenomenon you are referring to is called “concierge medicine;” I suggest you google it. Professor Mead has actually blogged about various iterations of concierge medicine that can reduce costs while improving access to care.

    One of these models is frequently referred to as “concierge medicine for all.” The idea is that the physician provides care for a membership fee that can be as low as $500 per person per year. All routine care is included and no insurance charges are billed by the physician for routine care. Physicians limit the number of patients that they care for to 1,000-1500. In urban area under the current system, patient rolls average about 3,000 for primary care providers.

    High deductible insurance coverage is available for specialist care, surgery etc. Employers are typically delighted to pay the cost of employee membership in physician practices because when the cost of doing so is added to the cost of high deductible insurance, total costs per employee plummet because high deductible insurance costs so much less than the plans they are paying for now.

    Here are a couple of points about your situation, Adam. First you need to find out whether the $1,650 is per family member or covers both you and your spouse (and potentially children below the age of 25). Second you need to find out if, in addition to the membership fee, your physician plans to bill your insurance company for routine visits. Third you need to ascertain whether routine blood tests/X Rays are included or will be billed separately.

    If the $1,650 includes routine care and tests for you and your spouse you have a good deal. Make your employer (which I presume is “The American Interest” pay the physician membership fee and find a new high deductible plan. Your employer will end up paying substantially less than they do now and they should pass some of the savings along to you as increased salary.

    By the way, a patient roll of 500 is really quite small. If your doctor has a patient roll this small you will hardly ever have to wait for an appointment or wait in his waiting room to see him/her. My guess is that his take home pay will be increased under the new system only modestly. He still has fixed costs like rent, malpractice insurance, etc and he still needs medical assistants (nurses, physician assistants, etc). He may very well save some money eliminating staff dedicated to filling out insurance forms. What will improve is your doctors morale. Telling the insurance companies to drop dead will make him feel so good that he might actually dispense better, less harried and more thoughtful care.

    Smile Adam; this is disintermediation of the health care business. Insurance companies are going the way of full service stock brokers, travel agents and pimps. These intermediaries aren’t needed any more. It’s a great thing.

    Thank you President Obama.

    • http://www.the-american-interest.com Adam Garfinkle

      The annual fee is just me, and it doesn’t cover anything: routine visits and simple tests still get passed to insurance. The concept you are talking about, and that Walter has too, may have lots of potential, as you say: but this ain’t it. This is just paying to eliminate some transactional muss and fuss. I suppose I could ask my employer to pay this fee. I could also be told, politely of course, to shove it if I do.

      More broadly, getting rid of the insurance companies would be nice, as would sharply limiting what needs to be taken care of in a hospital via personalized medicine joined to homecare, and it should be possible to get them out of the routine care business–where they did not used to be and where they have never belonged (as discussed in BROKEN). But for what we used to call “major medical”, I doubt we can get rid of them, unless government itself takes over the function–which I think is not such a hot idea.

      • http://abriefhistory.org MikeK

        The doctor cannot do what you describe and remain in Medicare and almost all insurance panels as a provider. I’m not sure you understand the situation. You may be able to use insurance for hospital care but not for that doctor’s care.

        • http://www.the-american-interest.com Adam Garfinkle

          Who said anything about participating in Medicare? That’s got nothing to do with this program, called MDVIP.

        • http://www.the-american-interest.com Adam Garfinkle

          You’re the one who’s not understanding. This has nothing to do with Medicare. This is a doctor joining a program that charges a $1,650 fee in return for a promise of more personal attention and more screenings. Doing that allows him to reduce the number of patients he sees, and probably for people who need to see a doctor a lot and can afford to do so this isn’t a bad thing. But for me it’s saying, pay this fee in order to maintain what you already have, or you lose it. So nothing changes for me except that I have to pay a lot more for the privilege.

    • webster

      When I lived in a poor rural area, everyone had state-mandated medical assistance or “rights” of some sort (I’m not sure how that worked) – but to get a doctor, you had to make an appointment weeks in advance, then wait at least an hour the day of the appointment.

      On the day of the appointment, you got a ridiculously small amount of time. I once inadvertently squandered my time by asking a question – it turns out that by answering my question, they deemed my time “up” and I had to start all over again with making a new appointment for the thing I’d actually come in for.

      This is what happens when there is too much insurance and not enough doctors. The quality of service for these poor people is actually lower than the quality of service faced by poor people living in places where they can go to “sliding scale” clinics staffed by medical professionals doing volunteer work on their day off.

      It is NOT an improvement for those poor people who actually need to use medical services.

      • http://www.the-american-interest.com Adam Garfinkle

        Good point, agree. One of the problems we already have and will face in future is a shortage of doctors….because we’ve making it harder for people to go into medicine with an expectation that they will make a good living. And you are bolstering the point I made in my ebook, Broken, that we need to get insurance out of regular, routine care, and insure only for what used to be called “major medical.”

  • WigWag

    Then you are definitely not getting a good deal and you should find another doctor. Membership or concierge medicine works marvelously if the membership fee covers everything or nearly everything that is routine. If you are expected to pay a membership fee and on top of that pay for visits, routine blood tests, etc. you are getting ripped off. Few if any primary care doctors are worth paying a membership fee merely for having access to their practice.

    In a broader sense, the whole health care debate is fascinating and depressing at the same time. The only way to reduce costs is for purveyors of health care to make less money. Either doctors have to make less than they do now or nurses do or hospitals do or pharmaceutical companies do or hospitals or health insurance companies do or all of the above. All the purveyors can’t make as much or more than they do now at the same time that costs fall; it just doesn’t add up.

    Insurance companies standing between patients and their primary care providers add little of value and are expendable; they are the logical party to purge from the system. Writing health insurance companies out of the process of providing primary care would allow physicians to capture some of the money skimmed off by these companies with the rest passed along to patients in the form of lower costs.

    What your doctor wants to do is a perversion of what could be a great system. He should tell you what you can expect to get for your $1,650 per year other than access to his unique skills and bedside manner (trust me; no matter how good those skills are, they are a dime a dozen).

    Other then shorter waiting times, what is it that you are supposed to get for your money?

    You are right; insurance for primary care-bad. Private insurance (subsidized by government for those who can’t afford it) for specialist care and hospitalization-good.

  • Tim Fitzgerald

    While I agree with WigWag that “disintermediation” in the health care system would be desirable, I do not think that replacing employers and insurers with the state is a positive step.

    It seems as if care without insurance for the poor will be replaced by insurance without care–I envision all day lines for “free” health care for low SES patients, while the well-to-do will pay more for more complete and faster service.

    The effect will be similar to what interventions in the financial markets have done since 2007–the wealthy will prosper and leave everyone else behind.

    • http://www.the-american-interest.com Adam Garfinkle

      Agree–as I said in the piece, Obamacare will spread and probably reify the class distinctions associated with healthcare.

  • Michael D. Abramoff

    “There are always private healthcare options in those countries, for people who can afford it, to detour around the public option.”

    Actually in the Netherlands, for a while it was an aggravated misdemeanor for a physician to bill a patient outside of the insurance system. There were plenty of surgeons flying with their patients to Spain and Portugal to do surgeries there, in order to avoid one or two year access times for that type of surgery. The side effects of this capping was one of the reasons the socialized system was left and replaced by a private system with subsidies for low income.

    • http://www.the-american-interest.com Adam Garfinkle

      I didn’t know about the Dutch exception, but as your own observation illustrates, my basic point is correct.

      • http://kavanna.blogspot.com Kavanna

        A lot of countries have moved or are moving toward that kind of system, not just Holland. Germany is there, as is Scandinavia. Israel did it 20 years ago. Canada is moving toward a mixed universal-basic + optional-pay-yourself-private-supplemental system.

        Many want the expanded choice. But from the point of view of governments, the key motive is controlling costs.

        The failure of ObamaCare is rooted in the failure to cope with costs, which mostly come from the largely Democratic and labor-intensive constituencies in medical services. ObamaCare passed, in part, because it was going to benefit medical services (hospitals, nursing homes, etc.), as well as medical insurance companies, in very big way. The cost shows up as imposed on younger people and elsewhere, like medical device makers — people not politically organized and lacking clout.

        • http://www.the-american-interest.com Adam Garfinkle

          Holland arose as an exception–having one=ce made going out of system against the law. It now, with others, authorizes a two-tier, public-private system. I do think your assessment of where the cost push is coming from, while not wrong, is oversimplified. See chapter 9 of my ebook BROKEN for what I think is a broader and more persuasive analysis.

  • DiaKrieg

    My parents were doctors in communist Hungary before emigrating (defecting, actually) in 1967. In a system where the salary of a highly educated physician isn’t much different than the lady who collects subway tokens, what ends up happening is the doctors start taking (and expecting) bribes. Pretty soon patients start bringing “gifts” to each appointment – an expensive bottle of liquor – or just a nice “tip.” Those who didn’t observe this practice received surly, brusk care after increasingly long waits.

    Moral: Man is an economic beast. No amount of progressive tinkering with regulations can alter this basic fact.

    • http://www.the-american-interest.com Adam Garfinkle

      Not true. Man is a complex beast, who laughs, uses tools, cries, plays music, creates, thinks silently and more. It is one thing to tinker with regulations, another to think you can do well with none because a theoretical market will take care of all things. This is nonsense.

  • Peter

    “You have to pass the bill so you can find out.” Guess we’ve got a lot of finding out ahead of us.

  • DiaKrieg

    I never said that “a theoretical market will take care of all things.” Who really believes that? But markets WILL thwart the best laid plans of central planners.

    Also I don’t understand your point about man laughing, crying, creating, etc. I never suggested that man is a mere souless cash register. He is complex, yes, and clever enough to figure out what’s in his own self-interest.

  • Douglas Levene

    Just a minor point. I think your characterization of your doctor’s offer to you as a “shakedown” is not at all accurate. He made an offer to you that you were free to accept or reject. If you think the offer doesn’t give you sufficient value for the price asked, you can refuse it and find another doctor. A shakedown would be where the doctor tells you that he’s sewing your mother back up without removing the cancer unless you pony up a quick $10K in cash.

    • http://www.the-american-interest.com Adam Garfinkle

      Maybe shakedown is not quite the right word, but it’s close: It’s pay me this extra money or the service you’re already getting goes away. It’s a polite kind of extortion, if not a shakedown.

      • http://abriefhistory.org MikeK

        I still think you are misunderstanding. A doctor cannot charge extra and still participate in Medicare or any insurance panel I am aware of. I’ve been a doctor for 50 years and haven’t seen the exception yet. This why so many are dropping out of Medicare and many more are dropping all insurance. What you may have been told is that you can use insurance for other doctors, such as surgeons or other consultants.

  • jan jones

    I live in the real world of medicine.
    No matter how you slice and dice these intellectual comments, the Democrats blew up the American health system for the sake of 15 million people. The “30-40 million” who lack health “insurance” was always a false narriative. The Republicans did not make the case often enough, well enough and loud enough as to how to begin to fix the system with OTHER options: IE: ability to break up the insurance cartels, and sell across State Lines – (create massive COMPETITION); caring for the indigent by setting up medical clinics in all States staffed with Nurse Practioners, PA’s and RN’s under the care of an MD; assigning care for the indigent at large Teaching Hospitals, where applicable; FIRM tort reform with major ceiling caps on $$; major reform with government spending on Hospice and Palliative Care in the HOME; massive government spending on training of Cartified BEHAVIORIST Social Workers to try to stop the tidal wave of hospital readmissions due to non-compliance by patients who pay nothing for their care, are disconnected from their own medical issues – and have no interest in GETTING connected to their own bodies.
    And finally, demand a sliding scale payment system for patients who wish to pay privately for their medical care, including a hospitalization. The price offered would be substantianlly less – across the board, without the insurance companies being involved.
    There are dozens of implementations we could have begun if the political class had a shred of intellectual honesty or back bone, or CARED about what is best for the American public in the LONG RUN. Health “insurance” means nothing if there are no MD’s to see you, or you die waiting for surgery, or a diagnositic work up with the start of a care plan.
    Socialized medicine? Clap Trap nonsense!
    Jan Jones, RN Care Manager

    • http://www.the-american-interest.com Adam Garfinkle

      I agree with most of this, especially the irresponsibility of our political class in this, and also many other, regards. You might want to read the chapter on health care in my ebook, Broken: American Political Dysfunction and How to Fix It, available via TAI. I even have some ideas in there that you don’t mention.

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