Wednesday, January 23, 2013

Health care spending


As of the implementation of the Affordable Care Act, the US and Canada are officially going two separate ways to control their rapidly rising health care costs.

Canada has a single payer system that buys everything in bulk. Reimbursement rates are negotiated between the provincial governments and unions that represent different groups of health care professionals. It is a proven way to control costs because the government only has so much money. Raising taxes (or cutting services) is less popular than raising doctors' payments.

The United States is creating a market-based approach where different health insurance companies bid to offer you the lowest possible rate. If doctors do not like the reimbursement rates, then they can simply try to can refuse to accept certain kinds of insurance. Insurance companies are mandated by law to cover certain procedures and medicines. What happens when the doctors (within a certain market) refuse to accept the insurance rates of an insurer? Who is legally at fault? Did the insurance company cover its obligation by covering the procedure while still having no doctors to provide it?

If so, doctors can play insurance companies off of one another. Patients are going to lose out as their doctors will "strike" from certain insurance companies leaving people uncovered for certain benefits.If not, then the insurance company will be forced to pay whatever the doctors want them to. Cost of care is going to continue to escalate.

One such "procedure" where the US and Canada are going two different directions is: The Annual Check-up. 

The ACA mandates that all insurance companies cover these without a co-pay or deductible. Any American will be able to visit their doctor at any time they want, just to check-in and say hello. The concept being pushed here is preventative medicine. If you stop by once a year, then the doctor might be able to catch something going on in you that might go unnoticed otherwise. The problem is treated before it escalates (and becomes much more expensive later on).

Canada, on the other hand, recommended to the provinces to stop covering the expense of Annual Check-ups back in 1979. Public Health studies show that a lot of expensive tests are done that serve no real purpose. In other words, most tests come up negative. In addition, those that get Annual Check-ups do not have a longer life expectancy compared to those who do not get Annual Check-ups.

Instead of writing off annual checkups altogether, perhaps there is a way to make them more useful and more cost efficient. I bet having electronic health records would go a long way in helping computer predict who should see a doctor, when they should be checked, and what tests should be run.

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