The Cadillac tax punishes individual Americans (specifically employees and their dependents) with higher health insurance costs (to pay for the Cadillac tax), by encouraging lower employer-sponsored health benefits (to avoid the Cadillac tax), and higher out-of-pocket costs (as High Deductible Health Plans replace low cost-share plans). Why? Because employees are being blamed for the high cost of health care, and therefore they must pay a price. If our government needs to blame someone, it should be the healthcare providers (doctors), who are in the “healthcare driver’s seat” for spending. They are largely responsible for over-treatment and duplication of services that fuel high healthcare costs. The patients are largely in the back seat along for the ride.
In the graphic above, I have included both the health insurer and our government in the driver’s seat for health spending. As the payers of healthcare, they can apply the brakes that keep health spending from becoming astronomical.
Justification for the Cadillac tax rests with healthcare economists and policymakers who argue that low cost-share insurance plans insulate workers from the high cost of health care and encourage the individual to overuse medical care with unnecessary tests and hospital visits. These healthcare economists argue that healthcare consumers “have little incentive to insist on cost effective care”. Furthermore, if required to pay higher cost-shares, they would reduce the unnecessary use of the healthcare system. This argument assumes that when a sick individual American walks into the doctor’s office, he/she is in charge of treatment. This concept of “consumer-driven” healthcare is just words on paper. The reality is a far different picture.
Let me illustrate with a specific example that shows who is in fact in the healthcare driver’s seat for costs .
Several years ago, my mom (Donna) was walking on a sidewalk, lost her footing, and fell to the ground. She got up and went home to discover a scrape on her face that later developed into a black and blue mark. For a woman who has suffered from the pain of arthritis (especially in her neck and back), the fall didn’t register any new symptoms to worry about. The next day during her regularly scheduled 6 month checkup, her general practitioner told her to go to the hospital immediately because at her age (late 70s) she should make sure she hadn’t injured her brain from the fall. My mom is not one to question a doctor’s orders or presume to know more about her own body than the learned medical doctor.
Should Donna have countermanded her trusted doctor and said she didn’t think it was necessary to go to the hospital? I would have, but Donna comes from a generation that was taught the “doctor is always right”. There is also an age-related element involved. I have noticed that since becoming a widow and living alone, my mom has become more fearful of sickness (not death). In the absence of a discussion that evaluates the “cost effective” need for going to the hospital given her symptoms (or lack thereof), she has no other input except the doctor’s. Did her symptoms actually point to problems beyond the scrape on her face that needed immediate attention? Could she have waited a couple of days before seeking hospital care?
Once at the hospital, Donna was admitted as an “outpatient” and over the next three days, she occupied a very expensive bed waiting for a series of tests ordered by various hospitalists (and her general practitioner?). The table below summarizes the testing that was done.
The total cost of testing and the hospital stay was $18,200 (of which Medicare approved $5600). I assume the EKG was one of those routine tests ($$) done on people who have the medical code 79431 Abnormal Electrocardiogram (Nonspecific) on their permanent record and was the code used for Medicare reimbursement. This code appeared on my mom’s official medical record after her open heart surgery to correct several blockages five years earlier. Amazingly, the code was part of her electronic hospital records, but the fact that she has had no heart-related problems since the surgery was not. She did not complain about her heart at the hospital and was not asked about any heart-related problems. Donna has had many EKGs since her open heart surgery and perhaps the doctor thought the fall from the day before had injured her heart. Perhaps an EKG is simply a standard test for all people admitted as “outpatients”.
MRI (and CT scan) overuse in the United States is known, and probably continues today because there are no guidelines specifying when they are “medically necessary and cost effective” to employ. The closest our healthcare system gets to policing over-treatment is through a voluntary campaign called Choosing Wisely by the American Board of Internal Medicine. For those who believe that self-policing will stop this practice, I have a bridge in Brooklyn I would like to sell you. With the right medical codes, use of these technologies can easily be justified for reimbursement.
Donna’s patient engagement was minimal during her stay at the hospital. The tests were ordered and all communication was geared so that she was assured that the hospital staff had her best interests at heart. The fact that the testing may have been “medically unnecessary” or fell under the category of “overtreatment” never entered her mind. Donna didn’t ask why a given xray or MRI was needed nor what the clinician expected to find given her symptoms and their physical assessment.
Donna was asked questions that were geared at justifying the tests rather than at assessing her immediate medical needs. For example, when asked if she had pain in her shoulder, she answered “yes”. How about pain in her upper arm and back? Again the answer was “yes”. Of course, as a sufferer of osteoarthritis for over 20 years, Donna’s answers accurately reflected her present situation. The question which should have been asked was “how much extra pain in specific parts of her body did she feel that was above and beyond her regular osteoarthritic pain which could therefore be attributed to the fall 24 hours earlier?“. In our for-profit world of healthcare, the hospitalists were not interested in learning that the pain was related to osteoarthritis. Arthritis does not medically justify three separate sets of x-rays nor a three-day hospital stay totaling $18,000 in billing.
Where in the scenario above was Donna supposed to insist on “cost effective care”? Should she have asked for the price of each test and said no if she thought it was too high? Her communication with medical personnel was cursory and she was not given enough detail to judge the real need for the tests nor was she qualified to make these assessments.
When a doctor asks the emotionally charged question– “don’t you want to be sure everything is all right?–how should the patient have responded? “No, I don’t care if everything is all right!” This question is geared to encourage over-treatment thereby maximizing income and profits to the hospital and its staff. It is not based on sound evidence-based clinical guidelines for treatment. The medical professionals are not only in the driver’s seat, they are often defining the exact course for maximal reimbursement.
It would have been very hard to demand “cost effective care” when the costs for healthcare were not known for months after treatment when they appear in Donna’s EOB (Explanation of Benefits) from Medicare. Once insurance coverage was recorded by the hospital, charges were not discussed with Donna during her entire stay. If she had asked, would the hospital have given Donna an itemized list of potential charges?
This healthcare provider’s control of healthcare spending is pervasive in for-profit medical facilities across our country. This is how the “business of healthcare” operates in the United States. The economists’ call for patients to demand “cost effective care” would require a realignment of the entire doctor/patient relationship. Both patients and doctors would have to be educated for delivery of “cost effective care”. This requires funding that the economists are not advocating. I will be providing many more examples in future blog posts showing the reality of healthcare encounters I have personally witnessed. I invite you to share your stories.
In case you were wondering, nothing was found except of course the arthritis.
The Bottom Line
The “business of healthcare” in the United States operates to maximize income and profits for healthcare providers. The delivery of “cost effective care” is totally in their hands, if they choose to exercise it. They have not done so in the past so insurance companies and government have had to step in as controls that keep health spending from reaching astronomical amounts. Asking healthcare consumers to wrestle that control from medical providers so that “cost effective care” can be obtained is like asking a student to tell his teacher how to run his/her class. Most healthcare consumers do not have the foggiest idea (or knowledge) to engage and contribute to the management of their own healthcare. Patients have not been educated in how to demand “cost effective care”.
Ways must therefore be found to assure that the medical provider delivers “cost effective care”. This could be a Beyond Obamacare Private (BOP) legislative initiative that would have to address business practices that have been honed over decades for maximizing income and profits. This is the conundrum of “for-profit” healthcare. The healthcare provider is looking to increase his income and profits by performing more treatments while the patient is seeking all treatment necessary to achieve “best” outcomes. “Cost effective care” limits the income of the medical provider and the healthcare consumer lacks the information necessary to demand it. Punishing healthcare consumers with an increased financial burden (Cadillac tax) will not solve the over-treatment problem described above. The healthcare economists and policymakers should go back to the drawing board and target medical providers for delivery of “cost effective care” rather than taxing the healthcare consumers when it is not delivered.