Grand Forks Forum—September 2011
Cost of Care1
Q: Does Medicare have any influence on the amount that can be charged for a medical exam, equipment, etc.? There seems to be a huge price difference for the same treatments between North Dakota and Arizona.
A: The thing Medicare controls is not the amount charged for a particular service, but how much they'll reimburse. The trouble is, there's not parody between states. Back in 1960, Medicare created formulas to determine how much they'd reimburse for services in different parts of the county. The trouble is; North Dakota looks very different today than it did in 1960.
Outdated formulas result in underpayment to North Dakota medical facilities for the services they provide to Medicare patients—they actually lose money in most cases. To fill the gap, typically other consumers—both businesses and individuals—end up paying more for services.
Access to Care1
Q: What do we do to incentivize people to take better care of themselves?
A: The fundamental reason the costs of health care are going up is that we use more and better medical services.
On the "more" side of the equation, this chart shows how rapidly our use of services has grown since 2000. You can see premiums have increased at the same rate.
Why? As a society we've created many lifestyle conditions that cause us to use more health care. Obesity is an obvious example. In 1980, just 10% of the population was overweight or obese. Now 64% of adults are either overweight or obese. That leads to people using health care services to treat Type II Diabetes, heart disease, joint problems and other chronic conditions.
On the "better" side of the equation, there's a whole category of medical advances, or medical miracles, that save lives. Take total hip replacements or total knee replacements. Those people used to be bound to wheel chairs. Today they are living active lifestyles.
Back to the question of how to incentivize people to live healthier lives? We do have wellness incentives but are aggressively working on ways to improve our wellness offering. We welcome your input.
Q: Is there really any chance you will use the information from these forums to address problems in the health care system?
A: The short answer is yes, and here's why… While the rest of the country is becoming more divided—on everything, North Dakotans are more apt to work together. Because of our size and uniqueness, we can sit down and have respectful conversations together—us, you, providers and lawmakers.
This is not a red vs. blue issue. Health care is an "everybody" issue. It's critical to our quality of life and it's important to economic development. And North Dakota is unique in that we can work through issues together and find solutions.2
Q: Are you planning to cover behavioral therapy for children who are on the Autism spectrum?
A: BCBSND covers occupational, speech and physical therapies for Autism, in fact the legislature mandates that we do so. The question whether or not to cover behavioral therapies is the same question we ask when adding any new treatment coverage—is it proven to work?
Health care costs a lot. Before we add coverage, and therefore cost, we owe it to all BCBSND members to do due diligence and know for certain a specific treatment is cost-effective and results-producing. Right now there's a legislative committee reviewing the results of behavioral therapies for autism.
Depending upon their findings, insurance companies may have their medical staff review the findings, seek input from provider organizations and study other medical data to see if there is justification for adding it to the plan. It's early yet in the process.
We want to help kids with autism lead the fullest life they can. We just need to know what works.
Jamestown Forum—September 2011
Cost of Care1
Q: A couple only has the option of buying a family policy, even after their children are gone. Why can't we buy two singles, which would be cheaper?
A: That's a common question. Here's why. After their kids leave home, a couple is typically in their late 40s early 50s. And the fact is, we use more health care as we grow older. For example, a 55-year-old man uses five times the health care of a 25-year-old man.
The single plan rate is based more on the 25-year old before marriage—a person who typcially uses very little health care.
BCBSND could develop products for a couple in that late 40s/early 50s demographic, but the fact of the matter is it would be more expensive than a current family plan.2
Q: How did we get here with health care costs?
A: One of the ways we got into the problem of high health care costs is that, in general, we pay a very low portion of health care costs ourselves. As Americans, through premiums and co-pays, we only contribute 15-20 percent of the total cost of our health care.
So who pays the rest? Your employer or the government pays the bulk of the cost. And then here's what happens. It creates an environment where we pay very little to see the doctor (relative to the actual cost). That perception drives us to go to the doctor for treatments we wouldn't otherwise seek if we had to pay the full cost.
That's caused the health care industry to bring more and more equipment to market, and to create new drugs to satisfy demands. None of those things is bad in itself, but gradually we've created an inflation cycle that's driven up health care costs beyond what we can bare.3
Q: Why can't I have insurance rates that reflect the amount of health care I actually use?
A: A little history…
When we started 70 years ago, we charged the same rate for everyone. The basic theory was I'll pay for you when you're sick; you pay for me when I'm sick. All the money goes into a pot and divvy it based on who's sick.
Over time, different companies came in with different ideas and made smaller pools or groups based on demographics. That's the way the industry went. So now you are pooled with a group of "similar" people. Even if you use very little health care, you pay the same rate as someone in your group who uses a lot of health care.
That is obviously frustrating for some people that pay high premiums and don't feel like they get much out of it. But then there's that one year when you get sick or require a surgery and that becomes an expensive year.
So what can we do about it? We do have some programs that incent healthy behavior. There is a wellness benefit that reduces your premium, in effect, by giving you money back for exercising. The health club credit reimburses you for some health club fees when you exercise so many times per month. Frankly we don't think the BCBSND wellness incentives are strong enough, and we're working on doing more to incent health living.
Access to Care1
Q: How can we address the physician shortage in the state?
A: The physician shortage is a problem across the country, and not one we have much direct control over. If the country and the state of North Dakota want more physicians, we will need to put pressure on the federal government because they control the number of residency slots available each year.
More specifically to Jamestown, Jamestown Regional Medical Center CEO Todd Hudspeth reported that good facilities like their new hospital and a good quality of life both help with physician recruiting in Jamestown. Five new family practice physicians have come to the community in the past few years.
Quality of Care1
Q:How can we address the length of time a physician spends with a patient?
A: Most doctors are paid based on the number of patients they see. What's happened in the last few years, according to Todd Hudspeth, is that physicians' annual expenses—things like their malpractice insurance and licenses—have climbed rapidly, so in order to maintain the same level of income, doctors need to see more patients per day. Eventually, it looks like something BCBSND CEO Paul von Ebers calls "hamster medicine."
BCBSND is doing something about this. Through its MediQHome program, BCBSND is paying primary care doctors more so they can spend more time with patients and coordinate that patient's care across the whole health system. Even if that doctor refers a patient to medical specialty, because of the MediQHome technology, the family doctor can still stay involved in the care.
So why would BCBSND do this? Because North Dakotans with chronic diseases aren't getting the care they need to keep their conditions under control. Ultimately, they end up in the ER or the hospital. Obviously, it's more economical to manage a condition than treat an emergency.
It's not going to solve every problem in health care, but MediQHome will help significantly.