Matthew Holt

Two rules by which to judge a health reform bill

Right now we have sausage-making going on in DC and lots of uninformed opinions and outright lies being strewn across the front pages and on cable from newly declared experts. I sat in an airport last night and heard 5 Wall Street pundits spewing rubbish about health reform on one cable show. It even included an aging upper-class British twit declaring that government health care was more expensive than private systems. Clearly he’d managed to miss comparing the 8% of GDP his (and my) original homeland spends on health care versus the 17% we spend here. Later on CNN had 4 random people including Christine Hefner—yes one of those Hefners—talking about it. I suspect that if you know something about health care and your name’s not Michael Cannon you’re just not allowed on cable TV.

But all the hot air aside, even those of us in the punditocracy who know something about the subject matter (i.e. anyone reading THCB) seem to be so deep in the weeds that we have lost the basics about what we should be looking for from a health care bill. So it’s time to make that very clear, and here in my not so humble opinion are the rules by which to judge reform.

Rule 1 A health care reform bill needs to guarantee that no
one should find themselves unable to get care simply because they
cannot afford it. Neither should anyone find themselves financially
compromised (or worse) because they have received care.

Rule 2 A health care reform bill needs to limit the amount of
GDP that is going to health care to its current level, with an overall
aim of reducing the share of health care going to GDP.

Everything else (quality, safety, care integration, patient satisfaction, malpractice, primary care, etc) is about rule 7 onwards. Of course a good reform bill would fix all that too. But we have a bought & paid for Congress so we’re not getting that.

Incidentally I just read an interesting biography of Sidney Garfield, the MD who founded Kaiser Permanente. He made the point that once workers were paying into his pre-paid medical plans in southern California and Washington, then patients came in for preventative care that they had been putting off because they couldn’t afford it. Garfield was also—despite years of being accused of being a communist by the AMA—vehemently opposed to socialized medicine and thought pre-paid salaried group practice was the only logical alternative to it, in that it could cover everyone and in the long run do it cheaper because of its emphasis on long-term prevention. And he was more or less right.

Seventy years later the story is the same. We need to get everyone in the system, and figure out how to do it cheaper.

So when you look at the legislation coming out of Congress, it appears to be making a five-eighth's effort at Rule 1.

All of the bills seem to be improving access to freedom from ruinous costs for most people, and increasing costs in a trivial way. So although I’ve said that this reform seems to be trivial and small, it is in its small way potentially going to incrementally improve things.

Sadly it’s ignoring Rule 2, but Rule 1 is more important. Because when we get Rule 1 fixed, Rule 2 will eventually follow.

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49 replies »

  1. Wow! This thread is a conceptual thicket and regarding economics I usually get lost in the scrub brush!
    The original Rules #1 & #2 as stated by Matthew are badly misguided, as many have said. Their intentions are admirable, and I would completely agree with them if only softer words like “promote” and “encourage” were used instead of “guarantee” and “limit”.
    The is the government we are talking about!! Whenever government guarantees or limits goods and services (as opposed to rights and opportunities) there comes hell to pay in terms of rules and restrictions, policies and procedures, violations and punishments, and a whole host of other such things that NONE of us wants to dominate our health care system.

  2. Doctor comment. I wonder what MOST people think about the idea that “fee for service” not being aligned with the pulbic’s interest. How about the patient who is actually sick?
    Is it really evil that a doctor is financially motivated to be available at that person’s beck and call? Evil that he/she would take risks to purchase equipment to make diagnosis with increased accuracy and convenience? To own and maintain equipment with which to render treatment with increased oversight, convenience, and personal accountability? Would one really rather be faced with a situation where the MD gets a flat fee from a third party, whether they see you today, tomorrow or never? Cancel your surgery or stay late and do the case? Send you all over town to stand in line for Xrays or treatments? The major incentive being to get you off the schedule. Do we really think the government has the talent or incentive to force “better care” out of this type of arrangement?
    Every physician is partly motivated by financial forces. If your doctor is only motivated in this way, find another one. You might get an extra Xray if he is fee for service and owns an Xray machine… or blown off altogether if they are salaried. We know which way the third party payor likes it… but really… how about the patient? If the patient wants a salaried doctor, to be “protected” from fee for service… no problem… sign up for an HMO. Done. No 1.5 trillion dollars needed.
    I find that most of the doctors that point fingers at “greedy fee for service doctors”, are also the ones who can’t seem to show up to work on time, cover their share of call, seek extra training, or work past the point of minor fatigue, and are often at the twilight of their carreer calling foul against younger more energetic “upstarts” who outshine them. Apparently, we don’t retire gracefully. Naturally, these less energetic types would favor receiving equal pay to against their harder working counterparts. Are they really the best of us to lead us through this debate?
    I fantasize about a world where some of the patient’s own money is in play, one with widely publicized treatment guidlines created by science (not in courtrooms), where cost saving strategies bring smiles to the faces of an actual live patients (not a third party payor), and hard work still pays.
    I dread going back to the VA type of environment, where any case gets cancelled for an encyclopedia of reasons that really boils down to the staff wants home by 3 pm or 1 pm even better. Pays the same either way at the VA. Costs the government less… so they get away with it with a little nod from the supervisor at the end of the month for keeping costs down. Your greedy fee for service physician just shrugs his shoulders and heads out to play golf. Pays the same.

  3. Ok–just found this blog as I sought to educate myself a bit on this mess. I will say right now that you are all far more able to address many of what seem to be the larger issues to you and the American Government than I am and I know it-that’s why I went looking for blogs and articles-;)
    As I listen to all the soundbites and quasi-debate about the American health care system, I am reminded of a few simple facts that are true about my life.
    1-My children and I are all covered by Tenncare for which I am extremely grateful. We have never had insurance of any kind before now and that we are is due only to a divorce and my inability to find employment.
    2-My former husband, who does pay child support faithfully and mostly on time, runs a small business and it is our sad experience that most “government reforms” come at the expense of the small business owner.
    3-My adult foster daughter is unable to get insurance to cover her needed surgery, yet is also unable to find work that would allow her to pay for it herself.
    As I am seeking to understand the topic, I have to ask-how is it going to affect the small business owner when it does come about and will it ever be able to address people like my foster daughter and if so, how? Where are these funds going to come from?

  4. I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
    Susan
    http://ovarianpain.net

  5. This thread is full of hyperbole. Today we saw apatient I had seen last week, a VA patient who had a huge kidney stone. We got him comrfortable last wek and he wanted to go to the VA. He went to the VA, but he was told it would be 30 days before he could see a urologist. Today we see him back, now dehydrated and in pain again. He is too sick to wait to go to the VA, so the private sector gives him the care he needs, (admission, hydration, lithotripsy,) without question, even though the VA will likely pay NOTHING towards his private sector care.
    Also today I saw a lady sent here by the local military base clinic nurse for a totally nonemergent condition. This happens quite often. TriCare is a different budget from DoD, so patients often are denied service by the military clinic and shunted to the private sector.
    The VA and the military are prime examples of badly managed systems which claim no responsibility to their benificiaries and who provide convenient, mediocre care at government speed.
    Does this relate to this blog? This discussion is about covering everyone with federal care, is it not? Cover away, but pray the care is better than the coverage, if you can get any care with the coverage.
    Can it be better than the recent cash for clunker program?

  6. Ideally the free market would implement rule #2.
    We all know this, and why it hasn’t happened: information, decision making, incentives, reimbursement method.
    If medicare is reformed over time towards a reimbursement method that is centered on outcomes, then Mayo, Cleveland, Kaiser will all suddenly find their natural advantages matter.

  7. MG Says:
    > I have been kind of wondering when the various
    > physician societies are going to be willing to
    > offer a little in order to get a little.
    Not that this is easy, but I’ve been saying for awhile now that all they need offer is leadership.
    t

  8. Barry – I agree with you largely on the physicians and their role in reform so far. They are obviously the lynchpin in any reform because they directly & indirectly control so much of healthcare spending but their message so far has largely been – pay me more (e.g., PCPs), tort caps, and let me be.
    Sorry, that approach hasn’t worked and the old-line, lip-service arguments that the “care in the US” is safe and incredibly-high quality have been completely exposed the last 10-15 years by various health services research in a comprehensive way. You just can’t say anymore that care in the US is safe and of high quality in a number of circumstances.
    Physicians shouldn’t have things uniformly imposed on them but the results are usually very disappointing as a result but I have been kind of wondering when the various physician societies are going to be willing to offer a little in order to get a little.

  9. “How many cycles would it be before a democrat could get elected to national office if Medicare and Medicaid went bankrupt? Throw the insolvency of SS into that and the public might finally realize welfare/socialism/liberalism doesn’t work. It Never has and it never can.”
    You are a bright guy but you just rant, rant, and rant like a broken ideological record. Who passed the MMA Act of 2003 which was the biggest addition of liabilities to the US Federal ledger sheet since the LBJ administration?
    As for you rant about SS, wasn’t it Reagen who completely passed the buck on really reforming it in 1983 when he had the political capital and ability to do so because he knew the Republicans would get slaughtered in the ’84 elections and that it would seriously harm his own reelection chances?
    The reality is that both parties in their owns ways have significantly expanded the the US from a creditor nation in 1980 to the largest debtor nation in the world today. You act as though it was solely “liberals” who were responsible which is utterly ridiculous and completely untrue. Both parties have more than their shame of fault and blame.

  10. Deron,
    If COngress passed a bill giving vouchers to the uninsured to buy coverage in the exisiting plans no one would bat an idea. THe problem is reform has NOTHING to do with covering the uninsured. It has NOTHING to do with improving quality of care or lowering cost. If it is simple measures could have been passed 10 years ago to accomplish all that and cost next to nothing.
    Medicare and Medcaid are unsustainable. They are 2 of the three pillars of liberism and the welfare state. If Democrats don’t find the trillions to sustain them liberalism is dead. There are not enough rich people to tax to cover the debt those plans have. The only way Democrats can possibly save these plans is to divert resources from the private systems. That is why reform is so large and expensive. They can’t just insure the uninsured they need to consume the remainder of the system or see every thing they belive collapse.
    How many cycles would it be before a democrat could get elected to national office if Medicare and Medicaid went bankrupt? Throw the insolvency of SS into that and the public might finally realize welfare/socialism/liberalism doesn’t work. It Never has and it never can.

  11. We have been begging the Obama administration & our new head of HHS
    Secretary Sebelius to invite us to the discussion table to lower health care costs. We are still waiting to be contacted. We know you are busy but come on, what will it take to get someone with real world, everyday experience taking care of thousands of the sickest, oldest, and most costly patients to the table? Dr Anderson geriatric specialist is well known for her physician
    home care program over the past 10 years seeing real patients that reduces costs by 75% and increases quality of care.
    See more at:
    http://www.draandafmc.com
    and program video at:
    http://www.youtube.com/watch?v=M4eGMSymjQM
    dr anderson & associates
    arletha@draandafmc.com
    From: CS.Comments@ks.gov
    To: arletha@draandafmc.com
    Sent: 3/18/2009 10:13:06 A.M. Eastern Daylight Time
    Subj: 'Thank You' from the Office of Governor Kathleen Sebelius
    Dear Ms. Anderson,
    Thank you for contacting the Office of Governor Kathleen Sebelius to
    express your ideas about improving healthcare in our country. The
    Governor regrets that she is not able to personally respond to the many
    letters and e-mails she has received from Kansans and others across the
    U.S.
    It is inspiring to witness so many Americans taking an active role by
    sharing their comments and personal stories. While the confirmation
    process of her nomination as Secretary of the Office of Health and Human
    Services remains ongoing, we encourage you to submit any thoughts you
    may have to the department directly at their new website:
    http://www.healthreform.gov/contact/index.html. You may also contact
    them via mail or phone at:
    U.S. Department of Health and Human Services
    200 Independence Ave, S.W.
    Washington, D.C. 20201
    (202) 619-0257
    Thank you again for contacting Governor Sebelius. I hope you find this
    information helpful.
    Sincerely,
    Vicki Buening
    Director of Constituent Services
    Office of Governor Kathleen Sebelius
    —–Original Message—–
    From: arletha@draandafmc.com [mailto:arletha@draandafmc.com]
    Sent: Monday, March 02, 2009 11:16 AM
    To: CS Comments [GO]
    Subject: WE HAVE A SOLUTION TO OUR HEALTH CARE CRISIS
    Title: Ms.
    First Name: Arletha
    Last Name: Anderson
    Address: 503 west garnd blvd
    Address2:
    City: detroit
    State: mi
    Zip: 48216
    Phone: 3135540227office/3134336987-cell
    Email: arletha@draandafmc.com
    Subject: WE HAVE A SOLUTION TO OUR HEALTH CARE CRISIS
    Comment: Dr Anderson, family medicine and geriatric specialist, is well
    known for her physician home care program that reduces costs by 75% and
    increases quality of care.
    This would simultaneously solve the auto maker’s “competition problem”
    and our nation’s health care problem. We don’t just “think” this will
    work, we are real physicians on the front lines of urban and rural
    health care doing this with thousands of the sickest, most costly, real
    patients for over 10 years.
    PLEASE BRING US TO THE DISCUSSION TABLE.
    See more at:
    http://www.draandafmc.com
    and program video at:
    http://www.youtube.com/watch?v=M4eGMSymjQM
    dr anderson & associates
    arletha@draandafmc.com

  12. Agree, again, Deron S.!
    One more point I just ran across – there is some interest in giving the recommendation/oversight function to the Institute of Medicine (IOM) instead of creating a new Presidentially appointed board to replace MEDPAC. This idea I like, as IOM is already in place and has some “heft” with the public, given its landmark report on patient safety a few years ago.

  13. Barry – The $100-$150 billion estimate to cover the uninsured sounds about right. Thanks for putting that out there.
    To all that support Matthew’s order of priorities, how do you suppose that figure is going to put us over the edge? I hardly think people are going to be rallying in the streets over a figure which has, unfortunately, become “trivial” in these times. Costs will continue to escalate because we will only have taken care of the “feel good” part of reform. The “someone’s bound to get pissed” part of reform will not get sufficiently addressed anytime soon, at least as long as Washington and lobbyists continue to procreate.

  14. I think this is quite an interesting posting on some basic principles to judge a health reform bill. I think this would prove to be helpful for many of us.

  15. Bev,
    Thanks very much for your detailed an excellent response, especially the link to the very informative discussion published in Health Affairs.
    I agree that the contributions to reform put forth by hospitals, drug companies and insurers are in their self-interest, but they are at least a step in the right direction and are more than they were willing to do in 1993-1994. I also think you are probably right in your suggestion that the doctors will probably need to be dragged kicking and screaming into a new world of reform including a payment model that moves away from fee for service toward payment for value.
    Medicare is, I think, the most likely vehicle to drive reforms, especially in payment and coverage policy. Private insurers simply don’t have the moral authority to do it on their own and Medicare generally drives payment policy for everyone else anyway. There is already a pilot project on bundled pricing that started in July of 2008 and is scheduled to run for three years. Then it will have to be evaluated. An earlier demonstration project designed to explore whether disease management could save money for complex elderly patients with multiple co-morbidities was a failure. It didn’t save enough money to cover the cost of the fees charged by the management companies.
    We will also need to take coverage and payment policy out of the hands of politicians and give it to an independent body like MedPAC that will be as insulated from politics as possible and, hopefully, modeled after the Federal Reserve Board. Once Medicare starts to implement payment and coverage policy changes designed to save money and reward value instead of volume, private insurers will be more than happy to follow Medicare’s lead.

  16. Oh, and Barry, addressing 2 more of your points:
    1. Paying the check to the hospital is problematic. They of course will try to keep most of it. As a hospital-based physician I can attest they cannot be trusted otherwise. Some other mechanism must be devised; I don’t know what yet. Perhaps if all were aligned in this accountable care-type organization with each participant’s percentage pre-determined somehow; I don’t know. But someone will figure it out.
    2.”While hospitals, drug companies and insurers have all offered substantive contributions…..”
    I know you well enough to know you are aware that they did this for their own self-interest, just like paying a lobbyist as a business expense. They expect to recoup it. I also question the amounts they agreed to; it is probably a drop in the bucket. Docs have no single representative organization to make this offer on their behalf – the AMA is, I must say, a joke. Not that they would make the offer, anyway, for the reasons I mentioned above. I agree – it makes them look bad, doesn’t it? Hello, out there??!!

  17. Barry;
    I completely agree with you regarding doctors. I was a trough-feeder myself, making far more $$ during my career than I ever anticipated – and that was just in an ordinary practice, no unusual entrepreneurship involved; although in the later years, two group members did want to be more entrepreneurial, as if we weren’t already making ENOUGH money. For years there has been this paranoia that Armageddon is coming so better make as much $$ as possible now.
    My premise is that you’re not going to get the docs to agree to any of this – or the hospitals either for that matter. I don’t think the hospitals “agreed” to DRG’s – it was imposed on them. And remember docs fought Medicare tooth and nail.
    I hate to say it, but when I say it can be done, I mean it will have to be done even without the cooperation of the rank and file providers. There are plenty of people out there who know how to begin, as demonstrated in some of the posts and comments on this blog and others. There are thoughtful physicians in the academic world such as Bob Wachter, or those already in accountable care-type groups, who can contribute much.
    Although I think most physicians mean well, they themselves are caught up in this system and in general their mentality and training are not oriented toward team-focused, organization-driven global solutions to problems. The paranoia I described above exacerbates their attitudes. Except for a few speciality societies such as cardiology and others, do not expect them to ever lead this effort. They will be dragged kicking and screaming into it.
    Sorry, my colleagues, to be a rat – and those who are exceptions know who you are. As a patient and relatives’ caregiver recently, however, my attitudes have drastically changed.

  18. “I say, redesign the payment system thoughtfully, drastically and FIRST, perhaps by bundling payments per medical condition and basing them on value for each medical condition as Porter suggests. Thus the hospitals, the docs, the nursing homes, the physical therapists, the home health people, the wheelchair vendors, the drug companies, and all the other trough feeders have to work together to get any $$ at all. (And trust me, you can’t count the trough feeders.)”
    Bev – I’m also a fan of bundled pricing, especially for expensive surgical procedures and courses of cancer treatment. Presumably, however, under bundled payments, the actual check would go to the hospital which would then pay the other non-hospital owned or employed providers for their contribution to the patient’s treatment. The problem, I think, as with so much else in healthcare reform, is that getting doctors to agree to participate in this and to reach a reasonable payment agreement for their services is the biggest single obstacle.
    I admire doctors for their skill and dedication. Indeed, I’m alive today because of that skill and the miracles of modern medicine including prescription drugs. That said, doctors have a decades long history of fighting reform and competition at every turn. Anything that threatens their power, their income or their autonomy is anathema to them. While hospitals, drug companies and insurers have all offered substantive contributions to the reform effort, all I’ve heard from doctors so far is give us tort reform, which I support, and get rid of Medicare’s SGR formula. Primary care doctors are in favor of reform because they think it means an increase in fees for them at the expense of specialists. So, I once again ask the doctors my longstanding question – what’s your contribution to the reform effort? I also ask the same question of trial lawyers which this Administration hasn’t even asked to contribute anything.
    It’s hard to see reform succeeding without physician cooperation. Yet, they cherish their independence. They don’t seem too interested in taking on the risk inherent in capitated payments. They’re resisting bundled payments. They’re not enthusiastic about joining accountable care organizations. They resist linking pay to performance. Many are not interested in working on a salaried basis. So, how the heck are we ever going to reach the point where we can start to reward value instead of volume?

  19. You know Matthew, I know little about financial matters but I DO know that our current medical system wastes time, money and lives like no other. I worked inside it for many years, and so have all the M.D.’s who comment here. So, though you sound sophisticated and no doubt are, your condescending statement:
    “No, Bev MD & Deron, it’s NOT backwards. As I’ve explained AD NAUSEAM on THCB, unless everyone is covered in one actual or virtual pool there is no reason for the health care system to care about overall costs–as it can make more money from increasing costs/prices than it loses by falling out of the system.
    So a) you need to cover everyone first, and b) cost containment will follow as the escape valve of adding to the uninsured is taken away–we are seeing that in Massachusetts right now.”
    assumes that we retain the current set of incentives for the health care system, so it can CONTINUE to “make more money from increasing costs/prices”……ad nauseum.
    I say, redesign the payment system thoughtfully, drastically and FIRST, perhaps by bundling payments per medical condition and basing them on value for each medical condition as Porter suggests. Thus the hospitals, the docs, the nursing homes, the physical therapists, the home health people, the wheelchair vendors, the drug companies, and all the other trough feeders have to work together to get any $$ at all. (And trust me, you can’t count the trough feeders.)
    Massachusetts is considering its payment reform theories now, precisely because covering everyone is killing them – just like it will kill us nationally. There is absolutely NO guarantee some thrown-together bill passed in desperation after your #1, when the deficit has flown past Jupiter, will work; and meanwhile the deficit is heading for Pluto. Fix the delivery system first – then you can afford to cover everyone. This can be done. I am not wedded to one particular method, but make no mistake – IT CAN BE DONE. Just not by continuing to think inside the box as you are.

  20. Well, boy, how about that? An impartial presentation of unquestionable facts from the highly esteemed Hoover institute! And peer-reviewed, no doubt!
    Never mind the conflict of interest inherent in a neuroradiologist’s assessment of the benefits of CT and MRI technology. Clearly we have a man who can stand apart from his pocketbook in the good Dr. Atlas!

  21. “The fact is that we cannot compete with countries which spend 6-8% of their GDP on health care”
    We have blown Europe away the past 40 years even as we spend twice as much as them on healthcare. Japan is no threat after their lost decade. Our threat is China, India, Brazil and other countries that don’t have healthcare systems anything like what the left is proposing.
    “I thought all insurnace plans “financed care”.”
    You thought wrong. True insurance, i.e. specific and aggregate, cancer, disability, life policies etc, protect from an unknown or uncertain event, this is completely different then financing care. An annual check up or maintenance meds are not insurable services.

  22. These are admirable rules for they cut to the chase. The fact is that we cannot compete with countries which spend 6-8% of their GDP on health care because that leaves little to spend on anything after taxes. It is much like setting up your own budget with your own earnings. This will eventually bankfupt the rest of the economy, as they will make products that no one cn afford to purchase. So there is no choice on rule #2, but to have it. Rule #1 has a lot of heart. However, when looking at this, I am reminded of the three physicians who were on the panel of CNBC’s Meeting of the minds July 27th, Tom Frist, a physician from Cleveland Clinic and one from the AMA. When asked by the moderator what was the price of a human life, they all gave a variation of it being priceless and so we should spend as much treasure as necessary to save it. This is incongruent with reality, no matter how it follows the Hippocratic oath. It is because we have treatments that use unlimited amounts of resources. Thus when providers treat patients from this perspective they will exhaust, what is not an unending supply of resources. Furthermore, the needs, that are generated by the majority of the patients, are due to lifestyle choices, and unless legislation directs itself at this and the previous major cause of consumption of resources, the problem cannot be solved. The system will undoubtedly crash, even as it is in the process of crashing now. Do not be reassured by what appears to be the bottom of the housing market, as tsunami effect the dislocation created by this collapse has not yet been felt by all. There is actually very little time to correct this, less than twelve to eighteen months. Correction actually requires individuals to become responsible for their choices, which produce their health and not rely on a system to correct their consequences. This, actually cannot take place, as unlimited spending, using the best methods of treatment we know has taught us. For more on this perspective visit http://www.thehealingattribute.com/.

  23. Just a thought, Why doesn’t the politicians practice on the existing national healthcare system. Medicare and Medicaid If they handle the tort law, the fraud, the overchargingm, overhaul the reasonable and customary charges, reevaluate the Medicare cost shifting, then adjust the entry into the Medicare/Medicaid system based on the ability to pay. Maybe we wouldn’t need a new non-fuctional healthcare system. Insurance needs the bill to be submitted by the patient and not the by the provider. The billing process needs to be simplfied. This should help stop charges for service and product not provided. I have found a couple of thousand in our bills, Maybe base a large amount of the allowable charge based on the outcome of the patient. Let me make my best deal. Provider charged my insurance 16000 for my son’s last wheelchair because it was the so called reasonable. All they did was get a prior approval and order it, we had to pick it up. Now manufacture made it for around 2000 sold it to the manufacture Rep for 4000 who sold to DME for 8000, you know the rest. Now I pay my premium and 20% co=pay. I was give a splint after a cast was removed from my wrist charge was 60.00 tomy insurance. After I got my EOMB I check it out at local Rite Aide same splint for 5.00

  24. “Do any of you know how much it will cost to cover the uninsured?”
    The best estimates I’ve seen suggest a figure in the range of $100-$150 billion per year. This assumes that the 10 million or so illegal immigrants will not be covered and will not use anymore healthcare than they do now which is comparatively little relative to the rest of the population. About 9 million of the uninsured are children who are fairly inexpensive to cover even if they are poor. There probably would be some pent up demand for services in the first couple of years from the remainder of the uninsured who can be expected to address known medical issues more completely once they have coverage.
    At the same time, just because people suddenly receive an insurance card which ensures payment for most of their healthcare, it doesn’t mean that they will actually be able to access care, at least on a timely basis. This is the experience in Massachusetts where wait times for a first appointment with a PCP are the highest in the country. One of the key impediments to dealing with the cost issue, aside from misaligned incentives mentioned by a previous commenter, is the total lack of straight talk from anyone in power. Providers will have to accept lower payments and/or less autonomy in determining their practice patterns, individuals will have to pay more either out-of-pocket for services or in higher taxes or both, or fewer services, tests, procedures and drugs will be delivered because they won’t be covered by insurance or they will be withheld as part of a redefinition of good, sound medical practice and, eventually, tort reform. Regarding the last point, I’m thinking about futile end of life care.

  25. You can say that we need to cover everyone because it’s the right thing to do. I don’t fault anyone for that. It’s an ideological debate that could go on forever. But to say that covering the uninsured will flip a switch and everyone will suddenly realize that we need to tackle the real problems is illogical to me. Do any of you know how much it will cost to cover the uninsured? I don’t know the figure, but I know it wouldn’t add enough cost to the system to make the cost case any more compelling than it already is. After what we’ve spent on the wars and spending package, spending hundreds of billions doesn’t phase anyone.
    Some of you seem to think that we woke up one day and there were suddenly 46 million uninsured people. There have been 10s of millions of uninsured for decades. Each year that we ignore the cost issues, healthcare becomes unaffordable for more people. We can cover everyone and then keep our fingers crossed that the cost issues get addressed (read: spend and hope), or we can dig in and attack the problems instead of the symptoms.

  26. Warning: I’m new to this blog!
    Rules #1 and #2 are full of heart but short on reason. We can hope that no-one will be unable to seek care because its cost is unacceptable. We can pray that health care costs do not increase further as a share of GDP. But we cannot legislate these outcomes. They depend on uncontrollable cost drivers – increases in health technology (mainly) and the aging of our population (marginally).
    Legislation should have the policy goal of shifting incentives in this field to align profit with good health outcomes. At the moment insurance company profits are too aligned with “cherry-picking”. Health care professionals’ profits are too aligned with services (the fee-for service problem). There are models out there at the moment (including some versions of doctors on salaries) that do align incentives with good health care outcomes. Legislation needs to give these models a big boost.
    Because there is a strong positive association between good health outcome and lower cost, if we shift the incentives, we will be much more able to tackle the problems of those who cannot afford health care and begin to bring our high cost of health care down. Again we cannot make these outcomes happen by legislative fiat.

  27. “First off low deductible plans don’t insure risk they finance care and inefficiently at that.”
    Gee Nate, I thought all insurnace plans “financed care”. You might want to separate low cost care from high cost care to make a weak argument that insurance companies don’t lower premiums by reducing their risk of paying for care, as opposed to that evil government that will, but in the end it’s all risk as to who will use the system and who will not.

  28. “A prescription for medication is issued in 60 percent of consultations with general practitioners in the United Kingdom and in 71 percent of visits to family physicians in the United States”
    Darn those private insurance companies for giving people what they want!

  29. Matt,
    You always pick your weakest arguement to take a stand and argue with me on. US spends 17% of GDP compared to 8% in UK.
    Short answer have you seen their teeth over there? If we eliminated dental care we could save 1-2% right there.
    Now for the windbag responce for jd. We pay our doctors more, that is why something like 70% of medical inovation comes from the US, easy to experiment when your rich and don’t have to worry about working. We spend a fortune on high risk care, i.e. keeping premmies alive, treating cancer patients, and end of life care. majority of it is futile, Americans DEMAND it though.
    We cover more expensive drugs then they do, we get more rx filled, more office visits, and more test.
    Now that the table is set pull up a chair and eat some knowledge.
    The cost of care, public v private, CAN NOT be measured as a percent of GDP when the quantity and level of care vary. In order to do an accurate comparison you would need to compare a private system to a public system that covered the same population with the same benefits and same delivery.
    There are arguments you could try to make saying public can deliver the same service cheaper then private but your GDP analogy is not one of them, it was weak and wholely inaccurate statement.
    According to commonwealth fund UK had a higher Average Annual Growth Rate of Real Health Care Spending per Capita, 1994–2004 then the US 4.2 vs 3.7. inflation of services being rendered measured by GDP is a more accurate comparison then yours as long as your measuring very similiar services.
    Is it the fault of our private insurance systems that americans are twice as obese as UK?
    Do we blame private insurance companies for our immigrants both legal and not?
    Peter you two really need to learn to pick your arguments;
    “Why do you think high deductible plans cost less, it’s because risk is shifted to the insured.”
    Actually no it’s not. First off low deductible plans don’t insure risk they finance care and inefficiently at that. Next if you ran the numbers, I do every day, what a group saves in premium by buying a high deductible more then pays for the claims they are now liable for. This stands true for 95%+ of people that individually purchase a high deductible plan, what they save in premium more then pays for the higher claims they have the 1 in 5 years they are sick.
    I’m going to take a guess here and say your not an actuary, even farther out on a limb you have never in your life analyized the difference in incured claims to premium of HDHPs, that being said should you really start arguemnts with someone that has?

  30. Matthew, I think I know Nate’s rejoinder:
    Even if I grant you that it is an apples to apples comparison, the US system is Red Delicious apples while the UK system is Granny Smith apples. Everyone knows you can’t compare the price of Red Delicious to Granny Smith! They aren’t the same thing!
    Of course, Nate will say it in 1,500 words. And he might change the names to “Freedom Apples” and “State Bondage Apples.” Who doesn’t prefer the taste of freedom?
    Joking (sort of) aside, I of course agree emphatically with the gist of this post and comments from Margalit and Peter. Well, the first comment from Peter.

  31. “And they lower cost by eliminating coverage”
    That’s what insurance companies do! Why do you think high deductible plans cost less, it’s because risk is shifted to the insured. Why do you want mandates to end, so you can sell less for less cost!

  32. I agree halfway with #1.
    Health is valuable and it’s not out of the question to ask people to pay for it. People go into debt for all kinds of stuff, is health so unimportant it’s not worth going into debt for?
    But things cost so much now that it’s overwhelming. I’d go for limits rather than guaranteeing that no one should be compromised.

  33. Nate, you had me worried. some of your comments of late had even become interesting if not sensible. Luckily you’re back to your old form. But think about just one of your illogical statements for a second–do you really want to join the upper class twit in arguing that 17 is less than 8. Because it is apples to apples that the OECD is comparing. Or are you just keen to prove that you’re a twit too.

  34. “Most costs are incurred in end-of-life and chronic condition care for people, who are past their prime…”
    @Alexander: the whole point of efficient health care spending is to extend “their prime”. I agree that much current end-of-life spending is wasteful.

  35. “It even included an aging upper-class British twit declaring that government health care was more expensive than private systems.”
    Excuse me sir? It is, it’s not even debatable. Our private systems widely outperform our public systems. Aren’t British and twit redundant? I can’t think of one British comentator who doesn’t make my ears hurt. The ex solider on red eye is generally ok but even he can be a twit. UK just has a twitful history and thus your all engrained with twittyness.
    “Clearly he’d managed to miss comparing the 8% of GDP his (and my) original homeland spends on health care versus the 17% we spend here.”
    Matt this is a meaningless comparison. What does the cost of apples have to do with the cost of oranges? Heck you don’t even bother to adjust for the difference in consumption. Yes a crate of oranges cost more then one apple, your point?
    Rule 1 – does this extend to the tax payer? Does a bill that guarantees this to the individual but drives our country and future generations into BK acceptable? Are you Ok with passing more cost onto our kids? It’s very easy to promise the world if you never have to pay for it. Seeing as how the government already can’t afford Medicare, Medicaid, and SS promises how many more do you allow to be made?
    Rule 2 – hello comrade. Who the heck are you to tell me I can’t spend 100% of my income on healthcare? If my neighbor spends to much does that mean by law I can’t spend what I need? This is an example of why the reform, and the left in general, always fail. You can’t legislate results. Congress just tried again with their 4% cap on insurance premium increases. If it wasn’t so sad it would be funny how little congress knows about our health care systems and basic economics.
    “All of the bills seem to be improving access to freedom from ruinous costs for most people, and increasing costs in a trivial way.”
    I would disagree, everything I have read would significantly increase cost, reduce access, and lower the quality of care. Keep in mind government reform HAS NEVER delivered what it promised and always cost 5-10 times as much as claimed. Part D being the only exception. Look how much Medicare was originally projected to cost, look at the 1990 estimates. Look at Medicaid projections. Look how Ted Kennedy’s HMO Act 1973 turned out.
    “Pertaining to rule 1, how many individuals in the US are truly unable to access care due to pure financial reasons?”
    Roughly 5 million. Dems want to spend 1 trillion for 5 million people…
    “It’s too hard for Congress. They should have done the hard part first, then covering everyone would have looked easy when the system was sustainable.”
    This is all 100% Congress’ fault. We could lower private insurance premiums 20-40% overnight if;
    1. Medicare & Medicaid didn’t cost shift
    2. Democrats allowed AHPs
    3. Dumping overage deps from Medicaid was stopped
    4. Medicare Secondary Payor was reformed
    5. Congress stopped passing poorly written laws like COBRA that cost employers billions in court cost before anyone knows what the bill means and how to comply.
    “unless everyone is covered in one actual or virtual pool there is no reason for the health care system to care about overall costs”
    As long as you erroneously demand the system control cost you will be nauseous. You don’t ask the grocery store, your mechanic, car manufacturers, or anyone else to control your spending. It is the role of the person consuming to determine what they can spend. No other system will ever work. Every system makes more money by increasing prices.
    MA is on its way to failure. Please take 2 seconds and read up on HI and TN and see what happened when they tried universal coverage minus the cost containment. What your saying has been tried numerous times and failed just as many, IT DOES NOT WORK!
    Canada and UK are universal and cost is breaking both systems. Can you name one time EVER that cost containment has followed universal coverage?
    “We will all scream so loud when we see the real numbers there will be action to lower costs.”
    And they lower cost by eliminating coverage, so what is the whole point of blowing trillions to accomplish nothing?

  36. Docanon, I am not sure that the measure of efficiency you propose, would work. According to this publication,
    http://www.meps.ahrq.gov/mepsweb/data_files/publications/st124/stat124.pdf
    “…In 2002, 1 percent of the population accounted for 22 percent of overall health care expenditures and one out of four of these individuals retained this ranking in 2003. The lower half of the population accounted for only 3 percent of overall health care expenditures in 2002 and nearly three out of four of these individuals retained this ranking in 2003.”
    Most costs are incurred in end-of-life and chronic condition care for people, who are past their prime…

  37. Disagree with rule #2. It would be better to just subsitute: “A health reform bill needs to improve the efficiency with which health care is delivered.”
    Efficiency = benefits of health care / costs of health care
    Reducing the share of GDP constituted by health care has no inherent benefit. We could always reduce the share of GDP constituted by health care in maladaptive ways: eliminating high-value, low cost services would be one example. However, improving the efficiency of our health care system is always beneficial (using the correct definition of efficiency, which puts the benefits of health care in the numerator and the costs on the denominator).
    Put another way, there’s nothing inherently wrong with eventually allowing health care to constitute 50% of GDP. If this health care expansion produces a healthier, happier, and more productive workforce, there’s no good reason why the other 50% of GDP can’t be enormous (maybe double our entire current GDP). GDP is not a zero-sum game, and focusing on the fraction of GDP constituted by any particular sector is just as misleading as using the medical loss ratio (a stupid division with cost in both the numerator and denominator) as an indicator of efficiency.

  38. Matt’s and then Margalit’s point is correct because the system now sloughs off those who can’t afford it into a
    a hidden undermarket where they may or may not get care. The financial costs, either personal and/or charity as well as their own personal and family non-financial costs, are hidden from the costs reflected on the books of insurance companies and providers. Once everyone is in the game then we will have a more accurate and higher accounted for cost – which will show up in taxes, budgets, premiums, and government debt. We will all scream so loud when we see the real numbers there will be action to lower costs.

  39. The math is very simple. You cannot do both at the same time. They are contradictory.
    Rule #1 can be passed as legislation and enforced rather quickly. It is the easiest of the two.
    As Matt says, after #1 is implemented, we will be forced to tend to #2, because the costs will truly be unsustainable.
    I think several people here have said that things must get a lot worse before anything is done, so implementing #1 will take care of that. So hopefully #2 is imminent.

  40. I am all for covering the uninsured and even more than that, which I blogged about on
    http://betterhc.blogspot.com/2009/05/are-we-ready-for-healthcare-to-go.html
    What I am not convinced in, though, is that cost containment is going to naturally follow extended affordability of health insurance. In the current healthcare economics, increased utilization of medical services translates into additional spending. Matthew, are you saying that growing insurance premiums or shrinking benefits should make us more willing to tackle the reasons behind runaway healthcare costs?

  41. No, Bev MD & Deron, it’s NOT backwards. As I’ve explained AD NAUSEAM on THCB, unless everyone is covered in one actual or virtual pool there is no reason for the health care system to care about overall costs–as it can make more money from increasing costs/prices than it loses by falling out of the system.
    So a) you need to cover everyone first, and b) cost containment will follow as the escape valve of adding to the uninsured is taken away–we are seeing that in Massachusetts right now.
    In addition, the most suffering is in #1–so the moral thing to do is to protect the wealth of Americans meeting the health care system, and then worry about the wealth of America as a whole.

  42. Agree with Deron S. We are going about it backwards. I do not agree that rule #2 will necessarily follow once rule #1 is instituted. It’s too hard for Congress. They should have done the hard part first, then covering everyone would have looked easy when the system was sustainable.

  43. You’re right of course Deron, but as Keynes pointed out, people live, suffer, and die in the short run, not the long run. Starting where we’re at, it seems to me “we” will simply have to pay the price of our and our parents’ shortsightedness and make our best attempt to do both together, avoiding the mistake of letting a never-attained ideal to block improvements. Not that every change is an improvement.
    And Dr. Motew, you’re right too — there is a huge distinction between financing and delivery. Surely you’ll agree they’re related.
    There seems to be ample evidence that people delay care for fear of bills. Here’s an anecdote: I was in a PCP office of a medium-sized exurban or rural multispecialty group just this past Wednesdsy and heard a conversation betwen a nurse and a doc, and one side of the nurse’s conversation with the patient. Patient had had belly pain for a few weeks and “it felt like something was going to break.” Just had a BM and there was an alarming amount of blood in the bowl and elsewhere. Can we work her in? Doc tells her to go right away to the practice’s urgent care center. (BTW I know this doc and like him a lot — he’s a conscientous guy.) Patient evidently says “I don’t have insurance”. So she’s told to go to the ED instead. Patient evidently expressed fear that the ED would cost her even more. “But they have to take you anyway” she’s told.
    Why the fear of a bill? Because she’ll be legally required to pay an unknown amount of money, probably a large one, perhaps as much as a car might cost her, perhaps more. As a society we’re conditioned to “pay what we owe”, we don’t as a rule dicker or simply walk away.
    Back in the day when doctor and hospital payments were, shall we say, more robust, taking care of people gratis was considered normal, within the NFP mission of the institutions and within the vocation of doctors, nurses, and everyone else in medicine. It wasn’t even called “cost shifting” then, was it? But when payers gained pricing power and decided they wanted to pay only for their own beneficiaries, the funding source for the less fortunate evaporated at the same time medicine came to be seen as an “industry” at least as much as a “calling”. And so here we are with a woman who could die because she is afraid of a bill, and docs (even very good ones) refer to a very lucrative hospital admission source, the ED. Hmmmmmm.
    t

  44. Pertaining to rule 1, how many individuals in the US are truly unable to access care due to pure financial reasons? Certainly the number of ‘uninsured’ persons is incredibly high, but when needed, how many are truly denied care? I see anyone who comes to my office or the ED regardless of financial status.
    The distinction between lack of ‘health insurance’ and lack of ‘health care’ must be emphasized as a key point in reform. I am simply unaware of the numbers regarding the latter.
    The second point in rule 1 may certainly be more germane and a likely consequence of lack of coverage and thus may limit access in itself.

  45. And only two criteria: 1) wellness index and 2) cost.
    We say to the world so proudly that we are the most productive nation, yet with top notch machines and top notch physicians, we should find a way to bring the cost to the lowest in the world. Should’nt we?
    Just on the side, I used to blame insurers the most but that was wrong place. It is the providers that are responsible for health system run amuck. Not to say that Insurers have not been able to deliver to their goals becuse they have wrong way about it.
    rgds
    ravi
    blogs.biproinc.com/healthcare
    http://www.biproinc.com

  46. You don’t have to yell, Matthew! I will only add that the order of priorities is backwards. Covering everyone will not lower costs, but lowering costs will get us closer to covering everyone.

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