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Over the next few years, the U.S. healthcare system will be in the hands of academics from Cambridge, Massachusetts. New CMS Czar Donald Berwick was a member of the Harvard Medical School faculty. Joe Newhouse, who has been the senior adviser to Medicare for as long as I can remember, holds appointments in three different schools at Harvard. David Cutler, Dean of Harvard’s Undergraduate College, seems a good bet to lead the Independent Medicare Advisory Board. Countless of their colleagues and former students have taken key policy making positions in Washington.
I know most of these scholars. They are brilliant as a rule and are acting in the truest sense of public service. None of them are socialists in the usual sense of the word; they do not believe that the government is an efficient provider of most goods and services. I don’t think they want the government to provide health care either. They have never called for government ownership of hospitals or suggested that physicians join the civil service. But whether they realize it or not, they are the vanguard of a movement bringing socialized medicine to America.
My Cambridge colleagues are mostly economists and know a lot about how markets do and do not work. They have learned from economic theory and practical observation that free market health insurance is imperfect. Fearing adverse selection, unregulated insurers take steps that leave some individuals uninsured, while other individuals choose not to buy insurance and free ride off of taxpayer subsidized charity. Most economists (myself included) agree with this diagnosis of the problem with insurance markets.
Academics have proposed many fixes to these market failures. Conservatives like Stanford’s Alain Enthoven and Wharton’s Mark Pauly favor some sort of voucher or direct subsidy with which individuals can buy their own private insurance. Unfortunately, Wharton is hundreds of miles from Cambridge and Stanford is on the wrong coast. The preferred Cambridge solution is a combination of greatly expanded government insurance and a tightly regulated private insurance market. This is the essence of Obamacare.
But this solution does not end with a government takeover of health insurance. There isn’t a public or private health insurer anywhere in the world that doesn’t directly intervene in the delivery of medical care. Socialized insurance necessarily leads to socialized medicine, and if the government controls well over half of the insurance sector through Medicare and Medicaid, and tightly regulates the rest, it is only inevitable that it will also seek to control how health care is bought and sold. And I don’t think it will make much difference whether it is Democrats or Republicans in control. The temptation to set the rules for 17 percent of the GDP is too great.
Let me give you one example. Nearly 20 years ago, academics (from Harvard, naturally) devised a new way to pay physicians under Medicare. They anticipated that improvements in productivity would allow physicians to bill ever increasing amounts that would threaten Medicare’s long term solvency, so they crafted some rather clever rules to calibrate fees, while keeping both physicians and Medicare on an even keel. Those rules are still in place, but they have never been implemented. Every year, doctors protest and Congress overrides the rules. So the best laid plans of academics are cast asunder, doctor enjoy ever higher revenues, and Medicare faces insolvency. (Fees per “unit” of service actually fall, but the number of billed units increases at a faster rate.) This same issue is going to plague Obamacare. To take another example, I helped redesign a physician payment scheme in Alberta with the goal of increasing competition. The provincial government adopted part of the scheme and omitted key details. Now I fear that competition is going to be stifled.
The Obama administration has hired an army of academics to implement the new reforms. They bring with them the finest Cambridge pedigrees and promising ideas. They will write the first draft of the rules and academics everywhere will nod in approval at the cleverness of our colleagues. (Some of us may even enjoy seeing our own pet ideas turn into policy.) But in the fullness of time, the rules and regulations that will govern our health care system will bear the imprint of politicians more than academics. It is the nature of the beast.
My Cambridge colleagues do not favor socialized medicine. But I fear that the regulatory behemoth they have been entrusted to manage is too big for them, despite their talents. Ten years from now, we will look back at these days as the beginning of the end of market-based medicine in America. And my colleagues will only be able to look back, shake their heads, and say “it wasn’t supposed to turn out this way.”
UPDATE: My brother Joel reminded me that there are some parallels to be drawn with “The Best and the Brightest.” As chronicled by journalist David Halberstam, these were the Harvard whiz kids enlisted by Robert McNamara to modernize the Defense Department. I doubt whether these academics ever envisioned that their hard work would help McNamara wage war against the Vietnamese.
It is not well known but a young Alain Enthoven was one of the McNamara whiz kids. After serving as chief executive of a defense company, Enthoven took an interest in health care and, especially HMOs. He developed the principles of managed competition while a professor at Stanford. Enthoven’s ideas formed the intellectual foundation for Bill Clinton’s health reform proposal. But after reading the reform legislation, Enthoven commented “Of the 1700 pages in the Clinton proposal, Congress should throw out 1700 of them.” This is a sad reminder that when academic principles meet political realities, the politicians always win.
David Dranove is the Walter McNerney Distinguished Professor of Health Industry Management at Northwestern University’s Kellogg Graduate School of Management, where he is also Professor of Management and Strategy and Director of the Health Enterprise Management Program. He has published over 80 research articles and book chapters and written five books, including The Economic Evolution of American Healthcare and Code Red. He has a Ph.D. in Economics from Stanford University.
Filed Under: OP-ED
Tagged: Affordable Care Act, Berwick, CMS, Medicare, Obama administration Aug 30, 2010
Market-based healthcare has given us the most expensive and yet least fair or effective healthcare system in the world.
This is the system we’re supposed to mourn the death of?
I agree with Mr. Sader. Look at the facts not the fantasy. The SGR mechanism that Dr. Dranove refers to implicitly:
“devised a new way to pay physicians under Medicare. They anticipated that improvements in productivity would allow physicians to bill ever increasing amounts that would threaten Medicare’s long term solvency, so they crafted some rather clever rules to calibrate fees, while keeping both physicians and Medicare on an even keel. Those rules are still in place, but they have never been implemented. Every year, doctors protest and Congress overrides the rules.”
in fact is a simple and potentially effective mechanism. The fact that Congresses have overridden the mechanism every year except 2002 is a reflection of the still potent influence of the physicians lobby, primarily the AMA.
The idea of the SGR was to put adjustments on a kind of auto-pilot. But no doubt due to the influence of the AMA and like-minded physicians groups, the override was included in the legislation.
Many physicians who do not subscribe to the mostly noxious influence of the AMA believe that the mechanism should simply be allowed to function.
I do not know who came up with the idea of the SGR, but somehow I do not think it was some group of academics at Harvard. Dr. Dranove may be confusing it with the RBRVS system for compensating all medical services under Medicare and indirectly through private insurance as well. That was devised by an academic and colleagues still working at Harvard.
“Socialized insurance necessarily leads to socialized medicine”
This is a blatantly false statement.
Socialization of medical services exists to greater or lesser extents in all western European countries, as it does to a certain extent it the USA, but mostly lesser.
The notable exception is the NHS in the UK, where both the financing and provision of medical services are socialized. It works very well, despite the inevitable problems with any healthcare system. Interestingly physicians compensation in the UK is relatively high.
In regard to at least two of the academics cited, Professors Newhouse and Cutler, I agree that their academic work is outstanding. However, my sense of their politics is that neither is a leftist by any definition. In fact Dr. Cutler’s book, Your Money or Your Life, and Dr. Newhouse’s book, Pricing the Priceless, reflect to me a fairly conservation viewpoint politically to the extent that a viewpoint can be discerned in the books.
Every human decision, from choosing to start a war to selecting what to have for lunch, may have unintended consequences. I think we all know this.
It would be more constructive to point out specifically what provisions of the law are flawed and to provide a solution for them. What is Prof. Dranove’s proposal? There is some vague mention of vouchers. But that is pretty much what Obamacare does: providing vouchers/subsidies to buy private insurance.
It seems that no matter what’s in the law, the usual suspects will call it the first step to socialism.
To the extent that the current health care finance system (aka health insurance) has failed, it has nothing to do with a market failure.
The current health insurance system bears no resemblance to a free market. In fact, it has nothing to do with insurance. The current health insurance system has its roots as a tax-advantaged form of employee compensation, and has evolved into a third-party administered, prepayment system for healthcare expenses.
It’s not insurance if the system is required to pay for events that have a high probability of occurrence and which are not financially devastating (most healthcare expenditures).
And it’s not a free market when a prices are administered by a regulatory institution, and not set by competitive market forces.
When CMS decides what it will reimburse for products and services, through the use of formulas and other non-market methods, it sets the “floor rate” that most private insurers follow, and thus determines the profitability of virtually every product and service in health care.
It’s also not a free market when my State determines who I can buy “health insurance” from, what that “insurance” policy must include, and how much it must cost.
If we can’t even frame the problem correctly in an area as important as healthcare (17% of GDP), ten years from now we will look back at these days as the beginning of the end of a market-based economy in America, not just the end of market-based medicine.
Great presentation. Decades of laws and policies have promoted this: “doctor enjoy ever higher revenues, and Medicare faces insolvency. (Fees per “unit” of service actually fall, but the number of billed units increases at a faster rate.)” However, many doctors are experiencing markedly lower incomes for increasing hours.
That said, the government price controls have beget inflation for the reason you state, not unlike the price controls of the 1970′s (my parents told me of the high T bill rates).
How to break that cycle? Most doctors are entirely fed up with the perverted games they have to play to pay their overhead and provide care. They should be given incentives to practice cost effectively (they know what to do better than Cutler or Berwick. I believe that each doctor can order fewer tests, hospitalizations, and surgeries to easily save $50,000 (of total costs) per year. Assuming 800,000 physicians, on average are incented (not beaten on)do that, there will be $4 billion saved per year.
That is so easy. Take one unneccesary operation that gets complicated, the cost can be easily $100,000.
Interesting that in the UK, they have a pilot to do just that, with a slight permutation.
David’s comments, please.
Conversations like this are tiresome. I’ve been reading and hearing them ever since the so-called discussion of health care reform finally got on most radar screens. I’m not optimistic it will help, but I want to make two points.
First, one of the best healthcare delivery systems in America is socialist by definition: Veterans Health Care. Facilities owned and operated by the government staffed with professionals on salary, also paid for by tax money. Beginning this year all new service people will have an electronic health record which will follow them to their grave. Is it perfect? Of course not, but we gotta start somewhere and all the red-baiting and screeching about socialism sure won’t help in the private sector.
Second, the much-worshiped free market system, coupled with an embedded fee-for-service model, treats medical care as a market commodity when it should be regarded as a public safety issue (think building codes, food safety, road and traffic standards, seatbelts, etc.). Medical care in the US is an economic train wreck of breathtaking proportions, expensive and saddled with a rate of inflation greater than the economy as a whole.
So David’s saying
a) academic theory that gets translated into practice via government policy gets mangled in general (true)
b)You can accuse anything of being socialist if enough of the money for it comes through the government (true but worthless)
Whoop-de-woo. Not exactly sure that this is worth the cost of a Northwestern MBA….
I guess I’m just upset that he dared to compare Enthoven and Pauly
Like Dranove, my instinct is that I would like a market-based medical system to reward the best doctors, hospitals, and drug companies. My instinct is is that I would always like the good guys to always win, too. My instinct is that I want to drive my car as much as I want, forever, without adverse consequence. It goes on and on.
But, all of these things defy reality and pining for them is immature. So, give it up on market-based health care. It just does not work. If Dranove has a plan that would make market-based health care work, let’s hear it. Until then, I would rather have a guy like my local postmaster making the decisions instead of a CIGNA executive.
I agree with John Ballard. Make your fortunes somewhere else. Manage medical care so the greatest number of us are as healthy as possible. I don’t believe U.S. MD income level or drug company share prices are the biggest problem we have right now.
“I believe that each doctor can order fewer tests, hospitalizations, and surgeries to easily save $50,000 (of total costs) per year.”
If physicians could do so, why are they not doing it?
The healthcare (aka medical services) system in the USA easily incurs $1 trillion/year of useless spending, so nothing surprising of the assertion that any given physician could reduce cost incurrence by $50,000 per year. That equates to $50 billion by the way, or 1/20 of the level of valueless spending, given that there are about 1 million physicians in the USA.
The point on an SGR mechanism, which Prof. Dranove alludes to and as crude as it is, is to at least globally force some level of cost responsibility onto physicians. But even a mechanism as innocuous as that has led to Chicken Little cries of the sky falling in from the AMA and similar.
In fact, an RBRVS that automatically reduces compensation to physicians on a predictable basis to reflect the productivity-enhancing effects of learning is probably a good idea. At least it would start to wring out some of the purposeless waste of resources.
“They have learned from economic theory and practical observation that free market health insurance is imperfect.”
? All free markets are imperfect, there is no such thing as a perfect market. What has been proven over time is the imperfections of free markets are less and more equitable then regulated markets.
“market failures.”
How is it a market failure to only sell a service at a price that covers cost? The failure is in the input, the individual’s decision not to buy before needing it, there was no failure as you describe.
“There isn’t a public or private health insurer anywhere in the world that doesn’t directly intervene in the delivery of medical care.”
This statement shows a fundamental lack of comprehension of the US healthcare system. Look up reinsurer to see 100 examples of not knowing what you’re talking about.
“despite their talents.”
What talent? 45 years of their work proves they lack any talent.
“Market-based healthcare has given us the most expensive and yet least fair or effective healthcare system in the world.”
Interesting comment Keith, exactly what was wrong with American Healthcare in 1964, the last time it resembled anything close to market based?
“in fact is a simple and potentially effective mechanism.”
That is devoid of any real world application. The problem with academics, besides having no particle knowledge in the field they are trying to fix, is they work in a vacuum. They either don’t grasp, or more likely refuse to believe, that there are millions of people far more intelligent then them who’s goal is counter to that of their proposed system. It takes very short or no time for these more intelligent individuals to circumvent these supposedly infallible mechanisms. Not a single proposed mechanism proposed for Medicare has ever addressed fraud. They have been unable at any time to develop a system that can identify desired care and undesired care. They will pay more for both or less for both but not one of them has ever been able to figure out how to pay more for desired care and less or nothing for non desired care. Only one of the many reasons academics have failed with every single reform they have advised since 1965.
“It seems that no matter what’s in the law, the usual suspects will call it the first step to socialism.”
Paolo, is that because the usual suspects, unnamed this time, they thank you, are politically bias or because those proposing reform always propose socialist solutions? For example for 15 years usual suspects proposed AHPs to address the gap between small group plans and large group plans. No one called that idea Socialists. Tort reform has never been called Socialists any where I have seen.
“It seems that no matter what’s in the law, the usual suspects will call it the first step to socialism.”
Dr. T makes a great point. Doctors do know better then Berwick just as insurers do, payors do, and individuals do. The problem with healthcare/Insurance is people like Berwick that don’t know anything keep picking sides and making a mess of it. The less knowledgeable people in the room have been given all the authority, let me rephrase that, they have taken all the authority.
The Haves and the Have not of Health Coverage. A combination of Class Warfare, survival of the fittest and richest. Those indivuals who refuse Health Insurance for those who are willing to contribute to its cost. Are often those business’s and individuals that leech off those who contribute. Gaming the system at the expense of the Few.
A ideaology exploits the system a leaves a tremendous burden on the few.Draining revenue from all levels of Government to compensate the Health industry short comings from the Uninsured and the uninsurable.
You can call it socialism to incite fear among the Population. However, we have social programs like Social Security that have delivered sucessfully for decades. If it were not for the double dipping by politicians.
Including 30 million people to contribute to these cost is what our forefathers would have willingly done. Without question,Some have placed the values of self-interest over all else. What a shame!
“…doctors enjoy higher revenues…”
Screw you and this academic bs fostering lies, misperceptions, and just plain scapegoating.
You know what, if I can find financial security outside of being an MD to keep my family above water for the next 15 years, I would walk out that office door and not look back, because the idiots making these assumptions, politicians selling it like the f—ing Brooklyn Bridge in the middle of the desert, and a dumber and more uninvested public who want the best health care and do pretty much nothing to enhance responsible returns all can stick it up where the sun don’t shine! It is beginning to border on the equally incredulous and absurd what this site prints as alleged fact and direction for heath care.
And apart from a few responsible colleagues who do speak out, the defining silence of the majority who should give a damn while providing the best care they were trained to offer, I hope the rocks get you when you land off the cliff!!!
Let me be the one realist out here who is taking care of these people on Medical Assistance: the majority suck up over 2/3 of the resources and make no effort to learn and make changes for the better. And with more people going on the rolls and expecting doctors to do it all and get paid less for it, well, let’s remember the adage that has never changed over the centuries:
you don’t pay for something of value, it ain’t valued in the end. But all these phony salesmen/women will tell you otherwise.
Enjoy the water view over that bridge in Death Valley. Appropo name, eh??!?!?
@Nate, I have no idea how awesome 1964 medical care was since I was unborn at that time. However, looking back with Nostalgia at an insurance system that still has the fundamental flaw of being employer-based doesn’t lend any credence to the anti-ACCA position. Considering the first heart transplant was three years away, I’m going to say that medical care in 1964 isn’t comparable to 2010.
Again, we pay more and get less than any other industrialized country on the planet. This is due mainly to how we fund insurance i.e. the employer-based system.
re: Socialism – give it a rest. I suppose that Richard Nixon in 1972 and the Republicans in 1994 were also socialists, since the current ACCA is almost *exactly* like the 1972 & 1994 plan.
To sum up, our medical technology is the most incredible in the world if you can afford it. However, the routine stuff that helps people live longer lives is almost de-facto prohibitively expensive.
I’m curious how many of the commenters on this thread have actually *bought* private healthcare w/o any corporate help?
At this point, I find it hard to believe that whatever the ACCA implementation is, that it will be that much worse than the current system.
“whether they realize it or not, they are the vanguard of a movement bringing socialized medicine to America.”
___
Gotta start somewhere, I guess. That epithet is beyond tiresome.
http://bgladd.blogspot.com/2009/05/us-health-care-policy-morass.html
http://bgladd.blogspot.com/2009/07/doing-some-basic-health-care-reform.html
http://bgladd.blogspot.com/2009/07/breaking-foreign-born-radical-communist.html
http://bgladd.blogspot.com/2009/08/public-optional.html
http://bgladd.blogspot.com/2010/03/irrespective-of-national-health-care.html
Go right ahead. Pin the pejorative “socialist” label on me as well.
@Nate,
Of course we docs know how to save money. I waste ungodly amounts of money at work every day. I order tests and consults which I don’t think are necessary. Why? To keep the lawyers away. We all do it. It’s called defensive medicine. You gotta prove something is not wrong with someone. Proving a negative takes a lot more time and money than proving a positive. Do I own the CT scanner? No! I’m a salaried, employed, county medical officer. I have no financial incentives to order either more or fewer tests. I’m a socialist and I like it. Suck on that, all you anti-socialist haters.
The fact all the capitalist pigs on this board don’t want to acknowledge: in a purely capitalist system, you are going to have extremes of wealth and poverty. So, you are going to have both some patients pampered beyond our wildest dreams, and some babies dying in the street gutters. Is your ideology worth that? Can you stomach that? If you can, go forth. If you can’t, then we need a socialized system to some degree. The current system stinks. The incentives are misaligned for patients, physicians, hospitals, insurers, and lawyers. Until we correct those perverted incentives, we will never have a cost-effective, humane system.
End rant.
We already have a socialist system to some degree. Leave it alone.
“Paolo, is that because the usual suspects, unnamed this time, they thank you, are politically bias or because those proposing reform always propose socialist solutions?”
Well, Obamacare for the most part already exists in Massachusetts since 2006. It was proposed by a Republican governor with guidance from the Heritage Foundation!!!! The concept of individual mandates with government subsidies to purchase private insurance actually came from a conservative think tank.
In 2006, nobody said that Romney’s plan was the first step to socialism. It was touted as an example of a market-based solution. It became “socialism” only after it became a Democratic proposal and the GOP figured out that it could use it as a scare tactic.
There have also been a number of reasonable Republican proposals for comprehensive health care reform. From Paul Ryan to Wyden-Bennet to McCain 2008. All of them are more expensive than the PPACA. McCain’s plan gave everybody a government handout (whether they needed it or not) and put all sick people with pre-existing conditions into government insurance plans. Why didn’t we call that the first step to socialism?
What about tort reform? You could easily argue that it violates the 10th amendment, that it’s a federal takeover of the state judicial systems, and that it takes away individual rights to seek justice. Should we call it the first step to tyranny?
If you define everything that the government does that you don’t like as a first step to socialism, at some point the word becomes meaningless.
Paolo=italiano? Excellent commentary by the way.
‘Socialist’ vs. ‘Capitalist’ rhetoric is a general part of the ridiculous jargon that occurs on both ends of the political spectrum in TV/radio shows that is essentially meaningless.
You can put other ridiculous and false dichotomies in there as well including ‘Free Trade’ vs. ‘Protectionist’ but advocates of both positions will begrudingly acknowledge there is no such a ‘free trade’ just various form of commerce with less barriers.
@Paolo
Tort reform is a red herring. If physicians were civil servants (instead of private businessmen), litigants would have to sue the state or federal government. Problem solved. I’m actually quite proud to be a civil servant, BTW. We do a good job for less pay, but get great benefits to compensate. If somebody went in to medicine so they could drive a Porsche and live in a McMansion, they went into it for the wrong reason. If I wanted to be a rich man, I’d have gone to business/law/accounting school, defrauded people up one side and down the other, and got rich; the old fashioned way.
Now if only I could get this fail EMR (CPSI) to work…
Luckily I already got the fancy car (not a Porsche) and the big house plus more.
Veterans Health Care one of the best? OMG! There goes your credibility John Ballard.
“an insurance system that still has the fundamental flaw of being employer-based”
This is an opinion that 100 million Americans disagree with and millions more in other industrialized countries that have employer paid benefits.
“Again, we pay more and get less than any other industrialized country on the planet. This is due mainly to how we fund insurance i.e. the employer-based system.”
I’m afraid you have no clue what you’re talking about Keith, you must be an academic. Seeing as how the most expensive and inefficient plan in this country is not employer based your argument lacks any support. You start by making the fundamental flaw that academics, reporters, and those that don’t know anything make, we don’t have “A” system in the US. We have thousands. To compare the aggregate results of all these systems to one other system then say all of our systems are bad is ignorance of process. We have systems that are equal in cost and higher in quality than most other nations. Compare the Private insurance employer based systems in Utah to any other country for example. People that don’t understand what they are talking about over look the fact if the rest of the country modeled Utah we wouldn’t being having this discussion, to then turn around and say Utah is a failure is just partisan BS. The employer based system is not what screwed up our HC in America, it is the failed public plans and 40 years of politicians trying to regulate employer based plans.
“I find it hard to believe that whatever the ACCA implementation is, that it will be that much worse than the current system.”
That would be because you don’t understand the current system and how it works nor are you able to grasp how the current system will react to the poorly designed and terribly written ACCA. It might surprise you that just because politicians slap a name on a bill and claim it will accomplish something that doesn’t mean that will actually be the result, in fact it seldom is. Poorly written bills by people that don’t understand the subject have a way of distorting the market into doing some very unfavorable things. Like Insurers discontinuing individual children policies because of reform. When the first Mental Health Parity passes politicians where shocked to find out plans capped the number of visits or dropped coverage.
How many goes unpaid in taxes each year? When people are forced to spend an equal amount on insurance they don’t want they will extend the same effort to circumvent the law as they do in paying taxes. These failed bills never solve the problem they are written to and only drive up coast and make it more expensive for those that try to be honest. Gary made a good point but had it slightly wrong. 80+ of Americans try to do the right thing and stay insured. They are by far the majority, it is the few who game the system that destroy it for everyone.
“The fact all the capitalist pigs on this board don’t want to acknowledge:”
Quack Vickstrom you need to lay off the propaganda and come back to reality. Just last week in some comments with Maragalit I said I wanted to be filthy rich and not share any of it. No capitalist denies there is a huge gap between the haves and haves not. There should be, it should be bigger than it is. There are many people that aren’t worth minimum wage. I see that socialist upbringing worked out great in regards to your education.
“In 2006, nobody said that Romney’s plan was the first step to socialism.”
Maybe you weren’t reading me back then so since you missed it people that now insurance called it socialism and laughed how those idiots in MA managed to find a way to make their already highest cost system even worse. There is a difference between conservatives and republicans in MA that pander for their vote. No one that knows the business would refer to MA as a market based solution. We had already seen numerous exchanges tried and failed, we knew better.
“You could easily argue that it violates the 10th amendment, that it’s a federal takeover of the state judicial systems, and that it takes away individual rights to seek justice.”
Unless federal laws were eliminated that allowed it to truly be a state issue. Allow the states to write their own reform, then let doctors decide where they want to practice and people decide under which State laws they want to live.
Its not all socialism, some we call communism, some tyranical, some just corrupt. But that being said there are a lot of socialist agendas out there, thus the commonity of the label.
“All of them are more expensive than the PPACA.”
There is no way to make this claim, Medicare was “suppose” to cost 1/100th what it actually did. This bill will have unanticipated cost many times the projected cost.
“We do a good job for less pay,”
Where the heck do you live Craig that civil servants do a good job for less pay? They do a terrible job for higher pay then private counterparts and benefit package that cannot be justified.
Dranove is basically right. The Obama-ites are good people, but only two of them have actually practiced medicine: David Blumenthal (up until the moment he went to Washington) and, a very long time ago, Don Berwick.
(And because of inept Congressional relations, Berwick has basically been fed to the sharks. This is a tragedy. He’s a really good leader, almost universally respected, and he’s got until his recess appointment expires next year to get something done. Then, like John Bolton, he’ll be eaten alive by the Congressional opposition and he’ll be back in Boston with a fresh set of scars all over his body, wondering why he changed his mind and took the job in the first place.)
The rest of Obama’s team are either academic “theorists” who exist, as Dranove said, in a very strange corner of America completely dominated by the Harvard teaching hospitals and their clinical staffs, professional Hill staffers who occasionally leave DC and visit the real America, or lawyers and former state insurance commissioners from second tier states.
PPACA is a phenomenal regulatory project; a charter to reshape entirely not only the role the federal government plays not only in financing care but also extending the clammy grasp of bureaucrats over a nearly $900 billion private health insurance purchasing pool. With the possible exception of Nancy Ann Deparle, who ran both Medicare and a state Medicaid program, and actually had some business experience as a corporate director, I don’t think Obama’s team has a CLUE about how to manage this legislative monstrosity. (She’ll likely be gone in by next summer). When she goes, there will be an astonishing shortage of real world experience in running anything in the rest of the team.
Socialism, communism, syndicalism, onanism, who cares. Despite the best of intentions (remember the 30 million people who get insurance from this thing) PPACA is a political albatross for the Democrats. Only 29% of Americans actually think it’s going to help their families. A Republican majority in the House could block a lot of the implementation funding in any case. Let’s see how far they get.
I just hope they don’t make things worse trying to help all of us. Lots of great material for doctoral students in public policy, that’s for sure. This crew reminds me powerfully of the Kennedy Administration.
Thanks Nate. I have been one of those who lost a job and was unable to pay the full force of Cobra Payments. It is a major challenge for working Americans to hindge their Health Coverage thru a Job. Then be further penalized for every step you make to protect your Health. Are we getting our moneys worth? No!Are we treating the person? No! Only the symptom.Can we do Better? Yes, We Can! Will it be perfect? Of Course Not!
The idea that Health Care is not good care unless you pay dearly is insane. If it doesn’t become a agonizing and a finacial Casthrophie than its not worth it. The Fact is Defensive Medicine seems to be the professional Mandate and a excuse by the Insurer and some providers to exploit patients bank accounts. Simply not to exclude themselves from lawsuites as some would Claim.
There is a human factor that gets thrown into the Morgue whenever it comes to professional Consideration,profitability and accountability. I don’t think that Lawsuits are the way we should reform healthcare.However,Insurance and providers have worked tirelessly to market extreme profits into a microchasm of the minimal services. So its understandable why these corporations want to limit access and why our sick care system is in dire straights. It is survivial of the fittest and class warefare to say the least.
Ok, one more time, who are the key elements to the health care debacle that has forced this “albatross” on everyone’s neck? In order?:
patients, who as a whole do not accept the basic requirements of appropriate health care access and response to interventions by not practicing preventative measures and following standards of care in responsible order of application;
physicians, who forgot how to discipline themselves, looked to inappropriate substitutions for income streams, and allowed outside, non equivalent sources to demand supervision and definition of standards of care;
families/significant others of patients who do not accept the boundaries of realistic patient care needs and irresponsibly and reckless force their input much more often than is realistically appropriate;
employers, who provide a sizeable chunk of the costs for insurance coverage, have chipped away at such realistic coverage needs and lost perspective that keeping invested, committed employees by letting employees access good care and instead just focusing on numbers and today’s needs for the most part, have made employment mostly a fill in the blank exercise in employee relations;
insurers, who have made health care a for profit model, focusing solely on the bottom line in each and every patient care need, and now have figured out how to milk the potential future system until they can dump it for better profit margin options in the next 3 or 4 years, have no real interest in seeing patients maximize appropriate standards of care if the cost today is going to prevent their CEOs/boards/stock holders from making an extra dollar tomorrow and not focus on where things go next year;
Government, PartA: mostly the states who run the regulatory boards, who do it so ineptly and personally punitively that real discipline is random chance instead of real investigation of impaired and inappropriate physicians and other providers, and
PartB: the fed who runs the national system of regulations, and now this pending farce of health care for the country, for allowing politicians who have no clue to what are responsible and effective changes to realistically improve the deficiencies at hand and have instead just used an alleged legislative intrusion to make their constituients like them enough to let them keep their narcissistic intents to screw the public further;
Hospitals, who have at the very least lost perspective in maintaining a true interest in the welfare of the communities they reside in, if not pimped out how to maximize a profit margin even for those who are allegedly non profit, and are just focused on appeasing any outside regulatory bodies who could realistically shut down those institutions who border on criminal care interventions;
Pharmaceutical and medical devices companies, that have twisted the logic of offering health care innovations and improvements in treatment options that can improve health care outcomes in the end for the sake of the company line, minimizing, marginalizing, and denying any and all consequences that probably in the beginning were not intended, but then instead of accepted and reframed if not removed, just allowed to continue until the consequences were as plain on the nose of one’s face;
and last, not least but the one I thought of last, is the medical educational system that tries to keep the standards of care efficacious and responsible, who have instead been manipulated by some of the above participants, and have fostered the attitude and environment of accepting a profit margin in a system that does not operate in business model, and at the very least looked the other way as the discipline deteriorates to the point where every one else who has no real equivalency to set standards of care are now doing so.
Sums it up for me. So, who will shoot this down because it exposes your weaknesses to your arguments to let Health Care Deform Legislation win out!?
@ExhaustedMD: I actually agree with most, if not all of your complaints. Even the part about politicians being corrupt and narcissistic and bureaucracies being inefficient.
My question to you is: if you were a law maker or a policy maker, what would you do specifically to fix the problems you have identified? Complaining about how everything sucks and how life is unfair and insisting that everybody should be fired or thrown down a cliff does not solve any problems.
@Nate: I am sure that you and a few other bloggers have always called the Heritage foundation a socialist think tank. I give you points for honesty and consistency. My point is that nobody in the GOP establishment and in the right-wing media called individual mandates socialist when it was a Republican proposal.
/Agree with Paolo, IOKIYAR, no matter what be the policy. My suggestions for reform would be: no for-profit hospitals, clinics or insurance companies. Physicians, hospitals, and politicians without conflict of interest (physicians don’t own their testing equipment, hospitals not employing physicians, and politicians no longer accepting bribes – otherwise known as “campaign contributions”). Physicians on salary as state or federal employees. Torts go to the state or federal government, or whoever does the physician licensing. Free higher education to anyone entering any health occupation (stop the need for money). Enforce proper use of medical resources (no more ER visits at 7 PM for sore throat. Emergency room for…emergencies. Imagine that.) Patients responsible for their own health. No drug abuse, smoking, or obesity. If they engage in chronic self-injurious behaviour they have to pay higher co-pays and do not get any heroic procedures or life-sustaining measures, unless they want to pay it all out-of-pocket. And finally, a BIG investment in PUBLIC HEALTH. Sorry to shout, but public health is really where it’s at, not in the acute treatment of illness. How does that sound for austerity? When I practiced in a mission hospital on the edge of the Sahara, restrictions were much harsher than this, BTW.
Craig Vickstrom: Your comments reflect Dr. Arnold Relman’s prescription for a healthcare/medical services system outlined in A Second Opinion. Excellent exposition of the facts and issues by someone with hands-on knowledge of most aspects of the USA healthcare system.
Medical services and their financing are, as others point out here, activities with many externalities, ergo appropriate for socialization of financing and for much of medical service delivery.
The point on externalities is that private economic activity almost never, if ever, accommodates the impact on society of negative externalities nor captures positive externalities such as the reduction or elimination of contagious disease.
Public health services funded and delivered through governmental and private means have been essential to eliminating contagious disease as the primary cause of death in the USA in the early to mid 20th century.
Public health measures more broadly considered include diet. Diet impinges directly on broad swaths of the USA economy and private enterprise, primarily the fast food industry, food service industry and the processed foods industry, very significant elements in the USA economy. Adequate pursuit of public health therefore enters into an even larger realm of politics and of other industries outside of the medical services and medical services financing realms, large as those are.
However the relatively poor showing of the USA in regard to measures of population health status depend more on diet and “lifestyle”, e.g. suburbanization and its negative consequences in regard to a sedentary, rather than physically active, life of the average suburbanite, than on the availability and quality of medical services which obviously are generally excellent in the USA, albeit far too expensive.
Therefore topics such as diet and the need to inform the public adequately about diet run counter to the interests of this very large group of private entities in the USA economy. However a part of lowering of costs of medical service delivery and more so the elevation of health status are dependent upon such public health initiatives.
Paolo is too kind in regard to Nate’s commentary. That commentary may be sincere, it probably is in fact although constrained by his political prejudices and work experience, but unfortunately the facts he attempts to adduce and the analysis he provides are no better than nonsense written by the average extreme rightist nutcase.
To the author:
How can you write a piece like this without addressing the fact that for profit insurance companies are dictating what medical services should be provided to patients and doing so based primarily on a desire to keep the bulk of premiums collected in their coffers or distributed to their shareholders? Not every free market endeavor has to be an ethics-free zone. In the health insurance market, middlemen are making profits based on a model where neither the providers nor the consumers are satisfied, neither have real bargaining power, and neither are able to exit the relationship freely.
You say you agree with the current assessment of the problems with the American health insurance market – what are your solutions? Vouchers? Really? Why should tax money be used to purchase health insurance based on a corporate model where maximizing profits is the legally mandated goal above all else? This is an an industry famous for rampant consumer abuses and bureaucratic obstacles. It is also an industry free from the fear of being sued for any real damages because federal law shields most health plans from liability. How is this a free market enterprise with such a gross imbalance of information and power in the contracting process, and no checks on abuses built in to the system?
I don’t begrudge you the point that large bureaucracies – government run ones or otherwise – distort best practices and veer toward political expediency. But defending a model where shareholder interest are placed far above the physician-recommended treatment needs of seriously ill patients is neither an ethical nor intellectually genuine position. At least include free market fixes to empower patients – or, if you prefer, consumers – to have a fighting chance when purchasing and utilizing health insurance. Maybe throw in some bargaining power for the physicians.
At some point it would be lovely for experts such as yourself to to try and craft solutions with the patient who requires the right care, at the right time at the center of the policy solutions put forward.
Mr. Holt,
Where is my post from yesterday?
“First, one of the best healthcare delivery systems in America is socialist by definition: Veterans Health Care.”
No, it is not a socialist system by definition. Veterans were government employees. They are provided health care coverage as employees and retired employees through their employer.
Paolo:
what, are you looking for a different answer than what I have been saying here since I first starting commenting?
Take the F-O-R out of profit in health care. Watch the bastards/roaches who feed on this run for cover and search for new feeding grounds. It is that simple.
@Exhausted,
I second that. The F-O-R must go, especially the profits of third party leeches like insurers. Has an insurance company ever actually provided any health care to anyone? I think not. Continue the struggle, comrades!
This is fascinating. First time I read one of these debates from beginning to end where I didn’t say anything
So academics don’t know anything, and that coming from other academics, and the Government of course doesn’t know anything and every time someone tries to fix something, that someone is by definition a Socialist, because “fixing” implies shackles on the, so called, free market, which is the only entity with the prerequisite wisdom and intelligence to always be right on every account.
Too bad there’s no such thing as a “free market” anywhere. I guess various folks define a market as “free” if it does not impose any restrictions on their personal needs to accumulate wealth.
So back to Dr. Vickstrom’s comment way up above, if you’re OK with babies dying in the gutter, or alternatively, if you do not travel in areas with gutters, all is well. Otherwise, your “free” market is restricting my freedom and it has to go away.
I would point out that our current system, corporate capitalism, is not the “free market.” In a truly “free market” there are no corporations, as a government granting a corporate charter is government interference in the economy. So there is no personhood for corporations and no limited liability for their shareholders and executives. Something goes right, they get the profits. Something goes wrong, they all pay with their equity, personal funds and their freedom (i.e. prison) until the debt is paid. I see no one on this board, nor in the media, advocating for honest, clean capitalism. They also don’t concede the consequences of extreme wealth and poverty, as I mentioned above. This is the fundamental intellectual dishonesty of the “free market” crowd. So, let’s be honest that we are all arguing for a mixed economy of some kind. We are just arguing over the distribution of risk, benefit and detriment.
” GOP establishment and in the right-wing media called individual mandates socialist when it was a Republican proposal.”
GOP are still politicians and right wing media are still journalist. With a rare exception both are classes of people so stuipd and uninformed they can’t get real jobs and contribute anything to society. I don’t care nor measure what either of them do. I care what the conservative citizens of the country think. I know very few conservtives who read Heritage and even fewer who care what they say.
“How can you write a piece like this without addressing the fact that for profit insurance companies are dictating what medical services should be provided to patients and doing so based primarily on a desire to keep the bulk of premiums collected in their coffers or distributed to their shareholders?”
Juliette, maybe becuase the vast majority of people are not covered by for profit insurance companies. Government covers a large chuck, 50% of those with private group insurance are self funded and 50% of those with fully insured are covered by non profit. Maybe 15% or so of people are covered by for profit insurance companies. Basic facts would help your argument if you got them right.
“Has an insurance company ever actually provided any health care to anyone? I think not.”
THis is really scary Quack, I would have thought in medical school they tought you who provided care and who didn’t? What exactly did you get your M.D. in? How many insurance companies have M.D…..that’s right none there not doctors D… A.. You provide the health care and insurance companies finance it, if you can’t grasp that no wonder your lost.
“Too bad there’s no such thing as a “free market” anywhere.”
every developing nation has the majority of it commerace in free trade. Exactly what regualtions do the nomads in Africa suffer under margalit? Independent farmers in South America answer to what government agency? When I sell stuff online how is that not a free market? I pay no taxes, I have no license, half the time they don’t even know who I am. Blogging is a free market.
The rest of your comment makes even less sense then the quoted inaccuracy.
” They also don’t concede the consequences of extreme wealth and poverty,”
You love beating strawmen don’t you quack. You can’t cut and paste one time in the history of this blog that someone has denied consiquences to wealth and poverty. In your sad world unless someone starts every post saying I accept poverty has consiquences they are denying it. M.D. treating only strawmen of their Quack induced injuries.
This week, none other than extermination company Terminix ranked New York as the nation’s bedbug capital. The firm based the ranking on the volume of calls to its offices around the country. New York surpassed Philadelphia, Detroit, Cincinnati and Chicago, which rounded out the top five cities.
Over the last three years, Terminix said, the company’s commercial bedbug business more than doubled, with a significantly Herve leger higher number of calls from individual householders.
“Exactly what regualtions do the nomads in Africa suffer under margalit? Independent farmers in South America answer to what government agency?”
Yes, Nate. This makes perfect sense. Let us model the entire US economy after the extinct nomads in Africa and the poppy seed farmers in South America.
Can’t wait for the machetes and Cartels to materialize in Kansas….
wow you liberals are mass killing strawmen. You would think you would learn to make cleaner arguments and fewer mistakes instead of creating opposition arguments to attack.
Margalit your the one that claimed free markets don’t exist. This was obvious hyperbole and I called you on it. No one said anything about modeling the US Economy after nomads. You made a sloppy argument then an even sloppier cover up. Your over the top partisian propoganda gets you in a corner and your reaction is to go even further over the top. If people like you and Quack could have intelectually honest conversations things might actually stay ingaging. Instead first chance you get you run off to make beleive then argue about the scenery there.
in related and similar news forshadowing what it is to come;
“Instead of achieving its stated goal of 90% private-sector job creation, ARRA did the exact opposite. More than 95% of any jobs created have been in the government sector (fully outlined on Recovery.gov and confirmed by the Congressional Budget Office).
The original document outlining job creation estimates is no longer available on whitehouse.gov. It was replaced with an “updated” document three pages shorter and without the industry-specific job targets originally outlined. Christina Romer, the now-departed head of the Council of Economic Advisors, wrote the original report based on the private-market analysis done by Mark Zandi of Moody’s. Like most economists, neither of these two have experience with spending multipliers, unlike Harvard’s Robert Barro, whose research suggests their multipliers are at least 100% too high.”
I always found it odd that the actual results 1-3 years later never get a fraction of the coverage passing the bill does. MSM will write endlessly about how great some new healthreform bill will be but never bother to look at the complete failure of the previous 10 bills to do anything they claimed.
@Nate: Very well, you at least are an honest conservative. You are OK with the extremes of wealth and poverty. I admire your honesty. But sadly, the vast majority of conservatives evade the logical consequences of their ideology.
I am aware that insurance companies do not provide medical care. That is my point. Insurance companies provide nothing of value. They shuffle the money around, taking an ever larger cut of it. They provide no value-added product or service. A non-profit quasi-government entity could do much better, paying the administrators civil service level salaries instead of bazillion dollar bonuses. Even the drug companies and device manufactors, who make out very well, provide valuable products, ditto the for-profit hospitals, clinics, and nursing homes. But being corporations, they are not a form of free enterprise. They are on the government dole like all the others.
“But sadly, the vast majority of conservatives evade the logical consequences of their ideology.”
uuuuuhhhhhhh, just when I think we are making progress. Quack, I find it very hard to beleive more then a couple conservatives could tolerate a conversation with you. I’ll give you the benefit of the doubt, how have you come to the conclusion the vast majority evade the logical consequences? I can’t think of a single conservatibve person I know who denies poverty. Most of them welcome it, we see poverty as motivation to work hard so you are no longer living in poverty. We don’t see poverty as a label you are born with and forced to die with like liberals, we see it as a place you are in at a time and usually the result of ones own actions. I once again must call BS on your projection. Another quack comment another dead strawman….the slaughter must stop
Warning, I am going to ask you a very leading question with the full intent of turning your answer around and using it against you, think very carefully before you answer this;
” That is my point. Insurance companies provide nothing of value.”
So we should do away with auto insurance and homeowners insurance? And life insurance to I suppose becuase all three provide nothing of value?
“A non-profit quasi-government entity could do much better,”
Like Freddi or Fanni? Those have worked great for the mortgage industry. Sallie has made college so affordable. Maybe we should model Indian Health Services? Maybe we should copy State Worker comp insurers, those have been raging successes. I can’t think of a single successful non-profit quasi governmental agency that has been successful despite their having been dozens. If I missed on let me know, USPS? I can name a dozen failures off the top of my head. Is it possible you are wrong about this conclusion?
My point: health insurance companies are parasitic. They extract resources from the health care system, without adding any value in terms of goods or services.
Large amounts of resources are also wasted practicing defensive medicine, inappropriate end of life care, useless treatments, useless testing, self-inflicted sickness from poor lifestyle choices, for-profit clinics and for-profit hospitals.
The purpose of the health care system is not to get filthy rich, but to deliver the best health care to the most people. This includes a robust public health system, not just an acute illness system. I will let others worry about Fannie and Freddie, African nomads (the Tuareg?), the USPS, and cocoa growing farmers.
Now, back to treating the straw people…
Nice pice. Funnily enough, I wrote a closely related piece, entitled “The Best and the Brightest,” on Aug. 31. A shame I hadn’t seen this earlier.
http://www.avikroy.org/2010/08/best-and-brightest.html
“There isn’t a public or private health insurer anywhere in the world that doesn’t directly intervene in the delivery of medical care. ”
What part of this do people not understand? If you don’t want anybody coming between you and your doctor, then pay cash or stay home. If you want my help to pay for your care — through public or private system — you better brace yourself for some guidelines.
I don’t want to hear any doctor crap about not wanting to practice evidence-based medicine – if you’re not doing EBM, what ARE you doing? And don’t go having a hissy fit if somebody asks you why you are deviating from standard of care — you got a reason, just say so.
” health insurance companies are parasitic. They extract resources from the health care system, without adding any value in terms of goods or services.”
Without stop-loss insurance how would smaller employers self fund their benefits? Without self funding how would they offer affordable insurance? I think there are a number of lefties on this blog that would also disagree with you claiming Kaiser doesn’t add any value.
Without insurance companies how would seniors fill in all the gaps of the poor public plan they are forced to have?
Can you name any country in the world that has a 100% public system without any insurance companies? The only ones I know are communist countries with very poor systems, systems far below the US standards. There is not a sustainable public system in the world. Most of the existing public systems are moving towards more private insurance becuase they can’t deliver the care their citizens want at an affordable price.
While your plan looks great on paper it can’t exist in reality
How would you feel working 12 hour days 5 days a week treating over weight people with self inflicted illnesses who consume needless amounts of care because it doesn’t cost them anything? And make $60,000 a year for doing it. That would be the public system yoiur asking for. I don’t think we could find enough doctors to staff such a system. MD as Hell would you sign up for that? bev would you pratice in such a system?
Nate,
I don’t know as if I’d like to see insurance companies banned entirely, maybe just regulated like a public utility, with the government limiting how much of a profit they can make, how much they can pay their staff, minimum benefits they must provide, and maximum premiums they can charge.
“How would you feel working 12 hour days 5 days a week treating over weight people with self inflicted illnesses who consume needless amounts of care because it doesn’t cost them anything?”
I already do more than this, far more. I have to waste unconscionable amounts of resources. As a former missionary, it galls me. But it’s what I have to do to stay in practice, and ahead of the lawyers. Sadly, this is America, and self responsibility no longer exists.
“And make $60,000 a year for doing it.”
I make more than this, thank God. But not a whole lot more. Certainly nothing close to an orthopedic surgeon or an ophthalmologist. And I WOULD do it for 60K a year, if I had perks and bennies to compensate for it.
“That would be the public system yoiur asking for.”
No, that’s not what I’m asking for. I’m asking for a system where people get what they need, not what they want. A system in which we don’t waste resources proving negatives, treating what doesn’t exist, testing for what isn’t there, and making excuses for people’s bad behavior. I want a system in which I don’t have to buy my patients’ medications for them. A system in which I don’t have to rely on drug company samples to keep my patients alive. A system in which people stay in the hospital, nursing home, or in home health for as long as they need, not when their insurance/Medicare/Medicaid run out. A system which pays to help people stop smoking before they get lung Ca or COPD. A system that treats obesity before they get DM, HTN, HLP, and DJD. I could go on….
“I don’t think we could find enough doctors to staff such a system.”
Don’t bet on it. Many of us go to medical school for rather idealistic reasons, not to get rich. If money was what I loved, I wouldn’t have gone in to medicine. I’d have gone into a money-handling job. Yes, I make a comfortable living, and that is all I want out of life. I don’t need or want any more. Money may be the prime motivator for most, but not for all people. My prime motivator is to do a respectable, useful job for a decent wage. I would like to produce at least as much value as I consume. That is about the best any of us can do, unless we are geniuses like Franklin, Gauss, Archimedes or Edison. I freely admit that I am not. So, yeah, I do think we could find people who would do it, and do it well. I know them. They do a good job because they want, need to do a good job, not because they are showered with money. They do it because it is integral to their self-respect as decent human beings. I work with them every day.
Nate, why does everything have to be black or white?
Why are the only options Colombian Cartels free markets or Communist non-markets?
Why is the only alternative to the miserable system we have now, a felcher staffed Gulag public clinic?
Why should insurance companies have either license to exploit as they please or be totally dismantled?
Why can’t we look at countries that use health insurance companies, or sick funds, a bit more creatively and a bit more fairly?
Why do we have to make the assumption that this country cannot possibly provide quality health care for all its citizens?
Why are the only income options for doctors 600K or 60K?
Perhaps those who become doctors just so they can make 600K and up shouldn’t become doctors at all. And yes, there are plenty others, equally talented, who will step in once the expectations are reset.
Why the simplistic and completely unrealistic assumption that poverty is a transient self-inflicted or self-perpetuated condition?
There is a limitation on the willingness of the poor to support the rights of the rich to get richer, particularly when they realize that their own way to riches is blocked by greed, avarice and sheer callousness. If you leave enough people behind, and for multiple reasons we are doing that now, this entire bubble is going to explode.
May I suggest that in the long run you are shooting yourself in the foot.