Tuesday, September 3, 2013

Module 2 assignment for my students (and for other readers)

The usual notion regarding market competition is that in the long run it will result in the efficient production of goods and services as "better" companies win out over "not so good" companies in the marketplace. While some scholars argue that competition is the solution to rising costs and the need for higher quality in medical care, others say, "no," medical care is different.

A medicine that I take daily became available in a generic form recently. I use the pharmacy at Walmart on Ledo Road. They informed me that they were out of the generic form and that I had the choice of waiting a few days for the generic, going across town to the Walmart on the East side for the generic, or getting the version that is not generic for an out-of-pocket cost of $30, compared to out-of-pocket for $10 for the generic version. I asked what the non-generic form would cost my insurance company for 30 days. The answer was $186. I drove across town to get the generic in order to save both myself and my insurance company some money.

Here are my questions of you. Was my behavior rational? How many people (as patients) would have cared in the least what a prescription costs their insurance company? Why do we have the complicated system at all? Why not just charge patients the cost of things and not bother with government agencies and insurance companies at all? What would you have done in my situation? How "should" people make economic decisions about medical care? Based on your reading of chapter 2 of our textbook by Marcinko and Hetico do you think competition alone is the solution to the quality crisis and rising costs of medical care?

I am looking for at least one solid paragraph as a reply to this post. You don't have to answer every part of the question. Please remember to include a link to a relevant Web page or YouTube video.

23 comments:

  1. Yes, I do think your behavior was rational. I say this because you were given choices. You picked what was best for you at the present time. You needed your meds, you drove a little further to get your prescription, but no extra money was spent. I would have done the same thing especially if I really needed my medicine. Sadly to say people make such economic decisions more so now than ever. I had a patient today who is on a fixed income of around $1600 a month. He is unable to work. He stated at the beginning of the month he tries to balance his check with rent, gas, food, utilities and medication. Unfortunately he stated sometimes he has to choose between his prescription and/or food. I personally wouldn't be able to make ends meet let alone purchase my needed anti-seizure medication. I would choose to eat more than likely or see can I purchase some of the pills.




    http://youtu.be/bjwd0-FFk-A

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  2. V. Stephens

    I do feel and believe that your behavior was rational. Had I been in the same situation, I would have done the very same thing. I say that because one way or the other someone is going to foot the cost if everyone goes with the non-generic. No there are not a lot of people would have considered the insurance company and depending on where the person lives, they would not have considered driving to the other side of time because they would have been complaining about the gas price and felt as though it would have equal out to just getting the non-generic. But not taking into account next year there may be a price increase. content.healthaffairs.org/content/20/5/43.full
    Competition has brought about low cost in computers, TVs, and some vehicles but I do not believe that it will bring about a decrease in healthcare cost. As long as there are republicans, they will always find a way to keep healthcare high. Romey and Ryan has purpose a plan that beginning in 2023 that the federal government will give retirees a payment to choose Medicare or private plans. Who do we think are going to benefit from this, surely not the poor and maybe some middle class either? Although in reading and researching, some states have benefited from the competition and have seen some dramatic drops in their healthcare premiums I still believe it is momentary. Some companies believe that more competition, lower the price. But when it comes to someone health is this going to become like going to the grocery store and shopping for the lower price or the generic products? If prices do become lower due to the competition does that mean I am going to have to settle for the less experience or me not receiving the best care possible? As they say, one get what they pay for. www.dispatch.com/.../07/05/competition-will-lower-health-costs.html

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    1. Thank you. I don't think Republicans are the cause of the rising costs of medical care. Republicans believe Democrats are. :-) I could not view one of your links. It may be best to put links on their own line of text. - bjn

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  4. I feel that your behavior was very rational. Recently I was placed in a situation similar to this one. My youngest daughter had a check-up appointment with her PCP. Because of a prolonged cough, chest and sinus x-rays were done. Come to find out one of her lungs are beginning to swell. To make a long story short, she was prescribed an antibiotic as well as a steroid in the form as an inhalant. On top of the stress of her condition, when I arrived at Walgreen’s pharmacy I was informed that my co-pays were $317 for the inhalant and $84 for her antibiotic. Since my insurance will only pay a flat rate towards prescriptions per month, I was concerned with the price of the medication more than how much the insurance would have to pay. Although the system is indeed a complicated one, personally I feel that it is worth having. Without it, I would have been stuck paying an $800 persecution bill verses about $400. Considering my situation I would’ve done the exact same thing you did, more to benefit me than the insurance company though. I think that if people made better economic decisions pertaining to healthcare that would in turn drive down the costs of premiums, possibly. I am thinking in the lines of, the less the insurance companies have to pay, because we are searching for affordable healthcare, the less we would be required to pay for premiums and co-pays. I think that competition would be a long-term solution to the quality and costs of healthcare. More choices will force healthcare providers to lower costs and improve their quality of care because we as consumers will have something to compare them to. We would no longer be in the healthcare situation as we are today in Southwest Georgia.
    www.calhealthplans.org/pdfs/HCC07_TheRisingCostHCCauses.pdf

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    1. Thank you for sharing. I hope your daughter is well now. - bjn

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  5. Y Love
    Being a mother of three I can truly relate to this decision you made. I find myself budgeting and driving to the other side of town for a cheaper price for various items more now than ever. While doing such debating about time, gas versus the cheaper items that are much needed. I found myself driving to the other side of town for a better bargain. With that being said, I do think that was a very rational decision. But I do not think people with good insurance care about the amount it will cost the company as long as their medicine is covered and they are not paying with out of pocket cash. I think the decision that you made was normal for people who have to pay for it themselves.
    http://expertchoice.com/rational-decision-making-is-subjective-decision-making/

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    1. I think your choice of a link is very good. I would hope that others would realize that collective behavior ultimately drives what individuals face. But perhaps that is being an idealist. So be it. :-) No one here has said that my behavior was irrational. But from an individual perspective, it may have been. - bjn

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  6. Yes, I do think your decision was rational. In your situation of course the price of gas would have crossed my mind but if I really need the medication I would have drove across town. I had a similar situation in which I got sick over the weekend and I chose to wait until the following Monday to get my prescription filled at Phoebe Pharmacy because it was a whole lot cheaper. Most people would have not cared about the prescription cost their insurance company because some feel like their monthly premiums are expensive already so they feel paying it is good enough.
    Yes we have a complicated system. Research shows that prescription drug prices in the United States are the highest in the world (Wikipedia, 2013). Some Americans are purchasing their medications in Canada. Although, pharmaceutical companies feel that the prices they set are necessary in order to continue to fund research.
    The current economic crisis is affecting everyone overall, it’s forcing many to forgo basic needs such as food and housing. Everyone is feeling strain from the increase cost of healthcare and other basic needs. Choosing to seek medical care and not think about other necessities can be stressful for anyone. I read this article about the Samaritan Clinic location in Albany, GA a lady visited the clinic explain her recent problems and financial situation. I can’t remember the type of cancer she was diagnosed with but I believe the mass that was removed was twenty-five pounds. What I enjoyed most about the article was the doctor that treated her statement. He said “don’t worry about the cost of your medical expenses; my purpose is to allow God to use me to provide healing to you” If everyone in a political or healthcare setting could read that article I would hope that they could put aside their differences and put what matters the most first and that’s the providing quality of care to patients.

    www.youtube.com Empathy:The Human Connection to Patient Care
    www.wikipedia.com (Pharmaceutical)

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  7. Yes, the decision you made was rational to me. Because you decided it was more rational to drive across town to get generic medicine, which to you was a satisfaction decision you made in order to save your insurance provider. So you decided it was a better route and cost efficient to drive across town to get the generic than to pay the upscale price. I personally think sometime we need to think outside of the box to save money. I personally would have taken the same route in order to help me save money. I think if more people thought rational and did their research whether for a CAT scan, prescription, or stress test they would see they can save so much money instead of going with the first price we hear. I have a co-worker that is an extreme couponist, many people at work think that it takes more gas for her to travel distance to get certain deals and double her coupons. But to her it’s a rational behavior and in the end she saves more than we do. She told us that the gas doesn’t hurt her because with the amount of money she have saved makes it more efficient to afford her gas. http://healthinsurance.about.com/od/savingmoneyonhealthcare/tp/4-unconventional-ways-to-save-money-on-healthcare.htm

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    1. An extreme couponist. That is new to me. :-) Thank you. - bjn

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  8. If searching for the best possible price for your medication that you will be paying with your hard earned money is irrational, then sir, that is what you are. In all seriousness, you merely did the same thing that all consumers do. In this regard, one can see the power of the market place at work. I would have done the same thing, because it is economically correct and it is innate in us to search for the best deal no matter the product. However, while the notion of "better" companies win out over "not so good" companies is applicable in this scenario it would be hard to apply this when looking at something more complex such as where to go get healthcare. This would typically be based on the insurance a patient has and the number of hospitals available. If a person is in a one hospital town, his or her only alternative is to drive to the next nearest hospital or perhaps visit a clinic (and even the clinic would be limited to what it could do for a patient). The same would apply to a small town that may have only one doctor (think Mayberry). Kenneth Arrow states, “healthcare is inherently different from other competitive industries” (sDayaratna, 2013), but in my opinion it does have some similarities. We do have choices in insurance providers, medicines, amongst other things. I believe the reason you are not seeing patients being charged the cost of things is due to an underlying business philosophy of making profit. Because insurers are paid a fixed percentage of the claims they administer, they have no incentive to hold down costs. Worse than that, they have not incentives to do their jobs with even a modicum of competence (Pfeffer, 2013). Citizens and consumers can begin by making economically sound purchases, thus keeping the “market” in-flux. We could also make petitions for change to our congressmen and representatives.
    Citations:
    Pfeffer, J. (2013). The reason health care is so expensive: insurance companies. Retrieved from http://www.businessweek.com/articles/2013-04-10/the-reason-health-care-is-so-expensive-insurance-companies
    http://www.heritage.org/research/reports/2013/08/competitive-markets-in-health-care-the-next-revolution

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    1. Thank you. But I drove across town primarily to save BCBS some money. It probably was not worth the $20 difference in what the non-generic would have cost me at the Ledo location. I think many people really don't care what it costs their insurance company. I do, I guess, because I am a systems thinker, which in this case may be irrational. - bjn

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  9. I feel that your decision was very rational. I do feel that your education and knowledge of the health care field was very instrumental in your decision making. To know how the system works in terms of the impact that your decision makes on the overall system that provides you with healthcare and how those cost ultimately affects the cost of your premiums. I strongly feel that with proper education to all policy holders, more informed decisions will be made that would create a huge,favorable,improvement in the cost of health care.
    Why do we have such a complicated system? Greed; in many instances someone is making the rules without a thorough understanding of how it largely affects so many people. Rules and regulations are many times made to govern the majority, the small percentage of the ones that are unaffected are mostly the ones that are making the laws; the affluent.
    No, competition alone is not the solution to the quality crisis and rising costs of medical care.

    According to Ron Paul,he feels that government meddling in health care delivery is to blame for healthcare costs having skyrocketed over the past few decades. Paul recalls that in the early 1960s, patients typically paid for basic medical services with cash, as there was almost no government payment for care, and as those Americans who had private insurance were typically only covered for hospitalization and emergency care. He says, providers almost always charged minimal fees for services in order to improve the chance of being paid. He argues that the emergence of government as a payer for healthcare services in the form of Medicare and Medicaid, along with government policies of the 1970s led to the expansion of private insurance to cover routine medical services in addition to hospitalization and emergency care, and which required most employers to provide health insurance for their employees, interfered with the traditional physician-patient relationship.
    The incentive for healthcare providers and patients to keep costs as low as possible was lost. He says that now providers always charge the maximal fees for services, since the government or insurance company can be counted on to pay the bills.
    http://www.youtube.com/watch?v=KuPqwAMGZg8

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  10. I do feel that your decision was rational when stating that you drove across town to save money on your medication. However, I don’t necessarily feel that saving my insurance company some money would have been motivation to for me to want to make adjustments to my routine, considering how insurance companies are one of the shadiest businesses. Furthermore, I do sometimes understand the strategic policies and procedures that are implemented by insurance companies which is why they are so profitable. Insurance companies have this complicated system to simply attempt to keep cost down. Any insurance plan's prescription drug coverage includes a formulary, or a preferred drug list. It contains the medications your plan prefers and that can usually be prescribed without any prior authorization. This list is created to keep the drug costs down for the insurance company while still offering you a competitive choice of medications, which is why generic prescriptions are encouraged.
    If patients are charged the cost of things and didn’t bother with government agencies and insurance companies, patients couldn’t simply afford it or either wouldn’t have access to it because aren’t knowledgeable of those generic brand options. Brand name drugs are simply just too expensive, in most cases, because of the overhead that’s used in production. Generic drugs are not as accessible to consumers because of marketing.
    People should make economic decisions about medical care by simply doing some research on what policies, premiums, and programs are best suited for your medical needs. As well as what has helped me out in the past is just to simply ask my doctors what tests and/or procedures are necessary, how much does it costs, etc. This actually helped me saved hundreds of dollars in one visit; as patients we must make ourselves knowledgeable.
    http://tlc.howstuffworks.com/family.htm

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    1. I think perhaps you paint with too broad a brush when you characterize insurance companies. They do provide a needed service in the existing system. I tried to view the link you provided but it is no longer working. I am not sure that the non-generics are expensive because of the overhead in production. The usual explanation is that the very high costs and risks of drug discovery and getting new drugs through regulatory processes is the reason why the pharmaceutical companies are allowed to charge high prices before drugs become generic. - bjn

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    2. Yes, I just tried that link as well, and I'm not sure why it isn't working. However, I don't understand why the usual reason for non-generic drugs to cost more than generic drugs are due to the risk of drug discovery and getting new drugs through regulatory processes because generic drugs, in most cases are not identical to the non-generic drugs; there are usually added/missing ingredients/components. So I would assume because of this fact that generic drugs too have to go through drug discovery and regulatory processes. :) Just a thought.

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  11. I feel that your decision to drive across town was perfectly rational but the reality of individuals caring about how much cost is charged to their insurance company is low. Most individuals are simply unaware of different generic brands or informed about how much cost is involved because the medical system is so complicated and there is little effort to explain cost to people. On the other hand, some individuals don’t care because they are probably paying so much money a month on insurance anyway. Yet, because of your knowledge, you were able to use the system in a way to save some money. To me it seems that we are placed in a scenario where we have to ask all the questions and make all the moves on our own. I feel that the system is complicated to use people to over spend on medication and services that can be cheaper and this mainly due to profit. Thus, there is a continuous struggle between what your insurance company expects of you and what you actually know because insurance companies want to limit cost. If I was placed in your situation I would have probably did the same thing because we have to research the information to become knowledgeable about our health. Health should be top priority for everyone so that the U.S. will consider changing different aspect that decides if we’re able to maintain or not. The U.S. health care system has registered unsatisfactory performance in both costs and quality over many years. While this might be expected in a state-controlled sector, it is nearly unimaginable in a competitive market and in the United States, health care is largely private and subject to more competition than virtually anyplace else in the world. Therefore, I feel that competition alone is not the solution to the quality crisis; we must first learn to care for human beings.
    http://healthandadministration.blogspot.com/2013/09/module-2-assignment-for-my-students-and.html#comment-form

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    1. Please link to some external URL, not back to this particular blog site. One of the things I learned in this process is that the "same" generic drug is manufactured by multiple companies. I am not entire satisfied that any generic is the exact equivalent of the original. I would have rather gotten the "original," even if it costs me $20 more per month. But I realize that if "everyone" did that, it would cost the insurance companies even more money.

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  12. I believe that you was rational in your decision making towards cost-effectiveness in purchasing the medical prescription generic brand. I also believe I would have chosen the same course of action. Since I do not have a network formed to consider additional information such as travel-pay and co-pay it appears that the benefits including time are very rational.The matter of my insurance company engagement in this ordeal is minute or of little importance because having my medicine in a timely fashion is more important than procrastination. I think that the average individual would use the same rational thinking if faced with the same set of circumstances.

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