The Cost of Healthcare

Today was the first day of class.  The only class I had was one I thought might be boring, but it turned out to be pretty interesting and I think I will get a lot out of it.  It's about healthcare, our current and future system, other systems in the world, economics, and related topics.  The instructor made the assumption that we've all had at least a basic economics course (which I haven't), so hopefully that won't hinder me.  I guess if I don't understand something, I'll have to find a friend who knows something about Econ.  I think I have one of those…

An interesting point was brought up in class today that related to an experience I had recently at work.  We discussed the relationship between the patient, the provider, and the payer in our current healthcare system.  The patient doesn't pay nor choose services; the provider doesn't pay nor use services; the payer doesn't choose nor use services.  The analogy was made to buying a cup of coffee.  If you had "insurance" that would cover a cup of coffee, you'd probably be more likely to buy more often and more extravagant (expensive) drinks, especially if the copayment was similar or the same for differently-priced options.  After all, you're not the one paying for it…  I think this is one problem that contributes to our high cost of healthcare.  When people aren't asked to pay for things more than a minimal copayment, they're way more likely to choose more expensive treatments that may only work slightly better or sometimes not at all. 

One man that is a regular customer was picking up his wife's prescription for a drug that had been recently switched from a shorter acting form (taken twice daily) to a long-acting form (taken once daily).  His copayment was the same for the two products, but he noticed on his receipt where it lists the "usual and customary" amount, which relates to the cost of the drug to his insurance company, the long-acting drug was considerably more expensive (somewhere around 10-fold).  Even though his cost would be the same, he asked us to switch back to the short-acting form.  Having taken both in the past, his wife didn't notice any difference therapeutically and he said he'd rather not get something that is going to cost his insurance company ten times as much if it only means having to take it twice a day. 

That was a shocking interaction, as that line of thinking is so rare.  Most people don't care what their drugs cost to their insurance company, as long as their copay doesn't increase.  Maybe if more people thought like this particular man, insurance premiums and healthcare costs wouldn't be as astronomical as they are.  It's amazing how many complaints we got with DSHS started charging a $1.10 copay for drugs that were previously free to patients (drugs which may cost hundreds of dollars) or how much people complain about a ten dollar increase in copay when the drug they switched to costs way more than the alternative.  An example is minocycline (used commonly for acne in teenagers) vs. its extended-release form, Solodyn.  From what I've heard (I haven't read studies), there isn't much of a difference in efficacy.  The big difference is that you don't have to take Solodyn as often.  But get ready for this… the average wholesale price for Solodyn is more than $28/pill where we get generic minocycline for less than $0.20/pill.  And patients complain when their copay is $10 more for a month's supply of Solodyn.  So what if it doesn't work quite as well.  Is that $25+ difference in the price of each pill really worth the convenience of less-frequent dosing?

Another example is when doctors start patients on a nasal steroid for allergies.  Two common choices are Nasonex (not generic with a ~$105 wholesale price) and Flonase (generic wholesale price ~$20).  Nasonex might work a little better for some people, and many doctors will try to start people on that, but why not start on Flonase and see if that works well enough for that patient.  If the insurance company actually does pay for it (many don't), it costs much less for all parties involved to try the cheaper one first, and it will likely work just fine for most people.

When you think more broadly, past the amount you're paying and more about the true costs of things and who is actually paying for it, you begin to realize why our healthcare costs so much.  It also makes you lean more towards the insurance companies in some situations when they say they're not going to pay for some incredibly expensive treatment that isn't much better than the standard.  Sure, if people want to pay the difference to get the state-of-the-art treatment, that's fine, but they shouldn't expect their insurance (especially government-subsidized or -sponsored plans) to do so.

Without economics in my background and not having much in-depth knowledge about the healthcare system, I think this class will bring up a lot more topics that will help me relate to, work in, and understand the healthcare system as well as the current healthcare reform.  I hardly get involved when politics come up, but this is one topic that I actually do care about as it relates to my future career and the well-being of myself, friends, and family.