What Sort of Reform?

Presumably as a step in its Bezos-demanded shift in its editorial policy, the editors of the Washington Post note just how costly “Medicare for All” would be:

Roughly three-quarters of Medicare-for-all supporters believe that it could be paid for entirely by taxing billionaires. They’re wrong.

A recent poll by Echelon Insights found that 74 percent of voters who support the idea championed by Sen. Bernie Sanders (I-Vermont), Rep. Pramila Jayapal (D-Washington) and other progressive lawmakers think raising taxes only on billionaires would cover all of Medicare’s costs.

Just 40 percent knew the truth: Medicare-for-all would require raising taxes on most taxpayers, including the middle class.

In making that observation they have inadvertently, to use the late John McLaughlin’s phrase, lurched uncontrollably into the point I made decades ago: at the rate of increase of Medicare costs no plan that did not limit those costs would be affordable.

In a related but not identical point Andy Kessler’s recent Wall Street Journal column offers tentative praise for Atria Health’s business model:

“People have basically become resigned to the fact that healthcare sucks, it’s going to get more expensive, access will get worse.” I’m sitting in the New York City location of Atria Health with founder Alan Tisch. He’s making the case for preventive care.

“All of the incentives in our healthcare system are to treat sick people, and the sicker people are, the more money everyone makes,” he says. “There’s not even a billing code or a system for preventive healthcare. Doctors, scientists and technologists lost control. Healthcare is the only system on earth where both sides of the marketplace are wildly unhappy.”

He expects pressure for change: “People born in the 21st century don’t want to live that way. Consumer mindset and interest is massively shifting towards preventive health, wellness and longevity. They want to know where they stand, they want incredible amounts of data, they want to be proactive, and they want to be technology-enabled.”

Atria Health and Research Institute calls itself “a precision-based approach to preventive medicine and longevity” with offices in New York, Los Angeles and Palm Beach, Fla. Four more are planned in the next two years. Mr. Tisch says members (currently 5,000) pay “$20,000 to $75,000 per year that covers everything that we do within our four walls.” Atria makes $150 million in annual recurring revenue and is profitable from operations, he says.

Maybe it’s just an illusion but it seems that roughly that every generation or so preventative care is proposed as a cost savings measure. That was, for example, part of the Affordable Care Act, cf. Section 4002, establishing the Prevention and Public Health Fund:

The purpose of this Fund is to provide for expanded and sustained national investment in prevention and public health programs to improve health and help restrain the rate of growth in private and public sector health care costs.

Historically, it hasn’t taken long before those in the health care sector recognized that it was considerably easier to bill for services for the sick than to keep people healthy.

So we’re left with a system in which people are billed for something they don’t want (care) as a proxy for something they do want (health) and Congress is unwilling to control the cost increases within the system, cf. “Sustainable Growth Rate”. Every successful single-payer system has depended, in one form or another, on political mechanisms that restrain cost growth. Financing alone has never been sufficient.

The policy discussion of health care reform generally addresses three questions:

1. Who pays? (taxes, insurance premiums, employers, individuals)
2. How healthy are people? (prevention, wellness, longevity)
3. What determines the cost of delivering healthcare? (provider incentives, pricing, utilization, technology, regulation, political willingness to say “no”)

The discussion spends most of its time on (1); reformers focus on (2); neither can succeed without confronting (3).

One argument advanced in support of the Affordable Care Act was that expanding insurance coverage would reduce healthcare costs by reducing uncompensated care and shifting treatment from emergency rooms to less expensive settings. More than a decade later, the uninsured rate is substantially lower, yet healthcare expenditures continue to rise rapidly. Whatever benefits expanded coverage may have produced, it has not resolved the underlying problem of cost growth.