As summer draws to a close, many of us will return to work to find unpleasant news from our employer or in our mailbox. It is the annual selection of health insurance for the upcoming year, and certainly it includes an astounding spike in costs.
Whether you are self-employed, work for a large company or buy an individual policy, health insurance premiums are expected to increase dramatically nationwide this year. Actuaries and others say much of that can be attributed to the impact of the Affordable Care Act (ACA).
For those shopping on the exchanges, they will find fewer choices this fall as Aetna and United Healthcare have dropped out of that market. Humana will have the highest rate hike – 67.5 percent for plans in the exchanges.
All this expense in healthcare continues because one of the primary drivers of healthcare costs has not been addressed: wasteful, defensive medicine.
During my 40 years of leading hospitals, I can say that the majority of physicians I met have been sued – most under frivolous circumstances. As a result, doctors will often order more tests, CT scans, medications and procedures than are clinically necessary. This is called defensive medicine.
According to a 2011 Pacific Survey, 92 percent of physicians in the United States reported practicing defensive medicine, while the response rate was zero for Canada, the United Kingdom and New Zealand where physicians do not have personal liability if they make an error.
Gallup says one in four healthcare dollars can be attributed to defensive medicine. BioScience Valuation, a healthcare economics firm, reports such wasteful medicine cost $487 billion in in the United States in 2015.
As a result, health insurance is now one of the most expensive items in the household budget as premiums, co-pays and out-of-pocket costs skyrocket. Deductibles of $6,000 or more are common for those who have their own policies – making healthcare rarely covered by the insurance company unless there is a major medical incident.
To contain this wasteful medicine, we have to encourage physicians to stop engaging in a defensive practice. One proposal now before five state Legislatures, including right here in Georgia, would make that happen. Tennessee, Alabama, Florida and Maine are also considering similar plans that would eliminate defensive medicine by abolishing the medical malpractice legal system and replacing it with a no-blame administrative model similar to workers compensation.
Known as the Patients’ Compensation System (PCS), this pioneering concept is drawing the attention of physicians’ and hospitals as it would do what the ACA, tort reform and other regulations have failed to do: change behavior. That’s because doctors won’t stop practicing defensive medicine unless they have protections against lawsuits.
Under the PCS model, a patient who was medically injured would file a claim with a panel of healthcare experts instead of filing a lawsuit. An administrative law judge would determine the compensation based on a schedule no different to the payouts traditionally offered in a legal system. The doctor would not be personally held liable.
The patient would be compensated in a timely manner. Compensation would come from funds generated from physicians’ malpractice premiums and fees. Only trial lawyers would lose out as they would not be able to generate enormous fees that come with years of litigation.
Charles Gaba, a health insurance analyst, predicts insurance premiums will rise 24 percent nationwide in 2017. This will undoubtedly lead to discussions over single-payer once again.
We know what the diagnosis is – defensive medicine. Since Washington won’t treat the problem, let’s work with physicians in the states and encourage them to change wasteful healthcare spending. The only way to do that is to offer them the protections found in a no-blame malpractice system that compensates patients quickly and reduces costs for all of us.
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