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Sunday, January 31, 2010

BiPartisan solution

Today Katherine Kersten, a conservative columnist for the Minneapolis StarTribune, offered her recommendations on how to achieve a bipartisan healthcare bill.

There were a number of problems, which I'll go into further, but the most significant simply was this, her solution was for the Democrats to become Republicans, and simply adopt all of the Republican ideas while abandoning ALL of their own. In short, her bipartisanship was simply, "We can be bipartisan if you do what the Republicans want, and expect no comprimise from us." That's not bipartisan, that's capitulation, and it's silly to think the majority party should simply acquiesce on all points and call it bipartisan. It is anything BUT BIpartisan, it is purely partisan.

She made several points - which I'll discuss below:

1. Her first suggestion was to allow for insurance carriers to compete across state lines. The idea is to foster competition by allowing carriers who are succesful in one state to compete against those in other states who are 'less incented' to be price competitive. This sounds good on paper, but it is anything but correct. First of all, virtually ALL carriers already compete in many states, if not all. There isn't some 'hole-in-the-wall' state where only small carriers are keeping rates jacked up due to a lack of competition. In fact, in Minnesota, the law stipulates that health carriers MUST be non-profit, a fact that chased several carriers OUT, not into the state, they could not compete with programs priced at a non-profit level (or rather would not). But the more significant element is the concept of state rule, each state has passed laws protecting consumers from various predatory practices. Most states are pretty aggressive in this, a few, like Delawaree, instead prefer to offer safe haven to insurance carriers who chose to offer less than robust coverage. When these states did this, states enacted laws with provisions referred to as 'extra-territorial' or 'extra-territoriality' clauses, these clauses required that if the majority of a health plan group resides in the state, even if the company is headquartered elsewhere, the laws of the state prevail. The fact is that any carrier can offer a group program to employees across state lines if the group represents employees from several states, but they are required to conform to the laws of those states. This recommendation does NOT seek to offer competition, instead it seeks to eliminate those extra-territorial clauses and requirements. It will strip away MANY MANY protections of consumers, and subject them to coverage by carriers who incorporate in Delaware, and thus where none of the normal kinds of provisions will exist. Laws prohibiting predatory coordination of benefits, or predatory re-pricing into new groups, will be gone. This is a sop to business, and nothing more.

2. Ms. Kersten suggests that small businesses should be allowed to 'pool' into larger group programs, like large companies can do. It's a reasonable idea, but as a news flash to Ms. Kersten, THEY ALREADY CAN. Most states have group consortiums, and even where they don't, any number of small employers can form a benevolent association and buy larger group insurance. We don't need laws for it. That said, this is the same concept, of a large, sweeping program, that Ms. Kersten objects to about Obama's proposal, which smacks a little of either hypocrisy, or an unreasonable fear of the government - an unfounded fear at that since Medicare works VERY VERY well.

3. Ms. Kersten also suggests allowing for health savings programs in greater measure, but these are already present, and in growing numbers, yet have never proven to be the panacea that the right used to very frequently suggest it would be. Catastrophic, high-dollar deductible .. whatever you call it, making the consumer bear some of the pain is very much the way to reign in some of the inflation in the system, but it cannot be done overnight, or it would cause massive deflation, a catastrophe of unfathomable proportions, in 1/6th of the economy. Further, it doesn't address the increasing age of the population - which is the KEY driving element of health care inflation.

4. Finally, Ms. Kersten brings up malpractice, and tort-reform. She suggests that 100 Billion dollars annually is spent on unnecessary medicine to avoid charges of malpractice. My response is, such a suggestion is ludicrous in it's face. Their is a GREAT deal of overutilization, but Medicare experts suggest it is VASTLY more about fraud than defensive medicine, and further, there are MANY MANY other reasons for defensive medicine than simply avoiding a malpractice charge, not the least among them, ensuring you haven't missed something. Further, malpractice costs have been tied FAR FAR FAR more to losses suffered by malpractice carriers who invested premiums in the stock market, and so looked to recoup those losses by jacking rates, than due to frivolous lawsuits. Finally, frivolous lawsuits don't get awards above $250,000 very often (read damneed near never). Malpractice carriers may be willing to shell out $5-$15k as nuicance payments, but they absolutely AREN'T willing to pay 1/4 of a million. If the case has no merits, it is MUCH less costly to contest it in court, since, if it is frivilous, it is easy to dispense with. NO, instead, what THIS tort reform cry is about is protecting malpractice carriers from paying for claims and losses in exactly the kinds of cases they are SUPPOSED TO PAY, namely, where a doctor really and truly screws up, usually negligently. 100,000 people die each year in hospitals or other clinical environments due to mistakes, most of them innocent, but still mistakes about countra-indicated mixing of medicines. MANY thousands die from negligent conduct, and doctors buy malpractice because the cost of paying families for these negligent mistakes is FAR more than just a few thousand dollars. If they had to pay out of their pockets, as would EVERY OTHER TYPE OF BUSINESS which didn't have similar liability insurance, it would bankrupt them, but it would rightly, THEY cost someone their life or limb. This is instead about making doctors sacrosanct from their mistakes, limiting awards to an amount they could probably pay out of their pockets. Malpractice insurance would be a nuicance element - but you should not expect, not for one moment, that costs would be materially affected. Malpractice costs are estimated to comprise about 1/2 of one percent of the inflationary pressure in the market. Defensive medicine is certainly another driving factor for costs, but fraud as well as proper thoroughness are part of that factor as well, and I have heard estimates that there is no less than $40 Billion in fraud in defensive medicine, so Ms. Kersten's numbers, which were not attributed, likely are VASTLY inflated.

In the end, the Republican proposals either are to do little (propose HSA's or group coverage for small employers) including proposing things which are already in place, or they are to provide bail-outs for insurance carriers (in malpractice) or to propose changes in law which will allow for predatory trade practices as carriers flee to havens where protective laws are not possible to enforce. That's not change, it surely isn't standing up for the common man, and one other thing it isn't, it isn't bipartisan, not by a darned sight. It is simply asking the people to let the corporate interests determine the best way forward, and as recent history has shown with respect to wages, with respect to banking, and with respect to jobs, that may be good for the wealthy corporate leaders, but it is anything but good for the rest of us. Ms. Kersten's ideas are both staid (they are ideas which have been around and tried for the better part of 20 years), and decidedly partisan.

21 comments:

  1. Well written Pen!

    I'm never completely clear if the republican statements like those of Ms. Kersten are reflecting a genuine ignorance about the workings of the insurance company OR if they are simply smiling broadly while lying through their teeth.

    I'm starting to believe the latter, because no one could fail to learn the way these advocates of stupid solutions appear to have done.

    Obama did an excellent job of pointing out at the recent televised caucus that the proposals championed by Republicans just don't pass muster as working the way they are presented to work, when reviewed by a variety of experts in the health care field. NOT liberal experts, not Democratic experts, but NON-partisan experts.

    Republicans are proposing pretty much total crap, for some reason thinking it will be mistaken for something of value.

    It won't.

    Unlike Obama, however, given the level of suggestions for capitulation rather than any real copromise, it's time, past time, to say the heck with them.

    There is a genuine place for patience, but it has limits.

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  2. Are they... reflecting a genuine ignorance about the workings of the insurance company OR if they are simply smiling broadly while lying through their teeth?

    I think it is a little bit of both.

    Concerning the issue to allow insurance carriers to compete across state lines, this seems to be a basic market availability tenet - the more competition available to consumers, the cost will drop. Right? But like you mention, the issue is far more complex than just blindly saying 'more competition - less cost'.

    Would more competition reduce costs? Probably a bit. But the business of health care is more complex than purchasing products with discretionary income.

    Concerning the issue of allowing health savings programs in greater measure, a secondary statement she makes in that point is we'll offer tax credits to those who need it. Umm, I know more than a few professionals with 2 - 4 children who pay their own health insurance and, get this - they don't make enough income to have any tax bill! Credits! A laugh! Now that's just an ignorance if current affairs.

    In general, the proposals I've seen have three tenents:

    1) More competition *always* reduces prices of products

    2) Ignorance of: a) what's really happening to lower income people; b) (only partially) of how the health industry works

    3) Tort reform issues. a) Big business always looks out for the little people. Right? b) back on the ignorance issue of how much the industry really spends on this issue.

    On another note, I did like Richard Langer's letter to the editor about Ms. Kersten's 'Obamessiah' opinion piece. Now that was good...

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  3. I'm a physician who views the tort reform issue through a different prism. Just because an idea might benefit an insurance company, doesn't mean it's bad policy. Demonizing causes myopia. For some balance to your post, See www.MDWhistleblower.blogspot.com under Legal Quality.

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  4. Dr. Kirsch,on behalf of my co-admins and myself, welcome to Penigma!

    Pen and I both have a number of years of experience in the insurance industry, including in my case, working with medical malpractice insurance for one of the largest carriers in this country.

    If you feel we have misstated anything, or would like to elaborate on the topic from your perspective to a greater degree, I would like to extend to you an invitation to write something to be posted here in conjunction with Pen's "BiPartisan solution" piece - either a rebuttal, or simply something which goes further than this article by Penigma. With of course, the option to link back to your own blog if you would like.

    Whether you accept the invitation or not, I do hope you enjoy our blog, and we welcome feedback of any kind.

    Enjoy!

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  5. RedBeard,

    I certainly agree that meme's, like for example that greater access=greater competition=better prices AND better service. Those are in fact, historically, provably untrue IN THE LONG TERM. The goal of virtually any product line/business is to maximize market penetration, and eventually to achieve market dominance, if possible.

    When such dominance exists, competition has been squeezed out by, for example, low-ball pricing - and the ultimate product then delivered is quite frequently of poor grade, and low cost.

    Further, adherence to normative standards of care, or propriety of law/ethics in determination of benefits, is a far and distant memory once laws mandating certain standards of practice have been obviated. For example, in some states (Minnesota as I recall was one), for a LONG time, the state mandated mental health care had to be treated exactly as any other illness in terms of insurance compensation, while most 'National' programs set a lower compensation level. Without extra-territoriality provisions, programs making payment in Minnesota would have paid substantially LESS for mental health treatment, not more, and the benefit therefore to the patient would have obviously been lower (benefit meaning coverage of expense). Until a national change (as part of Hipaa if I recall), these provisions were scatter-gun across the country. Since then, of course, wiser heads have prevailed and mental health is better treated and things are now paid much more equivilently, but until then, any 'cross-state line' kind of situation, would have lost this benefit in all those states, and resulted in a lower level of service/benefits for people in their insurance program.

    Dr. Kirsch, in now way was my intent to demonize Malpractice carriers. Their desire for tort reform is economic, and any company would try to do so if it could. Malpractice insurers lost FAR more in stock losses than payments - and it is specious to say that tort reform in and of itself won't materially modify insurance costs (meaning health care insurance costs - it clearly will change malpractice costs) -- My point was to point out further that tort reform isn't going to affect insurance costs long term, because they (malpractic costs) won't - they simply aren't a significant element of the health care system. Defensive medicine certainly is - but defensive medicine is only partially attributable to malpractice defense. So, please accept I do not demonize companies, they behave in a very human and predicatble way, but it is to THEIR economic benefit - not to the benefit or detriment of the patients.

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  6. Welcome to Penigma, Dr. Kirsch!

    I am ok with the idea of tort reform if the end goal would be to reduce the number of mistakes and injuries to patients caused by negligent physicians and other health care professionals.

    The medical profession, as I understand it, is largely self regulating. Any attempt to have an open and outside regulatory agency discipline physicians has been fought tooth and nail by various physicians groups.

    Some states have enacted various forms of tort reform, and medical costs have not been contained in those states. In Kansas, for example, we have strict caps on awards for non-economic damages, and the process of getting a medical malpractice case to trial in Kansas is very slow and fraught with difficulty for the plaintiff, even in cases where the defendant is clearly liable.

    In short, doctor, I think you're right that just because a policy benefits insurance companies it doesn't make it bad per se, but when it benefits insurance companies without any corresponding reduction in rates, etc, I don't see any public benefit in enacting reforms.

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  7. I appreciate the welcome - refreshing! I would be delighted to offer one of my tort reform postings to offer a different perspective on the issue. If one of the esteemed admins, sends me an e-mail, I will be pleased to provide a post.

    The phrase, "but Medicare experts suggest it is VASTLY more about fraud than defensive medicine" from your post demonstrates how out of touch the author is with the reality of medical practice.

    The issue, in my view, was not presented with any context or balance.

    Nonetheless, I'm enjoying the dialogue

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  8. Dr. Kirsch, we have a blog email address listed in the upper left hand corner of this blog, penigma2@hotmail.com.

    One of the three of us who act as admins - Penigma (it is his blog), or Thoughts of Eternity (ToE for short) or myself (Dog Gone, DG for short) usually check this email once a day.

    I checked out your blog earlier, but did not see a way to contact you directly listed on it, so I hope you don't mind the way the invitation was offered. You have an intriguing blog; I enjoyed it very much.

    I hope you may enjoy some of the other topics covered here on Penigma.

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  9. There are a couple of things I will comment on with this. I have several friends I went to college with who are doctors and talking to them I can give one really good case where some sort of tort reform is needed. Anesthesiologist pay some of the highest, if not the highest, malpractice rates. Something a doctor told me was that 1 in 4000 people has a severe enough allergy to the anesthesia that they will go into respiratory failure when they get it. There is no way to test for it and in about half the cases the onset is so fast and severe the person will die before anything can be done. Usually the anesthesiologist gets sued and his malpractice insurance pays and the rates go up. I don't know what you can do about this one but the doctor who administered the anesthesia could not have forseen or avoided this. This was 10 yrs ago and maybe they can test now or use different anesthesia but the whole sue the crap out of the anesthesiologist was not really fair.

    The other thing my doctor told me is something that might be accomplished by regulations on the insurance companies. 6-7 yrs ago if I was sick and went in and while I was there he checked on my asthma or whatever, I would pay one co-pay, and he would bill the insurance for 1 office visit and 2 procedures. Now the insurance will only allow him to bill for 1 per visit. So for what used to be one visit I now have to come back the next day, pay 2 copays, the insurance gets billed 2 office visits and 2 procedures. I pay more, the insurance pays more, the doctor actually ends up making less (2 $100 appt vs 1 $150 and free time for another appt). At first I thought it was the doctor until I talked to friends at work and their doctors do the same thing. I really don't know why the insurance would do this as they pay more than they used to.

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  10. Dr. Kirsh,

    You said, "Demonstrates how out of touch the author is with medical practic.." in reaction to my comment about fraud.

    First, there was a recent expose about medical fraud JUST in Florida which suggested it was at least 40 Billion, JUST in Florida (iirc) - this was commentary both by perpetrators, the Florida AG and Medicare experts.

    Second, I worked for 11 years in health care administration, including 5 years as a Sr. Auditor/Compliance officer - I'm reasonably 'in touch'.

    Third, where tort reform has been tried, it has not resulted in lower medical prices.

    Frankly, you didn't offer any evidence of your claim that I'm 'out of touch' other than that we are to read something on your blog. I'm happy to discuss things, but you would do better in your discussion to NOT make remarks about the quality of the other person's experience, especially not in such sweeping generalities.

    Malpractice is not a material driving factor in the cost of medicine, the number of independent studiees that have validated this is sufficient to believe the claim is credible. Further, the vastly larger impactor for Malpractice rates was investment loss, not case payments, in the past 10 years (and more). If you feel this is incorrect, you are welcome to prove your case, but the personal comments need to remain by the way side.

    Many thanks- Pen

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  11. Tuck,

    Anesthesia, Obstetrics/Gynecology, and (iirc) Surgeons have (generally) the highest Malpractice claims.

    With respect to moribund reactions to anesthesia, your friend who is the anesthesiologist needs to do some investigating. IF his/her malpractice carrier paid out in a case of moribund reaction, then either they were foolish (not bloody likely) or the carrier simply decided it was acceptible to pay a small amount to avoid a bigger fight, because, and this is really important for people to understand, to win a case of malpractice, the anesthetist must be shown to have violated standard practices of care. Providing anesthesia is a 'standard practice of care' and moribund reactions are, as your friends say, wholly unpredictable (which is darned scary).

    Anesthesia, however, has a higher malpractice rate because things can go wrong fairly easily in ways that a claim of violation of standards is at least possible, because the morbidity rate is unfortunately fairly high if something happens, there can be severe negative reactions due to mixed medications (as I understand) AND - Dr.'s chose a while back to use CRNA's in many cases rather than direct supervision, which has meant that they faced claims of lack of supervision of the procedure. The second point is more important than any of the rest (the morbidity rate when there are issues). However, none of these are in reality related to moribund reaction to anesthesia - that's not the driving factor. Your friends may feel it is, but from what I understand - and again I worked at least peripherally in the area for quite a while - a claim of malpractice is only going to be winnable if the doctor violates standards of practice. Offering anesthesia is not doing so - carriers may PAY something, something less than consequential comparatively to avoid a fight, but that doesn't make it a valid malpractice claim, it makes it simple economy to the company.

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  12. Dear Pen,

    First, call me Michael.

    Let me respond to some of your comments. I withdraw the 'out of touch' phrase, which was an erroneous assumption.

    "First, there was a recent expose about medical fraud JUST in Florida which suggested it was at least 40 Billion"

    I have no data on this. In my 20 years of medical experience, I have never personally confronted fraud, and I doubt that my colleagues have either. I suspect that with regard to physicians, that it is very rare. Fraud, a criminal act, is distinguished from abuse or coding errors. I don't think that there are many physician criminals lurking out there.

    "Second, I worked for 11 years in health care administration, including 5 years as a Sr. Auditor/Compliance officer - I'm reasonably 'in touch'."

    Point already acknowledged. Mea culpa.


    "Third, where tort reform has been tried, it has not resulted in lower medical prices."

    This is not the case in Ohio. In addition, even stipulating your point that costs would not decrease, there are many other reasons to pursue tort reform. This is a fairness issue, as much as a cost issue.

    If every physician you know is hostile to the medical liablility system, doesn't it suggest that the system needs to be reformed?

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  13. Dr. Kirsh,

    First, no offense taken, thank you for your decency and civil reply.

    Second, the question is whether tort reform is in the interest of the customer as well as whether it is in the interest of physicians. Without doubt when all physicians feel the liability insurance process/coverage isn't at all a good situation, then it should change. My counter-question to you is, what is the ability of doctors to force such change? It would seem to me that as the consumers of the insurance, you would have the greatest amount of influence.

    Frankly, I'm happy to consider anything which could prevent needless lawsuits, the court already of course frowns heavily on it, and if you have a suggestion which could preclude such cases, addresses removing inept practicioners, but still protects the rights of those victimized by obvious negligence, then you'd have my support. Even if such a solution ONLY addressed one leg of that, I'd likely be in favor of it, but tort reform doesn't do that, not in the slightest, it allows for frivolity, but precludes large payments, which are payments on meaningful claims, not meaningless claims.

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  14. Sorry, Michael :), call me Pat if you like.

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  15. Pat,

    First, to continue your spirit of forgiveness, I forgive you for misspelling my surname!

    It appears that we agree on the objectives of a medical liability system. We want incompetent physicians sanctioned and patients harmed by negligence to be 'made whole'. (You could argue that any patient who suffers harm should be compensated, even in the absence of negligence.) We want a system that screens out the innocent from the negligent. I'm sure that if a half a dozen folks were in a room, we could design a system that works fairly well. This will not happen. The forces favoring the status quo are too strong and influential. In order to make progress on this, and in health care in general, one must separate one's own interest from the public interest. In other words, it's a non-starter for the present.

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  16. Pen, the problem is not so much the actual lawsuits, or winning the lawsuits, as it is the threat of them. A little of this makes people careful, too much makes them paranoid. Like you say they have to prove the doctor was not following standard practice and procedure. The problem with our legal system, at least in civil courts, is if a good attorney gets in front of a jury and hammers home the fact that their clients spouse died the burden of proof shifts. The doctor or the insurance company finds themselves paying thousands in legal fees, missing appointments, and all the bad publicity that goes with it. Add to that the stress, as if the insurance company cancels his policy he is then risking his house and savings if he continues to practice(if he can find a hospital that will let him). Most of the time the insurance company will settle just to avoid a jury trial. If the system were truly fair and you had nothing to fear if you did nothing wrong then I don't know of anyone who would want to change it. What we have is a system where it is possible to be only slightly less damaged if you did nothing wrong than if it was really your fault. Last night you gave a good example of your father's store and the sidewalk icing up. It was probably the cities responsibility to maintain the sidewalk yet if he did not do it and someone fell on the ice he would get sued. I have a friend at work who has a pool in their yard and an 8 foot privacy fence. They had to put another fence around the pool with a lock to keep their homeowners insurance. They have no children under 17 the extra fence was if someone climbed their 8 foot fence and fell into the pool and drowned their homeowners insurance could be sued for negligence. I know that is not a medical example but it is a good example of what some tort reform needs to put a stop to.

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  17. Economists have a concept called elasticity. An elastic market reacts quickly to price changes. An inelastic market does not.

    Elastic markets:
    When the cost of Cheerios increases, people flock to the generic substitute, or another type of cereal altogether. When the cost of gas goes up, people stop taking long road trips and opt for different types of vacations. These elastic markets are so because it is very easy to switch products or discontinue participation.

    Inelastic markets:
    The greater market of food in general. While consumers can move about within the market (elastic) they cannot get out of the market (inelastic). Energy - particularly home energy - is extremely inelastic. One simply cannot change suppliers just because the price increased and one can usually only make minor adjustments to use. And finally, HEALTHCARE! I don't care if there are a thousand competing insurance carriers in a state, they all know something that the far right seems to ignore or be ignorant of: healthcare is one of the most inelastic markets in the economy! What's more, doctors (and hospitals) know it too! What good is freedom of choice if switching between suppliers takes weeks and requires one to fill out forms and document past medical history (Even if prior conditions cannot prevent entry - they can effect rates, so all of that information must be available.) Moving about within the healthcare market is not a decision that can be made spontaneously - like selecting a cold cereal or deciding which gas station to stop at. What good is freedom of choice when all of these costs are related to something that we perceive as a MUST! When opting out of the market could cost you your life, price is not a factor!

    When people on the far right suggest that healthcare would best operate "in the free market," they are either very ignorant, or they are attempting to scam the public.

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  18. The healthcare market is not quite as unelastic as that. You are talking about the problems with switching doctors. If you switch from one insurance to another and your doctor accepts both, then I have found it is as simple as telling them you switched insurance and showing them the new card. The problem come when a doctor takes Aetna but not Prudential and things like that. Maybe Dr Kirsch can comment on why doctors accept some insurance and not others.
    The other problem with insurance competition not working is the size of the pool. If you work for a company with 500 employees you will pay more than a company with 5000 employees. The thing is the insurance is offering both the same plan and in reality they have a big risk pool of 5500. Now I have not been in the insurance industry (except as a collector 25 yrs ago) so I don't know if they are allowed to pool companies with similar plans but it seems like if they did it would save the smaller company a lot and the larger would even see a small savings.

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  19. In general, physician opt out of certain insurance plans for the obvious reason - they are not reimbursed sufficiently. The extreme example of this is concierge medicine or cash medicine, reimbursement models where physicians are paid more and patients enjoy premier service, which is not possible in conventional practices where there is pressure to see a high volume of patients.

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  20. Ahhh...But what kind of a process is it to switch insurance? It might take weeks just to find out what the premium of the new carrier might be? It takes a lot of work to be able to get to see the "price tag."

    Doctors and hospitals, too, often cannot simply show you a price tag. Just try it. For one, the doctor (private practitioners excluded) probably doesn't even know. Secondly, the hospital or clinic is often reluctant to tell you what they "charge" the insurance carriers (which is far more than they actually get from the insurance carriers). So what, exactly, is the cost?

    Whatsmore, I cannot simply select an insurance carrier for one procedure and that carrier for another procedure. The suppliers (mental and physical healthcare professionals)and the doors to the suppliers (hospitals/clinics and insurance companies)are inexorably linked in a complex web that cannot be easily navigated as a consumer in a free market.

    Yes, the healthcare market is indeed highly inelastic; even if one does not change doctors. It is perhaps the most inelastic market there is.

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  21. "Whatsmore, I cannot simply select an insurance carrier for one procedure and that carrier for another procedure."

    Should read

    "Whatsmore, I cannot simply select one insurance carrier for one procedure and another carrier for a different procedure."

    Aorry for the poor job of proof reading...

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