Popular theories on how to control health care costs have had a hazardous side effect: higher costs.
For many years, the prevailing theory behind health care cost management was that easy access to medical services would catch conditions early, preventing serious and expensive illnesses. The stomachache caused by ulcers could be diagnosed and managed in a physician’s office, and a costly hospital stay would be avoided.
For that reason, benefit plans put low copayments on physician office visits and other everyday care. In practice, that approach creates a mountain of expense from a molehill of minor health complaints. To see how that happens, let’s follow the trail of just one stomachache.
A Case Study
The patient goes to her primary care physician, complaining of stomach pain and occasional heartburn. Though she does not have a peptic ulcer, her laboratory test comes back positive. (For peptic ulcers, 17 of every 100 positive tests are false.)
Based upon her complaints and the test results, she is prescribed antibiotics. The physician and the pharmacist, however, fail to tell her the antibiotic should be taken with food. After a few days of more stomach pain, she calls and learns the proper way to take the medicine.
She is also referred for an upper gastrointestinal (GI) x-ray. The upper GI x-ray, like any test, has limited accuracy and does not detect all ulcers. So the physician is not surprised when the x-ray yields no ulcers, and he refers her for an endoscopy, which will cause her to miss at least half a day of work.
The demand for colonoscopies is very strong at present, so the gastroenterologist is booked for two months. In the meantime, the woman’s doctor prescribes Nexium, the famous “purple pill,” for her heartburn.
Meanwhile, the patient has become constipated–a side-effect of the heartburn medication. She leaves work early one day due to her pain and discomfort.
Unnecessary Testing, Treatment
As the example shows, when a health plan encourages greater use of medical care, lots of medical care will occur for illnesses that would go away by themselves. In fact, some experts contend the vast majority of illness is self-limiting.
Even if our patient had not had any stomach pain, she still would have been encouraged to visit her doctor for the ultimate in early detection: the routine physical. This visit is intended to detect illness even before it causes a problem. Nearly 146 million general medical examinations were done in 2002, making a routine physical the most common reason for a physician office visit.
For all that expense, we get very little benefit. Studies find no evidence of need for routine physicals for adults under age 65, and they show most routine tests do not lead to better health. For example, routine pelvic, rectal, and testicular tests do not improve a patient’s likelihood of surviving cancers in those organs.
According to the U.S. Food and Drug Administration, “Two major government-sponsored inquiries sparked the reassessment of the routine annual physical. In 1979, the Canadian Task Force on the Periodic Health Examination published an evaluation of the effectiveness of preventive services performed routinely by Canadian physicians.
“A similar effort was launched in 1984 by the U.S. Department of Health and Human Services. The U.S. Preventive Services Task Force, a 20-member panel of non-federal physicians, other health care providers, and preventive medicine experts, closely followed the Canadian scheme for ranking preventive services.”
All this testing and treating are intended to bring better health, which is less expensive than illness, according to the theory. But the theory breaks down when it is applied to an entire group of people instead of one patient. The expense of treating 100 stomachaches is high and prevents few, if any, hospital stays.
From an underwriter’s perspective, the money spent on treating minor aches and pains could be better spent on “real” illnesses. If patients with self-limiting ailments took care of themselves, health plans would save a considerable amount of money.
Cost-Control Health Strategy
Preventive medicine is a health strategy, not a cost-management strategy. Hence, employers and their health plans must choose which goal to pursue: to strengthen health or to manage costs. These two goals are not in concert with one another. Indeed, health is often more expensive than illness.
So what is an employer to do?
Successful strategies will balance health and costs, a calculation unique to each employer’s workforce. A careful look at any employer’s medical claims will show the group’s unique dynamics. Each workforce has its own mix of ages, genders, socioeconomic status, salaries, health benefits, attitudes, health habits, and turnover, all of which affect its medical costs.
Take, for example, a workforce with an average age of 35 and average length of employment of three years. Chronic disease will not be a cost driver since employees leave before they age enough to develop these illnesses.
Even if a number of these employees smoke, lung cancer and emphysema will not appear in their medical costs. Disease-management and smoking-cessation programs would have little, if any, effect on this group’s health care costs.
Recognizing that each employer group has distinctive health characteristics is the first step toward creating truly effective cost management. Once rid of the dusty myths, health care strategies can seek new methods and greater success.
Consumer-driven health plans (CDHPs) are one of the new health care strategies being adopted by employer groups across the country. These plans impose a high deductible and give each participant a special account to cover medical expenses. Since the special account stays with the employee, these plans motivate people to take care of their own vague and minor ailments.
This strategy may well work to curb patient demand, at least for certain types of care. CDHP deductibles range from $1,000 for a single adult to $2,000 for a family. Most people–90 percent of the general population by some estimates–will spend less than $2,000 on medical care in a year, hence many will have complete control over how they spend their account money.
Others, however, despite their best intentions, will not have such control. People who spend more may have predictable expenses (for example, they are on kidney dialysis) or have an unexpected catastrophe (such as developing a bone infection). Few big-spenders have discretion over their first $2,000 in medical expenses.
In addition, patient demand is only one factor of many fueling the cost spiral. The health care industry itself is growing, always inventing new definitions of illness and new treatments for cure. For example, the standards determining unhealthy blood cholesterol levels recently changed, making more patients than ever candidates for prescription drugs.
Consumer-driven health plans, by giving patients themselves more control over their health care spending, can play an important role in an employer’s efforts to control health care costs.
Linda Riddell, M.S. ([email protected]) is a principal of Health Economy LLC in Cape Elizabeth, Maine. An earlier version of this article originally appeared in Health Insurance Underwriter magazine. Reprinted with permission.
For more information …
“The Not-So-Routine Physical,” by freelance writer Ken Flieger, published in FDA Consumer magazine, is available online at http://www.fda.gov/bbs/topics/CONSUMER/CON00156.html.