And now this is interesting:
?? Jamie Dimon told JPMorgan investors today: high deductible health plans aren't working out for the company (transcript via @TheTerminal) #TicTocNews (cue the Amazon-Berkshire-Chase speculation) pic.twitter.com/DXsGY87ZP6
— Zachary Tracer (@ZTracer) February 27, 2018
The academic evidence has shown that people are horrendous shoppers for health care as the information costs to figure out what is good versus bad much less what is really good versus acceptable are too high. There is a reason why training for specialists and surgeons is usually a decade of work after a bachelor’s degree.
The theory of change behind a High Deductible Health Plan (HDHP) is that people with intermediate levels of expenses would be good shoppers. This means they would avoid low value services, embrace high value services and seek good pricing among multiple offerings of high value services. Ooops.
Walker
I just had a gall bladder removed this fall. The number of different bills (hospital, surgeon, anaesthesia, tests) that I have gotten makes it clear that it is impossible to shop. There is no one price. It is a bunch of little prices that you cannot know until after the fact.
MomSense
When Dimon announced the decision to switch to high deductible policies, did the statement have buzzwords like “stake holders”, “skin in the game”, etc.?
Do you ever get the feeling some people are paid way too much for what they do?
Butch
Hmmmm. I’m bleeding. I better get some estimates.
Bobby Thomson
People do not shop for medical services. Lack of transparency, limited supply, and normal cognitive error make it impossible. High deductible plans are good at discouraging people from seeking care (including preventative care) and nothing else.
Villago Delenda Est
Jamie Dimon. One of my favorite persons in the world.
////////////////////////////////////
Hm…enough sarcasm /s?
Raoul
High deductible plans, but low visibility pricing for services. And low visibility for quality. The result is, not surprisingly, what Dimon says.
It’s not like we can hop on HospitalAdvisor and see 100s of ‘unbiased reviews’ of orthopedists, nurses, room rates, etc. We aren’t shopping for a Hawaiian vacation.
satby
It’s always been a stupid concept, that’s why the MBA types liked it. I’ve come to believe that the entire goal of an MBA program is to eliminate any common sense or understanding of human nature in an MBA’s outcome planning.
Adam L Silverman
Kenneth Arrow in 1963, Kenneth Arrow in 1963, please pick up the white courtesy telephone.
http://www.who.int/bulletin/volumes/82/2/PHCBP.pdf
dr. bloor
Invisible Hand Stumbles Over Own Fingers While Shopping for Best Prices in Price Fixed Industry. Details at Eleven.
JGabriel
David Anderson @ Top:
Then there’s also the concern a lot of people have, warranted or not, that if they “shop around” (in the semi-rare instances when that’s a viable strategy) they’ll anger their primary care physician and get lower quality health care as a result.
laura
@Bobby Thomson: Nah, they’re an investment vehicle. I cannot believe what other people believe about the current state of their health and use that as the measuring stick to gauge their future health and then, when using their plan express shock and dismay about the out of pocket costs. They can’t see beyond the savings of their health care dollars, and can’t comprehend how fast those dollars fly out of their pockets.
brettvk
I’ve never understood why people at the Dimon level think that the peons have access to price information from their healthcare providers. It’s like they’re speculating on the number of ice cream flavors you can select from on Jupiter. And I’d bet that price comparisons never enter the room when it’s their own care at stake – they can afford whatever the best is, so they don’t even check the sticker.
Yarrow
@satby: Things really went to hell once MBAs became prevalent.
geg6
Well, duh.
These masters of the universe seem pretty stupid to me.
Yarrow
@brettvk: I once spent two full days trying to find out how much a certain procedure would cost me. I had the billing code from the doctor, I talked to the company performing the procedure, I worked with the insurance go-between people (who talk to you and the doctor/company performing the procedure). The final result was that it was impossible for them to give me an accurate estimate. The best they could do is tell me it was going to be somewhere between $500 and $1,000. That’s a pretty big spread.
I was told by everyone involved that it was not possible to know until it was actually billed, even though I had the code. How the hell is anyone supposed to find out costs? I was actually told it was not possible. End of discussion. And yes, this was after the ACA passed.
Faisal
Sometimes I wonder if the people who come up with these plans ever talk to actual humans.
The only people I know who like high deductible health plans are people whose health costs are zero or people whose health costs are so high that it’s cheaper to just budget for the entire deductible and skip all the copays and coinsurance.
At one large employer I watched the cost of the high deductible plan creep up and eventually pass the cost of the standard high-cost plan, after which the former was canceled. Draw your own conclusions about the populations there.
Another Scott
Um, we shouldn’t confuse a “theory of change” with a talking point (not that you do, of course).
Does Daimon have a HDHP? Does the rest of his senior staff? Or do they (effectively) have a Ruby-Encrusted Iridium Plan as part of their executive compensation?
Cui bono?
Cheers,
Scott.
Barbara
You can only shop for prices when price information is freely available.
Barbara
@Faisal: HDHP are a way of transferring costs to employees who intensely dislike more stringent, non-price related controls, e.g., narrow networks. They don’t solve any problems, they just transfer the cost of those problems to employees.
ETA: And yes, most plans and consultants know the pain they are inflicting. But they don’t care anymore because health care is so expensive.
Catherine D.
@satby:
I worked at an Ivy League business school for several years. As far as I can tell, an MBA is a two year degree in ass kissing and back stabbing.
Kelly
We have a high deductible HSA plan this year. It pays for very little until we each reach $6550 then it pays everything. It works for us because our payment after subsidy is $31 a month. The HSA contributions of $8900 do not count MAGI which helps us stay away from the $64k subsidy cliff. Our medical shopping began and ended with the selection of the plan. We’ll stay in network and do what our docs say because we sure as hell don’t know what’s better.
Anotherlurker
@Catherine D.: Perfect definition! Thank you!
piratedan
anecdotally, we have what most would consider pretty good insurance…
our 20 year old was suffering pretty badly with the crud…. late Sunday evening… the over the counter stuff wasn’t doing much to help… so down to the Urgent Care… they evaluate him, hit him up with the double strength version of the ibuprofen and then send us along to the local ER because they really can’t tell what’s actually wrong…
over to the local ER…. another dose of high powered ibuprofen three hours after the urgent care hit… he feels marginally better, they said while he’s sick, he’s not “that” sick to warrant an admission…
then the bill show up… post the co-pays, what’s left over… three separate bills…
The Urgent Care – bang.. 240.00 that isn’t covered
The Hospital – bang – 480.00 that isn’t covered
The ER physician – gang – 300.00 that isn’t covered (yes, the ER doc is a wholly separate entity from the hospital, he’s a bleeping subcontractor)
lesson learned, don’t be sick and to double up on meds if needed because that’s a 1,000 for the trouble and no one really did anything
lollipopguild
@Catherine D.: Sometimes at the same time.
sam
I’ve mentioned before that I have a HDHP, and I don’t *hate* it, but I also…don’t shop around for health care. I still go to the same medical providers I did before because I value their judgement and services. For me (and only me – not sure this can be extrapolated to everyone!), the premium cost (to me!) of the HDHP was so low compared to our prior “traditional” plan, that the money I “saved” on the premiums and re-allocated to my HSA helped me realize that I was saving money in the long run, as someone without any serious chronic conditions but who saw the usual panoply of doctors and specialists throughout the year.
This obviously only works if your employer is picking up most of the premium tab (as mine is – my premium “cost” is about $14/month, compared to about $200/month for the traditional health plan). I also have no dependents.
But again – I have still never been able to “shop” for services – the one “emergency” service I had last year involved falling down a flight of stairs in the NYC subway and hitting my head (i was fine – mild concussion). Someone else called an ambulance, which took me to the nearest hospital. It’s not like I could stop in the middle and ask for a price list for the ambulance, or even argue over which hospital I was going to go to. That’s the first time I’ve completely used my deductible in my “high deductible” plan.
Just One More Canuck
@Villago Delenda Est: better check with OO
The Fat Kate Middleton
Just came back from a long visit with a young nephew who works for Chase Morgan. He was bragging to us about his company’s wisdom in setting this up for its employees. He said, yeah, his deductible was pretty high, but his bosses knew how to make money, and he knew it was going to work. I disagreed.
sam
to add to my prior comment (too late to edit)
all of this being said – there’s so much psychological baggage for people when spending money, that I’ve seen a lot of my colleagues simply put off getting needed services and such because they don’t want to spend the money, even though it’s coming out of the HSA pocket – and that’s a REALLY difficult hurdle to get over. And, of course, it’s still impossible to find out how much things are going to cost, people may not have enough in the HSA accumulated yet to cover it, etc. etc.
I have to constantly logic myself through how the plan works in order to know that it’s working “OK”. And many people, especially when they’re sick, don’t have the bandwidth for that. And even when I logic my way through the whole thing, sometimes I think it would still be easier to just pay a damn copay.
Just One More Canuck
@piratedan: Our daughter had something similar a couple of years ago – the only cost to me was the parking at the hospital.
Yes, I live in Canada. Why do you ask.
Barbara
@sam: This is actually one of the most serious drawbacks — from a policy perspective — of putting everyone into an HDHP. Some people need to spend up front dollars to avoid significant back end expenses. The only policy response I can think of is to expand the kinds of services that are considered to be exempted from first dollar expenses as preventive. For instance, asthma medications are not considered to be preventive but they sure do prevent ER visits.
Barbara
@The Fat Kate Middleton: Wait until he gets married and his kid who has allergies and asthma. Everyone is healthy until they aren’t, and then world looks rather different.
Fair Economist
Dimon is just figuring this out now? I’ve been reading articles about this for years. I guess bankers make the big bucks for figuring out things years after everybody else, just like in the housing crash.
Fair Economist
@piratedan:
Except that’s the wrong lesson, because sometimes when you’re sick, you really need help. My brother, while in college, went to the ER because of flu-ish symptoms not responding to OTC drugs, and he ended up delirious under an oxygen tent with pneumonia. Had he stayed home, he might well have died. Urgent care sent you to the ER, so the ER should have looked at you (or the urgent care is incompetent). This is an example on how basing insurance charges on post-visit diagnoses doesn’t work.
sam
@Barbara: one of the ways my company helps with this is that they contribute immediate money into our HSAs at the beginning of the year – we get some money for participating in various “wellness” initiatives (which can be annoying, but you can find stuff in the plan that has nothing to do with strenuous physical activity – they include financial wellness, getting better sleep, doing yoga, and it’s all self-reported). But one of the things that gets you money is literally “signing up for health insurance”. so you start out the year, before you contribute any of your own money into the HSA, with at least $150 in the account. In addition, HSA dollars roll over, and don’t expire (unlike FSAs) so after year one, you will often have some money in the account – there’s no incentive to “spend down” at the end of the year like with an FSA. There are other incentives to actually accumulate funds rather than only contributing the bare minimum you think you’ll spend and then not rolling over anything – after you accumulate a certain amount (I think it’s $3,000) money gets invested like a 401(k) so can earn additional interest (This certainly has drawbacks in a volatile market).
I’m seriously not trying to sell anyone on a HDHP or HSA. Just trying to clarify how mine actually works since I’ve had one for a few years and don’t hate it as much as I thought I would when they first introduced it. But as I said earlier, it *does* require me to spend a lot more time thinking through how the plan works to make sense of how it compares to the traditional plan on offer – for a few years we only had the choice of two different HDHPs – this year the company began offering a “traditional” plan again as an alternative because some people really hated the HDHP, but the premiums were so high that I actually stayed with the HDHP – I did the math and figured out I’d spend a lot more money up front with the traditional plan, whether or not I used any services.
NCSteve
I have an HDHP with co-insurance which is as good as a plan with those features can get.
A few weeks ago, I had what I can only describe as a John Cole type of accident. The kind that sent me from an urgent care center to a local hospital ER and then on an ambulance ride to the ER of Enormous Memorial Regional Medical Supercenter over the course of a few hours. Because turns out, they were really worried for a while there I was going to either need a horrible, horrible debilitating operation to save a limb or throw a clot that could kill me without immediate attention or both.
Two horrible, horrible days under observation in an ER room with no food or liquid other than what was coming through the needle in my arm. There was no TV and, somehow, I’d forgotten to put a tablet or phone charger in my pocket before I went to the UCC, so I had a lot of time to think.
Mostly I thought, “holy fuck, this hurts” and “holy shit I’m hungry” and “jesus christ, I hate having to ask people to help me when I need to go to the bathroom again” and “fuck, no, hell will freeze over before I pee into a bottle or poop into a pan.”
But I had time to think about many other things as well. And I can honestly tell you that the one thing I never once thought from the moment I had the accident to the moment they finally let me out of what I had come to think of as a CIA black enhanced interrogation site was “hmmmmm, I wonder if there are providers or facilities where this all of this crap could be done more cheaply if I discharged myself AMA and paid for an elective ambulance ride?” Or, for that matter, “hmmm, I wonder if it is really necessary for them to CT my whole body and would it have been cheaper if I had insisted that they could only CT the site of the injury.”
I absolutely never thought “hmm, I wonder if I’m going to be overcharged for the synthetic heroin they are finally giving me now that a doctor has finally seen me.”
(I will admit that, when they finally allowed me to have some food, I made a mental note to refuse to pay for it if there was a line item for it on my bill.)
Now, granted, maybe I didn’t think about it because in virtually every urban market in this state and most of the rural ones, pretty much every ER bed and surgical suite and most of the professional practice groups are owned or managed or otherwise affiliated with one of three major giant networks and all three are in my plan. In this state, even in most of the rural areas and even with what passes for a skinny network hereabouts, you really have to work at it to find someone who’s either, on one hand, off plan or, on the other, not getting paid the same negotiated rate by my insurer as every other provider. But that only means that the ivory towered freshwater economist assumptions that underlie HDHP’s and, for that matter, co-insurance are more stupid here, not less.
Oh, and yeah, between the deducible and the co-insurance payments, I am still responsible for more than half the bill after the insurer discounts are applied.
WV Blondie
@Bobby Thomson: Agree wholeheartedly! My husband recently had a small stroke (only lingering effect a slight stammer when he’s tired). As it was happening – we were driving to the doctor’s office for some routine bloodwork! – all I thought of was how quickly I could get him to the hospital. And when they released him from the ER after more than seven hours, and had set up appointments for a bunch of tests he needed, I wasn’t about to say, “Hold on, I’ve got to do some cost comparisons first.”
I’m old enough to know one or both of us is likely to have some serious medical bills over the course of a calendar year. But I can’t choose a low-deductible plan; I can’t afford the premiums.
Barbara
@sam: Yes, if your need for care is episodic it can work as you suggest. If you know you are always going to be spending $5000 on asthma and other medications and diabetes testing supplies, you do not build up anything in the HSA. The theoretical justification for the plan design is that most care is episodic when, in fact, the disease prevalence in society is now overwhelmingly chronic.
Brachiator
I don’t even know what this means with respect to medical care.
I get sick and go to the doctor. If I have to consult with a specialist, we never discuss prices and services. Or ranges of services. My decision is pretty much limited to a yes or no to a recommendation. Even if I read up on a procedure, I am at a huge disadvantage with respect to understanding and making a decision and comparing alternative procedures. And I don’t think I’ve seen a google result discussing medical procedures that also lists prices.
And then there is the matter of time if a procedure needs to be done.
Has anyone gone to a doctor or specialist and said, “I am willing to spend a maximum of $1,500 for diagnoses, tests, treatment and medicine. Do you accept my offer?”
JustRuss
@The Fat Kate Middleton:
I’d say your nephew was half right, they do seem to know how to make money.
Mnemosyne
@Fair Economist:
This. It’s ridiculous to penalize patients who go to urgent care or the ER on the advice of a doctor and it turns out to be, say, pancreatitis instead of a heart attack.
proudgradofcatladyacademy
@Yarrow:
My business just crunched rough estimates for clients on upcoming planned procedures. Basically I word my findings like this: “After looking at average costs per your provider level/zip code, and your current insurance benefits, the your estimated out of pocket cost will be X. ” And all my caveats and disclaimers, this is an estimate your cost may be higher or lower based on your insurance claims processing, providers’ actual bills etc… are included because in all honesty even a seasoned person like myself can’t ever be sure that my final cost analysis is in the ballpark with any degree of certainty.
What I really want to say is : “Well, we’d have better luck putting a bunch of numbers up on a board, and having a blindfolded two year old throw a dart to see what number they hit might be more accurate than what you just paid me five bucks to do, plus we can pay them in Hershey bars instead of real money”
Additionally, since I am building a business using Fiverr’s platform to trial everything, I charge 5.00 for this basic service, and with labor costs (bare minimum it takes about two-three hours to research and write up the information for clients ) I lose money every single time and am really bothered that I can’t with certainty say that my numbers are even in the ball park for their out of pocket costs.
Expecting a busy working mother to give up four hours of her time to comparison shop hospitals, providers, etc on scheduled known procedures is ridiculous. To expect that same mother to shop around when her child is experiencing an emergency is beyond ridiculous.
workworkwork
@Walker: This. I got my spleen removed two years ago.
I came into the ER with a nose bleed that wouldn’t stop and they admitted me directly into the hospital when they found that I had zero platelets.
So no shopping and a multitude of bills from all of the different departments and specialists that worked on me.
Thank God for the ACA and the limit on out-of-pocket expenses.
Freemark
I was just ‘forced’ to sign up for a HDHP. I currently make crap money and had great insurance through the Marketplace. Since my employer has now offered me insurance I now have to cancel my Marketplace plan to pay much higher premiums for much worse insurance through my employer. When your income is $18000/yr a $4000 deductible is pretty steep. The offer of insurance was unexpected so I won’t be able to get some things checked out and done that I had planned under my current insurance.
Bob Hertz
There is a simple solution to the horrendous problem of trying to find out the real price of medical care.
This would be a 4 word consumer protection law:
“No disclosure, no liability.”
If you ask a provider for the cost of a procedure and they will not tell you, then you do not have to pay.
Similar laws were imposed on auto mechanics over the past decades.
With a law like this, you will get price quotes “quick as hell.”
There can still be reasonable caveats for surgeries with a risk of complications.
ken
@Kelly: Yup, pretty much our story too