Financial Management Criticisms of Medical

Financial Management

Criticisms of medical 'gate-keeping' highlight the inherent inequities within the American healthcare system. Gate-keeping by HMOs (health management organizations) was instituted when actuarial data indicated that consumers would tend to 'over-consume' medical procedures and care when given carte blanche insurance privileges. "In the 1970s, the RAND Corporation conducted a major study of the effect of different health insurance patterns on health care utilization and outcomes for working age people and their children. This study showed that when co-payments were applied, utilization of health services declined dramatically" (Kane et al. 1996). There is a tendency to over-test out of concern to 'just make sure' that something is not wrong, or to seek treatment of dubious efficacy 'in case it might work.' In the absence of gate-keeping there a financial incentive for physicians to provide additional care if they are confident they will be reimbursed for their actions. Also, physicians wish to please their patients, and patients often associate better care with more care. Managed care was instituted as a way of evaluating whether certain procedures were tested to be effective based upon research and actuarial data.

However, the problem with managed care is that non-physicians frequently evaluate whether procedures or tests are needed based upon generalized surveys, without adequate attention to patient data. The wide variance in insurance coverage of different treatments is evidence that it is difficult to 'prove' that something is inherently better or worse based upon demographic data. Health insurance companies also have a powerful incentive to deny care, even life-saving care, to improve their bottom line and frequently give physicians financial incentives to avoid prescribing costly but potentially beneficial treatments. "With an over-riding incentive for under-service, the burden of proof is on those who propose more intensive geriatric services or LTC" or more intensive treatments and screenings (Kane et al. 1996)

There is no question that in America many people are over-treated and over-tested while others have no health insurance at all. However, the solution to this dilemma is not reducing current levels of care, rather the solution is providing health insurance to all citizens and having a singular, objective regulatory government institution, staffed by healthcare professionals, to provide intelligent rationing of care. Health care should not be rationed by practitioners or insurance industry bureaucrats with a financial incentive to provide or not provide care.

Question 2

At present, healthcare in America is 'rationed' based upon who possesses the best insurance, rather than upon who has the greatest need. When health insurance is allocated almost entirely through employers, everyone loses out. Society is less healthy, given that people during their most productive years often experience gaps when they should be screened for medical conditions and receive preventative treatment to prevent chronic illnesses later in life. Today, because of concerns about costs, people may even self-ration their own medication, simply because their co-pays are too high, because they have no insurance, or their insurance is not comprehensive enough to cover treatment.

Fears about rationing end-of-life care stifled debate in America and encouraged people to see healthcare in black-and-white terms. Most of the other major industrialized nations have evolved certain models of care to allow for comprehensive coverage, either in the form of nationalized healthcare in England or requiring private insurance companies to give healthcare to all citizens, regardless of preexisting conditions or income. Healthcare must be regarded as a right, not a privilege. Americans who must work multiple part-time jobs or who work for very small employers (or who are self-employed) often cannot afford health insurance. These hard-working Americans should not be denied coverage simply because they are not fortunate (or do not desire) to work for the government or a large organization that can provide comprehensive healthcare. To demonize the concept of universal healthcare with the word 'rationing' "buys into the myth that we don't have rationing of medical services now. But we do. It takes many different forms. It is commonplace for health insurance companies and HMOs to deny patients beneficial treatment. They find a variety of excuses for doing so, and may not openly admit it, but we all know that it happens. Medicare rations drugs by requiring co-payments that many patients can't afford. Emergency rooms ration care by making people wait so long in line that some just give up and go away" (Singer 2011).

Question 3

The recent decimation of many retirement funds means that more and more members of the elderly are eligible for both Medicare and Medicaid. The elderly on fixed incomes often struggle to afford medications not currently covered within the provisions of Medicare because of the "doughnut hole" in prescription drug coverage in the Medicare Prescription Drug, Improvement and Modernization Act of 2003. The most logical solution is one which is currently experiencing tremendous political resistance, however, namely to add new individuals to the insurance who are not chronically ill or elderly. One of the advantages of national healthcare, or at very least a healthcare system where everyone is required to have some type of insurance is that the 'risk pool' is much larger. "Adding young healthy Americans to the insurance rolls means a: society doesn't pick up the exorbitant tab when they get injured and end up at the emergency room and b: Because the under 26 crowd tends not to get sick, adding them to the insurance pools helps bring the very balance that was intended by the new law. The more healthy people available to pay for those in the pool who are ill (translation -- the older people), the better the system works and the lower our premium charges should go. The individual mandate [in the 2011 healthcare legislation] that requires everyone to get insurance would obviously have the same effect, on an even larger scale" (Leonard 2011).