I was working on a post about the healthcare system. All was moving along nicely until, as if by coincidence, Ezekiel J. Emanuel (Rahm’s physician brother) posted an op-ed in the Washington Post, covering much of what I wanted to say and providing me with an ideal “hook”. Here’s his opening statement:
Democrats succeeded in elevating health care affordability to the top of the national agenda during the shutdown fight. Indeed, they forced President Donald Trump to offer proposals — albeit wrongheaded ones — under the rubric of affordability. Count that as a win.
But simply defending the Affordable Care Act does not a health plan make. About 150 million Americans have employer-sponsored insurance, where a family plan now costs workers an average of nearly $7,000 per year from their wages and $27,000 in total — the equivalent of a new Toyota Corolla every year. Half of Americans worry that they cannot afford health care. Congress — and the American public — desperately need new ideas.
While Trump and the Republicans dither, Democrats can seize the advantage and craft a more comprehensive health care affordability bill. These five reforms can be immediately implemented to control costs…
His five points are:
- Change hospitals’ incentives with price controls
- Change physicians’ incentives by changing to a capitation system
- Change insurers’ incentives by forcing them to compete
- Change pharmaceutical companies’ and PBMs’ incentives with price controls
- Reduce administrative costs through standardization
Read the whole thing. If you are a close reader, you may notice the connecting thread among these proposals.
Democrats are shrewd in chiding Republicans for having no plan for healthcare. Dr. Emanuel has said, as they say, the quiet part out loud: Democrats have no plan, either, at least not beyond extending the ACA and the COVID emergency subsidies indefinitely.
Unfortunately, I’m afraid it’s vanishingly unlikely that we will see any sort of real reform along the lines proposed in the op-ed. I say that with confidence based on experience. Sustainable Growth Rates were approved more than 25 years ago. Their biggest failing was that, if Congress had the courage to stick with them, they might have worked. When they at long last repealed the requirement a few years back, the jig was up. There will be no plan for reducing costs forthcoming from Congress..
We do not have a healthcare system. We have a rent-seeking system. In 1965 the federal government spent less than $3 billion per year on healthcare. Today we spend almost $2 trillion per year. The percentage of GDP represented by the healthcare sector has risen from around 5% to around 17%. There is no metric that shows Americans’ health improving commensurate with that increase in spending. Yes, there have been marginal improvements. At least until 2010 when gains in life expectancy slowed dramatically. The reason is simple.
Not one of Dr. Emanuel’s proposals is a new idea. We have known that the fee-for-service system was a problem since back when Harry Truman was president in the findings of the Hoover Commission. Standardization could have been implemented at any point during the last 60 years with obvious benefits.
Today LLM AI has the potential to increase the productivity of our healthcare system substantially at a lower cost. That could be facilitated by regulatory reform and applications being approved on an accelerated basis by the FDA. Unless that is done in a way that disrupts the present system it will suffer the same fate as previous attempts at reform.
