How can a health care system lead not to ruin but to, actually, health?

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.