The Politics of Health Care Reform – Part 2
The Second Obstacle to Health Care Reform
The High Cost of Care
If we are going to win enough votes in Congress to achieve health care reform, we need to confront runaway health care inflation. Without the votes, reform is a wonderful idea, and we could talk endlessly about what shape it should take. But it will never happen until we learn how to rein in spending.
The truth is that our national health care bill has been growing faster than the economy—and faster than the average worker’s wages—for years. And now we are talking about covering 47 million uninsured Americans, many of whom haven’t seen a doctor for years. In addition, we plan to offer millions of underinsured Americans comprehensive health coverage. Many of them have put off getting the health care they need. In both cases, there will be a lot of very expensive catching up to do.
We simply cannot afford to provide high quality healthcare for all Americans unless we squeeze the waste out of our healthcare system. Here I agree with Dr. Ezekiel Emanuel, director of Bioethics at the National Institute of Health: “Without controlling costs, any attempt at universal coverage will be transient.” In a recent issue of the Journal of the American Medical Association Emanuel insisted “health reform proposals by presidential candidates should be critically evaluated primarily on whether they establish a financing structure and incentives” that will make healthcare affordable.
Otherwise, health reform will hit the same roadblock it hit in Massachusetts: not enough money. And if Massachusetts, one of the wealthiest, most progressive states in the union can’t provide healthcare for all of its citizens, then how can the nation possibly hope to achieve universal coverage?
No wonder so many voters are wary of health care reform. As I pointed out in part 1 of this post where I talked about the lack of “social solidarity” in the U.S, polls reveal that Independents, Republicans, and households earning more than $75,000 a year do not rate “covering the uninsured” as a top priority. When asked about healthcare, their main concern is the high cost of care.
Moreover, a Kaiser poll released just last month shows that when Independents were asked whether they would favor a new health care plan that would cover “all or nearly all of the uninsured—but would involve a substantial increase in spending,” although 66 percent of Independents voters who “lean” toward the Democratic party said “yes,” a mere 28 percent of Independents who lean Republican and 47 percent of Independents who don’t lean either way agreed.
Congressmen read the same polls and this is why the exorbitant cost of medical care in the U.S. is the second major obstacle to reform. Legislators who represent Republicans, conservative Democrats and Independents simply will not vote for universal care if they know that their conservative and independent constituents are not willing to pay it.
And let’s face it, they are right to be worried. Too often, progressives refuse to wrestle with the economics behind their proposals. They say “Let’s just do it—we’ll worry about the math later.” And then they are surprised when they are shot down by Conservatives who do analyze the numbers and tell the voters: “We would like to do this too. But the fact is, the government doesn’t have the money. And we don’t want to ask hard-working Americans to pay higher taxes than they can afford.” (Moreover, given the spiraling cost of the war in Iraq, it is true that the next Congress will have very little money to work with—and major financial headaches. Taxes will have to be increased just to keep up with current spending.)
Moreover, the hard truth is that even if we don’t try to cover the uninsured, we cannot support the healthcare system that we have now. Medicare for seniors is approaching a financial crisis. Last month, the Medicare Payment Advisory Commission (MedPac), an independent panel that advises Congress on Medicare spending, pointed out that if we continue spending at the current rate, the assets of the Medicare trust fund that covers hospital expenses will be exhausted in just nine years. At that point, income from payroll taxes collected in that year would cover only 79 percent of projected benefit expenditures. Here is the bottom line: to finance the projected deficit through 2080, the trustees estimate that Medicare’s payroll tax would need to increase immediately from 2.9 percent to 6.44 percent of earned income.
This is why Congress is now talking about cutting the average fees that it pays to physicians by 10 percent, across the board. (I doubt this will happen; physicians have threatened that if it does, they will stop taking Medicare patients. But the fact Congress is even entertaining such a rollback—followed by another 15 percent haircut for doctors in the next two or three years—underlines just how serious the situation is.)
Why is Medicare running out of money? Medicare overpays for many products and services, while covering far too many unnecessary, ineffective and unproven tests, drugs and procedures. Decades of work done by researchers at Dartmouth Medical School show that the waste in our system is hazardous waste—it’s not just costly, it’s hazardous to your health. The cognoscenti of the medical world agree. (I’ve written about the Dartmouth research here).
The High Price of Reform
Covering the uninsured is just the beginning of the cost of universal healthcare. For example, most reformers also believe that the fees Medicaid pays doctors and hospitals should be raised so that they equal Medicare reimbursements. Currently, in most states, Medicaid pays far less than Medicare for exactly the same services. This two-tier payment system goes back to the time when Medicare and Medicaid legislation was passed: Southern Congressmen refused to vote for the legislation if healthcare providers were going to be paid the same amount to treat poor (i.e. black) patients as they were paid to care for older white patients.
Everyone agrees the system is inequitable, but righting the wrong will be costly. Medicaid is not a small program: in fiscal 2009, President Bush’s budget projects that Medicaid will spend $300 billion.
Progressives also agree that cutting waste in a national health care system will require funding an independent Comparative Effectiveness Institute where researchers and physicians who have no financial interest in the outcome review new products and procedures. Before a national health plan agrees to cover a new drug, device or surgical procedure the manufacturer or patent holder would have to provide head-to-head research showing that it is indeed, more effective than existing tests, treatments and products—at least for some patients--and that the benefits clearly outweigh risks. Only then would the Institute approve coverage for the specific group of patients who would benefit.
Finally, reformers know that we cannot reform healthcare without electronic medical records and other health information technology. Government will have to make a substantial contribution.
Make no mistake: if we rebuild our broken system, there is money to be saved down the road. If we refuse to cover new technologies unless medical evidence shows they are safe and effective, we should ultimately be able to achieve substantial savings—enough to make up for the added costs of universal coverage.
But at the outset, health care reform will not be cheap. And you can be sure that once the Presidential election narrows to a race between a Republican and a Democrat, the Republican will make this point—over and over again. If a progressive candidate tries to argue that universal health care won’t cost us anything in the first few years, he will seem, at best, terribly naive. There is a real danger that conservatives could torpedo health care reform on the cost issue alone
Here, Emanuel is looking for very specific, well-documented numbers as to how money can be saved. “True cost control means reducing how much health costs increase year to about 1 percent more than overall economic growth.” He rejects “vague promises” from reformers who “promise savings from cutting waste, enhancing prevention and wellness, and installing electronic medical records” as merely “lipstick cost control more for show and public relations than for true change.”
He also points out that while many talk about the enormous savings that might come from replacing at least some private sector insurance by offering government-sponsored coverage as an alternative , the truth is that this would “constitute a one-time savings.” Moreover, as I discussed on www.healthbeatblog.com in December, the money that we now pay private insurers to cover their administrative costs, advertising , marketing, exorbitant executive salaries and profits for shareholders adds up to just 4.5 percent of the nation’s $2.2 trillion health care bill. Even if we replaced all private insurance with single-payer government insurance, the government still would have administrative costs equaling about 2 percent of the $2.2 trillion. So we would wind up paring the nation’s total health care bill by 2.5 percent, a one-time savings that would not be enough to cover even one year of health care inflation.
The only way to make universal coverage affordable is if we use a scalpel--not a hunting knife—to excise all the potentially dangerous over-treatment from every sector of our health care system. There is no single villain. Unnecessary hospitalizations, unneeded tests, unproven over-prescribed medications all drive health care spending to the heavens. Make no mistake: eliminating this waste is not “rationing.” This is a matter of protecting patients from “iatrogenic disease”—a disorder or illness created, inadvertently, by medical treatment. Keep in mind that even a diagnostic test carries some risk. And if a treatment is unnecessary, we have, by definition, exposed the patient to the danger of side effects, with no benefit.
Finally, we must confront the fact that we pay more for virtually every pill, every artificial knee, and every screw than any other developed nation in the world—for absolutely no reason except that lobbyists have paid Congressmen to believe that if we don’t overpay, medical research will grind to a halt. The truth is that pharmaceutical companies spend much more on advertising than they do on research, and in recent years drug-makers and device-makers have been racking up double-digit profits—at the expense of the rest of the U.S. economy. Employers in Detroit simply cannot afford to keep the drug and device industry in the style to which it has become accustomed.
Under national health reform, reining in costs also will mean using the government’s clout. The government already is the single biggest payer in the nation and if it used that leverage, it could negotiate significant discounts on drugs and medical devices, just as every other nation does. The Veterans’ Administration is the only government entity allowed to bargain with pharmaceutical companies, and the VA has demonstrated that this can work: today it pays 50 percent less than Medicare for many of the top-20 brand name drugs sold to seniors.
But won’t Big Pharma object? You bet—they’ll fight this tooth and nail. In my next post, I’ll talk about how we can overcome the third obstacle to reform: the lobbyists.
You can find the first part in this series here
One major problem with our health care system isn't that too many Americans 'don't have' healthcare, its that too many Americans 'still do.'
Reverse the figures and see what happens.
April 11, 2008 10:53 AM | Reply | Permalink
This is an excellent line, Maggie:
This section of yours also bears constant repeating:
One major reason why is political: most western countries with universal coverage are facing the same problem of this health care inflation, as are all private insurers. Pro-universal debaters should be forthright about this, it will enable them to pre-empt arguments about "socialized medicine" leading to "rationing," because ALL methods of delivery in the future are subject to this "rationing." The talking point should be: it's going to happen. the question is Whether to have private for-profit interests as the only choice of who "rations" your health care.
A final point I might add: consider what happens if, instead of raising general taxes to pay for increased Medicare costs, Congress starts raising the monthly premiums the retired already have to pay for Medicare, and/or co-pays, deductibles, etc. When everyone is hearing complaints from elderly relatives about that, it will be easier for conservatives to make people afraid of changing to more government involvement. And if they cut doctors and other provider's fees, and more of them stop accepting Medicare patients, stories about the old "choice" issue will start rearing their head.
There is no running away from this, you won't be able to sell reform without confronting it. If one starts trying to sell reform with simplistic propaganda that it will all be better with instant installation of single payer, those attempting it will just end up with losing support and gaining mistrust as people learn the facts. I really thank you for taking it on and trying to get the ball rolling on talking reality.
And I would like to add that I find your two posts so far are really rare "must reads" on a site that increasingly lacks the same.
April 11, 2008 11:58 AM | Reply | Permalink
We simply cannot afford to provide high quality healthcare for all Americans unless we squeeze the waste out of our healthcare system.
Forget it. There is no "unless". Face it. Modern healthcare is inherently too expensive for the general public.
Plus...the situation is far worse than you dare imagine.
We are a nation of drug addicts - addicted to largely useless drugs which we prefer to take rather than alter our lifestyles...and pharmaceutical companies encourage and profit from our weakness.
Our current financial situation is dire. As a harbinger of things to come Jefferson county (Birmingham) is about to declare the largest municipal bankruptcy in our history...and we simply cannot just cut and run in Iraq...and all indications are that oil prices will continue to rise astronomically relative to the costs of other goods and services because we've reached peak oil.
So what to do about health care?
Close down most drug company activities and let addicts go cold turkey or die.
Make a national effort to change lifestyles and institute preventative care. That's going to happen anyway since most forms of transportation will become too expensive for most people...
and plan on endless war for increasingly scarce and expensive basic resources.
April 11, 2008 12:22 PM | Reply | Permalink
Obesity, smoking, and "ask your doctor" commercials aired largely during the evening news when older folks are watching, are the three biggest citizen-controllable inputs to our excessive (>15 % GDP) health care costs.
Smokers need to quit, and the obese and morbidly obese need to stop excusing themselves and lose weight.
I would have obesity premiums and other conditions placed on health insurance, and the cig tax raised to where cigs are $7 per pack, as they are in NYC. http://www.nytimes.com/2006/01/25/nyregion/25cigs.html?hp&ex=1138251600&en=ea73950929e5d592&ei=5094&partner=homepage
And those TV commercials need to be banned again, as they were for decades.
April 11, 2008 2:16 PM | Reply | Permalink
Smokers need to quit
This remark is a perfect example of Maggie's call on progressives to THINK before they blather.
Remember, ya gotta die of something, and very few of us are going to die at home propped up on pillows and peacefully receiving the parting kisses of our nearest and dearest.
Smokers die six years earlier than non-smokers. Result: huge pension and Social Security Trust Fund savings and reduced use of long-term nursing and old age services (less broken hips and Alzeimher's patients), savings transferred to non-smokers which they can use to subsidize their health costs.
And too, smokers pay huge amounts of use and sales taxes, far in excess of any claimed extra medical cost they are thought to impose on society -- again, to the benefit of non-smokers.
April 11, 2008 5:13 PM | Reply | Permalink
Smoking causes disease during life, as well as an early death. This increases the demand for and cost of medical care. And the fact that smokers pay taxes on cigs is completely irrelevant to the percent of GDP spent here on health care.
"[V]ery few of us are going to die at home propped up on pillows and peacefully receiving the parting kisses of our nearest and dearest."
What motivates this little observation in a discussion of health care costs?
You can quit if you try.
April 11, 2008 8:29 PM | Reply | Permalink
You can quit if you try.
Not if you don't smoke!
April 11, 2008 9:54 PM | Reply | Permalink
A couple of years ago I was sent by my primary care physician to a Vascular Surgeon for a protruding varicose vein in my left calf.
It took 3 months for my first appointment and at the time I saw a woman assistant at the Doctor's office, perhaps she was a Nurse Practitioner. She interviewed me, took pictures of the calf/vein and gave me an appointment to come back in 3 months for the process.
The surgery was done out patient, in the Doctor's office with the woman assisting. The surgery took less than 30 minutes. I had to buy a 2 piece package of support hose, (only needing one) to wear until my next appointment, a week to 10 days later.
The surgery cost $3,300.
Now, if I were a right wingnut babbling about taxes I might say "That Doctor makes $6,600 per hour!!!!!!!
Maybe there's money to be saved by cutting back on what "Specialists" and "Surgeons" get paid?
By the way, I live outside Philly in Bucks County, I checked the Yellow Pages under "Physicians" and found 14 pages of names.
I know some are doubles, but whatever happened to the idea that competition keeps costs down?
I'm sure I'm over simplifying, but what the hell. :-)
April 11, 2008 2:25 PM | Reply | Permalink
A much stronger case could be made for a universal program if the feds could get the failure out of the programs they run now. A record of failure is not a good resume for an expansion.
April 11, 2008 4:42 PM | Reply | Permalink
Amen.
People keep using the 'free market' pricing argument to keep insurance companies involved. The way I see it, when the individual patient doesn't scrutinize the bill at all (for whatever reason) the free market isn't having a influence on the prices.
I'm deeply concerned that a proposed government program would mandate coverage by 'for profit' insurance companies, this would likely increase cost abuse, not reign it in - no matter how many people participate or not.
The mandate is blaming individuals for the abusive nature of the insurance system. In my opinion its rewarding the bad behavior of insurance companies (pre-existing exclusions, covered/not covered expenses etc.) with a government contract to keep up the good work.
I think we should take a measured approaches. Start by making it illegal to exclude for any reason and make everything covered no exceptions. Doing that might actually provide a product people would be willing to pay for without a government mandate.
April 11, 2008 5:55 PM | Reply | Permalink
Re: And now we are talking about covering 47 million uninsured Americans, many of whom haven’t seen a doctor for years.
Is the above really true? I am skpetical for two reasons: first, that 47 million is not a static population. People cycle in and out of it continually. Heck, I tend to be annoyingly responsible, but even I was uninsured in the months of March and July of 2006. Secondly, seeing a doctor is not all that expensive. You can do so out of pocket for not much more than it takes to fill your gas tank. Now it is true that a lot of medical procedures and some drugs are very expensive and there are certainly people who have put off those procedures and not taken those drugs. However even their costs are not entirely off the current ledger: sooner or later their procrastination does show up on the books, generally as uncompensated care when their conditions grow so serious they can't be ignored and they can't pay the resulting bills. Indeed, when talking about covering the uninsured we also need to subtract the current costs of uncompensated care (which may be well hidden in the system) from what anticipate having to spend.
Re: Southern Congressmen refused to vote for the legislation if healthcare providers were going to be paid the same amount to treat poor (i.e. black) patients as they were paid to care for older white patients.
Were they really that dumb? I mean, an awful lot (a majority in fact) of Medicaid's patients are white, while there are at least some Blacks in the elderly Medicare population.
Re: We are a nation of drug addicts - addicted to largely useless drugs which we prefer to take rather than alter our lifestyles.
With respect, that's bullshit. I am prepared to believe that there are some dubious drugs in the pharmacopia and that some drugs are overprescribed (the latter I can even believe in moderately common). But referring to the entire pharmacopia as "useless" is beyond even hyperbole. Also, the major unhealthy component of our lifestyle, responsible for by far the largest anount of healthcare spending and the vast majority of deaths, is something we will never escape no matter what wonders we create or how ascetic we live. Because we will never be able to secede from the rule of Time and Entropy. I am speaking about simple aging, and there is no lifestyle choice (other than a youthful suicide) that will avoid it.
Re: Close down most drug company activities and let addicts go cold turkey or die.
Social Darwinism of a sort that would embarrass a 19th century robber baron. Even Marie Antoinette would hesitate to suggest that sort of policy to the public. Now for my counter: America is a rich country, fabulously so. We can afford our healthcare bill-- if the will is there to do so. That's what lacking, the will and the decision to spend the money (which of course means raising the revenues to do so, in defiance of Grover Norquist and his ilk). Yes, I agree with Maggie that we need to get a handle on healthcare expenses, but I refuse to throw my hands up in despair and cry "Let them all die". They money is there. We just need to stop spending it on wasteful wars, future interest on public debt that should never be borrowed in the first place, etc.
April 11, 2008 6:39 PM | Reply | Permalink
@JonF311
With respect, that's bullshit
And you evidence for that is...? Because I'm a long-time member of a hospital board and I've been talking to doctors for YEARS about this problem.
Now for my counter: America is a rich country, fabulously so
You're out-of-touch on this one as well. 40 years ago we were fabulously wealthy. No longer. And we are about to get a lot poorer...when gas goes to $5 or more dollars per gallon and the economy continues to collapse.
Still, we spend quite a bit more on health care than any other country. But that, too, will change very fast. The governor of California has proposed a 10% cut in health care services (in response to a massive budget deficit) and he'll get his way, mostly. That will result is hospital closures in many rural areas and severe over-crowding in the rest. Probably the same thing will happen in urban areas - which will result in a complete collapse of the emergency room system.
You ought to get out more often. It seems you've been living in an ideological bubble for a couple of decades at least.
April 12, 2008 10:30 PM | Reply | Permalink
Re: Because I'm a long-time member of a hospital board and I've been talking to doctors for YEARS about this problem.
And this gives you the right to sit in judgment over millions of people you don't know and never will and condemn them for their excesses. Pat Robertson without the Bible and the TV show.
Re: You're out-of-touch on this one as well. 40 years ago we were fabulously wealthy.
No, you are wrong about that, though it's easy to see why (although America's GDP is not exactly an unknown number). The problem we face is not a lack of resources, it's their distribution. We have a tiny fraction of the population controlling a huge portion of the country's total wealth and receiving a huge portion of its total income. With the political will (which we don't seem to have, I grant you) we could capture some of that and use it for universal healthcare and other public goods. It's a problem of the will being weak, not the resources lacking.
Re: when gas goes to $5 or more dollars per gallon and the economy continues to collapse.
That is not going to happen. Once we stop stirring up the hornet's nest in the Middle East and someone gets serious about knee-capping the oil and gas speculation market, oil will return to roughly $50/bbl and gas should fall back to the low $2/gal range. Remember how it dropped precipitously in Sep 2006, prompting speculation about someone trying to influence the election? That was mainly the result of an arcane rules change that (temporarily) killed the speculation market. Then it was quietly allowed to reinflate all last year. But it could be done again-- and should be. There's as much a bubble in oil and other commodities (including food) as there was in housing. And bubbles never last. Morever this bubble is profoundly immoral. The tech bubble of the late 90s cost people money, the housing bubble is costing them their homes. But this bubble will soon be killing people by starvation in the poorer countries. I criticize folks around here for acting like Jacobins, but this is one matter I'll be happy to shout "Les aristos aux lanternes!" along with them.
Re: Probably the same thing will happen in urban areas - which will result in a complete collapse of the emergency room system.
Nope. But they will have to be restructured. And with universal healthcare emergency rooms will no longer be swamped with the uninsured, so a big part of that problem would be solved. I mentioned this to Maggie's original post elswhere: when we do the accounting for universal healthcare we need to remember that we are not so much bringing in new costs to the system as we are shifting existing costs to more rational (and ethical) avenues. There aren't really 47 million people without healthcare, there are 47 million people whose healthcare is being funded via the cost shifts inhgerent in "uncompensated care". There is never such a thing as an unpaid bill.
April 13, 2008 8:32 AM | Reply | Permalink
I agree you have to confront the cost issue but if you focus your message on costs you affirm movement conservatives who'll use "costs" to undermine any proposal we present. How do you cut costs? You cut benefits and cut the number of people receiving them. Simple. No studies needed. Just get out that red pencil.
You don't SELL costs. You sell benefits. If you can't convince people the benefits out weigh the costs, there is no point in making an argument.
April 11, 2008 6:49 PM | Reply | Permalink
bluebell says:
"You don't SELL costs. You sell benefits. If you can't convince people the benefits out weigh the costs, there is no point in making an argument."
bluebell, excellent observation.
April 11, 2008 9:05 PM | Reply | Permalink
Smoking causes disease during life, as well as an early death. This increases the demand for and cost of medical care. And the fact that smokers pay taxes on cigs is completely irrelevant to the percent of GDP spent here on health care.
"[V]ery few of us are going to die at home propped up on pillows and peacefully receiving the parting kisses of our nearest and dearest."
What motivates this little observation in a discussion of health care costs?
You can quit if you try.
This remark is a perfect example of Maggie's call on progressives to THINK before they blather.
Remember, ya gotta die of something, and very few of us are going to die at home propped up on pillows and peacefully receiving the parting kisses of our nearest and dearest.
Smokers die six years earlier than non-smokers. Result: huge pension and Social Security Trust Fund savings and reduced use of long-term nursing and old age services (less broken hips and Alzeimher's patients), savings transferred to non-smokers which they can use to subsidize their health costs.
And too, smokers pay huge amounts of use and sales taxes, far in excess of any claimed extra medical cost they are thought to impose on society -- again, to the benefit of non-smokers.
April 11, 2008 6:55 PM | Reply | Permalink
Smoking causes disease during life, as well as an early death. This increases the demand for and cost of medical care. And the fact that smokers pay taxes on cigs is completely irrelevant to the percent of GDP spent here on health care.
"[V]ery few of us are going to die at home propped up on pillows and peacefully receiving the parting kisses of our nearest and dearest."
What motivates this little observation in a discussion of health care costs?
You can quit if you try.
April 11, 2008 8:27 PM | Reply | Permalink
Thank you all for your comments
This is an interesting thread,
and I have many things I would like
to say in response to each of you.
But it's Friday night, 9:30, it's been
a bear of a week, and I'm just
coming up for air.
So I'll be back tomrrow with comments on
your comments--
And I hope more readers will
weigh in.
April 11, 2008 9:22 PM | Reply | Permalink
>Moreover, as I discussed on www.healthbeatblog.com in December, the money that we now pay private insurers to cover their administrative costs, advertising , marketing, exorbitant executive salaries and profits for shareholders adds up to just 4.5 percent of the nation’s $2.2 trillion health care bill.
This is a half truth. Private insurers are like cockroaches. It is not what they eat. It is what they spoil. Our medical system puts in huge efforts filling out multiple insurance forms, fighting insurers for covering stuff they already agreed to cover, pushing medical staff to treat in a profitable rather than unprofitable way by driving patients whose treatment expense exceeds their coverage away. So total administrative savings in switching to single payer are more like 15%. We spend about 30% of our total medical dollar on administration compared to most other nations which spend between 10% and 15% of their healthcare dollar on administration. That is a huge savings.
April 11, 2008 10:19 PM | Reply | Permalink
We must remove the middle man from health care. Insurance is for things like property, liability and life; NOT for a basic human right such as access to health care. Drug companies should not be allowed to advertise or to pay for lobbying or make campaign contributions. Hospitals should be put under the control of regional or state public service commissions who decide on budget and what new technology is needed. Do away wit itemized hospital bills completely and just cover their approved budget. Docs and all other individual providers should stay mostly private but the payment system should be from one place. This change in payment will save about 30% due to removing the red tape of insurance companies and the billing complexities for the vendors. The majority of our citizens want major change. The barrier is the money going to the politicians and their lack of concern for us. The only way to make a change is to show the politicians that voter power will out weigh money power. It can but we must get past our belief that our votes don't matter and prove to the politicians that they have to listen or lose their job.
April 12, 2008 8:06 AM | Reply | Permalink
Re: Do away wit itemized hospital bills completely and just cover their approved budget.
We need a great deal more flexibility than is provided by shoehorning everything into some "approved budget". What happens if there's a natural disaster or a flu outbreak? Does the hospital close its doors because it's gone over budget? Your suggestion would make things even worse than they are with the current system.
April 12, 2008 8:32 AM | Reply | Permalink
"Hospitals should be put under the control of regional or state public service commissions who decide on budget and what new technology is needed."
I think an interesting thing to consider is the effect 'bureaucratizing' the medical system would do to employment within it.
Would hospitals still be able to offer as much and as well paying employment to its clerical, nursing and maintenance staffs? What effect would this have on the individual communities.
"We must remove the middle man from health care. Insurance is for things like property, liability and life; NOT for a basic human right such as access to health care."
I agree.
I think all this talk of "Universal Healthcare" in the form of mandating insurance coverage completely falls for the insurance lobby's argument that "If only we had more participants, than we could cover more services and more people". Mandating every person purchase insurance is giving in to the insurance lobby's position.
I will agree that the huge variety and methods of the billing practices that each provider adopts is driving up costs.
Standardization would be a really good start. Talk to any doctor, they HATE the complexity of billing, they HAVE to hire legions of office personnel just to wade through it to get paid, and then pass on the costs in regards to their prices.
I think Congress should really start by passing legislation that gets rid of the 'small print' in policies. It's this small print that is misleading and ultimately expensive to the system as a whole.
April 12, 2008 9:33 PM | Reply | Permalink
@JonF311
And this gives you the right to sit in judgment over millions of people you don't know and never will and condemn them for their excesses
We're making progress. You are now willing to admit that we are a nation of drug addicts (see Jonathan Taplin's most recent post for additional confirmation)...but now contend I have no right to sit in judgement over them. By the way, how many rich people whom you've never met do you criticize?
The problem we face is not a lack of resources, it's their distribution.
All around you is evidence that's not true; peak oil, species extinction, water shortages, etc, etc, etc. But still you persist in your egalitarian fantasies. We spend more on health than any other country but that's not enough. The rich are still too greedy. Even if that were true how do you propose to dispossess them? You are sure that we spend too much on useless wars but you propose to engage in another civil war? The leadership we have is the leadership we elected. Obviously, you don't like our democracy because it doesn't behave the way you think it should.
That is not going to happen. Once we stop stirring up the hornet's nest in the Middle East and someone gets serious about knee-capping the oil and gas speculation market, oil will return to roughly $50/bbl and gas should fall back to the low $2/gal range. Remember how it dropped precipitously in Sep 2006, prompting speculation about someone trying to influence the election?
Speculation reigns because smart people anticipate further price rises. If there were anything at all to your manipulation theories the price of oil would be dropping precipitously to ensure a Republican victory. That it's not is proof that the powers that be have lost control.
April 13, 2008 8:55 AM | Reply | Permalink
@JonF311
You're right about a couple of things though. More rational billing would vastly increase the efficiency of the system. Universal health care, or some better way to treat the uninsured, would also help. So would tort reform.
However there are no easy shortcuts to achieving those things and, even if they were in place, the problems would still exist. Because modern health care is inherently, unavoidably too expensive for any society to provide to everyone. Just look at the French experience for confirmation. They had, and may still have, the best universal health care system in the world. They can't afford to keep it.
April 13, 2008 9:00 AM | Reply | Permalink
Re: You are now willing to admit that we are a nation of drug addicts
Plus ca change plus la meme chose. Humanity has always liked its drugs. But your POV is way too extreme. As I said, we probably have some minimally useful drugs out there, but there's also some very useful ones. Indeed, some of our drugs, though pricey, save us money by repalcing even pricier procedures.
Re: All around you is evidence that's not true; peak oil, species extinction, water shortages, etc, etc, etc. But still you persist in your egalitarian fantasies.
Yes, silly me-- I actually have progressive political beliefs instead of buying into various species of rightwing or leftwing doom and gloom. I have studied enough history to know that there is never an era without its particular form of Apocalyptism. A long time ago this used to be religious in nature-- Armageddon and the Day of Judgment is at hand! As we've secularized, our Armageddons have too. As I was growing up in the 80s it was Nuclear War. Then it was Global Warming. Now Peak Oil is elbowing Warming aside. Such dark imaginings save us from having to the hard, hard work of actually ordering our world justly, since if we're all doomed it doesn't matter. Well, the hell with that.
Re: They can't afford to keep it.
Prediction: they will keep it, but with reforms, perhaps major ones. Their voters will demand it. And there's the difference between us: you are preaching helplessness, I am preaching a "Just do it" form of optimism. And I believe it too: as long as we are not violating basic laws of nature and logic we can do anything we have sufficient will to attempt. I find your attitude quite inimical because such defeatism saps the will and allows the Right to implement its program by default. I've pointed this out on other threads and other blogs: pessimism does not win elections. Optimism (see: FDR, Ronald Reagan) does.
Re: The leadership we have is the leadership we elected.
And now we have a chance to make a major and important change in that leadership. So we should get off our duffs and ensure that the leadership we get will have both feet on the ground and a commitment to justice for all, not just for the well-heeled.
Re: Speculation reigns because smart people anticipate further price rises. If there were anything at all to your manipulation theories the price of oil would be dropping precipitously to ensure a Republican victory.
See again: housing bubble. A whole lot of "smart" people assumed those prices would rise forever too. Where are they now? As for your point about the price of oil dropping so the GOP can win the election, there's still plenty of time for that, The 2006 drop didn't come until Labor Day after all, allowing the oil companies to reap windfall profits all through the summer driving season. Though actually I am somewhat less paranoid than my post may have suggested. I don't necessatily think there is some man behind the curtain manipulating all this consciously. That's not how bubbles work. Moreover this is a worldwide phenomenon and a good many people who have bought into it don't give a damn who wins our election. But I really don't have much concern about my prediction that the bubble will burst sooner or later. Bubbles always do.
April 13, 2008 10:02 AM | Reply | Permalink
@JonF311
Where are they now?
The smart ones are very rich. The others are crying their eyes out. That's how all Ponzi schemes work.
April 13, 2008 10:39 AM | Reply | Permalink
@JonF311
Humanity has always liked its drugs.
Yes, but it didn't always have expensive health care to try to remedy the side effects. You got lung cancer or cirrhosis, your family paid for what little treatment was available or didn't, and you died badly or worse.
But your POV is way too extreme.
Sorry, no, you've got it backwards. Certainly, there are useful drugs. Certainly, medicine has made great strides in health care. But the epidemic of drug dependence exceeds anything previously known.
Now Peak Oil is elbowing Warming aside.
Yes, it's difficult to separate fact from paranoia. Consider, however, that continental U.S. oil production peaked around 1970, just as Hubbard predicted it would (that's why we're so desparate to maintain our hold on middle east oil). Consider that world peak oil has been predicted to occur about now - using updated versions of the same theory (Read "Twilight in the Desert"). Look into the supporting evidence from many sources (I recommend a book by the Cal Tech physicist Daniel Goodstein).
I find your attitude quite inimical because such defeatism saps the will
It is difficult to distinguish unpleasant realism from defeatism. In defense, I point out that our board has rescued our hospital from bankruptcy and turned it into a fine institution, and that we are right now fighting the governor of California in his attempt to remove critical funding. Can you say you've done as much?
April 13, 2008 10:37 AM | Reply | Permalink
Maggie makes several main points in her article.
1) That the progressive community must find a way to bridge the financial and political social divide that saps the ability to find a common-good solution to our health care debacle.
2) The pro major reform proponents must avoid her perceived trap of a cost based argument (savings) as the savings from post reform administrative efficiency are overrated.
3) Single payer health will result in small administrative savings but offers the ability to sift out inappropriate treatments that (avoiding the savings argument) harm us.
Any analysis of why health care needs reform because of the cost of health care however is doomed to answer with a cost based solution. I think she gets trapped by her analysis and ultimately dresses up savings as “better, less harmful health care.” It seems an artifice.
An analysis of the failings of our current system should not be reduced to numbers of uninsured, or annual rates of increased cost, or even of some measure of efficiency of administrative to patient service dollars. Rather, the fundamental organizing principle of health care is mistaken and needs to be addressed. Doing so may not bridge the social divide of which she speaks, but doing so will put the progressive pro reform proponents on a path that will lead to better political framing, better policy initiatives that hopefully can reach out and cross financial strata. First things first.
Let us understand that the motivation behind our system’s organization is almost entirely based on reimbursements. Traditionally, fee for service was the norm. That says it all. The Common Procedural Terminology (CPT) code set is how all medical and health care procedures are described. Each code carries a unit value (RVU) that gets a dollar amount per unit applied depending on what type of service is involved. For example surgical units are valued at a different rate than radiology or anesthesiology or medical units, etc.). Each CPT code represents a service that translates into a dollar amount of billed services. As new procedures requiring more skill came into being, they got coded up into higher and higher relative units of service.
In the 90’s, managed care introduced constraints on the fee for service model. Preferred Provider Organizations (PPO) meant that providers agreed to take a discounted return on the CPT value of their services. Initially those rates were discounted as a percentage. Patients faced financial disincentives to go outside the PPO network. More recently PPO rates are disconnected from the CPT values but still require CPT billing (go figure!). HMO plans limit the total reimbursement for health care by paying the Primary Care Provider (PCP) a monthly amount from which the PCP pays any specialist, laboratory, or hospital for required services that the PCP thinks of as necessary. PCP groups who had contracts with HMO plans had to establish contracted service lines with labs, hospitals, specialists to survive. Those contract lines discounted the usual CPT rates sharply and led to the aggregation of health care into the major multi-specialty groups that we see today. While shifting risk from the insurance company to the PCP, the HMO asserts the fundamentals of the traditional system’s reliance on the control of CPT reimbursement as the basis of our system.
There are major negative consequences of our system being based on CPT code reimbursements (either their maximization of their minimization depending on which side of the bill you are on or what type of plan is being accessed).
1. Every component of the system is continuously adapting to maximize its financial advantage often at the expense of an individual patient’s health and ultimately costing the system more to provide care.
2. The system has gotten too complicated with too many layers vying for relative advantage. Understanding the different administrative elements in any given patient’s care is a complicated task requiring expertise.
3. Providers incentives to maximize CPT based reimbursement is inherent in the system and it is often at the expense of better qualitative outcomes or cheaper alternatives for the patient. This is especially true in end of life care circumstances.
4. For-profit insurance companies are just that; for profit.
5. Non-profit provider organizations have become all consumed by considerations of the bottom line. Non-profit insurance companies are attempting to convert to for-profit and cash in on the money being made by the payer community. The process of short term profit seeking is destructive to the system as a whole and often detrimental to patients’ health.
6. The many different payers within that community have each implemented cost saving measures that in aggregate create a huge administrative burden on providers who contract with hundreds of different payers.
7. The balancing economic forces of the marketplace have been disconnected from the patient- provider relationship and taken away from the health care consumer’s discretion. It is not a free market system.
8. Patient choice is limited by health care contracts they don’t choose, but that restrict their choice of providers.
9. Providers are often limited from entering contracts with payers. Provider choice is limited by the insurance contract process that is one sided, take-it-or-leave-it.
10. Payer pressure has caused providers to consolidate into corporate entities and/ or seek refuge in expensive umbrella organizations that further remove them from the contracting process.
11. Payer pressure on providers via tracking and influencing utilization patterns undercuts the provider’s ability to care for the patient.
12. Basic care is becoming increasingly difficult to deliver and obtain because insurance and the uncovered portion of health care is more expensive or fewer physicians accept the available insurances.
13. Basic care is diminishing under reduced primary care rates and increased time pressures that primary care physicians face.
14. The common procedure terminology code structure (CPT) places more importance and value on procedures rather than education. The system is pushed to over use intervention and under-use patient education and instruction in self management.
Whew! I could go on and on. With increasing breakdown of the CPT based reimbursement system we need to look for alternatives. Replacing the private insurance based system with a single payer system won’t really change anything unless we also change the CPT based foundations. We will just postpone the breakdown for a few years at best.
Outcomes based reimbursements and relationship based reimbursements seem two likely alternatives. They are mutually compatible. They require transition away from private health plan independence either by use of single payer mechanism or by government regulatory control over health care system functions and products. In this argument, single payer health care is not a goal, nor is it a requirement. It is a mechanism of transition to a more sensible system that restores free market initiatives. It is a sustainable alternative. I will offer this model in the near future.
April 13, 2008 12:31 PM | Reply | Permalink
Re: Yes, it's difficult to separate fact from paranoia
I also acknowledge the reality of peak oil, and global warming. And yes, even nuclear war was and remains a real danger. But I do object to exaggerating these dangers and to counsels of despair. In regards to oil, we really do have a bubble: the prices have gone up too far too fast to be accounted for by purely economic causes. We should be seeing a gradual rise in prices, strung out over decades, not compressed into a couple of years. That is what Bush's Middle Eastern policy has brought us, and that is what has largely enabled the speculative bubble too. As housing collapses the get-rich-quick types have been sinking money in commodities instead.
As for what we can do about it, we really, really need to prick the bubble. Not only is that morally imperative (starving poor people in Haiti etc.) but that investment money needs to go into alternate fuels and other technologies not into yet another ponzi scheme. At least the tech bubble did fund a truly transformative technological revolution. We need that in alternative energy, maybe in nanotech and biotech too.
Now, as for healthcare, I see that no one here has mentioned certain crucial facts about healthcare spending: the bulk of it is concentrated on a small number of chronically ill people (the 80/20 rule: 20% of the people account for 80% of the spending) and much of it in the last months of life. That is where a debate about healthcare costs needs to go: how can we manage chronic (and often terminal, at least long term) illnesses better and especially how can we deal with end-of-life care without throwing vast wads of cash at it?
April 13, 2008 1:44 PM | Reply | Permalink
re end of life care:
Medicare on an experiemntal basis recently altered its policy about Hospice coverage to allow beneficiaries to both seek curative medical treatment and participate in hospice. This has been a huge success w almost 80% of participants electing to reduce intensive heroic care and increase their dignity. This program needs expansion.
End of life specialists should become a mandatory screening for specific interventions in the cases of specific diagnostic groups. CPT codes used by those end of life specialists should be increased to attract more such slecialists into that line of work.
Likewise, CPT codes should have their values age adjusted and risk adjusted with decreased value placed on those codes when used in cases unikely to restore future contributions to society or in cases that have huge increased morbidity risks. Does it make sense to perform heart valve replacement on a 90 YO woman when that procedure has a 30% stroke outcome in her age? Should the incentives to perform it be the same as those for the same procedure in a 25 YO woman?
April 13, 2008 3:38 PM | Reply | Permalink
Although the administrative efficiencies of changing to a single payer system are often characterized as a "one-time savings," since it would change the trajectory of the cost escalation curve, it is actually a gift that keeps on giving. Many other features of the single payer model also have perpetual beneficial impacts on future health care costs.
As a monopsony, a single payer system would realign incentives to reinforce our primary care infrastructure which would provide higher quality care at a lower cost. Providing everyone with access to a primary care medical home would also enhance the partnership between the patient and the health care professional which would improve efficiency in selecting high-tech services, thereby reducing some of the excesses demonstrated by the Dartmouth studies.
Prices are much higher in the United States, but they would be addressed through price negotiation - paying for legitimate costs plus fair profits, but not for excesses (such as DTC advertising, or restart-the-patent-clock drugs).
Separate budgeting of capital improvements would reduce the excess capacity that has been demonstrated to increase inappropriate over-utilization, especially of expensive, high-tech services.
Narrowly targeting cost containment efforts to individual reform measures can have only a modest impact in overall cost increases. In contrast, comprehensive financing reform can provide the avenue for the broad health care infrastructure improvement that we desperately need. A single payer national health program would do it, but it would be almost impossible if we continued with our dysfunctional, fragmented system of public programs and private plans. Actually we could come close with a combination of public programs plus a very highly regulated private insurance industry, but that is by far the most expensive model of reform, and we would still fall short on many important goals.
April 13, 2008 3:42 PM | Reply | Permalink
a motivation for redundant service facilities is that competing vertical health delivery systems need to control their contracting costs w facilites to protect the managed care revenue from erosion by contracted expenses.
In my small city, Sutter Health will build a new hospital across the street from an existing one to eliminate the contract costs they have with the existing one and protect their managed care money.
A single payer system (SPH) would eliminate those redundancies. But A SPH system is not a goal in of itself. It would allow us to reassert the fundamental relationship between patient and provider and base the choice of providers on health outcomes rather than on contract negotiations.
April 13, 2008 3:51 PM | Reply | Permalink
Thanks for all of your comments.
I’m sorry I didn’t come back yesterday, but my laptop broke down. Today,
it magically, inexplicably ,began to work again. I have absolutely no idea how or why.
I haven’t been contributing to TPM café in recent months because I’ve been snowed under with my own new blog for The Century Foundation—(www.healthbeatblog.org)
But it’s good to be back, and to hear some familiar voices. Now that I’ve gotten my blog more
or less under control, I do plan to get back into the habit of posting here, on TPM.
Below responses to individual comments, beginning from the top.
Art Appraisor—It’s very good to hear from you again.
You write: “A final point I might add: consider what happens if, instead of raising general taxes to pay for increased Medicare costs, Congress starts raising the monthly premiums the retired already have to pay for Medicare, and/or co-pays, deductibles, etc. When everyone is hearing complaints from elderly relatives about that, it will be easier for conservatives to make people afraid of changing to more government involvement.”
You are right: if we let Medicare co-pays and deductibles continue to rise, people who greatly admired Medicare six years ago will see it as a failed project.
This, I’m afraid is what many conservatives want. They would liketo get rid of Medicare by privatizing it. (See my most recent post on www.healthbeat.blog. It's about privatized Medicare--Medicare Anvantage.)
And this is why we need to reform Medicare as soon as possible—cutting out the hazardous waste, raising the quality of care, and making it more affordable.
Thanks very much for the kind words about the posts..
Ellen & Wigmarx—
Wigmarx, I absolutely agree about getting rid of the TV ads.
But when it comes to obesity and smoking, it’s very important to understand that both
are linked to poverty. And while medical science has found a way to deal with one of these problems, it is helpless in the face of the other.
Begin with obesity and poverty. Poor people eat more foods high in carbs and fats
because they are much cheaper—and filling. Go to a grocery store in a low-income neighborhood and try to find fresh fish, fruits, vegetables, good meat . . If you find them at all, the prices will be very, very high.
Poor people also don’t have the same opportunities to exercise. They don’t belong to gyms.
And they’re not likely to go jogging early in the morning or in the evening after they comehome for work—too dangerous in the neighborhoods where they live.
Ghd public schools that their children go to don’t have playyards, may not have a gymnasium, regular gym periods, or a gym teacher (particularly in elementary schools.)
Finally, if you are poor, you are likely to be both depressed and quite anxious. You have a
lot to worry about: your kids getting hurt in the neighborhood; losing your job; getting a job;
your sister, who is an addict; your mother who is diabetic . . .etc. etc.
People who are very depressed or anxious tend to self-medicate: eating, smoking, and drinking in
excess are ways to feel better, and calm your nerves . . . You can’t afford a shrink. Or the medication a shrink might prescribe.
Finally when it comes to smoking, doctors have figured out how to help people quit smoking. Good
smoking cessation clinics are very successful. But we have far too few. Why? Because helping poor
people stop smoking is not very profitable. This is an area where the government needs to step in.
When it comes to obesity, this turns out to be a much more complicated problem. It’s a combination of the genes you inherited, environmental factors and psychological factors.
We just don’t’ understand obesity very well. Physicians who specialize it his area can help
patients lose weight—but they can’t Help Them Keep It Off. We don’t know why. The most conscientious patients who desperately want to lose weight follow their doctor’s instructions--and still regain the weight
So when you are tempted to blame obese people for being obese, you need to remember that
a) You are blaming them for being poor and
b) even physicians don’t know how to help them lose the weight long-term.
I’m afraid I have to break off now—other work to do. But I hope you all keep the thread going, and
I’ll come back to respond to the rest of the comments tomorrow.
April 13, 2008 8:21 PM | Reply | Permalink
. . . helping poor people stop smoking . . . is an area where the government needs to step in.
Why? It's one of the few legal pleasures available to the poor -- at least until Wigmarx gets his way and taxes them out of it.
April 13, 2008 9:46 PM | Reply | Permalink
I quit smoking, after 35 years, with a drug, Chantix (varenicline). Fantastically easy to stop, since it blocks the effect of nicotine. The connection to cigs is broken.
I got two other people to quit by using it. Over-the-counter price is equivalent to or less than I spent on cigarettes. In my case, Blue Cross covered it.
There will always be hard choices concerning what efforts to make on behalf of someone in declining health, or with a terribly difficult-to-manage condition. Only by moving that question into public policy does the harsh result become a shared decision. It is not helpful to a cohesive society or country to have some receive lifesaving surgery or treatment, and not others, simply because of personal finances.
April 13, 2008 10:34 PM | Reply | Permalink
I quit smoking, after 35 years, with a drug, Chantix (varenicline). Fantastically easy to stop, since it blocks the effect of nicotine. The connection to cigs is broken.
I got two other people to quit by using it. Over-the-counter price is equivalent to or less than I spent on cigarettes. In my case, Blue Cross covered it.
There will always be hard choices concerning what efforts to make on behalf of someone in declining health, or with a terribly difficult-to-manage condition. Only by moving that question into public policy does the harsh result become a shared decision. It is not helpful to a cohesive society or country to have some receive lifesaving surgery or treatment, and not others, simply because of personal finances.
April 13, 2008 10:35 PM | Reply | Permalink
I quit smoking, after 35 years, with a drug, Chantix (varenicline). Fantastically easy to stop, since it blocks the effect of nicotine. The connection to cigs is broken.
I got two other people to quit by using it. Over-the-counter price is equivalent to or less than I spent on cigarettes. In my case, Blue Cross covered it.
There will always be hard choices concerning what efforts to make on behalf of someone in declining health, or with a terribly difficult-to-manage condition. Only by moving that question into public policy does the harsh result become a shared decision. It is not helpful to a cohesive society or country to have some receive lifesaving surgery or treatment, and not others, simply because of personal finances.
April 13, 2008 10:35 PM | Reply | Permalink
Where to start? A couple of excellent posts - jono1412 and dmccanne both seem to "get it."
I've worked in healthcare for a couple of decades - specifically Integrative and functional medicine . Yes, the overall system is hugely inefficient, single-ligand/single-receptor drugs do symptom suppression and don't actually "cure" much of anything, and we're spending way too much on administrative overhead - the complexities of our reimbursement system create costs for payers, caregivers, and employers. All those costs need to be considered when looking at the potential overhead savings in a single-payer system, and we're actually much closer to spending 50 to 70% of every healthcare dollar on inefficiencies and administrative overhead.
But the major advantage to single-payer is that it would shift the economic incentives from where they are now, and not just by virtue of what that would do to the "profit" or even the "cost savings" issue.
Back around 1994, Humana published a description of their "average" Medicare profile patient. That individual "presented with 4.3 chronic illnesses and took an average of 15-18 prescription medications." The hair rose on the back of my neck when I first read that, cause ladies and gentlemen, it says "We've Failed" like nothing else I've read.
We have more than just a "too expensive" or "wasteful" problem with our current system. The real issue is that virtually all the economic incentives are directly opposed to the kinds of care that "work," i.e. prevention and the kind of long-term, dedicated treatment - generally based on a nutritional platform - to actually "resolve" or "cure" complex chronic illnesses. Private payers don't want to cover these, because a healthy patient can leave their plan and bring the benefits of good care to another payer. Our coding systems weren't set up to pay for the kind of medicine that works, nutrition and supplements aren't covered but pharmaceutical "bandaids" are. And finally, we've destroyed the relationship at the heart of healthcare that used to provide half of the horsepower needed to heal anything. And so we keep trying to throw technology and efficiency at issues for which the lack of these was never the problem in the first place.
But there is a model for single-payer care that's not on the table now ... and it would actually cover everyone, cost us less money than we're paying now, and promote responsible innovation. I'd be happy to share ... Suzie
April 14, 2008 5:35 PM | Reply | Permalink