Patients Need Power, Not A Bill of Rights

The reality of modern medicine is the traditional doctor-patient relationship has been all but destroyed. Whereas doctors once functioned as agents of their patients, today they are more likely to function as agents of third-party payer bureaucracies.

When a Blue Cross patient sees a physician these days, the physician is likely to view Blue Cross as the real customer. As a result, it will be Blue Cross rules and procedures, rather than patient needs and preferences, that determine what treatments the patient actually receives. Advocates of managed care originally foresaw the development of national clinical guidelines, based on scientific research, to which all doctors would adhere. Unfortunately cookbook medicine is not so simple. Today, there are several thousand sets of guidelines, developed by health plans, hospitals and provider groups. Although no one knows how these guidelines, were constructed it seems likely that considerations of cost far outweigh the findings of medical research.

Even if there were no bureaucratic interference in the practice of medicine, the doctor-patient relationship would still be deteriorating for a different reason: the economic incentives faced by patients and doctors are completely at odds. In the presence of increasingly smaller deductibles and co-pays, patients have an incentive to opt for any and all procedures and tests – so long as they hold any promise of medical benefit, no matter how remote. Physicians, however, are increasingly practicing under capitated arrangements that pay a fixed number of dollars for each patient. So every extra test or procedure patients receive means less take-home pay for the doctors who treat them.

The upshot is there is a crisis of quality in the U.S. health care system. Americans, once confident they were receiving the highest quality of care found anywhere in the world, today aren't so sure. Increasingly they suspect they are being short changed. News of malpractice suits and occasional horror stories reinforce those doubts. So what's the answer? Advocates of a patient bill of rights believe that more rules and more bureaucracy will help. They're wrong. Promised procedural rights are largely cosmetic, while the substantive rights are likely to cause premiums to soar and to induce more people to go without health insurance altogether.

Take the problem of patients being denied medical care. Bill of rights advocates would establish a right of appeal – either within the health plan bureaucracy or through an outside body. Neither remedy will do much good. Surveys show that managed care plans deny physician requests only three percent of the time (only one percent for hospitalization). And when Texas established an independent appeal process, the state received only a handful of complaints the first year.

It turns out that physicians with strong economic incentives to withhold care are perfectly capable of doing so on their own without any help from a bureaucracy. Moreover, in order for patients to appeal a decision, they have to have information about the care they are not getting. Physicians who are no longer acting as their agents are unlikely to supply such information.

The proposed substantive rights are more serious. For example, the Patient Access to Responsible Care Act (PARCA) currently before Congress, would make it illegal for a health plan to give doctors financial incentives to provide fewer medical services. But according to the actuarial firm Milliman & Robertson, this one restriction would add almost 10 percent to the cost of health insurance nationwide.

Another PARCA provision would allow patients to go outside their plans and force insurers to pay out-of-network doctors the same fee they pay those in the network. But the out-of-network doctors include those who order tests and procedures HMOs avoid to hold down costs. Take away this restriction, and premiums will increase about six percent more.

Adding up the cost of these and other restrictions yields a hefty sum. Milliman & Robertson's midpoint estimate is a 23 percent increase in health insurance costs for the nation as a whole, with a possible 39 percent increase if the most pessimistic assumptions hold and the provisions are rigorously enforced. These cost hikes are an average for all plans. Premium increases will likely be higher still for those now in managed care. (See, the NCPA publication, Can We Afford Patient Power).

As bad as these estimated increases are, they omit two big-ticket items. One PARCA provision would require employers to cover facilities near the homes of rural employees. Rural hospitals perform procedures far less frequently than urban ones, with higher costs and diminished quality. Another provision exposes health plans to tort liability simply because of cost-effective decisions. Say a plan doesn't allow MRI brain scans for minor headaches. An employee whose brain tumor is not caught in the early stages because of the plan's protocol could sue for damages.

The number of Americans without health insurance is now 41 million and rising. PARCA would make it rise faster. The Congressional Budget Office estimates that a one percent increase in premiums nationwide causes 200,000 more people to become uninsured. Combine this estimate with Milliman & Robertson's numbers, and PARCA is threatening to increase the ranks of the uninsured by at least 11 percent (4.6 million people).

The most fundamental objection to patient bill of rights proposals is they would restrict the choices of the very people they purport to help. That is, they would deny people the opportunity to take advantage of HMOs and other managed care plans that keep costs down by offering a more limited package of benefits. What patients need most is real power, not more bureaucracy. And the best way to empower patients is to change current laws that encourage employers and third-party bureaucracies to make all the decisions.

The only real alternative to managed care is medical savings accounts (MSAs). And the only real alternative to a health plan that serves the interests of the employers rather than employees, is personal, portable insurance owned by employees themselves. But while the tax law generously subsidizes third-party insurance premiums, it penalizes deposits to MSAs for all but the lucky few included in a federal pilot program. And although the tax law subsidizes employer-provided insurance, it provides little relief for those who purchase insurance on their own.

Few of us can afford insurance that allows us to see any doctor or order any test and send the bill to someone else. What we can afford is a plan that follows cost-effective protocols but allows us to use our own MSA money when different options seem advisable. We can use our employers to get price discounts that accompany group purchases. But the insurance we buy should be insurance that we individually own, and carry from job to job (for a summary of ways to implement these patient power reforms see the NCPA publication, Solving the Problems of Managed Care).