LOWERING HEALTH CARE COSTS BY IMPROVING HEALTH
by Doug Korty
From 1983 to 1993, a major Blue Cross plan lost half of its subscribers. The company’s executives attempted to identify and solve this problem but they missed the big thing that was happening -- the rapid movement toward HMO’s and managed care. Their HMO strategy was “too little, too late.” The big thing today, which many people do not understand, is the growing dissatisfaction with managed care. Companies that miss this will also lose business. We need to find alternatives to managed care for lowering costs.
The fundamental problem with managed care is that medical decisions are significantly influenced by financial criteria. A managed care company has a strong bias toward denying care or choosing lower cost care. Managed care reviews are inherently one-sided. They seldom recommend more expensive treatment. This financial bias distorts the diagnosis-treatment process and damages the provider-patient relationship.
Managed care reviewers or capitated providers would err in a significant percentage of cases even if they were insulated from financial incentives given normal probabilities of error. However, the financial incentives create another source of error – bias. Most patients would prefer that medical decisions be based objectively on medical criteria and that the provider be insulated from financial incentives.
With fee-for-service medicine and third-party payor insurance, physicians clearly had an incentive to do too much and to charge too much. Managed care has reduced some, but not all, of the excessive treatment and charges that occurred in the old system. However, as this occurred, the inherent problem of the managed care bias became more serious. As the excess due to the old system decreased, the risk of eliminating justifiable medical care increased. Any attempt to cut costs became more likely to cut justifiable care. Also, as finding excesses became more difficult; the administrative costs of managed care rose to the point where they often exceeded the savings, especially if the cost of lawsuits is included.
We need alternatives to managed care. There are better ways to lower costs. Quality assurance, process improvement and health promotion mean providing better health care more effectively, and more preventive care, including incentives to improve and protect subscribers' health. Tobacco use, alcohol use, automobile accidents, STD’s, poor nutrition, and obesity are responsible for well over 60% of medical care costs in the U.S.
HEALTH PROMOTION
Making people healthier with health promotion techniques and providers more competent through provider education programs, quality assurance and process improvement are better ways to decrease health care costs. Providing information on treatment outcomes, diagnostic tools, preventive medicine and health promotion to providers and subscribers can have substantial benefits. Most health insurers have done surprisingly little along these lines. Programs can be effective which: make information available; create incentives for healthy behavior, e.g., higher premiums for smokers; increase early detection and related treatment; focus attention on the connections between different illnesses, e.g., depression and physical illnesses and untreated dental problems and associated illnesses.
More than 60 percent of the population get only minimal exercise; more than 15 percent are obese. Moderate exercise would prevent many illnesses, injuries and afflictions (e.g., heart disease and back problems).
Nutrition links to cancer and coronary disease are now well documented. Good nutrition, low fat diet, vitamins, high fiber and sufficient water intake could make a great difference in general health and reduce the incidence of many illnesses.
Motor vehicle accidents cause two million 'disabling' injuries each year and 50,000 deaths. Airbags alone would decrease injuries and cut medical care costs significantly. Other safety measures, including safe driving courses, could produce substantial decreases. Major changes in the transportation system could eliminate most injuries and deaths.
Most illnesses are somewhat preventable. Many diseases are completely preventable, AIDS, for example. Early detection is often very cost effective, e.g., prenatal care. Untreated viruses cause many problems, e.g., the papilloma virus and cervical cancer. Prevention techniques can be very effective for sexually transmitted diseases (STD’s). Untreated dental problems are very widespread and often lead to more serious health problems. Health insurance companies might find it cost effective to include dental insurance in their plans.
Depression is a widespread and costly illness in this country. Because it weakens the immune system, depression contributes to many physical illnesses. One study found that people with untreated depression go to medical doctors 16 times as often as average. Depression is often a factor in addictions. Effective and inexpensive therapies, such as cognitive therapy, exist but are not widely available or known.
Mind/body or PNI (psychoneuroimmunology) techniques, such as stress coping strategies, developing a strong will to live and a sense of purpose, and humor are very effective in fighting illness and maintaining health. Very little is now being done in medicine to harness these powerful forces in the prevention and treatment of illness. Research suggests that there could be very substantial improvements in health from the use of “mind/body” connections.
