Now that health care reform is once again an active, visible issue in state governments and the presidential campaigns, the ideas are flying fast and furious. Predictably, some ideas are better than others.
Over at Health Care Policy and Marketplace Review, Bob Laszewski asks an important, practical but vexing question for universal coverage advocates: Can you really mandate people to buy health insurance?
Mandated health insurance is a plank in the Clinton campaign’s health
care reform plan and is a key way that Ms. Clinton and Mr. Obama differ on that issue. (I don’t know why Presidential candidates should
provide this level of operational specificity at this point in the game
– there are lots of different ways to skin the universal coverage cat –
but they have.) Under Ms. Clinton’s plan, all citizens would be
required to prove that health coverage has been provided to them or
that they have purchased it.
To illustrate the difficulties in actually using a mandate, Bob points us to the penalties
being developed by the Massachusetts Department of Revenue for citizens
who fail to buy health insurance. The 2008 proposal would tie the
penalty to the lowest coverage cost offered through that state’s health care
program, and would be $912/year for a person older than 26 years. As he
points out, the burden would fall most heavily on the group that makes just too much money to receive subsidies.
I recently described nearly the same problem in California’s health care reform
proposal, where a couple with a household income of $54,000 would have
to fork over $12,000 for coverage. It’s difficult to see how this can
There are two issues here. First, most
of these state efforts assume that whatever universal health coverage is achieved must be
comprehensive, an extremely expensive proposition. (Yesterday’s news
that US health care in 2006 had crossed three different annual
financial thresholds – $2 trillion, 16% of Gross Domestic Product and
$7,000 per person – ought to be sufficient evidence of that.)
But as a practical matter in getting a program underway, it may make far
more sense to shoot for universal coverage of basic care services. Of
course, defining "basic" is the trick here, for several reasons. (This is a terrifically complicated problem. Does basic include three liver transplants? Is it the same for a healthy person and one with spina bifida, or does it change with health status? How can we define it?) While social justice is an undeniably compelling reason to implement universal coverage, there’s a lot more to the universal coverage issue than simply that. Without universal coverage for at least basic health services that associate dollars for every patient who presents, the nation’s safety net hospitals will gradually be overwhelmed by the demand for uncompensated care. (Today’s NY Times article on Atlanta’s Grady Hospital’s financial dilemma does a pretty good job describing the reality of this problem throughout the country. A few weeks ago, I also wrote about Grady’s problems and how they’re at the edge of the much larger looming health care crisis.) A "basic" program would be far less expensive and easier to finance than a comprehensive program. And it should be possible to create a basic program for all Americans, and then let insurance companies build market-based supplemental programs on top of them.
Second, a mandate effectively caters to the insurance industry, suggesting that the only way that universal coverage can be achieved is for people to buy coverage (and let the insurance companies take a profit). But universal coverage could be built in other ways as well. For example, there is no reason why we couldn’t establish next generation community care clinics around the country, and designate a range of primary care providers who would "take assignment" for any care delivered through the program. Anyone in America could show up at a clinic or a designated provider and receive the basic care they need without paying much or anything. The care would be detailed in the EHR and a bill submitted to the Feds or their intermediary.
A mandate would also create extremely complex and expensive administrative issues. If we required everyone to buy coverage – including all those who aren’t subsidized but who would have trouble affording it – then we’d have to establish a monitoring/tracking function that could make sure that everyone did what they were supposed to do, and then punish the offenders.
But the deeper problem with the state and national reform efforts currently on the table is that they finance reform upfront by requiring a lot more money from the people paying the bills, while talking in vague platitudes about cost containment. All the real concessions come from the purchasers, and virtually none come from a health care sector where we KNOW that care and cost are extraordinarily variable between providers, and that between a third and half of all care and cost are unnecessary or inappropriate.
After 25 years of managing the care process, its not like there’s any mystery about what health care actions save money and get better outcomes.
We know, for example, that paying doctors salaries and not letting them make money on the procedures they prescribe, drives down cost significantly.
We know that, in any market, if you compare the resource consumption of all doctors within a given specialty for a particular condition, and hold the outcomes constant, that there will be a 6x-8x difference between the least and most expensive practitioners. You can save a lot of money if you look for the physicians who consistently get the best outcomes at the lowest costs, and steer your patients to them. And if you make your findings known publicly, it creates a competitive market for the doctors, and the quality and cost of the care will likely improve across the market.
We know that, for routine conditions, doctors who have modern tools and
follow evidence-based best practice guidelines generally have lower
costs and better outcomes.
We know that generic drugs perform just as well, in most cases, as brand drugs, and are a lot cheaper.
We know that, to the degree you can open up access with zero or very low co-pays, particularly for low-income populations, that you’ll nip exacerbated care in the bud.
We know that, if you can identify patients with chronic diseases, and
then intervene with face-to-face lifestyle, education and behavioral
counseling, you have the best chance of lowering that population’s
costs, which typically account for half or more of any credible
We know that, if you can tie payment to outcomes, you’ll change reimbursement incentives from rewarding more care to rewarding only the right care, and the total use of services and cost will be reduced.
We know that team-based medicine, where doctors collaborate, is more effective and efficient than siloed medicine.
We know that if we can obtain pricing/performance transparency information, we can identify the top vendors, and then we can use that information to make better purchasing decisions. We also know that, at this point, the information that’s become available is mostly too complicated and arcane for most consumers to use. But in the future analytical results will flow into decision support tools that will make objective purchasing decisions much easier.
We know that, until the pricing and performance of ALL health care players, services and products – doctors, hospitals, health plans, suppliers, particular treatments, drugs, devices – are made transparent, it will be impossible to really get costs under control. For example, I’m a big proponent of carefully constructed Pay-for-Performance programs, but until health plan performance is just as transparent as the plans have demanded that providers be, the gains would simply accrue to the plans. In other words, change the incentives and you’ll likely change the way care is delivered. But if the health plans aren’t transparent, how will we know how much waste and money was actually eliminated, and what happened to it. Was it shared with the providers who produced the efficiencies? Was it returned to purchasers in the form of reduced premiums? Or did it simply bolster the earnings of the health plans.
The real issues of health care reform have to do with universal coverage and cost. Universal coverage can only be achieved through policy change, because at a societal level, there must be a governmental assurance of payment for the services.
But its unlikely that real cost-containment can take place through policy reforms, because the most powerful lobby, the health care industry, has the advantage of a Congressional system that is highly susceptible to influence. Facing the possibility that their revenues could drop dramatically, the industry would use all its sway to prevent meaningful reforms. Even so, there are tremendous changes afoot in the marketplace – Health 2.0 is the best example – that will over the next few years infuse unprecedented levels of transparency and decision support into health care, and begin to rationalize the waste that has had a grip on the throat of purchasers and patients for decades.
Unless we can convince America’s non-health care business community to come together and roll over the health industry’s lobby, in terms of the policy-based reforms, we should resign ourselves to these realities and shoot more modestly, for universal coverage of basic care. That would be a critical foothold to build on, and would pave the way for much more progress.
We need to abandon lofty and impractical approaches that are constructed by dreamers, and develop practical solutions that are based on actions we already know work. Any other approach will almost certainly produce coverage at an unsustainable cost, and simply postpone and intensify the crisis.
About a year ago, the Executive Director of a very prominent national business association asked me to define the list of changes that any reform proposal must include if it hopes to be effective. That list is up on my site under the Reform section. Before it was posted it was reviewed and found acceptable by about 30 colleagues. Please feel free to take a look and offer comments.