Home Health Care vs Assisted Living

Home Health Care in Los Angeles

Home health care is health care that is provided to patients inside their home, and usually by either health care professionals or family and friends. The term “home care” suggests that the care provided is non-medical and more of a custodial nature, whereas “home health care” may suggest licensed staff members. The differences here are similar to the differences between assisted living facilities and nursing homes. Much like assisted living facilities, home health care lets seniors enjoy a good measure of independence. An elderly individual or couple will appreciate having privacy as well as assistance in daily living needs.

What Home Health Care Provides

What kind of services does home health care provide? Home health care may help seniors with daily living needs such as bathing, dressing, house keeping and cooking and dining preparation. Depending on the needs of the resident, there may be special provisions such as transportation services and errands, volunteer programs, exercise and walking, and toileting assistance. More extensive forms of home health care would also provide rehabilitation programs, including visits from physical therapists and nurses. Other qualified home health care professionals may include respiratory nurses, occupational nurses, social workers, mental health workers and physicians.

Who pays for home health care? This type of outside assisted living program can be paid by private resources from the resident or family, by public payers such as Medicare and Medicaid or by employer-sponsored health insurance plans. Medicare will usually not pay for home health care on a long term basis while Medicaid is more likely to help low-income families with little or no assets. Employer-sponsored home health care is likely to be on a short term basis unless the insurance plan is very generous. Most of the time home health care will be paid for by a family’s own resources.

Comparing Home Health Care with Assisted Living

How does home health care compare with in-house stays at nursing homes and assisted living facilities? Most seniors would prefer home health care, of course, as people always do value their privacy. However, there are also circumstances that would necessitate constant supervision of the resident at an assisted living facility, and not only occasional visits. Home health care is basically assisted living, but with even more independence. Therefore a resident that cannot be left alone for long periods of time would be better suited in a nursing or board and care type home.

It might appear that home health care would be cheaper than a stay in a nursing home. However, home health care costs can be just as expensive, depending on the number of hours aides work. Some residents have admitted that full time home health care usually costs twice as much as a stay in a board and care or assisted living home. Most home health care agencies will charge about $20.00 an hour or over. If the resident is relatively independent then the fees associated with the service can be controlled. However, don’t forget that if your needs are minimal to begin with, you could hire a trusted individual to perform the same tasks and save money from paying an agency fee.

Home health care is ideal for seniors who feel well and can easily get around but who need occasional doctor visits and help with housekeeping. It is also a preferable choice if a senior needs full time care but does not want to become a resident in a public nursing home. Full time home health care provides the most privacy and personal attention possible. If you are looking for this type of senior assistance, you should always be mindful of the qualifications of workers, as opening one’s home to a stranger could always be a security risk. The best home health care agencies have screened workers who are well qualified in their field.

How We Can Help You

ElderHomeFinders is a company dedicated to helping seniors locate assistance in the southern California area. We inspect assisted living facilities and retirement communities in the area so that our clients will find the perfect home at a price they can afford. Can ElderHomeFinders also help seniors find home health care? Yes. Our company can put you in touch with the right home health care agency, according to your special needs and budget limitation. We can also advise you on the differences between home health care services and assisted living and board and care facilities and which choice would better work for you. Seniors have worked hard all their life and surely deserve the best health care possible – whether in a senior living facility or in their own home.

Making the Choice to Execute a Health Care Power of Attorney and Living Will

Advances in medical technology, recent court rulings and emerging political trends have brought with them a number of life-and-death choices which many have never before considered. The looming prospect of legalized physician-assisted suicide is one such choice which severely erodes the inherent value and dignity of human life. The much-publicized efforts of certain doctors to provide carbon monoxide poisoning or prescribe lethal drugs for their terminally ill patients constitute euthanasia. So may the removal of certain life-sustaining treatments from a patient who is not in a terminal condition. Euthanasia and willful suicide, in any form, are offenses against life; they must be and are rejected by the vast majority of U.S. states.

However, people faced with these difficult dilemmas should be made aware that there are morally-appropriate, life-affirming legal options available to them. One such option, for Catholics and others, can be a “health care power of attorney” and “living will.” South Carolina State law allows you to appoint someone as your agent to make health care decisions for you in the event you lose the ability to decide for yourself. This appointment is executed by means of a “health care power of attorney” form, a model for which can be obtained from your attorney.

A health care power of attorney can be a morally and legally acceptable means of protecting your wishes, values and religious beliefs when faced with a serious illness or debilitating accident. Accordingly, for persons wishing to execute health care powers of attorney, see the following instructions and guidance from the authoritative teachings and traditions of various religious faiths.

The intent of the health care power of attorney law is to allow adults to delegate their God-given, legally-recognized right to make health care decisions to a designated and trusted agent. The law does not intend to encourage or discourage any particular health care treatment. Nor does it legalize or promote euthanasia, suicide or assisted suicide. The health care power of attorney law allows you, or any competent adult, to designate an “agent,” such as a family member or close friend, to make health care decisions for you if you lose the ability to decide for yourself in the future. This is done by completing a health care power of attorney form.

You…

o Have the right to make all of your own health care decisions while capable of doing so. The health care power of attorney only becomes effective when and if you become incapacitated through illness or accident.

o Have the right to challenge your doctor’s determination that you are not capable of making your own medical decisions.

o CAN give special instructions about your medical treatment to your agent and can forbid your agent from making certain treatment decisions. To do so, you simply need to communicate your wishes, beliefs and instructions to your agent. Instructions about any specific treatments or procedures which you desire or do not desire under special conditions can also be written in your health care power of attorney and/or provided in a separate living will.

o Can revoke your health care power of attorney or the appointment of your agent at any time while competent.

o May not designate as your agent an administrator or employee of the hospital, nursing home or mental hygiene facility to which you are admitted, unless they are related by blood, marriage or adoption. 1996

Your agent…

o Can begin making decisions for you only when your doctor determines that you are no longer able to make health care decisions for yourself.

o May make any and all health care decisions for you, including treatments for physical or mental conditions and decisions regarding life-sustaining procedures, unless you limit the power of your agent.

o Will not have authority to make decisions about the artificial provision of nutrition and hydration (nourishment and water through feeding tubes) unless he or she clearly knows that these decisions are in accord with your wishes about those measures.

o Is protected from legal liability when acting in good faith.

o Must base his or her decisions on your wishes or, if your wishes cannot be reasonably ascertained, in your “best interests.” The agent’s decisions will take precedence over the decisions of all other persons, regardless of family relationships.

o May have his or her decision challenged if your family, health care provider or close friend believes the agent is acting in bad faith or is not acting in accord with your wishes, including your religious/moral beliefs, or is not acting in your best interests.

CONSIDERATIONS FOR ALL PEOPLE FROM CHRISTIAN/CATHOLIC TEACHING

The following is an attempt to gather information from the doctrines of Christianity, Catholicism, and Judaism to see if there are any commonalities with regard to health care agencies and living wills. We will see that all three religions have placed a value on dying with dignity and the right of the person to direct how their dying process will occur.

A major tenet of the faith is that it is unethical to take a life. It is not the highest of all values to stay alive, but you cannot affirmatively take steps to kill someone. The church is strongly against euthanasia and suicide. But often if the patient and medical care providers permit nature to take its course without heroic intervention, the person’s life may be taken by God.

This is a narrow path. Taking a life is inappropriate; on the other hand, using heroic medical measures to keep a body biologically functioning would not be appropriate either. Mere biological existence is not considered a value. It is not a sin to allow someone to die peacefully and with dignity. We see death as an evil to be transformed into a victory by faith in God. The difficulty is discussing these issues in abstraction; they must be addressed on a case-by-case basis. The Christian church’s view of life-and-death issues should ideally be reflected in the living will and health-care proxy.

Roman Catholic teaching celebrates life as a gift of a loving God and respects each human life because each is created in the image and likeness of God. It is consistent with Church teaching that each person has a right to make his or her own health care decisions. Further, a person’s family or trusted delegate may have to assume that responsibility for someone who has become incapable of making their decisions. Accordingly, it is morally acceptable to appoint a health care agent by executing a health care power of attorney, provided it conforms to the teachings and traditions of the Catholic faith.

While the health care power of attorney law allows us to designate someone to make health care decisions for us, we must bear in mind that life is a sacred trust over which we have been given stewardship. We have a duty to preserve it, while recognizing that we have no unlimited power over it. Therefore, the Catholic Church encourages us to keep the following considerations in mind if we decide to sign a health care power of attorney.

1. As Christians, we believe that our physical life is sacred but that our ultimate goal is everlasting life with God. We are called to accept death as a part of the human condition. Death need not be avoided at all costs.

2. Suffering is “a fact of human life, and has special significance for the Christian as an opportunity to share in Christ’s redemptive suffering. Nevertheless there is nothing wrong in trying to relieve someone’s suffering as long as this does not interfere with other moral and religious duties. For example, it is permissible in the case of terminal illness to use pain killers which carry the risk of shortening life, so long as the intent is to relieve pain effectively rather than to cause death.”

3. Euthanasia is “an action or omission which of itself or by intention causes death, in order that all suffering may in this way be eliminated.” “[Euthanasia] is an attack on human life which no one has a right to make or request.”

4. “Everyone has the duty to care for his or her own health and to seek necessary medical care from others, but this does not mean that all possible remedies must be used in all circumstances. One is not obliged to use ‘extraordinary’ means – that is, means which offer no reasonable hope of benefit or which involve excessive hardship.

5. No health care agent may be authorized to deny personal services which every patient can rightfully expect, such as appropriate food, water, bed rest, room temperature and hygiene.

6. The patient’s condition, however, may affect the moral obligation of providing food and water when they are being administered artificially. Factors that must be weighed in making this judgment include: the patient’s ability to assimilate the artificially provided nutrition and hydration, the imminence of death and the risks of the procedures for the patient. While medically-administered food and water pose unique questions, especially for patients who are permanently unconscious, decisions about these measures should be guided by a presumption in favor of their use. Food and water must never be withdrawn in order to cause death. They may be withdrawn if they offer no reasonable hope of maintaining life or if they pose excessive risks or burdens.

7. Life-sustaining treatment must be maintained for a pregnant patient if continued treatment may benefit her unborn child.

Such principles and guidelines from the Christian heritage may guide Catholics and others as they strive to make responsible health care decisions and execute health care proxies. They may also guide Catholic health care facilities and providers in deciding when to accept and when to refuse to honor an agent’s decision.

CONSIDERATIONS FOR ALL PEOPLE FROM JEWISH TEACHING

Jewish tradition as understood by Conservative Judaism teaches that life is a blessing and a gift from God. Each human being is valued as created b’tselem elohim, in God’s image. Whatever the level of our physical and mental abilities, whatever the extent of our dependence on others, each person has intrinsic dignity and value in God’s eyes. Judaism values life and respects our bodies as the creation of God. We have the responsibility to care for ourselves and seek medical treatment needed for our recovery-we owe that to ourselves, to our loved ones, and to God.

In accordance with our tradition’s respect for the life God has given us and its consequent bans on murder and suicide, Judaism rejects any form of active euthanasia (“mercy killing”) or assisted suicide. Within these broad guidelines, decisions may be required about which treatment would best promote recovery and would offer the greatest benefit. Accordingly, each patient may face important choices concerning what mode of treatment he or she feels would be both beneficial and tolerable.

The breadth of the Conservative movement and its intellectual vitality have produced two differing positions put forward by Rabbis Avram Israel Reisner and Elliot N. Dorff, both approved by the Conservative movement’s Committee on Jewish Law and Standards. Both positions agree on the value of life and the individual’s responsibility to protect his or her life and seek healing. Both agree on a large area of autonomy in which a patient can make decisions about treatment when risk or uncertainty is involved. Both would allow terminally ill patients to rule out certain treatment options (such as those with significant side effects), to forgo mechanical life support, and to choose hospice care as a treatment option.

Nevertheless, important differences between the two positions may be found regarding both theoretical commitments and practical applications. Rabbi Reisner affirms the supreme value of protecting all life. Even the most difficult life and that of the shortest duration is yet God given, purposeful, and ours to nurture and protect. All nutrition, hydration, and medication should be provided whenever these are understood to be effective measures for sustaining life. Some medical interventions, however, do not sustain life so much as they prolong the dying process. These interventions are not required. The distinction may best be judged by our intent. We may choose to avoid treatments causing us fear or entailing risk or pain, in the interest of the remaining moments of life. We may not avoid treatment in an attempt to speed an escape into death.

Rabbi Dorff finds basis in Jewish law to grant greater latitude to the patient who wishes to reject life-sustaining measures. He sees a life under the siege of a terminal illness as an impaired life. In such a circumstance, a patient might be justified in deciding that a treatment that extends life without hope for cure would not benefit him or her, and may be forgone.

Both Rabbis Dorff and Reisner agree that advance directives should only be used to indicate preferences within the range allowed by Jewish law. They disagree as to what those acceptable ranges are. In completing a health care power of attorney and living will, it is recommended that you consult with your rabbi to discuss the values and norms of Jewish ethics and halakhah. You also may wish to talk with your physician to learn about the medical significance of your choices, in particular any decisions your physician feels are likely to be faced in light of your medical circumstances. You may find it helpful to discuss these concerns with family members.

CONCLUSION

In the end, the decision to execute a health care power of attorney and living will is a uniquely individual choice. Every person has their own set of principles by which they will live, and by which they will eventually pass on. When executing these documents, it is wise to examine how these documents assimilate into your worldview and religious beliefs. While the topic of death and dying is an uncomfortable one, you are well advised to discuss this decision with your family members, friends, and members and leaders of your religious community that you respect. Having done this, you can rest easy knowing that you have made a good decision with regard to your health care power of attorney and last will, and that your last wishes will be respected and undertaken.

Who’s Paying For Health Care?

America spent 17.3% of its gross domestic product on health care in 2009 (1). If you break that down on an individual level, we spend $7,129 per person each year on health care…more than any other country in the world (2). With 17 cents of every dollar Americans spent keeping our country healthy, it’s no wonder the government is determined to reform the system. Despite the overwhelming attention health care is getting in the media, we know very little about where that money comes from or how it makes its way into the system (and rightfully so…the way we pay for health care is insanely complex, to say the least). This convoluted system is the unfortunate result of a series of programs that attempt to control spending layered on top of one another. What follows is a systematic attempt to peel away those layers, helping you become an informed health care consumer and an incontrovertible debater when discussing “Health Care Reform.”

Who’s paying the bill?

The “bill payers” fall into three distinct buckets: individuals paying out-of-pocket, private insurance companies, and the government. We can look at these payors in two different ways: 1) How much do they pay and 2) How many people do they pay for?

The majority of individuals in America are insured by private insurance companies via their employers, followed second by the government. These two sources of payment combined account for close to 80% of the funding for health care. The “Out-of-Pocket” payers fall into the uninsured as they have chosen to carry the risk of medical expense independently. When we look at the amount of money each of these groups spends on health care annually, the pie shifts dramatically.

The government currently pays for 46% of national health care expenditures. How is that possible? This will make much more sense when we examine each of the payors individually.

Understanding the Payors

Out-of-Pocket

A select portion of the population chooses to carry the risk of medical expenses themselves rather than buying into an insurance plan. This group tends to be younger and healthier than insured patients and, as such, accesses medical care much less frequently. Because this group has to pay for all incurred costs, they also tend to be much more discriminating in how they access the system. The result is that patients (now more appropriately termed “consumers”) comparison shop for tests and elective procedures and wait longer before seeking medical attention. The payment method for this group is simple: the doctors and hospitals charge set fees for their services and the patient pays that amount directly to the doctor/hospital.

Private Insurance

This is where the whole system gets a lot more complicated. Private insurance is purchased either individually or is provided by employers (most people get it through their employer as we mentioned). When it comes to private insurance, there are two main types: Fee-for-Service insurers and Managed Care insurers. These two groups approach paying for care very differently.

Fee-for-Service:

This group makes it relatively simple (believe it or not). The employer or individual buys a health plan from a private insurance company with a defined set of benefits. This benefit package will also have what is called a deductible (an amount the patient/individual must pay for their health care services before their insurance pays anything). Once the deductible amount is met, the health plan pays the fees for services provided throughout the health care system. Often, they will pay a maximum fee for a service (say $100 for an x-ray). The plan will require the individual to pay a copayment (a sharing of the cost between the health plan and the individual). A typical industry standard is an 80/20 split of the payment, so in the case of the $100 x-ray, the health plan would pay $80 and the patient would pay $20…remember those annoying medical bills stating your insurance did not cover all the charges? This is where they come from. Another downside of this model is that health care providers are both financially incentivized and legally bound to perform more tests and procedures as they are paid additional fees for each of these or are held legally accountable for not ordering the tests when things go wrong (called “CYA or “Cover You’re A**” medicine). If ordering more tests provided you with more legal protection and more compensation, wouldn’t you order anything justifiable? Can we say misalignment of incentives?

Managed Care:

Now it gets crazy. Managed care insurers pay for care while also “managing” the care they pay for (very clever name, right). Managed care is defined as “a set of techniques used by or on behalf of purchasers of health care benefits to manage health care costs by influencing patient care decision making through case-by-case assessments of the appropriateness of care prior to its provision” (2). Yep, insurers make medical decisions on your behalf (sound as scary to you as it does to us?). The original idea was driven by a desire by employers, insurance companies, and the public to control soaring health care costs. Doesn’t seem to be working quite yet. Managed care groups either provide medical care directly or contract with a select group of health care providers. These insurers are further subdivided based on their own personal management styles. You may be familiar with many of these sub-types as you’ve had to choose between then when selecting your insurance.

  • Preferred Provider Organization (PPO) / Exclusive Provider Organization (EPO):This is the closet managed care gets to the Fee-for-Service model with many of the same characteristics as a Fee-for-Service plan like deductibles and copayments. PPO’s & EPO’s contract with a set list of providers (we’re all familiar with these lists) with whom they have negotiated set (read discounted) fees for care. Yes, individual doctors have to charge less for their services if they want to see patients with these insurance plans. An EPO has a smaller and more strictly regulated list of physicians than a PPO but are otherwise the same. PPO’s control costs by requiring preauthorization for many services and second opinions for major procedures. All of this aside, many consumers feel that they have the greatest amount of autonomy and flexibility with PPO’s.
  • Health Management Organization (HMO): HMO’s combine insurance with health care delivery. This model will not have deductibles but will have copayments. In an HMO, the organization hires doctors to provide care and either builds its own hospital or contracts for the services of a hospital within the community. In this model the doctor works for the insurance provider directly (aka a Staff Model HMO). Kaiser Permanente is an example of a very large HMO that we’ve heard mentioned frequently during the recent debates. Since the company paying the bill is also providing the care, HMO’s heavily emphasize preventive medicine and primary care (enter the Kaiser “Thrive” campaign). The healthier you are, the more money the HMO saves. The HMO’s emphasis on keeping patients healthy is commendable as this is the only model to do so, however, with complex, lifelong, or advanced diseases, they are incentivized to provide the minimum amount of care necessary to reduce costs. It is with these conditions that we hear the horror stories of insufficient care. This being said, physicians in HMO settings continue to practice medicine as they feel is needed to best care for their patients despite the incentives to reduce costs inherent in the system (recall that physicians are often salaried in HMO’s and have no incentive to order more or less tests).

The Government

The U.S. Government pays for health care in a variety of ways depending on whom they are paying for. The government, through a number of different programs, provides insurance to individuals over 65 years of age, people of any age with permanent kidney failure, certain disabled people under 65, the military, military veterans, federal employees, children of low-income families, and, most interestingly, prisoners. It also has the same characteristics as a Fee-for-Service plan, with deductibles and copayments. As you would imagine, the majority of these populations are very expensive to cover medically. While the government only insures 28% of the American population, they are paying for 46% of all care provided. The populations covered by the government are amongst the sickest and most medically needy in America resulting in this discrepancy between number of individuals insured and cost of care.

The largest and most well-known government programs are Medicare and Medicaid. Let’s take a look at these individually:

Medicare:

The Medicare program currently covers 42.5 million Americans. To qualify for Medicare you must meet one of the following criteria:

  • Over 65 years of age
  • Permanent kidney failure
  • Meet certain disability requirements

So you meet the criteria…what do you get? Medicare comes in 4 parts (Part A-D), some of which are free and some of which you have to pay for. You’ve probably heard of the various parts over the years thanks to CNN (remember the commotion about the Part D drug benefits during the Bush administration?) but we’ll give you a quick refresher just in case.

  • Part A (Hospital Insurance): This part of Medicare is free and covers any inpatient and outpatient hospital care the patient may need (only for a set number of days, however, with the added bonus of copayments and deductibles…apparently there really is no such thing as a free lunch).
  • Part B (Medical Insurance): This part, which you must purchase, covers physicians’ services, and selected other health care services and supplies that are not covered by Part A. What does it cost? The Part B premium for 2009 ranged from $96.40 to $308.30 per month depending on your household income.
  • Part C (Managed Care): This part, called Medicare Advantage, is a private insurance plan that provides all of the coverage provided in Parts A and B and must cover medically necessary services. Part C replaces Parts A & B. All private insurers that want to provide Part C coverage must meet certain criteria set forth by the government. Your care will also be managed much like the HMO plans previously discussed.
  • Part D (Prescription Drug Plans): Part D covers prescription drugs and costs $20 to $40 per month for those who chose to enroll.

Ok, now how does Medicare pay for everything? Hospitals are paid predetermined amounts of money per admission or per outpatient procedure for services provided to Medicare patients. These predetermined amounts are based upon over 470 diagnosis-related groups (DRGs) or Ambulatory Payment Classifications (APC’s) rather than the actual cost of the care rendered (interesting way to peg hospital reimbursement…especially when the Harvard economist who developed the DRG system openly disagrees with its use for this purpose). The cherry on top of the irrational reimbursement system is that the amount of money assigned to each DRG is not the same for each hospital. Totally logical (can you sense our sarcasm?). The figure is based on a formula that takes into account the type of service, the type of hospital, and the location of the hospital. This may sound logical but often times this system fails.

Medicaid:

Medicaid is a jointly funded (funded by both federal and state governments) health insurance program for low-income families. Eligibility rules vary from state to state and factors in age, pregnancy, disability, income and resources. Poverty alone does not qualify an individual for Medicaid (there is currently no government-provided insurance for the American poor…despite the fact that almost all first world countries have such a system…enter the current health care debate) but is a significant factor in Medicaid eligibility. Each state operates its own Medicaid program but must adhere to certain federal guidelines to receive matching federal funds (you may be familiar with California’s MediCal, Massachusetts’ MassHealth and Oregon’s Oregon Health Plan due to their recent media coverage). Medicaid payments currently assist nearly 60 percent of all nursing home residents and about 37 percent of all childbirths in the United States.

How are the bills paid?

We now understand who is paying the bill but we have yet to cover how those bills are paid. There are two broad divisions of arrangements for paying for and delivering health care: fee-for-service care and prepaid care.

Fee-for-Service

As we mentioned briefly while discussing PPO’s, in a fee-for-service structure, consumers select a provider, receive care (a.k.a. “service”) from the provider, and incur expenses (a.k.a. “a fee”) for the care. Deductibles and copayments are also required as previously discussed. Pretty simple. The physician is then reimbursed for their services in part by the insurer (i.e. a private insurance company or the government) and in part by the patient, who is responsible for the balance unpaid by the insurer (the return of the unanticipated medical bill despite your overpriced insurance). Again, the major downfall of the fee-for-service approach is that medical professionals are incentivized to provide services (and by this we mean any and all services they can legally request or must request to be protected legally), some of which may be nonessential, to increase their revenue and/or “C.Y.A.” (revenue that has steadily decreased as insurance companies continue to lower the amount they pay medical professionals for their services).

Fee Schedule

A fee schedule operates in the same way that Fee-for-Service does with one exception: instead of using the “usual, customary, and reasonable” amount to reimburse medical professionals, states set fees to be paid for specific procedures and services. The reimbursement is very low ($.10-.15 on the dollar) and barely covers the actual direct cost of providing the care. Physicians may chose to opt into the plan or not (starting to see why a doctor might not be so excited about this plan?). Would you sign up to be paid 10 cents for every dollar you charged for your work? Try the insurance reimbursement approach next time you go out to eat. We’ll come bail you out of the Big House if things go awry. What happens when the insurance system does this? You get the Wal-Mart approach to medicine (high volume, low quality). Not the kind of heath care we recommend.

Pre-Paid

Pre-paid health care? Like a phone card? Not exactly–but close. The pre-paid system evolved out of the insurance company’s desire to share its risk ( a.k.a “pooled risk”) with health care providers. Essentially, they wanted the doctors to have some skin in the game. In the pre-paid system, insurers make arrangements with health care providers to provide agreed-upon covered health care services to a given population of consumers for a (usually discounted) set price-the per-person premium fee-over a particular time period. What does that mean? It means that Dr. Bob gets paid, say, $30 per month to take care of Joe the Plumber including his blood work and x-rays. If Dr. Bob spends less than that caring for Joe, he makes money. If Joe is sick every month and needs lots of tests and follow-up visits, Dr. Bob could lose money caring for Joe. The set monthly fee paid to the doctor for taking care of a patient is set up on a per-member, per-month (PMPM) rate called a “capitated fee.” The provider receives the capitated fee per enrollee regardless of whether the enrollee uses health care services and regardless of the quality of services provided (not a good thing in our book). Theoretically, providers should become more prudent and subsequently provide services in a more cost effective manner because they are bearing some of the risk. Often times, however, less care is provided than is needed in hopes of saving money and increasing profits. In addition, physicians are incentivized to cherry pick the youngest and healthiest patients because these patients typically require less care (i.e. they are cheaper to keep healthy). We like that doctors are encouraged to keep patients healthy but we have to worry about the ways in which they are being encouraged to reduce costs (as little care as possible?). Again, the incentive system falls short and encourages providers to act unethically.

The Take Home Message:

Health Care in the United States today is complex and messy at best. The layers on top of layers of failed attempts to correct the system continue to encourage the wrong behavior in both patients (out of fear of medical bills) and providers (out of fear of bankruptcy). We have yet to provide every American citizen with medical care (something that goes without saying in most 1st World countries…even Cuba has it!). We spend more money on caring for our citizens than any country in the world yet we continue to lag behind in terms of national health outcomes. We think it’s safe to say that we’re not getting the best bang for our buck. The ultimate solution? We wish we knew. Only time will tell where the system goes from here. Our goal: to help you better understand the system as it stands today in hopes of developing a more effective, efficient, and comprehensive system for the future. Are you with us?

References

1. Levey N. Soaring cost of healthcare sets a record. Los Angeles Times. Feb 4 2010.

2. McKenzie J, Pinger R, Kotecki J. An Introduction to Community Health, 6th Ed. Jones and Bartlett Publishers. 2008.

3. Bodenheimer TS, Grumbach K. Understanding Health Policy. 5th Ed. Lange Medical Books/McGraw-Hill. 2002.

4. Kaiser Family Foundation. “EXPLAINING HEALTH CARE REFORM: How Do Health Care Costs Vary By Region?” Brief #8030. December 2009.