There are two great health-care crises in America--one in-volving coverage and the other cost. The Obama plan appears likely to tackle the first but not the second. This is bad economics but also bad politics: the crisis of cost affects 85 percent of Americans, while the crisis of coverage affects about 15 percent. Obama's message to the country appears to be "We have a dysfunctional health-care system with out-of-control costs, and let's add 45 million people to it."This is becoming the key moderate critique of health care reform as it moves closer to passage: HRC doesn't fix the cost crisis for families, or the federal government.
But this paragraph deserves a follow-up question. Why is it so difficult to reform the cost structure of health care? The answer is: Nobody will allow it.
The sure-fire way to control costs is to wrest profits and services from key constituents and challenge our prohibitively expensive fee-for-service system. But there's a catch. Cut doctor reimbursements, and you lose the AMA, rural hospitals and rural Congressmen. Cut services, you lose the AARP, which is political jargon for losing -- period. Even with a historic Democratic majority, it's a bare-knuckle brawl trying to tax rich insurance plans. Like I wrote, benefits are sticky, and elections are frequent, and it's very, very hard to tell key groups that their meal ticket constitutes "waste and abuse," because they'll disagree and vote your party out of office in a year.
In short, Zakaria might be right that this health care bill has a dysfunctional message for voters. But look at the larger picture. In health care, now and for the foreseeable future, it's all bad politics.
The cost structure got where it is because of how health care is financed. Change the system of financing almost all of your care, and almost all of the costs fall in line.
Everyone seems to be complaining about the insurance company being in between you and your doctor. So, move the insurance company from there to the other side, placing the patient into the line between the insurance company and the patient. Insurance company pays you & you pay doctor, instead of the insurance company paying the doctor.
You'll quickly know the costs when you have to write that check.
I've often thought that if all Americans had to pay quarterly income taxes like the self-employed, we'd have a revolution in no time.
If they would take the time to actually study in the waste revealed by the Dartmouth study and addressed by Atul Gawande, they may well be able to rearrange Medicare reimbursements away from fee for service and towards a Mayo Clinic model with salaries. The problem isn't that physicians in general are paid too much, but that some are paid more than others based on arbitrary "services", giving physicians incentives to order more services. Reforming this problem in Medicare would likely quickly spread to private insurance, because health insurance companies base most of their compensation practices on Medicare rates.
Add to that tort reform to get conservatives on board.
Add that to deregulation, both across state lines and ending the tax benefits for employer insurance, possibly replaced with a capped tax benefit (so as to encourage purchasing health insurance, but not Cadillac plans) to assuage Paul in Athens (with whom I am in total agreement). This would be health care REFORM.
If these changes do not significantly lighten the high cost for those struggling to afford health care, we can visit increasing Medicaid to help those still uninsured, probably with the savings from Medicare reaped from the above ideas.
Thoughts?
Controlling costs from the top is doomed. Think of it this way. Right now, if a hospital wants an MRI, they look at how much Medicare and insurers will pay. Dividing that into the price of the machine, they come up with a number of MRI scans they would have to do in a year to pay for the machine.
So far, that's the same analysis a market-oriented company would do. The difference is, in a market, the next question is "can I get patients to buy this many scans?" In our current system, the question is "can I get doctors to justify ordering this many scans?"
Those are completely different questions. The market oriented question boils down to "is this such a good value to the patient that I can talk them into paying for it?", whereas the current question boils down to "can a doctor come up with some reason that's good enough that the insurance company won't challenge it?"
In a top-down system, you don't have a good cost-control mechanism. You can browbeat hospitals and doctors to spend less, but unless you spend a lot of money to challenge each diagnosis that an MRI is required, you can't save any money.
In a bottom-up, market system, each patient and each doctor is worried about the cost, and so they control it. Each hospital is worried about paying for that MRI, so they buy less of them. That's a system that can work, although everyone is faced with uncomfortable choices every day -- "is this worth it?"
The market system also has huge pressure for innovation and streamlining. If the other hospital in town buys a cheaper MRI, they will get some of your business. If If the MRI manufacturer can make a cheaper machine, he'll get the business.
It also forces more intelligent rationing of procedures and equipment. Hospitals will ask "if we buy a lower-resolution MRI, how much will it matter?" They have little incentive to ask that question now. Once the equipment is bought, you are stuck with the bill, even if some future administration tries to cut costs.
The top-down system will just end up with lots of lobbying, as each interested party tries to get a bigger piece of the government-controlled pie. It will be run via politics, and it will not control costs.
Yup. I agree. More power placed in the hands of the people, less in the hands of the employer, even less in the hands of insurers and none in the hands of politicians.
Why not have health care payments be like your fica (social security) deduction on your paycheck? It seems so much simpler that way. Isn't that how Europe, Taiwan, japan, and Canada do it?
Again, I"m not sure that you're using the word "even" appropriately. It has been Republican economists and a Republican presidential candidate that suggested treating all insurance plans the same. It was obviously true that especially a historic Democratic majority would refuse to tax rich insurance plans, since rich employer-provided insurance plans are actually more common (and a higher percentage of income) among strong unions than among the rich, and unions are such an essential part of any Democratic majority.
Yes, "even" with a President whose most common and expensive ad campaign during the Presidential race was a commercial accusing his opponent of doing just that and promising not to, it's difficult to do so. Why in the world would you put "even" there? Is it so surprising that it's turning out to be difficult to do something that the President explicitly ran against, and promised not to do more clearly than he promised anything else?
If you wanted rich insurance plans taxed, you didn't want Obama elected President.