Despite all that I’ve written about healthcare reform I think it’s been some time (more than six years!) since I actually put down in black and white what sort of healthcare system I think we should have. That’s an essential question since our present system is so enormously out of whack that a little tinkering around the edges will not accomplish what we need to do and need to do soon. This is an opinion piece so I’m not going to source it. If you want to look at some facts, I’ll give you just two references: Gerald Anderson and Uwe Reinhardt’s paper, It’s the Prices, Stupid and usgovernmentspending.com. Those two should be enough to convince you that here in the United States we’re paying enormously more for what we’re receiving in healthcare than any other country in the world and that our current path is not sustainable, not merely in the long term but just in the next few years.
In order to say anything sensible about what should be I think you need to state your objectives first so here goes. I think that a good healthcare system would enable people to get some reasonable level of healthcare, that the system should produce a good general level of public health, that providers should earn a decent wage, and that from an economic standpoint the healthcare sector should not be a drag on other sectors of the economy or abroad.
In theory and at some point in time (i.e. the 1960s) we probably could have achieved those objectives with a reasonably free market solution. Conditions were substantially different then than they are now and IMO from a structural standpoint better. A market solution would be something along the lines that have been proposed by some Republicans and libertarians recently: high deductible health savings accounts, means-based subsidies, and so on. IMO the time has long passed when such a solution would be effective in a manner consistent with good public health (if it ever would have been).
Despite my general predispositions towards market solutions I believe that the situation in healthcare is along the lines of the old joke: you can’t get there from here. If anything my views have hardened since I wrote about this six years ago. I think we need to take private insurance companies and employers out of the picture with a single payer system (or, at the very least, private insurance companies should play a very different role as they do in Germany or France), I think there should be no for-profit co-ops or health maintenance organizations, I think that specialists should be salaried employees of hospitals and that hospitals should be run by the government (federal or state) and that their salaries should be set by law, that GPs can remain private but should be paid based on a capitation, and that there should be some restrictions on what the government single payer will pay for. I also recognize that practically everybody would despise the system I’m proposing.
If you’ve got a better idea that would allow patients to get all of the healthcare they want, insurance companies, hospitals and other healthcare providers, and all other parties involved to make as much money as they want, won’t drive the states and federal government bankrupt, won’t cause us to borrow to pay its operating expenses, and will produce a decent level of public health, I’m all ears. I don’t see it.
Now all you have to do is convince the American people and their elected representatives.
I think that people are pretty, shall we say, far from hinged on this topic. A system in which 60% of healthcare costs (our present system) are paid by government at various levels is a free market system and a system in which 90% of healthcare costs (France) is socialism? Please.
Every truly free market solution I’ve ever seen proposed writes off public health; every solution short of what I’m proposing writes off costs.
Well, all I can say is this: I lived in France for two years, and it was interesting how no one there had the fear of getting ill that I often see here.
One of my earliest memories of work here in the US was back in 1982, when the manager of the fast food place I worked at had an injured back, but he wouldn’t go to the doctor because he said he couldn’t afford it, so he lived with the pain.
Dave,
I think your version of single-payer would actually be really good if we could actually get there. I just don’t see it happening.
I would prefer a system with a proven track record. That could be a single payer, a French type system, Swiss, Singapore, Germany or several others. I think that they could be adapted to our needs. The most important part, I believe, is that we all be in the same kind of system. When they raise the prices for health care in France, they riot. It affects everyone (plus they seem to like to riot). In the US, coverage gets increased for different people at different times, never generating a response.
On HSAs in the 60s, I have to wonder if we would have seen the big spike in innovation and quality improvement we saw in the late 60s/70s that we had if there had not been a reliable funding source like Medicare. We would also have needed to find an alternative method to pay for training, which was a big part of the improvement in quality.
Steve
When I lived in Germany, I got out of the healthcare system by declaring myself “freiwillig unversichert.” Such a thing would suit me fine, since I am a confirmed non-believer in insurance of any kind. When I left Germany after 5 years because of its intractable socialism, they even paid me back my contributions to their “rentenversicherung”!
I am entitled to Medicare benefits and presumably to Obamacare benefits as well. I have paid into Medicare since 1965 and will be fined by Obamacare for not participating in it. Here I am at my home in Rio de Janeiro, entitled to benefit from neither Medicare nor Obamacare, which are not available to Amerikan expatriates.
Medical care is less essential to human life than are food and water. The way to run a medical care system is the way we run a supermarket system: Get the gummint the hell out, kill off licensing and certification, publish all pricing, charge everyone the same, grant no tax deductions for purchase of “food insurance,” and, basically, just let Walmart compete.
I don’t think the healthcare system in this country has a single problem but several. A healthcare system that met your standards (everybody under the same system) could be achieved several different ways in the United States. One way to achieve it would be to ban private health insurance, Medicare, Medicaid, veterans’ health benefits, and all similar programs with all healthcare expenses being paid out-of-pocket. Call it the “Jimbino system”.
BTW, if you take that system, subsidize the healthcare of the poor and the elderly and a couple of other groups, and allow private insurance, it is our system.
I believe that under that system public health would suffer. Those able to afford out-of-pocket healthcare would be overserved; the poor would be underserved.
If private health insurance were simply to be banned and all healthcare costs paid through a single payer system without other reforms, what other than the apparently non-existent determination of politicians to hold the line, prevents costs from rising?
I think the critical components of healthcare reform necessary for the United States are:
1. Get everybody under the same system.
2. Get private insurers out of the mix.
3. Remove incentives for over-treating and under-treating, over-serving and under-serving, and other forms of waste, fraud, and abuse.
That’s why I propose a single-payer system that also eliminates fee for service. As long as fee for service is preserved costs will continue to rise unacceptably. The system I’m proposing is essentially the one in use in all of the Scandinavian countries, generally rated the best in the world, particularly by its patients. It’s just as proven as the systems of France or Germany.
Applying my own criticism to the proposal, I think that the reason that such decentralized and egalitarian systems as prevail in the Scandinavian countries do so is because they are small and homogeneous, ethnically, religiously, politically, etc. Our size and diversity will necessarily dictate a system that varies in some ways from ours and probably won’t satisfy as high a proportion of the population as theirs do.
Our healthcare system is far more like our food production and distribution systems than it is like a purely free market system of the sort that you’re describing. Focusing on supermarkets misrepresents the system. It’s as though we started talking about a hospital system in isolation from doctors, healthcare, and patients.
We could probably “choose one” among the other more successful systems. It’s true. While they are not perfect, they are certainly less imperfect.
I still like vouchers though, to be taken to private (and non-profit) insurers. They’d put a market force in places, so that people could trade Blue Cross against Kaiser, and what they provide for “basic” and then “basic plus” (where the plus is an individuals higher contribution).
I say that in part because I think it could be made to work, and in part because I think that the right of center folk really do need two things in any solution: they need the poor to get less medical care than them, and they need the ability to pay more.
If you don’t give them those things, it’s “socialism” and they aren’t buying.
(Funny 30 Rock recently, when the Donaghys try too keep their daughter from being born in Canada.)
As long as there’s an auction system in which segments bid against each other and one of the segments has infinitely deep pockets, it will always produce a positive feedback condition and prices will always increase beyond control.
“Medical care is less essential to human life than are food and water. The way to run a medical care system is the way we run a supermarket system: Get the gummint the hell out, kill off licensing and certification, publish all pricing, charge everyone the same, grant no tax deductions for purchase of “food insurance,†and, basically, just let Walmart compete.”
Works great for those who do not get sick. While I agree with eliminating tax deductions, how do you charge everyone the same w/o govt interference? I dont do that now and wont do it in the future unless you enforce it by govt rulings. People wont publish prices either w/o govt laws requiring it. Under your proposal how does a young couple just out of school pay for the care of a premature baby if they have one? If they cannot pay, do I get to turn off the kid’s ventilator? It breaks my heart when I have to do that for kids, so maybe you and a group of like minded could come in to help out? How do the poor afford bone marrow transplants and chemo? Prolonged hospitalizations after trauma?
For what you propose, people are relying upon the fact that if they get really sick, they will get bailed out by the government. I would have no problem with letting people opt out if they want to opt out permanently. I think that should also include Medicare so that the rest of us do not end up paying for delayed care.
Steve
” 1. Get everybody under the same system.
2. Get private insurers out of the mix.
3. Remove incentives for over-treating and under-treating, over-serving and under-serving, and other forms of waste, fraud, and abuse.”
Well, I clearly agree with #1. I am fairly agnostic on #2. Much of Europe uses private insurance companies and it seems to work pretty well with risk rating. I think any solution needs to be politically feasible. I think that makes single payer less likely. I think that have a smaller, homogeneous country would make almost any health plan easier to manage, but I dont think that excludes the possibility we could adapt a similar plan. In many ways I like the Singapore plan, but the libertarians and conservatives would have their heads explode once they understood it.
On #3, your first bit is really important. Physicians have the ability to create their own demand. The limits to this are unclear, but studies have clearly shown that when you concentrate docs in an area, they find ways to increase demand for their services. I also think that if you just decrease fees for individual services, that you will see an increase in services to make up for those cuts, at least to a significant degree. The key is to decrease utilization.
Waste, fraud and abuse is always popular. Just be aware that when you go after it on the insurance side, you increase costs on the provider side. Most of my billing costs come from private insurance.
Steve
I don’t know Dave, if your single payer can set limits, then so can a basic healthcare voucher. Now, if you are saying your own proposal also has this infinitely deep pockets problem, alrighty then.
It does. That’s why I’m trying to mitigate that by changing the way providers are compensated and making it harder to game. It’s why I think that paying specialists a wage and GPs based on how many patients they treat is a crucial part of any plan that actually reduces costs.
There will still be problems with continually rising wages (even as most other people in the country’s wages stay the same or fall) but IMO it will be easier to control than trying to control it when compensation is based on procedures. The fee for services provides for two different ways to increase costs: higher rates per procedure and more procedures.
Setting wages might be fine, if you could do it. This site and OTB have been similar lately in that they have folk comparing pet plans that have no hope of national attention, let alone acceptance.
I would hope that by compensating for procedure you could get Kaiser to try to undercut costs on that procedure by more than Blue Cross, and hence expand their (non-profit) margin.
But, that’s a long way from political possibility. My problem with vouchers is that the constituency that would be most likely to back them is currently holding the line that less government healthcare is better healthcare, and rolling back the clock would actually reduce expenditures. We know that doesn’t’ work. Rolling back the clock just doubles-down on the current projections toward unsustainabilty.
A relatively easy start might be demanding some transparency in pricing, an end to the tyranny of the prescription pad and an end to ridiculous drug paranoia.
I carry a high deductible so I have an incentive to watch my expenses. Unfortunately there’s almost nothing I can do.
Can I diagnose my own apnea? Yes. Google and I did it just fine, but of course I still have to spend a 1000 dollars and waste a perfectly good night. Will I promise to call my doctor if after 20 uneventful years the Zocor suddenly makes me turn yellow? Yes. Am I going to kill myself if I get 90 or 120 Ambien at a time instead of making multiple pharmacy visits? I have a car and a gas stove: plenty of other ways to off myself.
Check-ups that don’t check anything, taking my home-schooled son to a doctor so he can get a check-up that includes a drug lecture? What?
I think any hope that individuals can push back on medical costs is made futile by the absurdities of medicine. They’ve built a machine the average guy can’t game, but they can.
Which is why I haven’t mentioned the direction that I think would work since six years ago. You can’t exactly say I’ve been perseverating about it.
Since the last time I suggested a plan, healthcare spending has increased about 30%. That’s not to say that we’re getting a lot healthier—essentially, we’re just spending more for the same healthcare. As has been said before anything that can’t be sustained won’t. Check the domestic news. The underlying issue behind budget problems in California or Illinois and the Wisconsin governor wanting to prohibit public employees’ unions from collective bargaining about benefits is rising healthcare costs.
Well that’s the thing. We might be on the cusp of a change with regard to public employee compensation. I’m sure there are still many under-paid civil servants, but I think in some regions and in some fields we have the over-compensated.
It would be a good outcome if discussion going forward started with current compensation rather than “we must value our ____”.
Sure I value you ;-), but tell me what you make before I give you another raise.
Dave Shuler: How does your healthcare system propose to deliver health care to me and other Amerikan expatriates? Do you propose to pay providers in Mexico, Costa Rica and Brazil, or do you propose to let us opt out?
Steve: When you walk into Walmart, you know that the price you pay is the same price that every other Amerikan pays, so that saves you a lot of research into what the fair price should be. Walmart does not do a “wallet biopsy” when you walk in the door. You can find their pricing, and that of their competitors Sears and Kmart right there on the Web. When you call to ask for a price, you are not met with “Do you have insurance?” as the first response to your inquiry.
Dave Schuler:
If you do not like my analogy to food delivery, consider this:
Plumbing is 90% of health care, though Americans both don’t understand that or have long taken it for granted. We should run health care like we do the plumbing industry in Texas: No certification unless public health is directly involved, worldwide competitions, no tax-subsidized insurance required, prices available right on the Web, same price offered to all at the retail level, no “wallet biopsies,” no charging expatriates for installation of Amerikan plumbing when they are living in another country!
Even if Obamacare or your plan caused prices to drop and health care to be more available, I still wouldn’t participate, for these reasons:
Just as I wouldn’t do business with a doctor or hospital that will not serve women’s contraceptive, abortion or IVF needs, I won’t do business with docs who agree to work basically as gummint employees. I wouldn’t work in a job that is unionized and I sure wouldn’t send my kids for an “education” where the teachers, as in Wisconsin, are unionized.
I’m only a rocket scientist, but when I look for jobs, I won’t work for any employer who runs a credit check, asks for my Facebook account info or requires a drug test.
If I were hiring, I wouldn’t hire anyone who would submit to any of those privacy incursions either.
I imagine a lot of docs and other healthcare providers feel the same way. With the Schuler plan or Obamacare, we will see a lot of docs drop out–certainly the ones of quality who, by my definition, are those who are anti-union, pro-choice, anti-gummint, etc. Unfortunately for Amerikans, but fortunately for me and other expatriates, many will show up in other countries, like Mexico, where they are freer to practice real medicine.
Even if I were in Amerika, I wouldn’t submit to Obamacare, since the last thing I would do would be to allow a doc to make a record of my medical care available to the gummint or to an employer or anyone else.
My preference is startlingly similar to John Personna’s (I didn’t know we were allowed to agree on anything). By keeping the entities non-profit, I think you avoid a good deal of the price escalation. You might also be able to force voucher-eligible insurance companies to offer a plan that meets certain (rather basic) criteria for the price of the voucher but no more.
I am also very sympathetic to Dave’s idea regarding physician pay structure, though I think it’s a tough sell shuttering the Catholic (Presbyterian, Methodist, and other religious) hospitals. Interestingly, doctors (even FP’s) becoming employees of hospitals is becoming increasingly common. My wife went that route and the local hospital bought up 2/3 of the local practices in recent years.
That’s one of the consequences of the ARRA.
Hastened by it, but it was already starting when my wife was finishing up her residency.
Jimbino:
You sound a wee bit nuts.
“Steve: When you walk into Walmart, you know that the price you pay is the same price that every other Amerikan pays, so that saves you a lot of research into what the fair price should be.”
People usually understand what they are buying at Walmart. They are not usually under a lot of emotional stress. They are not usually older and sick. They are not usually in pain. These are the patients I see every day, not young healthy internet know-it-alls. The choices are much more clear at Walmart. Strangely enough, when I take a 6 month old child out of a mother’s arms to go have surgery, they look pretty stressed out. In medicine we deal with probabilities, not certainties and we also deal with problems that exist over a period of time.
While I think some aspects of medicine might be amenable to market reforms, especially primary care, that is not where the real money is spent.
Steve
steve:
I had a six minute old child taken from my arms for a long ride to NICU. Neither my wife nor I had a lot of time for comparison shopping. The NICU didn’t look much like a Wal-Mart, either. More like the inside of a nuclear sub officered a bunch of nurses who cannot possibly be well enough paid.
On the other hand, my GP could use some Wal-Martification.
You can save your ad hominems, Steve.
“People usually understand what they are buying at Walmart. They are not usually under a lot of emotional stress. They are not usually older and sick. They are not usually in pain. These are the patients I see every day, not young healthy internet know-it-alls. The choices are much more clear at Walmart. Strangely enough, when I take a 6 month old child out of a mother’s arms to go have surgery, they look pretty stressed out. In medicine we deal with probabilities, not certainties and we also deal with problems that exist over a period of time.”
When people are stressed, sick or unconscious, they could hire someone who is a professional to negotiate with doctors and hospitals. But doctors and hospitals would still put up roadblocks to consumer information as they do now.
If we accept your argument at face value, those stressed-out patients you deal with are in no position, legally, to enter into a binding contract with you, meaning that payment for your services can be negotiated by a lawyer after the fact, something you may not like.
I have indeed twice done that for friends, saving each of them over $1000 in doc, hospital and lab fees. If you don’t like that, publish your prices, charge everyone the same, and stop hiding consumer information. Much as I loathe Obamacare, I take comfort in the thought that all you consumer-unfriendly docs and hospitals will soon become government employees and institutions, while Walmart will go on proudly and privately satisfying the Amerikan people.
Funny and tragic it is that stressed-out pets and their owners get better consumer service from vets in Amerika than do people from docs. If Obama were aware of that, we’d have compulsory pet insurance, I’m afraid.
Furthermore, Steve, all your talk about stressed-out patients is a distraction. I have boatloads of experience dealing with docs and dentists, where I always start out unstressed, only to end up totally stressed out by the docs and dentists.
Recently, thoroughly unstressed, I called around to all the dentists in my area of Austin, TX to find out the prices for routine tooth cleaning and a filling. This is information that should be published on the Web and that is indeed published by Amerikan-trained dentists practicing in Mexico. It takes a conscientious consumer forever to determine simple pricing. Of course, the first thing the brainless front-desk minion asks you when you ask for pricing is, “Do you have insurance?”
Then, thoroughly unstressed, I called around for pricing for a routine colonoscopy. Same thing. Even the vaunted Anderson Cancer Clinic in Houston took an hour to answer my question as to pricing of a routine procedure, and I had to get through to a supervisor to get that. And she came back with a price that was some 20 times the Medicare allowance for the same procedure!
Too bad Medicare, Medicaid and Obamacare funds can’t be spent in Mexico, Hungary, Czech Republic and Costa Rica, where treatment is good and cheap. It’s good to know that I, an expatriate Amerikan, will have the right to vote on your wages and working conditions now that you will be a mere government medical employee.
My perfect health care system would be something like what I read in “the undercover economist”. The government runs ALL emergency care and catastrophic insurance. This means emergency surgical procedures and cancer treatments etc. have to be dictated, probably at the state level.
All other elective or experimental surgeries, room upgrades, and procedures would be purchased with cash or private insurance. Well checks and the like would be cash or a workplace benefit.
In return for submitting to total government rule, trauma surgeons and obstetricians etc. would be given a clear, simple set of guidelines which, if followed would automatically exempt them from personal liability and they would be covered under a government run malpractice insurance.
Doctors not covered under the emergency/catastrophic government rule would be on their own for malpractice insurance.
Tyler Cowen also brought up an interesting twist on this – You and/or your insurance will be responsible for your first $100,000 in lifetime medical costs, beyond that, the government picks up the tab.
I would also make sure there is an easy, defined path from Physican Assistant / Nurse Practitioner to Physician that did not include starting all over again.
Excellent article. I agree the system needs to be completely re-done, as is so well pointed out by Deane Waldman, MD MBA in his book, Uproot U.S. Healthcare: To Reform Healthcare, which presents some hard facts on how our system became so “sick.” The author does a great job at empowering the reader to find solutions on how to fix healthcare.
Dave,
Single payer will not save you. It is not working anywhere. It wont work here. The “old joke” is that there is no solution without considerable pain and nobody is will to tolerate the pain so there is no solution.
You know this. You should admit it.
There is no “better idea” the solution set is the null set.
You may well be right, Steve, and I think you are right if we resolutely refuse to cut the pay of docs, hospitals, and everybody else in the healthcare sector.
However, I think there are slight glimmers of hope. If the U. S. cuts healthcare costs, it will slow the growth in healthcare costs worldwide. As largest and highest-bidding consumer, U. S. healthcare raises everybody’s healthcare costs.
And if we are incredibly fortunate the vast sums we’re spending on research might actually pay off. Genetic research, nanotechnology, computer technology, and the reasonably recently acquired knowledge of the immune system we’ve accrued over the last quarter century each have the potential to transform the healthcare system in ways we can’t even imagine.
Medieval weavers were very highly skilled and compensated; their successors who ran the automated looms weren’t nearly as highly skill or compensated but they produced a lot more cloth. Very much the same thing might happen in healthcare.
To be clear, I think there are alternative systems that could work at reducing costs now, reducing the growth rate, etc. Problem is that every single one of them will means cuts, problems, discomfort for various special interest groups and because so much of our health care is already via the government this makes it impossible to enact meaningful reform.
This doesn’t really fit with your observation that we both consume less health care than people in other countries and pay more. If this were true then I’d expect other countries to be paying as much or more than we are paying.
Yes, and if I’m incredibly fortunate I will the lottery and my retirement will be set. Not exactly the best policy proposal, IMO.
Sam is on the right track in his post above, as far as government handling catastrophic care.
I have written a blueprint in my book, Your Money or Your Life – An Introduction to The Health Care Crusade.
My overall plan works like this:
1. Emergency rooms are fully funded by tax dollars, just like fire and police stations. User fees are minimal, say $100.
2. Any medical costs above $10,000, or 15% of annual income, are paid for by Medicare Part A if the patient has no insurance.
This will cost taxpayers about $50 billion a year, less than 1% of payroll.
3. Medical bills less than the high deductible are the patient’s responsibility. Whether people buy a mini-med policy or have an HSA or just take their chances is not a federal concern.
However, the government will take several steps to help patients pay for non-catastrophic care:
– pharmaceutical price review boards, so that no drug costs more than about $40 a month;
– health courts, wherein a patient who feels price-gouged can go to a small claims court for free
– expanded public clinics, which charge sliding scale fees.
The goal of my program is to make health insurance a luxury — a nice thing to have, but not necessary to lead a decent life.
Any readers are free to learn more at bob.hertz@frontiernet.net
As a specialist I agree with the author here. The only way to control costs is to control specialists. The only way to control specialists is to put them on salary. If they are paid piecework they will do what it takes to make it. In the good old days when there was a relative shortage of specialists the shortage led them to only treat those they knew would end up with a good result. They had plenty to do. Now with a huge surplus of specialists it is about the income maintenance and the bills and the malpractice and the new office computer system and the PPOs and the marketer. The biggest mistake was to graduate too many doctors. In England they speak of the cure of he queue. It is true. A lot of what we see would get better if it was left alone for three months. Of course, to make it work we would have to relieve GPs of the risk of legal action by not referring things out. So the lawyers would have to get out of medicine……..fat chance……..