After a year of reporting in a series of articles in the New York Times (several of which I have
commented on in this blog) on the crisis in health care, Elisabeth Rosenthal
summarized her conclusions in a Times piece
on December 22, 2013, “Health
Care’s Road to Ruin”. As the title makes clear, those conclusions are not
positive. She summarizes highlights from her investigations that look at the
extremely high cost of health care in the US compared to other countries, the
extreme variability in pricing depending upon where you are in the US, and the
opaque and incomprehensible methods of coming up with pricing and the
regulatory incentives that are continually gamed by providers. On the other end
of the spectrum, she summarizes both the poor health outcomes at a population
level in the US compared to other countries, and the more personal, poignant
and dispiriting stories of individuals who die, are bankrupted, or both by our
health “system”.
As Ms. Rosenthal notes, the stories that she tells could be “Extreme anecdotes, perhaps. But the series
has prompted more than 10,000 comments of outrage and frustration — from
patients, doctors, politicians, even hospital and insurance executives.” She goes on to discuss the potential solutions
that those commenters, and others, have suggested, including regulating prices,
making medical schools cheaper or free, not paying fee-for-service that rewards
volume rather than quality. But, she says, “the
nation is fundamentally handicapped in its quest for cheaper health care: All
other developed countries rely on a large degree of direct government
intervention, negotiation or rate-setting to achieve lower-priced medical
treatment for all citizens. That is not politically acceptable here.”
In reality, however, the idea that the health industry is somehow, before
or after the ACA (“Obamacare”) an exemplar of the free market and the success
(or not) of private enterprise, is entirely a myth, a facile construct that is
used by those making lots of money on the current system to block change.
Medicare, as I have discussed (e.g., Outing the RUC: Medicare reimbursement and Primary Care, February 2, 2011), sets the rates that they will pay for
Medicare patients, and private insurers pay multiples of Medicare rates.
Services as mostly fee-for-service, except in HMOs, and integrated health
systems (such as Kaiser), and for Medicare inpatient admissions which are paid
at set fees based on the diagnosis (through a system called Diagnosis-Related
Groups, or DRGs). The entire system of what is profitable for a health care
provider (meaning a hospital or other health care facility or a doctor or
group) is based on this policy; it is profitable to provide cancer care because
Medicare (and thus other health insurers) pay an enormous amount to administer
chemotherapy drugs. Cardiac care, orthopedics and neurosurgical interventions
are also very profitable. (Oh! Is that why my hospital chooses to focus on
these areas instead of psychiatry, obstetrics and pediatrics?!) The doctors who
do all these things want you to think (and think themselves) that it is because
what they do is so hard or that they work so hard; it is in fact a regulatory
policy glitch. In addition, a majority of the money spent on “health care” is
public funds, not private, if you add Medicare, Medicaid, federal, state and
local government employees and retirees, and add in the tax break for employer
contributions to health insurance (i.e., taxes forgone because this employee
reimbursement is not counted as regular income).
So the majority of the money being spent on health care is public money,
and the system is already highly government influenced with government policies
setting reimbursement rates. The only thing “private” about it is the ownership
and profit, both by providers and insurance companies. In other words, it is a
parallel to our financial services industry: private enterprise is given a
license to make money from everyone, and the government finances it. The only
difference is that for financial services, the government steps in to bail them
out only after they have already stolen all our money, while in health services
the profit margin is built in from the start. Thus, Rosenthal’s comments, and
quotations from others such as Dr. Steven Schroeder of the University of
California at San Francisco: “People in
fee-for-service are very clever — they stay one step ahead of the formulas to
maximize revenue.” But, of course, we the people, through our elected
representatives and regulators, allow them to do so. And, therefore, the arcane
network of incentives and disincentives built into the ACA to try to get
reasonable results at reasonable cost – and still ensure insurance companies
make lots of profit.
The solution is very simple; emulating one or the other systems in place
in every other Western democracy. The simplest is closest to us is Canada, and
a single-payer system, essentially putting everyone into Medicare. Voilá! We are all covered by the same
system, providers can provide care to people based upon their disease, not
their insurance status, and rates can be set at the level that we as a people
are able to tolerate, or willing to pay, for the health care we want and need.
The clout of the empowered will bring along benefit for everyone. There will be
no more gaming the system, trying to attract certain patients with certain
insurance rather than other. Or, in a more complex fashion, we could follow the
example of other countries; Switzerland, for example, has multiple private
insurance companies rather than a single payer, but they are highly regulated
and non-profit; they are told by the government what they can charge and what
they must cover.
The argument that Americans will not accept major government involvement
and regulation is pretty flawed, both because of the involvement of the
government in regulating the health system already (mostly to ensure profit for
providers and insurers) and because regular people see the advantage of
universal health care. Rosenthal writes that “All other developed countries rely on a large degree of direct
government intervention, negotiation or rate-setting to achieve lower-priced
medical treatment for all citizens. That
is not politically acceptable here.” Study after study has shown strong
support for a universal health care system from the American people; however,
certain very powerful vested interests would likely lose out: “’A
lot of the complexity of the Affordable Care Act arises from the political need
in the U.S. to rely on the private market to provide health care access,’ said
Dr. David Blumenthal, a former adviser to President Obama and president of the
Commonwealth Fund, a New York-based foundation that focuses on health care.“
The political need is for the wealthy and powerful. This is
why ACA ensured that insurance companies would get their cut. Elisabeth
Rosenthal does not say so in so many words, but she does say that “…after a year spent hearing from hundreds of patients
like Mr. Abrahams, Mr. Landman and Mr. Miller, I know, too, that reforming the
nation’s $2.9 trillion health system is urgent, and will not be accomplished
with delicate maneuvers at the margins. There are many further interventions
that we know will help contain costs and rein in prices. And we’d better start
making choices fast.”
A universal health care program, Medicare for all, in which
everyone was automatically enrolled just as current Medicare recipients are
now, would be just fine.