For the last couple of weeks there has been increased interest in reforming the U. S. healthcare system. I think many of the pieces I’ve read have been well-intentioned but miss a key point. This piece by Deane Waldman at RealClearHealth certainly fits that description. Here’s a snippet:
News media are replete with stories about the killing of UnitedHealthcare CEO, Brian Thompson. While the murder mystery elements still dominate, a constant subtext is the perpetrator was angry at greedy insurance companies like UnitedHealthcare and frustrated that care is unaffordable and inaccessible.
With Trump in the White House and with the DOGE (Department of Government Efficiency) advising him how to improve efficiency of federal activities, radical reform may be possible, transforming healthcare to become affordable and accessible. Might there be anyone opposed to such transformation?” The surprising answer is, YES!
Who are these people? There are three reasons why some would resist: self-interest, wrong reform, and fear of change.
I think there’s actually other reasons, even a group of related reasons, that there would be resistance to change in our healthcare system including longterm trends within the practice of medicine. Dr. Waldman is pretty forthright about how he thinks our system should be reformed. I think he’s engaging in wishful thinking and introducing advertising and price competition into healthcare are unlikely to result in the cost savings that are necessary.
I would like to open this post up to a conversation about reforming healthcare and air some of my own prejudices about it. I don’t believe that any conceivable reform will result in more, better healthcare at a price we can afford unless the incentives are changed and any attempt at changing the incentives in healthcare will be fought to the death by all of the stakeholders, e.g. patients, providers, insurers, employers, etc.
Please don’t say “well, other countries pay less for equivalent care so it must be possible”. That’s a cop out. Say what you think should be done and how it can be done. There are a number of things that should be kept in mind. First, there is no country that is actually comparable to the United States. There is no country that is as large as the U. S. and as rich as the U. S. and shares a 1,600 mile land border with a country with a median household income a quarter its own.
I think his recommendations are vague at best, some kind of handwaving towards free market stuff but no specifics. Having read so many people for so long on this topic let me stipulate that the very large majority of left wing health care policy people agree that in the ideal, markets might be a good answer. However, no one knows how to do it, the details are important. Wherever markets have been heavily included while maintaining quality care prices have increased. It’s unfortunate, but I think the iron triangle (cost, quality, access) still pretty much holds. Easy to affect one, doable to affect two and no one knows how to easily do all three.
That said, while you dont think we can learn from other countries I think it likely they have one thing we can learn which is that it is easier to affect prices while maintaining the other two parts of the triangle if everyone is pretty much in the same system. We have Medicare, Medicaid, VA, Indian Bureau, private health insurers and probably some others I am missing. Each one of those has their own special interest groups.
Steve
I think the main thing to learn from other countries is that they are willing to cut spending. Our legislators have a demonstrated unwillingness to do that—one of the incentives problems I mentioned.
My main problem with free market healthcare is that it’s a myth, like a unicorn. You cannot have a truly free market with occupational licensing and the level of regulations that we do. We have occupational licensing and regulations because without them there would be too much quackery. Look how much there is with occupational licensing and regulations. Does anyone seriously content there would be less without them?
They make spending a priority which we largely do not. However, I think it is easier to achieve that if everyone is in the same system. In our system if you try to cut Medicare, as an example, you rile up the old folks who are the most reliable voters. So legislators back down and dont cut Medicare. Since private carriers want to pay more than Medicare so that their patients get priority then they dont cut. Or, the lobbyists for Medicare claim you cant cut it because privates are paying more and you need to keep Medicare close.
Also, it wouldn’t just be quackery but also not practicing up to standards.
Steve
Just slightly OT, I am sure you are aware that Ohio is passing a law that will require hospitals to allow patients to choose the drugs they want and the hospitals must allow privileges for providers willing to order those drugs or therapies. There are tons of loons out there promoting miracle cures. Heck, one of them is Dr Oz and he now going to run NIH or something. I doubt you have any idea how bizarre the requests made by patients that I have heard over the years.
Since I am retired I guess it’s safe to make more extreme statements in response. If the family believes they know best, they should just over complete care. Let the medical team give up care without penalty and turn it over to the family. Let them find someone to provide care and they can pay for it.
Steve
Who or what ever makes healthcare affordable in the federal budget could also convince the Taliban My Little Pony is a symbol of masculinity.
Many countries spend less on health, but they do not get US-equivalent care. They get worse care, rationed (often by political affiliation) care, delayed care, incompetent care. The two prime examples are the UK and Canada, who provide worse care, and shown by outcomes, and severely rationed care. Canada offers medically assisted death to sick people, as do some EU countries.
My daughter has lived in Germany for over 15 years, and she really likes Germany’s system. It is a mixture of a basic plan that every must take, and that is financed by income taxes, and additional, voluntary plans, also financed by income taxes. There are no required refferals.
In the German system, medical care and retirement take fully one-third of her gross income.
Germans’ out-of-pocket healthcare spending is about the same as ours. IMO the biggest difference between the German system and ours is that they are Germans. Positivist materialists tend to discount intangibles like that but it makes a difference.
I do have one question. Germans NOT spending on defense depends on their free-riding on us. Who will we free-ride on?
There is tons of stuff written comparing care in the US vs other first world countries. Outcomes in the US in a few specific areas are sometimes superior, but overall we arent better and those studies mostly include US people who have insurance. If you include everyone then the US often does worse. Just to start, the US is worse in life expectancy, infant mortality and maternal mortality*. Also, the claims about rationing are largely untrue. It does take longer to schedule many elective procedures in some other countries like Canada but their wait times to see their PCPs and for urgent care is about the same as ours. This was a conscious trade off as their care costs about 1/3 less. (The US has a much higher ratio of specialists to primary care docs which means you get specialist care faster, sometimes unnecessarily, but it costs us much more.)
*Yes, there are issue with these numbers and I have probably read more of the criticisms than most other people, yet they are still tied in some ways to our health care.
Steve
A lot of money is spent trying to treat people who simply cannot stop eating.
Industrial sized clinics have been built with freight elevators and five foot wide doors.
Robert Kennedy Jr says he’d like to try to change the national food supply, to lessen or eliminate high fructose corn syrup and what he termed processed foods.
He suspects everything from insecticides to herbicides to fertilizers.
These things both make food cheaper and taste better, that’s an incentive. We can hardly outlaw them, we can’t stop fentanyl. Though I agree with him on sugars.
I wish him well , I really do but…
As a layman, the way I would improve health care is to cut the rush.
Every patient should have a 30-45 minute sit down with a heath care professional every year, a 7 minute office visit even many times per year isn’t long enough for their health needs or lifestyle habits to be understood and addressed.
I agree with the premise that all of the incentives are wrong. Why? Much of this goes back to the historical mistake of tying our healthcare to our employment. When the doctor and I are dealing with the insurance company, I am not the customer for the insurance company, my employer is. As a result, the insurer gives lousy service with little risk to them because I can’t fire them. They waste my time rejecting legitimate claims; waste my time waiting for preapproval, and limiting my options to service that is inconvenient for me (in network service an hour away instead of one 5 minutes down the road because it saves them $5). A simple alternative would be to allow companies to make payments to a Health Savings Account that allows the employees to buy their own personal health insurance policies. This lets us get the right policy for our needs and allows us to fire am insurance company that gives poor service.
Having employers pay for health care has had its disadvantages but people should understand the advantages also. Maybe the biggest was that people could actually be insured if they had any kind of pre-existing conditions. Up until the ACA it was difficult, impossible in some states, to obtain health insurance if you had a chronic illness or a prior episode of a severe illness. It was also generally cheaper as employers get discounts for having larger numbers of people to enroll.
The concept of buying only the insurance you need is mostly kind of bogus. People generally dont know what kind of illnesses or trauma they will suffer in the future. In practice what it mostly meant was people bought cheap insurance that didnt cover much since they thought they would never get sick. When they did then they couldn’t afford to pay so everyone else picked up the costs. The notable exception would be obstetrical care since if you are a single male or older female it’s not an issue. That does have other issues.
Steve
Charlie:
It’s even worse now in that respect than it was at the inception. Nowadays most insurance companies are not risk-bearing on the accounts they care about most. Nearly every employer with 100 or more employees is self-insuring. The “insurance company” receives a fee for processing claims based on the amount. Talk about perverse incentives!
steve:
My understanding is that after a number of years of declining self-insurance on the part of employers in recent years that has started to resurge.
Just read a paper published in August. IIRC it has been pretty steadily increasing for smaller and mid-size companies after a plateau and that there has been a small decrease for large companies over the last few years. Self -insured plans can ignore most ACA and state mandates except for the reporting ones IIRC. (Note that lots of companies offer a variety of plans and that among those one will be a self-insurance plan. When we hit 200 employees our Blue Cross rep offered us one as an option with a stop-loss back up.)
https://www.ebri.org/content/new-research-finds-increasing-number-of-self-insured-health-plans-in-small-and-medium-sized-businesses-but-a-decreasing-number-in-large-companies-since-passage-of-the-affordable-care-act-of-2010#:~:text=Between%202010%20and%202023%2C%20the,from%2082%25%20to%2074%25.
Steve
I thin Noah Smith does a good job of puncturing the idea that private insurance is this huge driver of problems in the current system:
https://www.noahpinion.blog/p/insurance-companies-arent-the-main
The fundamental problem is that Americans want comprehensive and quality health care that someone else pays for.
There is no system that doesn’t have some kind of rationing. If one doesn’t want private insurers doing it, then a “public option” will.
I have both Tricare and VA insurance. They are not cheap on a cost per beneficiary basis, but they are cheaper than a lot of other insurance. The first for that is that they are insurers of last resort – they only pay for what other insurance doesn’t cover. Tricare pays the same rates as Medicare. The second reason is that many Tricare beneficiaries are served by salaried providers who are compensated on the fee-for-service model. Many of these are uniformed personnel utilizing a managed care program working in government facilities. The VA, in particular, is notoriously short of providers because most can make more money and not deal with government bureaucracy in the private sector.
I would also point out the magical thinking of single payer (by the government) as a savior. Let’s call it what it is: monopsony. We have other areas where government is the monopsony player – the biggest is defense. What do we see there? Do we see the federal government using monopsony power to lower costs for weapons systems and defense spending generally, including reducing administrative costs? Ha!
I don’t have a solution. The reason this is such a difficult problem is that someone’s ox will have to get gored for substantial reform, and the incentives are aligned to avoid that and keep kicking the can.
And they do deny procedures and reimbursement.
Thank you, Andy. The TL;DR version of Noah Smith’s post is the point I have made previously: it’s the prices. I’ll try to put together a post later based on that post and the KFF piece that Mr. Smith cites.
I also subscribe to Noah so I read that piece and he makes some good points but misses others. Yes, it’s the prices, but insurance is part of the price. Noah concentrates on profit but there is also admin costs and salaries. One of his critic pointed out, and Noah ignores, the admin costs paid by providers to comply with insurers requirements and billing costs. Go into a larger medical office and you may see 2 or 3 doctors around and 6 or more staff. A lot fo staff are there to make the insurance companies happy. Noah is not a health care economist so he doesnt really read health care journals. If he did he would know that this has been covered many times. For some reason the KFF numbers always leave that out. The famous popular article on this was the one that noted Duke University had 900 beds and 1300 billing clerks. So add up the 6% profit margin, the 15%-20% admin percentage and the costs borne by providers, another 5%-10% and its real money.
Which is not to say that prices are not a driver of costs and probably the largest factor. Everything in the US costs more although it is notable that the prices Medicare pays, except for drugs, has historically been close to what Europeans pay. Its private insurers paying the high costs most fo the time and lets note that insurers run ads all the time saying they are working to lower costs.
All that aside, Noah got off on a tangent. If the issue is why people were so angry at insurance companies and United Healthcare in particular its really more about the inconsistencies, the difficulties in having them pay for care and that the people in charge are being paid so much for that inconsistent service. AS I have noted and provided links to support the claim, health care cost increases have slowed markedly since the ACA was passed. What people seem to be complaining about, similar to the backlash against HMOs in the 90s, is the failure to pay for needed care. UH in particular seems to have had a high denial rate (Noah avoids mentioning that) and fails to note that UH still requires pre-approvals for most major procedures and even some less than major ones. Note that just like now, during the era of the HMOs costs also slowed but people were angry at the HMO industry.
In some cases UH has refused to pay for stuff they had approved while they claim they will pay for urgent care needed without prior approval they have a bad rep about it. In that context maybe you begin to understand why people were making comments about the CEO failing to have prior approval for a gunshot to the chest.
Steve
Since we are doing health care, the paper that started the fad for Hydroxychloroqine has been retracted by its authors. In fact, the group that published the paper has retracted about 30 of its papers. This was a deeply flawed paper that should not have been published, and once published should not have been given much merit. The part that got the most mention by critics was that they dropped out 6 pts, of whom 1 died and several ended up in the ICU. Most of all, there were only 36 pts in the study. One of the best ways to prove anything you wan tin medicine is to have a very small study population. There were other issues also. If not for the attention given by Trump, who has no medical background, experience or knowledge it’s unlikely it would have gained the prominence that it did.
So add this on as one more reason medicine costs so much. All it takes is one celebrity to make claims about some treatment and millions of people will buy into it.
https://www.science.org/content/article/infamous-paper-popularized-unproven-covid-19-treatment-finally-retracted
Steve