Matthew Holt

Enthoven beats up Gawande

I finally got around to reading Atul Gawande’s New Yorker piece on why the current reform bill mirrors early 20th century agriculture. I learned lots about the role of the Department of Agriculture in teaching farmers what to do. In post-war Britain the radio soap opera The Archers did much the same thing.

I was actually encouraged to remember that in almost every industrialization process, intelligence, leadership, and usually money, from the government was a key factor.

But I felt very uncomfortable with the analogy. First, the incentive for the farmers was to be more productive—even if in the long run productivity meant a relative fall in the price of food and eventually the rise of agri-business decades later. If they did things right there was an immediate market reward. Whereas we know that (from the Virginia Mason and Intermountain examples) increasing quality and productivity in health care leads to negative financial consequences.

Secondly, Gawande seems to be fine with saying that “we don’t know how to be more efficient, productive and effective, so let’s do pilots for years and figure it out.” This is just crap. We’ve both done pilots for decades, and have examples of organizational forms (you know who I mean!) that get it right. It’s just made no sense for most of the health care system to adopt those techniques and organizational forms because they make more money by doing what they’re doing—and government and employers keep paying them.

I was going to write a long piece detailing my complaints blow by blow, but luckily Alain Enthoven has done it for me!

This doesn’t mean I’m against the current bill as I suspect Enthoven is. There is some hope that ACOs and other modern terminology for the types of organization he’s espoused over the years, will arise more quickly from the “pilots” in the bill than Enthoven suspects. But more importantly, I support the bill because the saving money part is the second of my “two rules to judge a bill.” The first and most important rule is

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.

And the current bill just about does that….although Maggie Mahar is pretty doubtful, especially for near-seniors in the first few years.

17 replies »

  1. Atul Gawande is a narcissist. I realize this is a blow to many, who have not picked up on that. His ideas are useless. To praise the Cheesecake Factory, which may be a fun birthday spot, is batshit doubleplus nuts. Ivory tower idiot.
    Big question: Walrus or elephant. That his absurd ramblings are taken seriously by some is worrisome.

  2. MG – thanks for making all the points that I was about to regarding CDHPs and the current barriers to their success.
    Nate – how can you support your claim that pricing transparency is readily available? Real world example: you injure your knee and your doctor tells you that you should get an MRI. The majority of the time, if you call around to local hospitals or standalone imaging centers they will NOT provide you with an out-the-door price quote on how much that is going to cost you.
    I would add that the lack of price transparency plus the lack of quality / safety transparency means that consumers are unable to judge the comparative Value proposition of providers.
    Additionally, many CDHP plans are not equipped with the debit card option tied to HSA.
    I wish that CDHPs were already as great as you seem to believe they are, Nate!

  3. MG swiping that debit card and having the money deducted from your HSA is SOOOOOOOOO hard.
    Quality and sfatey is a bogus argument. CDHP or regular plan this doesn’t differ. If you can’t guage the quality and saftey of your doctor under a CDHP how do you do it under your normal plan? Argument lacks any logic.
    Pricing transparency is readily available.
    Any other concerns?

  4. Atawande’s comparison of medicine and healthcare really was a weak one at best. If you really want to talk about 20th century American agricultural policy, there are several things that were much more fundamentally important including the various New Deal policies which fundamentally set the gov’t role in agriculture until Butz and the Nixon administration changed a number of key components of them.
    I love comparisons as a way to explain things but to me education and healthcare share much more in common right now than agriculture.

  5. I would love to see the defenders of CDHPs make valid points about the following:
    1. You have the necessary information on pricing transparency to make them work.
    2. You have the necessary information on quality and safety transparency to make them work.
    3. They aren’t a pain in the a$$ to use because of the cumbersome and clunky tools offered and the awkward submission of reimburseable expenses.
    4. Paying for services is incredibly efficient or you can easily link their HSA/HRA to your CDHP plan.
    Part of these issues are larger overall issues with the healthcare industry but reason that people don’t buy CDHPs is because they are crappy products that don’t deliver on their premise and they are largely cost-shifting vehicles for most consumers. I get so sick and tired of hearing that CDHPs are ready for prime-action. They weren’t in 2004, they aren’t in 2009, and I would put good money that they wouldn’t be in 2014 when this reform bill actually kicks in.

  6. Ah,
    The New Yorkers article has to be one of the more disheartening products of the current debate. It actually begins by outlines the extremity of the problem fairly well and then engages in one of the most disingenuous analogies I’ve seen in any discussion on current policy – Bush’s argument for invading Iraq was a work of careful and exact logic in comparison. Shame on a usually intelligent publication for polluting the debate with such ill-purposed inanity.

  7. Rick your starting with the false assumption that the cost of healthcare is a problem. If people where unhappy with the cost they would buy CDHPs. Not everyone is driving or buying fuel efficent cars, becuase they have the disposable income to afford big gas guzzlers. People are overinsuring themselves becuase they have the money to blow and choose to blow it on excessive care consumption.
    Indeminity plans are no where close to 8% you wont even find 1%.
    “Simply put, If they were a better deal, people would buy them.”
    This is just fundementally false. You can make unlimited calls with Vonage for 24.99 per month yet 10s of millions still use traditional long distance. The local taco stand is a much better deal then Taco Bell yet there are still thousands of them around. Being a better deal doesn’t even beging to guarantee or fortell success and adaptation. In your own words indepmnity plans are inefficient why hasn’t everyone taken the PPO which is a better deal?

  8. @Rick: Did you bother reading the link Matt provided to Enthoven’s article (
    Enthoven points out that most employers do not offer CDHP’s as an option. Furthermore, employers also pick up most or all of the premium for any plan of the employee’s choice, so what incentive do employees have to choose the lower-priced CDHP’s when the higher priced, less efficient plans are effectively the same price to the employee?
    For example, in contrast to the average annual family premium of around $13K (IIRC), my family’s HSA premiums are about $4,500 (i.e., about a third the cost of the average plan). My company provides a monthly stipend of to spend on health-related expenses, including insurance. If we spend less than that amount on insurance, we can use the balance to pay other health-related costs, such as vision and dental. My total annual out-of-pocket costs on health care for a family of four run about half the average plan premium alone. When we talk about health insurance with friends, it becomes apparent that most people aren’t informed about CDHP’s and their potential cost savings (see reasons mentioned by Enthoven above).

  9. I’m relieved to hear Maggie say these bills are unaffordable. She’s right. Unfortunately, the big unaffordable part is off the federal budget: the 60 million person Medicaid program from whose costs states (except Nebraska!) will get three years of shelter. Medicaid will enroll one in five Americans! States will be compelled to increase enrollment, and three years later find the money to pay for a large chunk of the cost. The true cost of health reform- getting to 97% coverage- was actually north of $1.6 trillion .
    The only way to pay for the huge Medicaid expansion will be to raise state taxes (many Congresspeople who created this mandate will be long gone by the time it happens) or savage provider payments to balance their budgets. Medicaid already is an enormous, countercyclical problem for state budgets: when their revenues go down, Medicaid costs always go up. Who will pay: all the other worthy programs- education, public safety, etc.- that states sponsor. States are going to be primarily in the Medicaid business, with an inconstant and deeply indebted federal partner.
    Obama has paid a terrible political price for this legislation: every single constituency in his base has gotten the shaft: young people (many of whom will have spent his entire term living in their parents’ basements and who will blow off the mandate because they don’t have incomes to pay taxes on), women, hispanics, the unions, the single payor advocates (who may not even get a fig leaf in exchange for surrendering on single payor). There won’t be much of an army to support his re-election.
    The most enthusiastic people about health reform are the dwindling number of public interest oriented moderates. I think this bill loses the Dems at least one house of Congress in ten months, and puts the President in a deep hole, for trying to do the right thing. And it was and is the right thing.
    This process would have gone better if the Dem’s had been forced to share the power and blame with the other party, as they did with welfare reform a decade ago. If this is a failure, it’s not going to be a bipartisan failure and a lot of Republicans who don’t deserve any credit for anything will claim to have seen it all coming.

  10. Matthew —
    I agree with rule #1.
    And while I see serious problems ahead for older upper-middle class American couples earning $60,000 to $100,000 (making them too wealthy to qualify for subsidies, but not rich enough to afford to pay triple what younger Americans pay) it does provide access for low-income and lower-middle class Americans who qualify for subsidies.
    It also expands Medicaid, hikes pay for primary care docs etc.
    Finally, the Medicare Commission is still in the bill.
    But– and this is terribly important– we need the
    Rockefeller-Lieberman amendent to strenghten it.
    The Commission must begin controlling hospital costs, and it needs to be protected from Congress–as proposed.
    Cost-control could begin with the Medicare Commission.
    Some private insurers have told MedPac that if Medicare provides political cover, they will begin reining in
    reimbursements. We’ll see . . .
    Right now, the bill is unaffordable.
    But it does make it clear that, as a society, we have an obligation to make sure that all Americans have access to comprehensive care.
    Once we pass this legislation, I think there is no turning back on that point.
    We’ll then have 4 years to amend the bill, to make it affordable.
    Though I’m worried that it doesn’t go into effect by 2014. If Obama is not re-elected, a conservative Congress would have a full year to repeal the legislation before it ever sees the light of day.

  11. My criteria for judging the health care reform legislation is whether or not we will be better off with it or without it. Given the poor status quo relative to health care quality, cost and access, the bill wins easily on my scorecard.

  12. Let me suggest that the author’s Rule 1 as admirable a goal as it expresses, has little to do with Health Care Reform. I would suggest, instead, a Rule 1 that states that “A health care reform bill needs to reduce the actual cost of health care.”
    Unfortuantely, it is not clear that the Senate Bill will ultimately achieve that goal.

  13. Rule Number 1 is fine, I think most people will agree. the problem is that to implement this rule in today’s environment means that there will be subsidies, mandates on the level of benefits, mandates on someone else paying to assure Rule 1 is working.
    What is missing is addressing the cost of the care that people cannot afford. You don’t solve the problem of a leaky faucet by asking someone else to pay the water bill. What good will it do us to meet rule number 1 if the cost of doing so bankrupts us all?
    My wife recently had a drain placed in her ear, outpatient ten minute procedure. Cost to use the surgical center was $13,300 all paid by my insurance. Does that mean all is well, no problem here? Seems to be the $13,300 is the real problem.

  14. The biggest lesson of the entire exhausting most recent US health care reform debate is how terribly dysfunctional our US legislative process has become.
    Where are the most promising ideas to begin to remedy this very deep and widespread pathology?
    The American people have had it!This could bring our once great nation down.
    Dr. Rick Lippin

  15. Liz, you’re not the first person I’ve heard advance the notion of CDHPs as a solution to healthcare costs. Just last night I heard Sen. Judd Gregg of NH name it as the first idea off the top of his head when Matthews asked him where was the Republican plan to reduce healthcare costs.
    My thought then is the same one I will give you: CDHPs are universally available now, especially for those purchasing in the individual market, and their premiums, generally, are already significantly lower than those of more traditional plan designs. The first HRAs and HSAs came available in early 2004. The first MSAs and FSAs over a decade ago.
    And yet, despite significant growth, they still cover less than 8 percent of those with coverage, a smaller share of the market than simple indemnity plans, which are both ridiculously expensive and ridiculously inefficient.
    Please explain how much more the government can do through legislative action to give CDHPs any greater market advantage than they already enjoy?
    Simply put, If they were a better deal, people would buy them. The marketplace has spoken on CDHPs, and while the design has its merits for a certain type of customer, they are not for everyone.

  16. I’m pretty dubious about the bill, if for no other reason than massive “incentives” (I think you can safely call them pork, at the very least — some would use the word “bribes”) required to pass it and the fact that it’s being passed strictly on party-line votes and in the middle of the night. Something this major needs much more thoughtful deliberation. I’m very leery that costs will just explode and that savings are an illusion. Where’s the discussion on CDHP — consumer driven health plans? They’ll lower costs — you build a culture of health and wellness, maximize word productivity and employee wellness and let people make informed, responsible decisions about their lifestyle and healthcare spending. “Bend the Health Care Trend” is really timely in that it is all about CDHP, including explaining the 3 types and how each will work for employers and their employees.

  17. REAL Health Care Reform HEALS MIND, BODY and SOUL!
    I can still remember the United States of America before the new 21st century began with the puppeteers of government & industry confidently stepping out of the shadows and arrogantly strolling into the “Dawn’s Early Light.” In the first eight years of the new century, The New Age was transformed into The New World Order. Having been freed from the limitations of the voting public by dishonorable Judges and corrupted Voting machines, the amoral money changers now basked unashamedly in the spot light of center stage, ever tightening their financial grip on the populations of the world.
    Through the protective executive privilege of Oval Office degrees, Corporate CEOs seized both the most supreme judicial protection of what had been “the Land of the Free” and “a plague on both your houses” of Congress. “The Nothing” of the Dark Ages cast aside the great experiment of Washington, Franklin, Adams and Jefferson, and reduced the “Exceptionalism” of “The First Modern Democracy” into the hypocrisy of “The Patriot Act.” Right before our eyes, the “Right” had altered the American Dream into a reality quest for Global Financial Dominion, and then, we weren’t America anymore.
    Yet I still remember America in my dreams and out of the “the Nothing” heaped upon “We the People” by these Shadowy men & women of Secrets & Lies, a call to action rings deep within each of us still. It is the resonating and resounding ring of our Liberty Bell declaring once again, ”to arms, to arms.” It is a call to resurrect our National Essence; A call to re-take from The Takers “The Home of the Brave;” A call to stop the robbers of our soul, arrest the usurpers of our International Dignity and restore our National Honor. So when we talk about Reforming Health Care, let us remember to make our new Health Care Reform, True, Real and Complete. Remember the street dwellers and those who return home from war with lives changed forever by missing limbs, brain damage and in great need of Mental, Emotional & Psychological Health Care. Include them in your Health Care Reform, and so too the Dementia & Alzheimer’s plaguing their parents & grandparents.
    Real Health Care Reform requires more than 60 votes in Congress. It requires Health Care Reform in our National MIND-SET: YES, both eating habits of a fast food nation and Fast Food Corporations must share in responsibility for our National Obesity; YES, Healthy Reform in Public Education is as necessary to the development of our youth, as are more healthy items on the school lunch menu, for an educated mind is a most valuable asset to any Nation; YES, Healthy Campaign Finance Reform would lead the way to lucrative health in any National Budget for Preventive Care, for bridges, schools, Community Centers and fewer foreclosures. For the best of Health, invest more in Peace and less in war. This is the Truth about America that will set us free from The Takers. Then again we will be “Sweet Land of Liberty.”
    This is the America I remember in my dreams and it is “…of thee I sing:” “Let Freedom Ring!”
    Marcello Rollando
    A Reasonable Voice for a Rebirth of Our Humanity,
    Freedoms, Honesty and the Rule of Law