With the primary motivating force for change in the health care system being cost, I thought I would list the top ten dead or dying financing mechanisms now used throughout the health insurance industry to fund or manage health care costs. They actually consist of most of the ways we now do business, but for one reason or another they are not up to the task that the future holds in health care reform and need to be seriously re-thought.
After you look at this list you may ask “what’s left?”. Not much really. There is no silver bullet in this complicated, arcane but necessary area of health care. It just may be that it’s not a new finance system we’ve looking for, but some combination of these and other finance tools that together act as a system of checks and balances on costs. Complexity reigns here.
So here’s my top ten (BTW, Sorry for the use of industry jargon).
- Usual and Customary Physician Fees – Thought this approach was long gone, but keeps popping up here and there. Supply-side dominance of the cost equation.
- Benefit Indemnity Limits – Another holdover from the past. Now on life support mostly in plan riders such as dental.
- Fee for Service -Thought of as the culprit of health cost inflation and supply-side induced demand. Do more, get more. Worst approach except when considering the alternatives such as wage labor.
- Capitation – HMO breakthrough. Now thought of as a disincentive for quality care: do less, get more.
- Community Rating for Premiums – Great concept, poor performance in actual markets. Cherry pickers love it as their favorite source of customers.
- Government Provider Fee Schedules – Always out of sync with the market. Only viable because of massive cost shift to private sector health plans.
- Published Hospital and Physician “Prices”- Never relevant to real market charges or costs. Uninsured or self-pays take the big hit paying these prices.
- Traditional Consumer Co-pays – Too small and useless. Need a bigger stick to get their attention.
- Medical Necessity Determinations – Good idea but interminably contestable by doctors and lawyers.
- Pre-Authorizations for Care – May have good effect, but everyone hates the process. Too much old school utilization review baggage to overcome.
