Health Care Reform?

I’ve been mulling over writing a piece on the great health reform effort for many weeks now, but it is a moving target. I’m becoming increasingly convinced that the final effort will not be nearly as inclusive as once thought and that whatever comes from the effort may cause more problems rather than reduce their number.

OVERVIEW

When we speak of health we’re talking about a condition affecting everyone of the 300 million plus residents of the U.S. We all exhibit some form of health, good, bad or indifferent. Those of us in less than robust good health often seek remedies. This search has led to a $2.4 trillion economic sector, or about one-sixth of the US Gross Domestic Product. This sector engages literally hundreds of thousands of medically related jobs, thousands of hospitals, clinics, research institutions and manufacturers. There are pharmaceutical and biologic manufacturers in significant numbers along with the distribution mechanisms and retail outlets that distribute the goods and services produced. Numerous government agencies, some at the national Cabinet level, are involved, not to speak of the health insurance industry.

In sum the U.S. health care industry, if you want to call it that, is huge, complex and rife with conflicting interests. There are millions of “stakeholders”, many of whose economic interests and even livelihoods are at stake and many of whom vote. It is not a structure that can be defined clearly nor changed easily. Many if not a majority of Americans are dissatisfied with some or much of the system but at the same time are very concerned over the prospects of change, fearing that their particular situation may be worsened.

From time to time the movers and shakers of our government endeavor to reform the system, applying a “policy” approach. An early example was that of the “Progressives” of the late 19th and early 20th centuries, e.g LaFollette and TR Roosevelt, who worked on finance, industry, transportation and public health. Later Presidents favoring the “policy” approach have been Carter, Clinton and now Obama. The idea is that after proper analysis an overarching, rational approach to the problem can be crafted that will ignore short term vested interests and look to a longer term, sounder program that better fulfills the public interest. Unfortunately the resulting all inclusive legislative proposals, logical and beneficial though they may be, must go to the US Congress, perhaps best described as a “sausage factory” and the embedded home of short term vested interests.

Taking into account the genuine complexities of the overall health system and the lack of a truly sound analytical base on which to build - and adding in the political quagmire that is Congress - probably the only likely movement to change the system will take place at the margin, incremental approaches to selected elements or pieces of the problem.

Some of the elements of the “complexity” of the health system include:


Demographics - Overall the world’s population is aging, but the effect is particularly acute in the developed world. Economist Robert Samuelson in the Washington Post on October 12 quotes the Kaiser Family Foundation to the effect that people 55 years old or over account for half of all US health care expenditures. Those 65 and over account for one-third of such expenditures. As the number of people over 65 increases rapidly the impact in the US is two-fold: the elderly need more and more complex health care and the number of young, healthy people paying in either to retirement or health plans declines.

Environment - climate and our geographic surroundings obviously affect overall health in terms of what we need to survive as well as the nature of existing disease vectors. But our changing the environment through clearing of forests, overuse of water and general industrialization/urbanization has resulted in serious pollution of air, water and soil with resultant negative impacts on human health. Despite significant progress in cleaning up the environment in the US, we still face threats to health from poor quality air, water or food borne illnesses, embedded chemical pollution and the effects of crowded living conditions.

Economics - my grandparents had a saying: “them that has gets!”. And surely a hallmark of the problems of the US health system is income differential. From top notch care at expensive specialty hospitals to use of public hospital emergency rooms as health care recourse reflects a wide difference in what people have to spend. Current health care reform in its effort to expand health insurance coverage focuses on this issue. It has been said that Americans get the best health care they can afford, whether they need it or not, while they should be getting the best health care needed, whether they can afford it or not. But it’s not just a matter of money in the hands of prospective patients but how the industry is structured and how much of the money spent provides valid health care. A New England Health Care Institute report in 2008 stated that as much as $850 billion a year in health spending could be eliminated without reducing the quality of care. More than $58 billion is spent on inappropriate drugs and about $21 billion is spent of non-urgent cases in emergency rooms. The largest potential area for savings - up to $600 billion a year - is the great “unexplained” variance in hospital procedures such as Caesarean sections and coronary bypass operations. Further compounding the economic disparities involved in health care is another Kaiser Foundation calculation: the healthiest 50 % of the population is responsible for only 3% of all health care spending while the sickest 15% account for 50% of such spending.

Culture/Life style - this is probably the crux of the health care issue. It can be said that one’s health is the result of personal behavior and luck. Luck which includes one’s genetic endowment as well as the circumstances into which you are born has its impact but personal behavior is also key, and an element affected by culture. Our culture contributes to the attitudes we hold towards our health and how we respond to health problems. Cultural differences do affect how and what we eat, whether we go to doctors or not, how much care we demand and our attitude towards medicines, vitamins, supplements, etc. but culture also segues into lifestyle and here is a key element affecting health. Do we eat too much, do we eat the “wrong” things, avoid exercise, consume alcohol, smoke, use drugs or stimulants, drive wildly: the list can go on. We know lifestyle affects our health, leading to negative results like obesity, aggravating diabetes and leading to vascular and bone problems and we haven’t even touched on emotional or mental problems. But changing lifestyle is essentially a question of behavior modification, something as a society we don’t do well. We try legislation mandating seat belts and bicycle helmets. We’re working on forcing food suppliers, whether retail or restaurant, to list calorie and fat contents. We’re trying to eliminate saturated fats and demanding that schools provide healthier menus. But it’s a slow and difficult process and confronts a basic conflict: where should we as a society come out in the continuum between total personal freedom and the “nanny state”. The “Golden Rule” - nothing to excess and everything in moderation - wuld seem to apply but who defines moderation and excess? But absent some changes in lifestyle choices overall improvement of national health will be impeded. And of even greater significance is that the effects of poor lifestyle will be with us for decades as the consequences of poor living habits continue to appear through the natural course of aging.

Research/Development - meanwhile the industries that generate new and better equipment, devices and pharmaceutical products keep churning away, developing new and better product usually at higher prices. We now have biogenetic drugs that do wonders for certain diseases but the annual treatment for which can run into tens of thousands of dollars. The arrival of always better diagnostic devices seems to create its own demand. An example is the man who has a headache and goes to a hospital emergency room where he demands a CT scan. Numerous prescription drugs are now peddled mercilessly on prime time TV: their makers obviously expect that significant numbers of viewers will demand the appropriate prescriptions from their doctors. (Viewing the list of possible side effects as demanded by law certainly reduces my willingness to take any of these wonder drugs, but someone must be doing so.) The net result is that techniques to improve health or battle disease are improving rather rapidly owing to millions of dollars spent on research, both public and private. But the cost also goes up and in many instances the added benefit doesn’t match that cost. And the process also strengthens a general American sense of entitlement: if it helps I should have it, regardless of cost. One should note also the tendency of directing research resources towards issues that are either popular with strong lobbies, e.g. cancer, or that offer potentially large markets, e.g. diabetes. Things that are neither “glamorous” nor offer rich revenue streams are not often the subject of big research efforts. And so we have one more obstacle to getting a real handle on necessary health system costs.

Nebulous best practices - the Obama administration has taken a position that health services could be both better and lest costly if the health care providers just followed “best practices”. I defy anyone to come up with a compendium of “best practices” that covered most if not all of the diagnostics and treatments now being given that: a) would be acceptable to most everyone in the health care field and not subject to strongly held differences of opinion; and, b) wasn’t in constant change as new information and new devices, drugs, etc. come on stream. I and some of my descendants have an inherited blood condition that results in round red blood cells that have difficulty passing through the spleen, leading to anemia on occasion. In 1968 my twin daughters suffered aplastic crises - severe anemia - and were treated according to then “ best practices”, that is their spleens were removed. In January 1969 I had mine out as a precaution even though I was asymptomatic. The function of the spleen was not well understood then and it was thought to be of little use. In the 1980’s my then doctor told me that since I didn’t have a spleen I should take a “lifetime” innoculation against pneumonia. In the 90’s I learned that “lifetime” meant 10 years and now I’m told I need a new pneumovax shot every five years. In 2009 my current doctor tells me that the spleen plays a key element in the body’s immune system and that I, without one, have an impaired immune system and must exercise caution with respect to infectious diseases. And so much for “best practices”.

Flawed data - proponents and opponents of the current health reform efforts quote voluminous studies supporting their respective positions. (As have I.) Despite the tremendous volume of information in print I don’t think we have a good understanding of the situation. We’re all familiar with the pronouncement that “A” was bad for us only to learn two or three years later that “A” wasn’t so bad after all. It is also true that many of these studies suffer from poor methodology and inadequate data sources. Conclusions have been drawn that can’t really be supported by the data collected. And this doesn’t include the numerous studies written with financial underwriting from interested parties nor those written by practitioners pushing their own agendas and not beyond tweaking the data. So one should question the validity of much of this data and try to discount the conflicting and often contradictory points of view, while taking into account the interests represented and possible motivations behind the reports or studies. Not a firm foundation on which to build a sound policy.

POTENTIAL OUTCOMES

My conclusion from the overview illustrated above and what I see of the workings in Congress is that we are likely to see some sort of health reform legislation pass. The new law will quite likely expand health insurance coverage by requiring most everyone to subscribe and companies to offer policies. For those for whom the health care premiums will be beyond what they can afford, there will be subsidies. Rules governing health insurance underwriters will be tightened, allowing the companies fewer opportunities to deny coverage. Nothing in the legislation under discussion really attacks the key problems affecting the nation’s health in terms of changing health care provider practices, reducing wasteful procedures, encouraging more healthful lifestyles or encouraging greater personal responsibility. It will ensure more people and probably increase overall health costs. The assertion that the changes will not add to the federal deficit are based on tenuous assumptions of taxes on certain health insurance policies,reduction in Medicare expenditures and some additional taxation of the wealthy. Compounding the cost issue is that current legislation is predicated on the current situation. An aging population will, however, result in proportionately greater health costs in the future owing both to the aging process itself as well as the embedded consequences of poor lifestyle choices.

My guess is that the number of people who will be annoyed by the legislation will outnumber the beneficiaries and that the Obama Administration will not get great political mileage from this effort. In fact there very likely will be substantial disappointment in the actual results and strong calls for more “reform”.

APPROPRIATE GUIDELINES

As mentioned above the US health system is so large and complex that change most likely will only come about incrementally. I suggest the following as appropriate guidelines within which change should be sought.

1. Individual coverage. We need to get employers in general out of the health care business. The virtually mandatory tie-in between employment and health insurance benefits is unfortunate in many respects. If health insurance were an individual or family responsibility there would be portability. You get laid off or your employer goes out of business, your health insurance is not affected as long as you pay the premiums. If you can’t stand your job, you would no longer be forced to stay just for the health benefits. In times of economic distress some form of health insurance subsidy akin to unemployment benefits could be put into force. Making health insurance and other direct costs tax deductible within limits to the individual would certainly soften the net cost to the beneficiary. And I have to think that companies would really rather not to be involved in health care administration if it could be avoided without adversely affecting employees. I suspect that making health care insurance a matter between beneficiary and insurer would enhance transparency and bring home to the insured just how much their health care costs. The Obama Administration has opposed this approach because organized labor, a major party constituency, having gone to considerable effort to negotiate amply funded health plans in place probably of added wages, is totally against changing the system. Nevertheless I believe that if offered the option most people would opt for portability and a separation between health insurance and employment.

2. Regulation. For a health insurance system to be truly competitive there has to be a single set of rules which means Federally mandated standards that apply nationally. Widely disparate state-based rules lead to a far from level playing field for the participants. Especially with the high degree of mobility of the US workforce and general population, national standards make sense. In addition there need to be Federal rules governing malpractice litigation. Hospitals and doctors make mistakes and those damaged deserve compensation. But today’s system works like a lottery with trial attorneys shopping for clients and for favorable venues. Some recent class action suits,

for example the one involving asbestos, have been clearly shown to have involved fraud. So a system that provides reasonable compensation would go far to eliminating “ambulance chasing” and other frauds, reduce the burden on the judiciary and permit medical practitioners to reduce if not eliminate “defensive” medicine, thus reducing overall costs. The Obama administration is not averse to national rules for insurers but has been very skittish about malpractice reform. Trial attorneys are another major party constituency.


3. Economic incentives. At present in most instances medical practitioners and service providers get paid for services rendered: no action, no fee and no income. Far preferable would be a system that pays service providers a “capitation” fee: a monthly or perhaps annual fee to oversee the health of an individual. Some HMO’s and certainly the Medicare-Advantage plans follow this route. The government pays a fixed monthly fee to the service provider who assumes responsibility for maintaining the health of the individual member. Doctors receive salaries as do other clinicians. Preventive medicine can be applied in these circumstances and with a system of overview in place serious problems can often be avoided or treated in timely fashion. How much to pay for this approach is a difficult question, too little and patient care suffers, too much generates waste. At present some members of Congress contend that the US Government pays too much for Medicare-Advantage coverage and look to fund reform by reducing the payment rate. Make it unprofitable and the insurers drop out of the program. And there is the overall challenge of how and over what period of time can you change the current fee-for-service system. Should you put everyone into a plan. For those who believe in Government single payer systems, this is the answer, you belong to the plan and there is no choice to go elsewhere unless you can afford the cost of private services. Even where single-payer government sponsored health plans are in effect, services may be rendered by private practitioners. These latter, however, as in the cases of Germany and Japan, are tightly regulated by government agencies.


4. Personal responsibility. Assuming a shift to health insurance for individuals and families not tied to employment and a shift in financial incentives perhaps we can begun to instill a greater sense of personal responsibility for health care and lessen the sense of “entitlement”. Possibly we need to ban non-urgent care at hospital emergency rooms: we do have a growing network of “urgent care” providers and “minute clinics” that can surely absorb much of the non-urgent care demand. We do have personal health accounts and employer-designed health option accounts that present choices to the holders: do I do this procedure or save the money for something else? We do need to promote the concept that there is “no free lunch” and that nearly everything we do costs somebody. Of course with a society that appears more and more into instant gratification and the thought that everything that happens is someone else’s fault, besides which the government should take care of me, developing a stronger sense of personal responsibility for our actions may well prove overly quixotic