The end of an op-ed is a very strange place to put your premises but that’s what James Capretta and Scott Gottlieb have done in their Wall Street Journal op-ed sketching their proposals for the requirements of a program to replace the Affordable Care Act:
American health care is teetering because it relies too much on governmental coercion. A functioning marketplace can deliver high-quality care at lower cost. Now is the time to secure a system that empowers consumers to take command of their health care.
Those are actually six different premises and I’m not sure I agree with any of them. To restate they’re saying that
- The American healthcare system is teetering.
- Excessive government coercion is causing it to teeter.
- It is possible for the U. S. healthcare system to deliver high-quality care at lower cost.
- That can be effected by introducing a functioning marketplace.
- It is possible for ordinary Americans to “take command of their health care”.
- That can be done now.
What does it mean to say that “American health care is teetering”? If they mean that the present rate of cost increase cannot be sustained indefinitely, I’d agree. Otherwise I think I disagree. It’s certainly an idiosyncratic use of the word “teetering”.
The American health care system has never been larger, made more money, or been more effective. If that is teetering, I’ll have some. The present system has several defects:
- Too many people receive inadequate care.
- Others are over-treated.
- Between 50% and 70% of the present system is funded via tax dollars.
- The rate at which costs are increasing exceeds the rate at which the non-healthcare GDP is increasing, tax revenues are increasing, or non-healthcare income are increasing.
That’s simultaneously unjust, unhealthy, and unsustainable. You can prove the unsustainability part yourself by drawing some graphs on a piece of paper. Just assume that healthcare costs are presently about a quarter of total spending and that they’re rising three times as fast as revenues.
If the system isn’t teetering, it cannot be the case that government coercion is causing it to teeter. Even if healthcare is teetering and by “government coercion” they mean the Affordable Care Act, I challenge them to prove the claim. I think there’s a much better case that the rate at which costs are increasing is inducing the problems in our healthcare system.
I’m also skeptical of the claim that high-quality care can be delivered at lower cost. I’m confident that a uniform level of care could be delivered at lower cost. Would that uniform level of care be high quality? Would it even be adequate? What does “high quality” mean? I think it’s a campaign slogan rather than practical program.
Let’s jump to the “functioning market” point. What does that mean? It smacks of “no true Scotsman”. There has never been a national health care market and the very notion is nonsensical. There are actually thousands of little health care markets, none of them completely market-driven.
For our healthcare system to be completely market-driven we’d need to abandon government subsidies for healthcare, occupational licensing, government approval of treatments, procedures, and drugs, malpractice as the standard of medical misbehavior, and patents, just to hit the high points. Can you imagine our doing all of those? Me, neither.
I’m familiar with the studies that have shown that people can lower their healthcare costs by economizing. I’ve never seen a study that shows the ordinary people can economize and maintain a reasonable standard of health. Indeed, the studies I’ve seen suggest that people are as likely to economize on necessary care as on excessive care.
Rather than people taking control of their own healthcare, I think we’re stuck with letting professionals control their patients’ healthcare. The total volume of knowledge is just growing too fast for any other alternative. Professionals have considerable difficulty in keeping up with it.
Once you’ve accepted that, the opportunities become much more limited.
Only two things are needed to rationalize USSA health care:
1. Force all health care and drug providers to publish prices online.
2. Allow Medicare, Medicaid, insurance and HSA dollars to be spent overseas, same as cash.
I think free preventive care portion of the ACA has not worked. Making preventive care free does not increase usage, at least if other health care costs increase:
“Overall, the difference-in-differences analysis reveals that enrollees did not increase preventive care utilization in response to the benefit change and some subgroups, namely rural enrollees, meaningfully decreased preventive care utilization despite the fact that the benefit change decreased the price of prevention. These results reveal that there is a meaningful cross-price effect in that the increase in the price of curative care [i.e., non-preventative care] depressed preventive care usage, indicating that preventive care and curative care are complements.”
http://www.marikacabral.com/Cabral_CullenPreventiveCare.pdf
This is from a ten year study of a national company that reduced employee coverage to zero for preventative care, while increasing deductibles and co-pays for non-preventive care. It suggests to me that the cost of preventive care is not that cost-sensitive, and other factors like personality and distance/convenience in rural areas play an important role. Instead of price, the paper found that “an urgent curative care visit increases the probability of a subsequent preventive care claim soon after.” Therefore, if the cost of curative care increases, making people are reluctant to seek medical attention, they do not receive timely advise on preventative care.
I wonder if one could more generally describe the problem of “bundling” strategies in the healthcare industry. Take your child to an urgent care facility for a broken arm, and they check your health history to see if the kid needs immunizations. Go to the doctor for a free wellness visit, and they might order some services or prescriptions that are not free, so someone who just had their deductible increase substantially may put it off.
“reduced employee coverage to zero” = “reduced employee COST to zero”
The problem is that by eliminating deductibles and co-pays, there are no longer any cost controls:
“Childhood immunizations are so vital to public health that the Affordable Care Act mandates their coverage at no out-of-pocket cost and they are generally required for school entry. Once a loss leader for manufacturers, because they are often more expensive to produce than conventional drugs, vaccines now can be very profitable.”
The Price of Prevention: Vaccine Costs Are Soaring
Three remarks. First, there’s no such thing as anything free in healthcare insurance unless time and materials are being donated. Since that’s not the case these services are more properly described as bundled, something you get to later in your comment.
Second, the more things you bundle in that are not insurable risks, the more costly insurance will be. Preventive care, birth control, and childbirth (just to name a few) are not insurable risks.
Third, nobody except possibly the Democratic Congressional leadership, actually believed that bundling preventive care would lower costs, at least not in the near term. When most costs come in end-of-life care, how could it?
Even in the long term preventive care will have a negligible effect on costs as long as most of those costs are end-of-life. The mortality rate is 100%.
1) When you total health care spending from all sources, end of life spending accounts for about 13% of spending, per the following. Have seen higher estimates, but not hat were over half.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4638261/
2) PD- Preventive care per se probably increases total spending. However, there is some literature suggesting Value Based Insurance could cut costs. With this insurance, insurers charge less or offer care for free that cuts their total spending. Not limited to preventive.
3) There remains no example of market based health care that works. That works to hold costs down. The more market oriented the health insurance, the higher the costs if you look at this on a nation by nation basis.
4) May I safely assume that “take command of their health care†is one of those phrases that require me down a shot of bourbon each time I hear it?
Steve
I think the idea is absurd on its face. It reminds me of the wisecrack about if we had some ham we could make a ham and cheese sandwich if we had some cheese.
To me it seems so obvious. Humans, by nature, aren’t “preventative” in so many ways it should not surprise anyone that “free” preventative health care isn’t utilized. Plus I bet that 90% of the time the result of preventive care is advice from a doctor to exercise more and eat healthier.
As far as markets, there is definitely a health market for urgent care services in our area. Prices are listed upfront when you walk in and they are reasonable, there are several to choose from (4 near our house), there is rarely a wait. Although we have tricare, which covers just about everything, there are usually long lead-times for appointments and the staff is so overworked that we are never actually seen at the scheduled appointment time (one time we wait 3 hours because the clinic was so far behind). Urgent care is so much better for minor emergencies as well, even though the ER is technically free to us.
So for small stuff, we just go to urgent care and pay out of pocket (they don’t take tricare). We do the kids state required school physicals there every year and they’re only $20. To do those at our clinic I have to remember to make an appointment 2-3 months before the start of the school year. We are paying for better convenience, service and timeliness that we get with our otherwise excellent insurance coverage, which is admittedly a first-world problem.
So, as far as a “market” based approach, the only thing I can see that might work is a hybrid system that socializes catastrophic and significant long-term care (ie. make health insurance more like actual insurance) through whatever means and then privatizing most of the rest. People can then purchase coverage on the private market for non-catastrophic coverage or just pay out of pocket. Government would subsidize as necessary to ensure the poor can get at least the basics.
I think a key problem with this (which approximates what the Republicans have been suggesting) is that people don’t want it. They don’t want insurance, either. What they want is pre-paid healthcare in which they don’t bear most of the costs.
IMO that’s impossible except under a fully socialized system that is wholly committed to cost control. I don’t think that’s politically possible.
Oh I agree people don’t want it and I’m not advocating for it – I just think it’s probably the only way you can get some kind of workable market into the system. The politics of healthcare is such that I don’t expect much change until there is no other choice.
Personally, I’m ambivalent about ultimate solutions. I think there are many systems that have the potential to work here (once past the politics of course), but everything comes with trade offs.
@steve, I don’t have a problem w/ preventative care, I just don’t think it helps the ACA in any meaningful way, and there still needs to be some form of cost-control.
Immunizations, to the extent they are required for public health and herd immunity, fall into the category of public goods. My preference would be for the government to pay for immunizations, but in any event, if mandated, the provision of immunizations should be treated like a public utility, drug production and administration should be regulated at reasonable rates. A government agency should conduct a ratemaking and determine what a reasonable return for a drug company would be, and what it would cost for the drug to be administered (whether it be by Walmart, schools, health departments or physician’s office). The government sends checks upon proof of immunization once a month. No insurance involved.
I would consider whether it would make more sense for the government to buy out a drug patent in order to allow more companies to manufacture a given drug, but I’m guessing we’d still be back at the issue that once the government has granted a privilege via mandate, there will need to be a rate set.
I think this take immunizations more seriously than our current system. The main complication is that these public health issues take place both at the federal and state level.