Financing Controls
Regulatory Strtegies
Competetive Strategies
Problems: employees don’t realize the full cost of their insurance because it is tax-deducable for their employeers--allowed costs to rise much faster
Alain Ethoven--encourage employeers to pay part of the health insurance but give them and the employees an incentive to buy cheaper plans--have to keep insurers from merely "gaming" the market through rating
The Weakness of Financing Controls
poorly done reform will just result in the money being squeezed out of the system somewhere else--higher premiums for the rich or less care for the poor
Reimbursment Controls
Price Controls
competetive bidding on provider prices
Cost Shifting: providers charge more for another payer when one reduces its payments--must set up uniform fee schedules or this will happen
Lower prices encourage higher volumes to make up for lost revenue
Utilization (Quantity) Controls
Changing the Unit of Payment
Capitated care means that phyicians can not make more by utilizing more services--in fact they would make less
Patient Cost Sharing
deductibles, copaymesnts, and uncovered services payed at the point of recieving health insurance
effectively reduces the utilization, however poorer people also loose much preventetive medicine
Utilization Management (UM)
Attempts to influence the utilization of services by physicians by denying payment--used by hospitals and insureres--the at risk party does it
High administrative costs
No evidence of long-term cost reduction
No consistent methodology for acceptance/denial of treatments
Other plans look at physicians profiles against the norm to decide who is using more services
"gatekeepers" don’t work well in the US system
Supply Limits
"supplier-induced demand" the more surgeons, the more surgery
more likely to recive advanced care if the hospital you are at does it whether or not you need it
physicians can prioritize patients if faced with limited resources
Controlling the Type of Supply
GPs are cheaper and generally more effective
Mixed Controls
Managed Care in the United States
PPOs/HMOs either staff or group
Effect of Costs
some evidence that HMOs actually have lower costs
may provide only a one time savings
premiums for HMOs have been rising at the same rate
Effect on Outcomes
no real difference
patients are happier with fee-for-service but financially happier with HMOs
The Canadian Health Care System
centralized payment to provinnces and hospitals--fixed fee schedules--limits on number of specialists and capital projects
Effect on Costs
low overhead--administrative overhead make up 25% of US costs
grew by 39% in Canada, 78% in US from 1971-1991 as percent of GDP
lower overhead means: canada uses more physician services but pays less, and physicians keep more of their income
need physician payment caps to prevent growth of physician fees and use
hospital costs 20% lower eventhough rates of stay and lab usage are simmilar
Effect on Outcomes:
about the same--mortality rates lower but this may be more sociological
better mental health care in canada
MORE cardio-surgery in the US, no evidence of better outcomes, maybe less pain
Conclusion
must concentrate on macromanaging costs--NOT micromanaging at the patient-doctor level
must be done throughout the system to avoid cost shifting