Bernie Sanders has called for “Medicare for All”. Joe Biden rolled out this week a plan, and argued that “Medicare for All” would end Obamacare – which is what Donald Trump wants. Pete Buttigieg suggests “Medicare for all – who want it”. Kamala Harris wants a single payer system. Kirsten Gillebrand wants a transition period. And, in the first Democratic presidential debate, there was a clear divide between who would raise their hands to eliminate private insurance.
How to provide and pay for health care is one of the most central points of contention, debate and difference between the Democratic candidates for president. It is one of the most salient points of difference and contention between the Democratic and Republican parties as a whole. And it is one of the major issues of genuine and shared interests to all who live in our country. And has been so for at least half a century.
Just about anything that can be said about health care has been said, however everything said has been said in fragmented, multiple, diverse, and separate ways. This issue continues as perhaps the greatest key flash point in our national dialogue and division. The arguments remain every bit as heated as they were in 2010 when the ACA was being debated, as they were in 2001 when Hillary embarked on her famously ill fated attempt to reconsider our health care delivery system, and, truth be known, as they were 60 years ago when Medicare was first being proposed and derided. But with all the heat, I am not sure we have one candle power more light.
I am a physician who has provided front line care to patients for forty years, four decades when concern over health care costs and delivery have done nothing but soar. I have also been an interested witness of the system. From time to time I have tried to comment, albeit with little success. My first attempt at a cost containment article, (unpublished, not for lack of trying) was written in the early 1980s. My first play featured, perhaps of minimal interest to the audience, admittedly too much talk on the subject. (One LA Times reviewer called it ‘more like a surprisingly candid panel discussion than a play’) At the time I first tried to comment it was feared that costs could reach 100 billion a year. Now over two trillion and climbing.
With now half a century of arguement, it is not clear to me that the issue has been presented broadly enough, or comprehensively enough, for the majority of our citizenry to really come together and find common ground. We still lack the common language necessary to weigh and assess the issues and arguments. We still do not articulate what really separates either the voices in the democratic debates, or the difference between the general left and right about the issue. Shibboleths like “socialized medicine”, and “health care for all” get thrown around at each other, continuing to generate anger and resentment, but not enough understanding. The heat, again, generates little light.
We still have left well over a year before the 2020 elections. It is my hope that in that time, through the multiple debates, discussions and diatribes which will ensue, we can find a way to understand together enough of the basic issues to make some reasonable and common analysis of why we are were we are and what are some options going forward.
I hope to reframe a view of the basic issues behind the unsustainable growth of health care costs. I also hope to make the point that the calls to allow so called “market forces” to regulate health care costs as based on a false assumption, and that health costs can never be subject to market forces. I hope to show how any large restructuring process, such as the ACA was, and such as are being proposed now, while not perfect, have roots in the purpose of addressing those issues. I hope to show where other efforts will continue to be needed if we are to succeed in bringing both costs, service and their balance into line.
- Let me propose that for the moment we entertain the following premises:
1. There is more than enough blame, lack of communication, partisan bickering, special interest, and lack of understanding to go around in the health care debate. It is almost impossible to find a single clear comprehensive statement about the nature of the problem. The sound byte culture has not allowed anyone to offer a vision or conceptualization clear enough or accessible enough for the expert to find it valid, for all stakeholders to find it fair, and for the average citizen to claim to understand it.
2. The costs of the system are the key to defying a ready solution. Although most of us wish there were no one without health care, the moral issues regarding the uninsured are not the only concern for the majority of the American public. The need for reform has to be framed both in terms of fairness, but also in terms of the unsustainable costs to our society and our future. The system which President Obama sought to fix was not out of control just because insurance companies denied people for pre-existing conditions. Insurance companies denied people for pre-existing conditions partially because the costs of the system were out of control. We don’t spend a fortune on health care because we have millions without coverage, we have millions without coverage because we have to spend a fortune on health care.
3. Our nation includes those who hold widely divergent philosophies about the role of government in the common welfare of its citizens. We encompass very different views of the nature of health care, whether it is a ‘right or a privilege’, a market service or a commodity. There is a vast difference in the personal financial impact both for those working in the healthcare ‘industry’, and all other participants in the economy as a whole. There are vast differences to all citizens, and residents, of this nation depending on how we approach health care reform. There will be widely differing political consequences for the two parties depending on whether and how the health care conundrum is solved. These wide divergences of view, philosophy, financial impact and political consequences would make it extraordinarily challenging to ‘fix health care’, even if we all agrees that it has to be fixed.
4. Finally, even if we were to compact together to try to overcome the blame, lack of communication, bickering; even if we were all incredibly motivated to save the money we waste, even if we were willing to try to bridge the gaps in our philosophies, views, financial impacts and political consequences, still we would have a difficult time reeling in such a massive, complex, multiple player, multi-layer, multi-trillion dollar system which effects everyone at the most vulnerable moments of their lives. Given the very best of intentions, even if there were the commonality which we lack of vision and purpose, still the very complexity of the issues involved would make solution near impossibly difficult.
Let us then, for the moment, accept these premises and still try to move forward in framing the issues and difficulties.
What are the real costs of health care?
The figure is often quoted that we spend a much larger percentage of our dollars on health care than do other industrialized nations. Specifically, we spend almost 18% of GDP on health care, versus the average of 9% in the OECD (Organization of Economic Cooperation and Development) states, which is comprised of 30 democratic market economy countries, all first world, including such countries as the major European democracies, Canada, the USA, Japan, Australia and New Zealand. We hear the percentages, but rarely has it been articulated what this really means. Let’s “do the numbers”.
In 2009 the US GDP was 14.2 trillion dollars. The percentage of that GDP which was spent on health care is 2.34 trillion dollars. If we spent on health care what the average OECD country spends (8.9%), we would be spending 8.9% of 14.2 trillion, or 1.26 trillion. That is 1.08 trillion dollars less per year than what we now spend.
In other words, as a nation, we are spending one trillion dollars more a year on health care than we would be spending if we spent at the same rate as the average OECD country.
For perhaps a specific example. There is wide variation among OECD states and perhaps we don’t want to compare ourselves to Turkey or Slovakia., Let’s take Germany as more comparable. Germany spends 10.9 percent of its GDP on health care. If the USA spent the same percentage of its GDP on health care as does Germany, we would spend 10.9% of 14.2 trillion dollars, or 1.54 trillion dollars. That would still be 800 billion dollars a year less than we spend now.
(This figure, derived here from primary data, is the same figure I heard President Clinton cite in the only discussion of the concept I have ever heard publicly expressed, so I think we can take the 800 billion or so as reasonably accurate.)
So let’s examine what we could get for that 800 billion dollars every year. The size of the US National Debt is currently about 22 trillion dollars. (It was 11 trillion at the beginning of the Obama presidency, it was 19 trillion at the beginning of the current administration, so rising by about a trillion a year in both administrations, perhaps a shade faster now.) If the amount saved in health care each year by spending the same percentage of our GDP as does Germany were applied directly to the principal of the debt, the debt would change as shown in the attached graph, and we as a nation would be debt free for the next generation. (This graph was constructed in 2012 when debt was smaller and growth of debt per year smaller, so it would now be somewhat later, since since this calculation doesn’t account for the interest).
Fig 1.
This would be a very valuable use, I think most would agree, for any savings which could be realized if we could somehow bring our spending on health care to the level of a comparable country like Germany,
How about if we didn’t use the savings to pay down the national debt? How about if we used it to build things? Well, at about 25 million dollars for a hospital, that would be 32,000 new hospitals a year. Schools? About 53,000 new schools a year.
Let’s say we are military minded? Many of the detractors of Obama care and any current proposal have a strong belief in the importance of national security, as do we all. If we spent the same percentage of our GDP on health care that Germany does and devoted the rest to our military, it would easily more than double our defense budget. For the extra money spent on health care we could buy about 178 new Nimitz class aircraft carriers a year! We could put about 5031 new F-22 raptor fighters on them a year! We could pay for another two wars like Iraq and Afghanistan each 18 months -we could, well, you get the picture. (I am NOT advocating that as the best use of the money! But some might. At least we’d then have the money to argue about!)
To consider how we could save the money difference between what we spend and other industrial nations spend, we need to ask why is our care so expensive. In other words, what ‘drives’ our health care costs so much?
What are the Real ‘Drivers’, or ‘Driving Principles’ of Health Care Costs?
One reason that it is difficult, even without the dramatics, just to intellectually discern a way forward is that it is difficult to dissect the drivers of health care costs.
Table I lists a comprehensive, but by no means exhaustive list of those factors which have been cited as ‘drivers’ by various commentators on the health care crisis.
Table 1
List of Drivers….
The sources I used to compile this list of drivers ranged from university based, presumably objective scholarly treatises to short admittedly and obviously biased blogs, and they range from progressive to conservative commentators, but even a quick glance can show that dozens of factors can be implicated as causal in the nation’s “out of control” health spending. Those factors which any one analyst indicates as a driver of health care costs often depends on which side of the issue one stands on.
Providers may target administrative and legislative costs. Insurance executives complain of the rising prices of care given. Payors focus attention cite demographics, the aging population, obesity and point out the high costs incurred in the care of ‘outliers’, i.e., that relative small proportion of very ill and complicated patients who use the bulk of health care costs.
More liberal analysts will indict the lack of a comprehensive national system while those on the right more blame restraint and regulation of competition.
And everyone implicates increasing technology, except that new technology has the benefit often of years of useful life associated with it, and improvements in technology allow shorter more focused stays in hospitals.
I would propose we step back from the ‘trees’, and try to look at the ‘forest’ from a more comprehensive perspective.
I propose that we can frame the real “drivers” of health care costs as being subsumed into the following four (what I will call) Overriding Driving Principles of health care costs. We may not be able to alter these drivers, and some might argue we should not, but, in my opinion, until we address them explicitly all attempts to move forward will be filled with the kind of anger, frustration, misunderstanding and bickering that have characterized the debate so far.
The “OVERRIDING DRIVING PRINCIPLES” of health care costs
1. The Multiple Layers of Profit Motive.
2. The Incentive Structure of Health Care Reimbursement.
3. The Expectations of the American Patient.
4. The difficulty for patients of maintain our own health, alcohol, tobacco, weight, drugs, firearms, chronic disease.
5. The Concurrence of Fear of Litigation with Fear of Patient Dissatisfaction and profit motive ALL compel practitioners to do more.
And it must be recognized that each of these ‘Overriding driving principles’ move the cost of health care in the same direction – towards more expensive care, not less.
DRIVER # 1: Multiple Layers of Profit Motive
One the one hand, the right to fair compensation, commensurate with an individual’s abilities and efforts, for work performed, risks taken and value discovered and added is an essential feature in our capitalist system. It is a central tenet which has contributed to the development in our society of a growing, inventive and effective economy, and one which has provided a high standard of living for the majority of its citizens. The capitalist incentive has also given rise to technological progress and advancement in almost every area.
It is also true that there are areas within our society where the motive and ability to make a profit are simply not part of the service rendered. There are services which the society simply requires so reliably that the ability to generate profit and gain compensation are subjected, in the notion of a greater good, to other considerations, and the profit motive is controlled and regulated.
In plainer terms, the society offers some essential services to its citizens at a nominal fee, and some public servants are not expected or even permitted to use their role in rendering service to maximize their own individual financial well being. Clear examples abound. Our fire departments, police departments, postal services, public education, public utilities, parks and recreation services, for example, are all provided almost free of charge to all citizens as a right of citizenship, or even of residency. The same is partially true of the military, which, while it has several arms manufacturers which may make exorbitant profits, is as an overall societal effort meant to be paid for essentially by taxes. Individual citizens are not expected to pay private insurance to make certain their personal homes are not invaded by enemies. We don’t pay separately for “missile strike insurance.” Protection from foreign enemies is a service provided to all who live within our borders by the government as part of its responsibility to maintain the state.
I am not suggesting here that the medical system should copy law enforcement, the postal services or the military as a model. Nor am I attempting to demonize those who profit from the provision of health care. I am simply pointing out that while the profit motive is a key part of our society; it is not the only model by which essential services are provided in our country.
We may realize that there are broad philosophical differences between our views of the role of private enterprise in the provision of medical services to our populace. However, broader philosophical issues aside, what is practical and necessary to notice in the instance of health care is that profit motive exists separately at every layer and level in the healthcare industry.
That means profit, on top of profit, on top of profit, on top of profit. Follow the chain. The physician wants and deserves a decent living. So do the nurse, technician and aide. Fair enough. The hospital where they practice wants to make a profit. Or at least make enough to support its administrative expenses and capital expenditures. Many hospitals are designed and run specifically to make a profit, and those publicly owned for profit chains have a legal duty to maximize their profits to their shareholders. Fair enough. The pharmaceutical and medical device industry needs to make profit, enough to justify its continued expenditure and risk, so it says, but also, as many if not most drug companies are publicly traded, have a first duty to maximize profits to their shareholders. Fair enough. (?) The whole system of care delivery is generally paid for with insurance dollars. Insurance companies need to make enough above their expenditures for care to support their administrative structures. And, as many or most are publicly traded, have a primary duty to their shareholders to make a profit. Fair enough?
These multiple levels and layers of profit making thus insures that the providing of profit for each of the various players becomes in itself one major, perhaps the primary cause of expenditure. When I buy insurance for example, the premiums I have to pay are high, in part, yes, because if I get sick I will need expensive services. They are high also because my premium has to be called upon to supply a profit to the insurance company, the drug company, the hospital company, the hospital, and the professional actually providing my care. And many of the players in that long chain, as corporations, have a legal primary duty to their shareholders to maximize that profit.
One’s view of the ultimate moral place of profit making aside, one cannot deny that profit making at every level is at least one major class of drivers for our health costs, costs which, again, which run about $800 billion (170 Nimitz air craft carriers a year) more than other industrialized nations.
One essential plank of any serious attempt to reign in costs would have to be directed to mitigating this particular “driver/driving principle”, that of the multiple layers of profit. The ACA, “Obama care”, through its exchange mechanism tried to enhance competitive pressures on the insurance industry by forcing insurance companies to be more transparent and more competitive. The plan sought in that way to cause insurance companies to lower their prices. That was meant to moderate profits. Not eliminate them. But lower them. By forcing insurance companies to cover the sick, not just the profitable, that would take some of the profit out. Not all, but some. In turn, insurance companies would have (in order to maintain any profit) to lower what they will pay hospitals and doctors. Hospitals will then have (to maintain any profit) to lower what they will pay for drugs and devices, and this will lower some of the profit to those entities.
In essence, through the device of forcing the payer furthest upstream, the insurance company, to become more competitive and less selective in picking out the healthy patients and denying the sick, the Obamacare idea was designed to have the effect of gradually moderating some (but not all) of the profits out of the system all the way down the line. It is a very slow and gentle way of doing it.
The present administration encouraged tremendous antipathy and has sought first to eliminate then to provide obstacles to Obama’s plan. Remember this was, essentially a plan in which private insurance remained the primary payor but with enhanced regulation and facilitated competition, transparency and more universal delivery. Now, Obamacare, the “affordable care act” with its emphasis on mitigating the profits of private insurance, weakened, threatened and compromised, there is arising among the more progressive democratic wing an increasingly insistent demand for either a single payer, or a public option added to the existence of private insurance.
Those on the further progressive wing insist that the single player plan, so called “medicare for all”, would be much more effective, in providing care and controlling costs. Others, more centrist argue both that such a change it is not in keeping with the capitalist approach of the rest of our society, and that any sudden attempt to effect such a change would be much more disruptive. They have argued for either adding a public option to the already existing ACA (Medicare for all who want it), taking a gradual path in transitioning toward a single payer, or just improving the current ACA, making more effective its reliance on improved regulation and competition among private insurance carriers. Each of these seeks to make the Payor (government or regulated insurance” pay less, and thus control costs by slowing payment.
I believe that the difference among these positions can not be effectively resolved without making more explicit the goal that either, or any, of these approaches is seeking to achieve. I believe all candidates need to explicitly state that:
“To lower the costs of healthcare, we must modify some portion (perhaps not all, but some) of the multiple layers of profit existing within the current system, and to start off by putting some downward pressure on the insurance companies is one effective but gentle way to do it”. To eliminate insurance companies altogether would be a much more drastic attempt to achieve the same global goal”.
Once the goal has been stated explicitly, and the reason for this goal made explicit, reasonable thinkers could then weigh and balance the risks and benefits of various methods to achieve that goal.
DRIVER # 2: The Incentive Structure of Health Care Payment
This issue has been mentioned every time health care economists say that they want a system to pay doctors for better outcomes and not for each procedure they do. The most common method of reimbursement in the current payment for health care is called “fee for service”. The doctor, or hospital, are paid separately for each service they perform.
The drawback is well known, namely that “fee for service” may have the incentive and result that more reimbursed services will be performed and then billed for. Of course no one expects physicians to do unnecessary procedures just for the billing. But it is considered to be possible that when there is no great scientific evidence for one course of action over the other, there may be an incentivized proclivity in a fee for service system to opt for the more billable course of action. Not saying it happens – just saying it is possible.
Far more cost effective ways of reimbursing providers are known. These more cost effective ways served as the essence of the Managed Care companies who became the villains of the nineties. These are the companies, which, by the way, squeezed so much from the cost of health care that their profits from the savings became legendary. If those profits had been uniformly returned to the society and not given to CEO bonuses, we might have remembered with a far more generous attitude these organizations, intended to lower costs, than we have done.
It is not my intention to review all the devices of managing care, but it is worth using one example to make the point, and I’d like to contrast ‘fee for service’ reimbursement with what was called ‘capitation’ – not to further exhaust a subject which is well known within the industry but to illustrate for the general reader the essence of some ideas which underpin some of the current dialogue.
In the “fee for service” model, as we have said, the provider and hospital are paid for every service they provide. Let’s provide an example. Let’s say a patient comes to the emergency department. They get a fee for using the hospital (a ‘facility fee’) as well as a fee for the physician’s services (the ‘professional fee’) From the hospital, they get billed for every lab test ordered, every intravenous line started, every medication given, every x-ray taken. Again, for the x-ray, they get a bill for the x-ray itself, and a separate fee for the professional radiologist reading the x-ray. Now, again, to be clear, I am not suggesting that the hospital or the doctors do more tests because they have a financial incentive to do so. However they have no financial incentive to refrain from doing so.
If pure “fee for service” gives the most incentives to spend more, then pure “capitation” was perhaps the most effective cost containment tool in the armamentarium of the managed care companies because it provided the strictest incentives to limit expenditure. Capitation, in essence, provides a total lump sum for the care of a specific number of persons, and leaves it up to the health care providing system how they chose to spend that money. That system was designed so that it was now in the provider’s financial interests to spend as little as they need to. If, say, a million dollars is to be divided between a thousand persons, then spending the whole million on two patients would leave nothing more for the rest. The company would have to pay for that extra care from its savings, or profits. It therefore gave the incentive to restrict care to that which is really necessary. That would, hopefully lead providers to spend fewer dollars over the year for their thousand patients than they were allotted, and then save or distribute the rest. Using capitation, however companies drove costs way down, and, sometimes by denying what many thought was necessary care. Some, as we all know, pocketed the huge profits made…or saved, depending on how you look at it.
Since the insurance companies already know from observing their managed care competitors over decades that the best ways to lower the cost of care involve managing care (with incentive structures akin to capitation), it is expected that when forced to cut medical outlays to maintain some profit, the insurers will have to reintroduce, perhaps gradually at first, the principles of managed care of provider incentives, because they know the principle:
To lower costs, we need to change the incentive structure by which costs are paid.
Now, why didn’t managed care, with its very effective, scientifically designed and empirically demonstrated ability to cut costs continue? Because in its own desire to maximize profits, since companies were not being rewarded but rather financially penalized for spending resources on tests and procedures, they limited and restricted the tests and procedures in such a way that the patients covered began to feel, sense and realize the the managed care system was limiting their care – and often in such a way that it seemed not in the patient’s best interests. It felt like the managed care industry was putting profits in front of patients, and, thus it ran smack into the third driver/driving principle of health care cost increases – the strongest and most intransigent driver of them all.
DRIVER # 3 – Patient Expectations
I saved this area for later in the discussion for two reasons. First is for lasting emphasis. The question underlies every discussion, yet is never explicitly isolated as a cost driver. We are constantly reminded that the kind of care which is found in Canada, the United Kingdom, France, Germany, and most of the industrialized first world would not be acceptable here – that the level of care provided to virtually every other modern state would not satisfy the expectations of the American patient. We never ask, however whether perhaps those expectations may be realistic or sustainable. Or, perhaps to frame the question more palatably, we don’t ask whether it is worth it, to satisfy those expectations, to forego the $800,000,000,000 every year we spend to try to meet them.
I finish with the question also for a second reason. It is unpopular, perhaps politically impossible, and for some offensive to discuss anything that has the faintest whiff of “rationing” care. I don’t think we should ration care – but why can’t we rational-ize it?
It is pointless to put that question first, because we would run into such resistance. But perhaps after viewing the vast difference in our nation’s expenditure on health care, examining the role of layer upon layer of profit motive, and examining the inherently cost increasing effect of the most common current incentive structure, and suggesting how these can be changed, we can now dare point out there are efforts individuals might make in examining their own expectations which could have some effect on viewing how we delivery health care.
As an emergency physician with board certification and experience in internal medicine and critical care as well, with former teaching posts at both Harvard and Yale, and also decades of experience in urban and suburban emergency departments, I have seen first hand for thirty years that many American patients expect to be able to come to the emergency department for events which are, perhaps, not really emegencies – colds, bumps and bruises. It is also true that many American patients expect that every sniffle needs a chest x-ray, every bump on the noggin a CT scan.
More costly, but also more morally challenging are the issues on the other end. I have seen many times situations where, no matter how hopeless the prognosis nor how (apparently) limited the quality of life, any family can demand a virtually unlimited amount of resources enormously costly and often futile intensive care in the last few weeks and months of life.
And it is not always clear to the patient or even the physician which bump on the noggin needs a CT scan, or which apparently hopeless person may, in fact, get out of the ICU for another few months, so we are, as physicians inclined, by our nature, culture and training to support expectations of patients no matter how superficially unrealistic, with the traditional “full court press”.
It was precisely this wall which managed care ran into. There does exist, albeit in development, ways to minimize expenditure on both unnecessary and futile care. The managed care industry had developed effective (and truth be told, not so dangerous) ways to limit expenditures. But many of them limited access beyond what Americans expected and believe they deserve. Patients who want to be able to just go straight to the Emergency Department were told, instead, that they had to access 24 hour demand management telephone triage systems, whereby a specially trained nurse or other health care provider, using computerized decision support systems would tell the patient whether they could go to the ED or not. Primary care physicians, “gatekeepers” told patients when they could and could not go to specialists. Managed care companies, employing physicians (whose primary duty was to contain costs) decided who needed procedures like hip replacements, and when. And no one wants to be told, when they believe they have a health urgency, emergency or necessity, that it is not to be had.
This is precisely the limitation that Americans seem to find so odious about the more public care systems of other advanced nations. We have not been accustomed to delay or limit our expectations for the most advanced and immediate technology. And no one has really articulated the case why we should not have it.
The massive expenditures mentioned above, those on the other end of life are a related issue, and emotionally charged issue. Care at end of life is a deeply emotional issue, but one which needs to be discussed carefully both on an individual and societal level. Opponents, when the very notion was originally broached, called such discussions “death-panels”, perhaps in the effort to further make insoluble already difficult questions. However, in the long run, the difficulties in dealing with end of life care, and related questions such as whether nonagenarians should receive dialysis, fall within the rubric of patient expectations. There is no question that with increasing technology, we can offer patients who would otherwise die extra weeks, often months of life, spending the time, technology and money necessary to do so. Whether it is morally appropriate in all cases to do so is a worthwhile discussion. And one which we should have. Is there a balance between one the one hand, an individual’s perceived right to have if they wish access to a veritably unlimited expenditure on sometimes futile intensive care, and on the other hand the need for a society to use its resources in an effective and efficient manner?
This driver, the driving principle of the need to meet our American public’s patient expectations will be the most intransigent, and will not yield easily. It didn’t fade before the clearly demonstrated effectiveness and efficiency of managed care. But with work, time and education, it could be tempered. However, it first has to be explicitly and honestly identified as a driver! To make any change in health care lasting and satisfactory will require a long, careful and systematic process of national reflection about our demands and expectations, so that we can look specifically at what our expectations are, and weigh whether those are supportable or not.
Perhaps I have not listened enough, but to my knowledge no one has expressly addressed the role of overly unrealistic expectations about care. Perhaps no one else believes they exist. Perhaps eveyone knows that it is a politically impossibly tough sell. In either case, I think the American people know, instinctively, that you can’t lower what we spend on health care without lowering a little what we expect and demand, and to address this conundrum more explicitly and more honestly would, I believe, be helpful.
DRIVER #4 – The difficulty we have as patients maintaining our own health.
Addiction, whether it be to food, alcohol, tobacco, drugs, violence, and difficulty in doing the hard work of monitoring and maintaining our own health in chronic diseases such as COPD, heart failure, diabetes, asthma are neither simple, straightforward nor unique to our society. And it is by no means clear that any change in health care financing will have an effect on any of those issues, at least over the short run. At present, doctors struggle on an individual basis to counsel their own patients, often to little or no avail.
It is also true that with our present form of health care delivery, the is little or no national level stake in the population’s overall maintenance of its health. No single accountable, overriding agency stands to lose when too many people smoke, drink, overeat, take drugs or fail to take their heart failure medication. True, as part of the ACA, Medicare placed some incentives, there are becoming more demands, for instance, to have patients with chronic heart failure better manage themselves at home. In many cases, now, repeat hospital admissions within a short period of time are not compensated or penalized. We can ask though what overall entity is at risk, though, when too many people engage in non-health protective efforts.
In the days of the 1990s when HMOs were in ascendency, some made increased and active efforts to develop preventative health programs. To do so on a nationwide and effective scale would probably take a very long and concerted effort. Look at how many decades it has taken, more than half a century, to bring down the rates of smoking. Still, if we treated alcohol, obesity, smoking, drugs, and firearm violence as health emergencies causing damage to the whole economy, we might find ways to begin to address them.
This argument does not mandate any particular solution, but I propose that when we recognize self destructive behavior as well as the inability to maintain good health maintenance preventative care as a primary DRIVER of health care expenditure, we will perhaps be in a better position to start to manage it.
DRIVER #5 – The Concurrence of Fear of Litigation with other drivers
Both physicians, and opponents of health care reform in general have both emphasized the role of so called defensive medicine. Proponents of tort reform identify it as the primary and preferred method of cost control, while those who have studied its effects say the defensive medicine adds a very small fraction of the costs of healthcare. What can be said, I believe, as a practitioner is that fear of litigation is in itself a minor factor but one which combines with all the other drivers to move in the same direction.
Let us say that I were a physician practicing in a hospital which, using fee for service, makes a profit on CT scans, and also say that my community’s patients expect that they will get one when the hit their head. Let us further guess that my patients might write to my chairman if they are dissatisfied, or at least give me a bad score on a patient satisfaction survey. And let us further notice that my department takes patient satisfaction, that is, specifically, the satisfaction of patient expectations, seriously. And now add to that my awareness that in the hopefully very unlikely chance that I send home a patient with a normal neurologic exam after not doing the CT and they end up with the very rare occurrence of having something bad happen, I may get sued.
The fact is, if I’ve documented well, and avoided a really egregious error in judgment, I will probably win the suit. I don’t do the CT specifically to avoid litigation, but, and this is the key point, since I am paid by a hospital which profits from the CT, and my patients expect the CT, and they will make my life less pleasant if I disappoint them, and they might sue me if I don’t and miss something – I DO THE CT.
And that’s the point. Every single driver in our multilayer, multiplayer, multi-trillion dollar juggernaut of a health care system works together to drive us to spend more.
Having looked, I hope, explicitly at the Overriding Drivers, let us look at one oft touted but I believe unreliable solution.
The ‘Myth’ of the Role of Market Forces on Health Care Costs.
Those who generally oppose any central government role in the regulation of health care point to the market, to ‘market forces’ as a solution to the issue. The notion of “consumer driven health care” has received considerable attention especially in conservative leaning publications. It is suggested that when consumers (patients) are spending their own money, which they have been encouraged to save through tax advantaged specific health savings accounts, they will be more frugal than they are when third parties, i.e., insurance companies pay. Fewer unnecessary tests will be done, lower cost providers will be sought out, and the market will act as it is supposed to do to lower costs. Examples in which this has occurred, such as in plastic surgery, are cited. It is held that insurance should not be used for routine visits, but only for true catastrophes.
There is one major fallacy in the market theory of health control. With other goods or services the consumer’s informed choices determine the price of the goods or service both by putting suppliers into competition with each other, and by buying only when the value of the good or service purchased seems worthwhile for the price demanded. With the case of health care, much of the time, no real option exists to decline to use the service. Oh, yes, of course, you can put off elective preventative care for years (how many of us put our colonoscopies off as long as possible!?) However, in the face of severe pain or loss of function, especially to a child or loved one, there is simply no option other than to go to the doctor, and do what one is told. Shopping around for the lowest cost provider when you or your child is writhing in pain, or afraid for your life, is a non-option.
Furthermore, current internet empowerment notwithstanding, the patient is simply in no position to say what is appropriate to do. Physicians don’t always agree. The patient simply does not fulfill those criteria of ability to make an informed choice to choose or decline an expensive service, especially in a moment of extreme pain, fear or disability. The criteria which are necessary to make market forces a real controller of a market simply do not exist. Healthcare costs can not be controlled by “market forces”. It is an illusion.
Suggested Principles which might inform a comprehensive health care debate.
Now, I have reviewed and detailed what I believe are the real Overriding Drivers of HealthCare Costs. How can we begin to address them? I can’t claim to have the definitive answers, and I am not going to take specific sides at this juncture between Bernie, Joe, Kamala, Pete and Kirsten! I am going to seriously hope that they will find a way to elevated this discussion from a sound byte contest to a serious a joint and mutual consideration of these important aspects.
It is my wish that those candidates running for office would make the effort to articulate then discuss from the point of a common understanding of some of the issues what might be able to be done. I believe that would lead to a more fruitful evolution of thought, and ability to choose our candidates, then the current hand raising to single dimension questions.
Here are some suggestions of ( what I might call ) ‘Guidepoint Concepts’ which might help focus such a discussion.
1) Some efforts are large enough, complex enough, and demanding enough to require that the primary controller be governmental. That was true of the second world war, the development of the atomic bomb and the trip to the moon. The needed role of government as a provider of health care was clearly and explicitly acknowledged in the creation of Medicare. Those who think that if we just step back and let “the market” work are at least 60 years behind the times. The government is already ‘up to its ass in alligators’ in health care. Let’s discuss how best to make it work.
2) Personal resources and savings cannot be relied upon to pay for health care. Some form of insurance is needed. It is a pipe dream to believe that personal resources or “health savings accounts” can pay for health care. Perhaps most upper middle class people can afford the occasional few thousand for an ER visit, or maybe even to have your gallbladder out. But very few could come up with a few hundred thousand for a coronary bypass, and almost no one for the potential millions of dollars plus of a truly catastrophic illness or injury, stroke, paralysis, birth injury which happen every minute to someone across the country. Just can’t be done.
3) The larger the risk pool, the greater the number of covered persons, the safer, more stable and more resilient the insurer is. If three of us in a room decide to pitch in, say, five thousand dollars a year to cover each other, and one person gets a million dollar injury, we cannot cover it. If three hundred of us do it, we are a little better. If thirty thousand, then there is enough to cover most contingencies. If all three hundred and fifty million of us throw in a few thousand, we get closer to being able to cover the whole. The larger the contributing pool, the less likely any risk is to take down the system.
4) Fee for service is not the most cost effective way to pay for medical care. There exist and have been developed and researched and put into practice multiple more effective methods. While the “capitation” model caused much dissatisfaction to patients and providers, much of that could be mollified if the purpose of capitation were not to generate profit. And fair compensation could still be found for all health care professionals, albeit probably not at the upper levels now found in some specialities. Another longer discussion.
5) The competition among insurers, and the multiple layers of approval, fee setting, price comparison, network policing, to say nothing of shareholder distribution, marketing and the like mean that huge proportions of money available are spent by private industry over what a governmental system would provide. This is not to say that there is no role for private industry, just that costs inevitably go up.
6) We may be compelled to accept, in some manner, a multiple tiered health system, as much as that may be anathema to some. We have mandated as a society that no one should starve, and we provide necessary food to all who live here. That does not mean the the best restaurant in New York accepts food stamps. There will always be some disparity between the services received in any sector by the richest and the poorest. The difference, however, may be in amenities, it should not be in necessities. If the nation creates a system whereby all who live here receive all the care necessary at a reasonably cost effective manner, then it should not be impossible for those who can afford it to have, additionally, private access to ‘luxury’ services. I don’t object to the existence of the so called “cadillac health plan” if there exists no one in the country without reliable, safe, decent and affordable access to a clean, comfortable and punctual bus. (Maybe not the best analogy but hope it makes the point!)
7) A broad governed system, even if it evolves to an ultimate single payer type plan could still experiment with the optimal ways to regulate and distribute care. Perhaps Managed care plans and captivated plans are best for some, more specific isolated and partially self insured plans may work for others. There have been “demonstration projects” and, I believe, under the rubric of a more centrally planned system there still may be room to experiment with a variety of different such projects.
8) Finally, whatever comes to be the best, final, optimal solution, it will of necessity take some time to transition. That is not to say big big changes cannot be made, but there will be some evolution period needed. This is not only due to patient expectations, and the strength of the financial industry as it currently exists, but because for major change to occur, those who have spent their lives working in the industry will need to participate in its evolution as well. I think the vast majority of physicians will tolerate evolution of health care such that some element of autonomy, and profitability has to be sacrificed to a longer and more wide ranging good. I think, perhaps naively, that as a system changes to make health care less of a profit maker and more of a universal service, most if not all of the executives who run the systems will either change their own expectations, or enter other more appropriately profit driven industries. But these changes will not happen immediately, any more than it could happen immediately for patients to learn that they have to call a telephone triage demand management system before going to an ER or the doctor. Any major effort to really bring our nation to the point when we both have that extra 800 billion dollars a year, and a safe and satisfied populace, will take us time. And education. We need to be aware of this, and factor it into our own expectations for change.
BOTTOM LINE IS IT TAKES REAL DISCUSSION AND KNOWLEDGE, not sound bytes and one liners.
I would call upon those running for office, especially on the democratic side (but if republicans want to join, I mean really join in the discussion why not have them) to reject single line answers and hand raises, simple sound bytes and emotional appeals. I hope and call upon the field jointly, together, in the process of the debates and discussions to follow, start to expose, examine, analyze and then put together a serious and complete proposal.
In that manner, perhaps only in that manner, can they expose the bankruptcy of the “repeal and replace” simplicity of the current administration, draw a meaningful distinction and prepare to take back governance.
I hope that the issues pointed out in this article are relevant to evaluating the current arguments. I wish that out of the “everything that has been said”, these things had been said more clearly. I hope that those running for office can find a more focused way to address than is allowed by raising your hand to a simple yes/no question.
If these arguments were more explicitly framed, the American people would then be better able to ask and answer what may be the best ways forward.
How would that hurt?
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