Bob Dohse

Consultant,

This conversation is closed.

Individual American states - not only the entire nation - could also reduce medical costs by applying Larsson's ideas.

Dr. Stefan Larsson's ideas work at the national level, as shown by the national statistics quoted in his TED Talk.

But what about at the individual state level?

I suggest that, due to political and constitutional realities, the real potential of Larsson's ideas are at the state government level in America.

The medical profession in America is controlled mostly at the state level and medical (healthcare) insurance is almost exclusively under state government regulation.

Healthcare insurance plans and premiums are completely regulated at the state level, and insurance costs are consequently a direct function of medical costs.

If Larsson's proposals for medical CARE can be administered within an individual state, then the consequent costs of medical INSURANCE would fall proportionally.

And each individual STATE has all the tools necessary to make that happen regardless of what might, or might not, happen nationally.

So ... what ARE the barriers to individual state adoption of Dr. Larsson's ideas expressed in his TED Talk?

Let's give this a try in a few American states and see how it works.

  • Nov 22 2013: I have worked in an insurance company for 7 years. During the time I worked , I also studied the principle of insurance. In essence, insurance of any kind is the sharing the unpredictable cost by all the insureds. However, the members of the insured must all have more or less same risk within a narrow range so that the cost could be FAIRLY SHARED. If an insured later developed a disease condition that was taken in as with probability of occurrence BEFORE IT HAPPENS. In other word, the insurance takes care of this risk and distribute equally to the participants who voluntarily join the pool. When a person has the conditions (preconditions) prior to when he apply for the insurance, then he is no longer classified as an unknown risk with equal probability, then he must be classified as a high (known risk) group and be assigned to a high risk pool. Furthermore, if an insurance company is small in its capitalization, it can buy "reinsurance" from other insurance companies to share the risk of major loss from its own group of insured. Many of the huge insurance cos, including international firms are often called "reinsurers". And some of the arrangement is called "catastrophic" insurance, but reinsurance need not be all catastrophic in nature.
    The Obamacare insurance is really not free market insurance,or insurance in any normal sense at all, because it requires all participants to share the cost of the patients with preconditions, and also to pay some cost of particular "disease" or "health promotion" measures which MAJORITY OF THE INSURED WOULDN'T EVER INCUR SUCH COST (such as maternity care, newborn care or contraceptives, infertility treatment, etc.).
    Before this new ACA, we at least had some palatable health insurance system. The better remedy is free market competition to rein in the high cost of health care for the vast majority of the citizens. We could just expand the Medicaid program to all the uninsured, instead of twisting the entire health care system.
    • Nov 22 2013: The "Medicaid instead of Obamacare" option would have been properly called a tax from the beginning. Quite possibly the law might not have passed if the sales pitch was to raise taxes.

      Thanks for explaining in depth your insight into the industry.
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        Nov 22 2013: Probably true.
      • Nov 22 2013: I agree that if the ACA specified part of the insurance premium as the tax, it probably wouldn't pass the legislature. (even though the Supreme Court interpret it as a tax later.)
        However, the system is really very bad in 2 reasons:
        1. If it is a tax, then this is the worst regressive tax policy one could ever think of. Because this "additional tax" is levied on those young and healthy workers who just started to build a career and establish a family, while we don't charge those billionaires for this tax (because they could just be self-insured or even be subsidized by their own business benefits.)
        2. By the way it's going with mandates and existing health policy cancellations to be reversed by the Obama Administration, the U. S. taxpayers will be burdened with a much larger tax or deficit than even the originally planned expenditure in the ACA structure. For example. some Insurance enrollment web pages are now pushing most of the old and sick people into the Medicaid Program (instead of the insurance exchange program which may charge premium from the enrollee) which is entirely financed by the state and federal government supported by general tax revenue.
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          Nov 22 2013: True.

          But how might we change that at the state level ... at least, in those states that are opposed to the current version of Obamacare?
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      Nov 22 2013: I agree ... insurance works only when the risks have a lower probability than the expected payments.

      That aspect hasn't been articulated well, but mandating a policy that covers routine care (e.g., annual exams) builds into the policy cost a minimal rate of payout. Any additional risk to be covered must be added on top of that floor price.

      This is why the deductible is now larger ... to cover that "guaranteed" expenditure.

      The question is no longer IF a person goes to a doctor, but WHEN a person makes a routine visit.
      • Nov 23 2013: Let me answer your question concerning the cost control or efficiency improvement for a health care insurance and health care providers group. Let me introduce myself first. Even though I have worked in an insurance company, but I went back to a university as a special student in the college of business administration. then I switched my graduate study and finished a PhD degree in Public Health in the College of Medicine.. And I worked as a faculty member and a consultant with my colleagues in a medical school and a school of public health. So I have knowldges in health service administration, hospital management as well as experience in particpating in many research with medical and surgical procedure and treatment.
        I am quite impressed in Dr. Larsson's research. As I understand any health organization or practice now must somehow conform to the ACA law in certain areas. By my limited information, the states can not interfere with the ACA setup, except that they can operate with certain "plans" that are exempted by the ACA law. One such example is the so-called self-insured/financed insurance plan. Another is the "consiege" health managed group. If you can urge one of the insurance cos to hook up with a "conciege" group, and organize a consortium of a group of small businesses to share in a large self-insured/financed group, then they could become a structure similar to the insurance exchange under the federal government. If this setup can be exempted to be managed by the state independent of the ACA rules, then cost minimizing studies of Dr. Larsson's can be carried out, and possibly with other hospital groups which worked only with large businesses outside of the national exchange system. Of course, cost efficiency in health care is needed for everybody nowadays. The only obstacle is how to be separate from the ACA rules, so that one can make such cost-efficiency study without the interference of the feds. I don't know my suggestion is realistic or not.
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          Nov 23 2013: As a layman, what you write makes sense to me. Thanks for the extensive and informative response.

          Aren't the insurance plan costs within a state computed, in part, by the cost of care within that state? So, if all other variables were equal, wouldn't a state with lower healthcare costs consequently have lower insurance costs (even while complying with the requirements of ACA)?

          I'm sure that's a simplistic equation (and it certainly wouldn't be so pure in real life), but I see two issues at play ... (#1) the actual cost of care that nobody (politically) seems to be addressing and (#2) the requirements of ACA that deal with insurance coverage.

          Without addressing the cost of care, then the insurance debate is merely a scheme to share costs (without necessarily changing the cost structure).

          However, the other factor (the actual costs) can be moderated somewhat by cost containment strategies that ACA doesn't address.

          And, again, I'm a layman who is probably ignorant of some issues within the healthcare industry. But ...

          It seems to me that "cost containment" and "cost efficiencies" would be the natural domain of the GOP ... as ACA is of the DEMs.

          And the only way I can see the differentiation playing out is if the GOP's "red states" proactively promote efficiencies and containment.

          I observe the political divisiveness and conclude that the current issue in DC is the "sharing" of insurance costs ... what the DEMs call "fairness" and the GOP calls "wealth redistribution". And, at the moment, ACA has won the initial rounds of that battle.

          But couldn't "cost containment" and "cost efficiencies" still be applicable in a state, regardless of the other ACA mandates?

          And wouldn't that fit within the free-market paradigm of the GOP?

          (These are questions, not counter-arguments.)

          Thanks in advance for your input. :-)
  • Nov 23 2013: Bob,
    As I understand, the ACA regulation prohibits any in-state health insurance companies to offer insurance plans without the coverage of the "conditions" specified in the universal ACA coverage as I cited above. So what I suggested previously is how to set up a group health insurance program which could be exempted from the ACA intent of pushing the insured in the existing insurance program into the "Healthcare Marketplace" to "share", or subsidize, the (unwanted or unneeded) cost with the old and sick population. In the "Healthcare Marketplace. gov" system. The applicants are assigned to the insurance cos which have programs set up within each state (differ from state to state, e.g. there is only one insurance co in the state of New Hampshire) and manage the hospitals and health providers within that state. So there could be a little difference in cost structure among different state. But you can't do any cost containment research with the health providers in these management programs because they have all kinds of restrictions and, as I heard, that there could be fewer and fewer physicians willing to participate in these ACA programs when the insurance cos just unilaterally cut back on the reimbursement rates for a given treatment procedure, so that any research like Dr. Larsson's won't yield meaningful result anyway from these ACA sanctioned programs. What I proposed or suggested previously is to seek out health insurance programs outside of the ACA sanctioned and with larger number of more research minded health providers to study the cost efficient improvement with more freedom in the choice of operational approach in the research.
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    Nov 20 2013: A Bob to Bob reply, There is no national health care. The Supreme Court determined it is a tax. If that is true then the wrong people are in charge ... the whole thing by order of the Supreme Court belongs to the Treasury. ... and it should somehow be attached to our tax forms. What a joke ... what a mess.

    I agree with you that the power should rest with the states .. Which is exactly what the Constitution states.

    In Arizona we had ACCES which proved better coverage for those who qualified than Obamacare will. By federal interference and cold and calculated lies the poor have lost ... again.

    We really need to return to a Constitutional government .... big government is killing us.

    I am not yelling at you ... just tired of the elite (our government). If this is so good for us why did they enact a law that says they are exempt?
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      Nov 20 2013: Bob to Bob ... LOL.

      I recently moved from Tucson, so I'm familiar with ACCES.

      What I liked about Larsson's proposals is that they don't depend upon "big government".

      Any state could do these things and reap the benefits of COST savings, regardless of the INSURANCE plans or other ways to "share the wealth, share the cost".

      It should be obvious to all readers that INSURANCE is just one way (of many possible options) to pay for COSTS.

      Larsson's ideas are, essentially, a way that the free-market economy can implement change (for the good) regardless of what the government does. I like that idea.

      Thanks for contributing, Bob. :)
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        Nov 20 2013: This tax has interfered with what you stated ... the free market ... Obama last week said and I quote ... I will let insurance companies sell policies that do not meet my standards ... Who the heck is he to tell insurance they can or cannot sell policies. That is up to me the consumer. That is the rant of a King not the leader of a democratic Republic. Doesn't congress have a say in this???? Why would the insurance company stop what he started ... they are looking at a 400% increase in the cost of the same policy. DAH!!!

        This is all about single source coverage which was the original idea ... when this fails then a national health care will replace it. They have had since 2010 to design and implement this ... do you really think this is a coincidence that these problems have risen ... Queen Nancy Pelosi wanted this in fast before anyone read it ... she held votes behind closed doors to pass it ... "lets pass it and then read it" That will most likely be one of the dumbest quotes ever. She also realized it was a piece of crap and led the fight to exempt the elite from it. It was only good for the peons.

        Our insurance would be a lot better if we the public did not have to pay for all of the illegals go to doctors, emergency rooms, and hospitals with no means or intent of paying.

        There are many ways to make improvements .. adding more unfunded social programs and not enforcing existing laws and ignoring the Constitution are not any of them.

        Again ... not directed towards you. Big government is killing us.

        Thanks for the reply. Bob.
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          Nov 21 2013: I'm in agreement.

          I see Larsson's ideas as very "free market", in the sense that they reward excellence and empower the consumer with knowledge on the relationship between what they spend and the benefit received.

          Traditionally, those elements ultimately lead to an appropriate cost-benefit structure. Artificial interventions by the government tend to mask the realities of cost and prevent the free market from functioning as a control mechanism. Rent control is a typical example.

          My hope is that some of the states most eager to facilitate the traditional "free market" would try some of the more innovative medical practices to truly lower medical COSTS, as opposed to merely redistributing costs through medical INSURANCE.

          What has been lost in much of the "Obamacare" debate is that what we're observing is merely an argument about INSURANCE.

          A better approach is to work on keeping the COST structure of medical care at its lowest possible level ... maintained by the "invisible hand" of a free market.

          Insurance only pays for what medical care already costs. If care is more expensive, then insurance will be more expensive.

          The DEM discussion points have focused mostly upon INSURANCE.

          I'm surprised that the GOP hasn't countered by talking about COST.

          Perhaps we'll see in a few "red states" some attempts to keep costs low by better implementing "free market economics" ... and Larsson's ideas might add to that discussion.

          Regards. :)
  • Nov 20 2013: Maybe another Tedster can give us current examples as I am sure this is already happening.
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    Nov 20 2013: I'm all for enpowering the states, as the constitution intended.

    But it has been government intervention that has created the problem in the first place.
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      Nov 20 2013: One of the things I liked about Larsson's concept, Pat, was the fact that doctors and hospitals could do this themselves without any government involvement.
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      Nov 20 2013: LOL ... here's an un-government approach, Pat.

      http://www.ted.com/talks/john_wilbanks_let_s_pool_our_medical_data.html
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        Nov 20 2013: Larsson

        Has a good idea except it is business 101, the only true metric is whether or not a customer will pay for the service if there are alternatives.

        It already exists we just need to throw away the government interference.
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          Nov 21 2013: Agreed.

          I think that Americans will need to see some examples of success, and I'm hopeful a few states might start looking in the direction of improving the cost structure instead of simply accepting wealth redistribution via a massive insurance program that is inherently flawed.
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        Nov 21 2013: Yes I was listening to a pundit (not a talking head) the other day who said the reality is a complete collapse or secession are the most likely outcomes. So yes secession is a viable/only option. Or a more moderate state nullification as you indicate would be a start.

        People think that I'm spewing some sort of tin foil hat chatter, I wish I were.
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          Nov 22 2013: Or an Atlas Shrugged scenario of a limited type, where people in some places start developing local alternatives.

          It was for a different reason, but the Victory Gardens of WW2 were an alternative to commercial agriculture.
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        Nov 22 2013: They have certainly gone Gault.
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    Dec 3 2013: Atul Gawande starts off slow and never picks up much steam ... but he ends up with a standing ovation.

    O - M - G ... this is very relevant to the topic of "cost savings" (as opposed to insurance that merely spreads the cost and "transfers wealth from the rich to the poor").

    http://www.ted.com/talks/atul_gawande_how_do_we_heal_medicine.html
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    Nov 20 2013: A related TED Talk by John Wilbanks addresses the issue of sharing medical data in better ways ... which also yields lower costs.

    http://www.ted.com/talks/john_wilbanks_let_s_pool_our_medical_data.html
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    Nov 20 2013: Larsson's concept also seems to fit well within the paradigm of a free-market economy, in that it facilitates improved consumer knowledge and allows the expanded option of "choice" (by not imposing restrictions as a function of the "improvement").

    And, in contrast to simply insurance cost adjustments, the way Larsson's concept lowers cost is by improving competition and reducing the rate of failure.