Friday, April 17, 2009

Health Care Reform (3)

So, what are we going to do with this furshtunkina health care system? Look at it in any aspect, and it just sucks. Where is it fat? Like a fat person, everywhere. (Disclosure, as a primary care pediatrician, I have my own views, and at this point will not point out fat in my area. Not that it’s not there.) Some dysfunctional industries can be tolerated and everything can’t be fixed at once, but Obama is right when he says that the health care system is so dysfunctional and so big, it affects everything. We can’t let it fail completely, because health care is too important for human life. But we can’t support it as it is. So it has to get itself in shape, have a plan, diet some, and hit the treadmill.

Atul Gawande, the genius Peter Bent Brigham surgeon who is my hero for his great writing (I bet he’s also a great surgeon, such is my hero-worship), says in a recent New Yorker article that in the experience of virtually all countries, health care systems evolve, and comprehensive change all at once doesn’t happen. I had always naively thought that the British National Health Service had been a comprehensive imposed change by a socialist Labor government. Apparently not true. The change came about after their wartime experience, when people were moved en masse to the countryside and arrangements for medical care had to follow. (He doesn’t say how the new medical care arrangements built on what went before, and I don’t know.) But the new arrangements of medical care worked just fine, so they continued them as the National Health Service.

What he says has implications for the Hillary task force of 1994 and their misbegotten overhaul plans issued by a secret cabal of cognoscenti which was un-negotiable as presented. A permanent black eye for the Clinton Administration, and a temporary but profound delay in health care reform.

But now the Obama Administration is set on a more incremental reform that comes from wide negotiations. (I loved his idea that all negotiating sessions should be on C-Span, but it always seemed impractical – privacy will always find a way.) Reform will have to be change that is familiar. So they say that if you like your present health insurance you won’t have to change. In my experience no one likes his or her present health insurance (except my brother who gets it from the government of Pennsylvania), and no one should like their present health insurance. It all sucks. Most everyone is underinsured. But no one wants anything worse, and the unfamiliar could be worse.

To me, the most attractive near term fix is apparently what is actually being contemplated by the Administration. It would be introducing the present system that government employees have, with a twist. Their present system is to have a menu of health insurance options from which to choose. The government regulations set the basic standards that the plans have to meet – they need to cover pregnancy, etc., and as they accept all applications, they cannot retroactively revoke a policy for “non-disclosure”, a particularly disgusting health insurance company abuse. They in essence regulate away some dirty tricks. So, there is a menu of options. The twist is that, in the new plan, there would be a governmentally sponsored and run option. You could choose Aetna, Cigna, Blue Cross, etc., and Big Government Health Plan.

This option scares the shit out of the health insurance industry. Their overhead pus profit is very high, 20% or more often. They call the money they pay out for actual medical care the “medical loss ratio,” and I think Blue Cross of California boasted about their 78% ratio. The government overhead would be capped at 5%. So, even if the private companies get rid of the cost of underwriting and thus lower their costs, their profits would diminish or probably disappear. Good, I say. Make them into utilities. They are not providing any value to the system anyway – I can’t think of one positive thing they do. But you can see why they are scared.

So scared are they that they have said at the beginning of negotiations that they will accede to taking all comers and giving all the same rates (so-called community rating.) Just please, please don’t let the government program come in! They are now using scare tactics. An article in the WSJ opines that government will have unlimited resources and thus will be able to drive the private companies out of business. The government can lower their premium rates, and shortly thereafter as the private companies wither and die from that unfair competition, the government can use its unparalleled leverage to drive their payments to all providers down and down. This is a familiar tactic that businesses recognize, because it is their own monopolistic tactic that is supposedly illegal, but familiar all the same.

Truth be told, the rates of payment need to be driven down. Hospital charges are so high as to defy adjectives. Fat, as I said, is everywhere. The problem is how to get the industry lean and mean, and not just mean, the way most public entities react to cuts. But I agree with critics that government is unlikely to be a reasoned substitute for a market. But then, so are insurance companies unlikely to be reasoning, public-spirited agencies. It’s a logjam, which needs to be broken.

So I think the next step of letting the government enter the competition would be just fine. It, the government, just needs to be regulated when they enter. The accounting needs to be free and fair. They cannot be allowed to dip into general revenues and run their program at a loss. They need to have some quality regulation, but I don’t know just what that would be.

In other words, let the government into the competition and let every plan, public and private, endure identical regulation. That seems to me to be the next best step.

And now my hobbyhorse. Make sure that for Medicaid, just as for Medicare, that competition among providers is fair. Currently the Federally Qualified Health Plans get 2-3 times as much per visit as a private provider such as yours truly. This is precisely, precisely what the private health insurers are afraid of, and our experience in Medicaid shows that they are right to be afraid.

And hobbyhourse #2. As part of the rules of engagement, I would also ban high deductible health plans. While I understand that some think it is good to give some (healthy) people the right to gamble on their continued good health, and wrong to "tax" them because they are healthy -- especially wrong because a good part of unhealthiness comes from voluntary poor health habits -- nonetheless, when viewed from the public point of view, these plans suck. Why? Because, again from the point of view of the whole community and the whole nation, they don't meet the problem of high and rising health costs. They are like the drunk looking for his keys under the street light not because he lost them there, but because that's where the light is brightest. High deductible health plans attack primary care expenditures. Hospital costs? NOt touched (the deductible expires quickly at this level of care, so no restraint on these costs is exercised.) High priced specialists? Ditto. Health insurance companies? Nada. In other words, they violate Sutton's Law by going exactly where the money isn't. And research has shown that people make bad decisions about their health when it is on the marketplace - they forego early and preventive care, and thus wind up costing the system more.

Budd Shenkin

1 comment:

  1. Well, I've often said (to myself): I wish I could write as irreverently, yet as coherently as Budd does. Congratulations! Not on your rhetoric, but on your views. I agree with almost all of them. A reference to the Gawande article, which I read, too. Before the war, when many Britons, in and out of uniform, were displaced, the health care system consisted of private general practitioners who contracted on a capitation basis with "approved plans" (mostly small, mostly private insurance companies or workers' coops) for the care of manual workers (miners, construction laborers, manufacturing workers, etc.) The money came from the employers, workers and (I think) tax revenues and was channeled through these "approved plans," which took some kind of administrative fee, somewhat similar to how Blue Cross and the other "third parties" (generally one per state) work here with Medicare. There was no hospital coverage, but most hospitals behaved as charities and took in workers for free, more or less. White collar workers were not covered, nor were the dependents of the blue collar workers. And although the Liberal and Labour governments made several attempts to expand the British "National Health Insurance" after WW I, the objection that carried the day was always that the reserves in the treasury would not permit it. So, expansion couldn't work politically. In 1942 the Beveridge Report came out. It set forth the principles on which the National Health Service would be designed and, more broadly, how Britons could be socially secure. The Report, which had been authored by William Beveridge, an internationally-renowned expert on social insurance and the chairman of a commission appointed by the wartime coalition government, became a best-seller, especially among the British military. The mood of Britons and their hopes for a different post-war society, especially where class distinctions and social welfare were concerned, seemed to be echoed in the pages of the Beveridge Report. In 1945, Clement Attlee's Labour party defeated Winston Churchill's Conservatives, a major sign of the new political mood in Britain where social welfare was concerned. Gawande's point that the National Health Service was built on the wartime government takeover of the hospitals and employment of their physicians is certainly correct, but he doesn't give the political sea change the credit it deserves, either. Probably not enough space. So your preconception is correct as far as it goes, just as Gawande's reasoning is correct as far as it goes. Would the NHS have taken over the hospitals and placed the consultants on salary if there had been no wartime emergency? Maybe, but probably not. Would it have left the GPs in private practice but put them on capitation payment? Probably so. Would there, in fact, have been an NHS? Maybe or maybe not; but almost certainly the UK would have had universal coverage of some kind guaranteed by the government. Such was the national mood at that time. By the way, the second Wagner-Murray-Dingell Bill was the parallel post-war American attempt at universal coverage. Many thought it had a good chance. Labor, which was especially strong in 1946, was behind it, and so were the liberal Democrats, of which there were many (until the election of 1946) and so was President Truman. But the U.S. had had a wartime home front but never a battle front (except for Pearl Harbor), and both its recent social welfare history -- that's an especially long and complex story -- and overall political readiness worked against a successful outcome.