Not much more to say on health care

on Aug 24 in health care tagged by Trevor Hicks

The Atlantic magazine has a piece by David Goldhill that really does make me question how much more if anything I have to contribute on the topic of health care reform. I don’t necessarily promise to shut up about it, but my volume on the topic will likely subside.

He covers many of thoughts I’ve had, health != health care != health insurance for one. (by the way != is one way to represent “not equal” in software code). Also he points to the change in tax law back in the 1950s that favored health insurance as a company benefit over insurance bought by individuals as the key mistake that has brought us to this point, and I agree.  Here’s his diagnosis:

Indeed, I suspect that our collective search for villains—for someone to blame—has distracted us and our political leaders from addressing the fundamental causes of our nation’s health-care crisis. All of the actors in health care—from doctors to insurers to pharmaceutical companies—work in a heavily regulated, massively subsidized industry full of structural distortions. They all want to serve patients well. But they also all behave rationally in response to the economic incentives those distortions create. Accidentally, but relentlessly, America has built a health-care system with incentives that inexorably generate terrible and perverse results. Incentives that emphasize health care over any other aspect of health and well-being. That emphasize treatment over prevention. That disguise true costs. That favor complexity, and discourage transparent competition based on price or quality. That result in a generational pyramid scheme rather than sustainable financing. And that—most important—remove consumers from our irreplaceable role as the ultimate ensurer of value.

and treatment plan:

I’m a Democrat, and have long been concerned about America’s lack of a health safety net. But based on my own work experience, I also believe that unless we fix the problems at the foundation of our health system—largely problems of incentives—our reforms won’t do much good, and may do harm. To achieve maximum coverage at acceptable cost with acceptable quality, health care will need to become subject to the same forces that have boosted efficiency and value throughout the economy. We will need to reduce, rather than expand, the role of insurance; focus the government’s role exclusively on things that only government can do (protect the poor, cover us against true catastrophe, enforce safety standards, and ensure provider competition); overcome our addiction to Ponzi-scheme financing, hidden subsidies, manipulated prices, and undisclosed results; and rely more on ourselves, the consumers, as the ultimate guarantors of good service, reasonable prices, and sensible trade-offs between health-care spending and spending on all the other good things money can buy.

The bottom line and a point which I wish I had been able to articulate better is that meaningful reform that improves the performance of this sector won’t come by growing our existing system in include more people, as laudable a goal as I agree that is. The fundamental problem we have is that all too often, the real customer of the health provider is the health insurance company or Medicare.  A real reform won’t just substitute government in the place of the health insurance company, it will be to fundamentally retool the industry and put the patient back at the center of focus.

Here’s the money quote:

a guiding principle of any reform should be to put the consumer, not the insurer or the government, at the center of the system.

Here’s what this would mean in practice:

A more consumer-centered health-care system would not rely on a single form of financing for health-care purchases; it would make use of different sorts of financing for different elements of care—with routine care funded largely out of our incomes; major, predictable expenses (including much end-of-life care) funded by savings and credit; and massive, unpredictable expenses funded by insurance.

Make the patient the real customer, meaning transfer responsibility for paying most of the bills back to the people, not towards the government. And when this happens, all of the benefits of markets and capitalism can be brought to bear, people will demand to shop based on price and quality just as we do in every other market whether it be for food or cars. Right now, nobody has an incentive to fix any problems. The patient goes where the doctor orders, isn’t paying the bill and so doesn’t care to shop on price and often has little choice or information to go on regarding quality.

Read the whole thing, it’s well worth the time if you are interested in this topic.