Up at Spot-on I’m defending Jon Cohn from a way-off topic review of his book from Philip Longman in the Washington Monthly. This is an important topic because Longman is in the “we can’t afford universal health insurance because the delivery system is inefficient” camp. He’s way wrong about that and he’s not alone. In fact his logic is backwards. We need to sort that out quickly, and I have a go at doing so in a piece called New America? Old Excuses. (The “New America” is the Foundation Longman is from which for some reason has teed off my editor over at Spot-on in the past). Here’s the intro:
Last week, I came to criticize Jonathan Cohn (for being too nice). Today, I come to defend him. Phillip Longman who hails from the New America Foundation complains in the Washington Monthly that Cohn’s new book Sick is Misdiagnosed because Cohn concentrates on the financial consequences of living without health insurance and not on the overall problems with inefficient and ineffective care in the U.S. system. He doesn’t exactly get off to a roaring start, taking Cohn to task and getting it totally wrong in the process.
Read the rest and come back here to comment
Brian & Barry are as usual both very sensible and both right–we do need to deal with the issue of overuse and poor incentives. Medicare, which is a politically dominated single payer program, does not, as they both point out, deal with the inefficiencies in the US system. But it can cut costs. It did it in 1998 with the BBA. More importantly other countries have both used their single payer systems to contain costs (Japan/Canada in the 1990s both reduced the share of GDP going to health care) and others (UK, Denmark) have used their single payer systems to create pay-for-performance and complete EMRs.
My contention is that if there was a bottom line somewhere in US health care — either in a dedicated payroll tax, a government agency with a unified budget, or a fixed voucher that everyone saw the value of — then the observation of that amount would cause the payers to force change on the health care system. The uninsured are the “safety valve” that stops that happening.
Universal coverage and cost controls are the yin and the yang of a workable system. Neither alone is adequate.
Universal coverage may facilitate some cost management, but it is more about access, distributing risk and financially stabilizing the safety net. Without universal coverage, as enrollment in coverage continues to erode, the safety net will ultimately collapse under the weight of the growing numbers of uninsureds and underinsureds. The turmoil will gradually spread to the rest of health care and then, because health care is our largest economic sector, to the larger economy. And many in the middle class will go bankrupt over their health conditions.
Cost controls are necessary to drive waste out of the system and to make premium more affordable. Without them, universal coverage will eat all the money.
Contrary to Matt’s argument this go-round, in the real world single payer has not translated to effective management, especially with the Congressional escape valve greased by influence. If what Matt says held, why has Medicare – certainly a defined resource pool with a defined responsibility – had an inflation rate that tracks the one in commercial coverage?
In any case, Barry Carol’s comment on financing deserves further attention. The deepest source of the crisis is the cost explosion. While our financing mechanisms certainly are complicit in the crisis, we also need to acknowledge that most new cost is excess promoted through the supply chain and care delivery systems.
It is clear that half or more of care and cost in the US system is unnecessary, inappropriate or preventable, actively encouraged, as Matthew points out, by the financial incentives in the current structure. It is also clear that health care’s many interest groups won’t willingly accept less money than they’re currently making. Indeed, the excess revenues that accrue to many health care organizations have become a significant part of their financial baselines.
So the real challenge of reform will be rightsizing health care, driving out the waste, and doing so in a way that facilitates the viability of universal coverage while maintaining the stability of the health care sector.
Rather than focus on what really amount to arcane discussions of ideal reforms, it might be more productive to contemplate how we might align the nation’s purchasers/power players – here I’m referring to the non-health care business community, who represent 6/7 of the US economy, and have more heft and influence than the health care industry – behind a set of discrete policy changes that encourage stability and real reforms in health care. It’s less productive to nitpick over which matters more, cost controls or universal coverage.
Jonathan Cohn is a single payer advocate who wants to drastically reduce the role of private insurers and replace them with a one size fits all Medicare system for everyone. He readily admits that both Medicare and Medicaid are prone to fraud. Choice (which is an important part of our culture) would be eliminated. Then he not so reassuringly tells us that Medicare for all would be no worse than what we have now.
Hospitals often argue vociferously that Medicare does not cover their full costs, and Medicaid is even worse. They can make the system work largely by shifting costs to private insurers. Charlie Baker, the CEO of not for profit Harvard-Pilgrim Healthcare (HPHC), says that HPHC pays hospitals 100% of Medicare rates for some procedures, 150% of Medicare for others, and as much as 175% of Medicare for still others. Paul Levy, CEO of Beth Israel Deaconess Medical Center (BIDMC) in Boston, says that his hospital could not provide the level of care it does now if it had to accept Medicare rates from all patients, even if it received those rates from currently uninsured and Medicaid patients and assuming BIDMC achieved some savings in administrative (mostly billing) costs.
Medicare has known for years that there are enormous differences in practice patterns around the country (Miami vs Minneapolis, for example). Yet, despite controlling over $400 billion of annual medical spending on behalf of Medicare patients and another $180 billion (federal share) for Medicaid patients, it has done precious little to reduce these practice pattern variances. Why? Probably because it doesn’t want to make any tough calls like, perhaps, eliminating high utilizers who can’t improve from Medicare’s approved provider list. Moreover, in order to get some control over utilization nationally, someone is going to have to occasionally say NO. Should patients with severe dementia or advanced Alzheimer’s get any surgical interventions? How about bypass surgery, angioplasty, hip replacements, kidney dialysis for 90+ year olds? The list goes on.
Yes, we need to cover the uninsured and find a sensible mechanism to make sure everyone has health insurance all the time. However, I say again that we spend far too much time, effort, and ink arguing about healthcare financing and not nearly enough about how to safely and sensibly reduce healthcare utilization.