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Austin Frakt knows that this reform effort is not going to be the end of health care reform in this country. It will only be Health Reform Debate 1.0. This bill will greatly expand coverage, add some much-needed regulations, and contain some modest cost containment measures. It will not really address the serious cost issue in this country–we pay way too much for health care:
Meanwhile, the cost of care, and coverage for it, is becoming an increasingly heavy load stone for states, businesses, and families. Debate 2.0 is nearly upon us, even as we struggle to resolve 1.0 (beta).
Therefore, I’d like to add a 15th item to Cowen’s list: payment reform that compensates providers, at least in part, on the basis of quality and cost control. That’s very vague. One can conjure up some specifics and some have. Few are thoroughly tested and none have been anywhere near the center of political debate. But they will, and soon.
The problem is that we don’t need to try a bunch of untested ideas to bring down cost. Every other industrialized nation on Earth provides health care for dramatically less than we do. Cost control is not some great mystery. There is no need to re-invent the wheel. There is no need to come up with brand new, super-complicated “reimbursing for quality” reward ideas. There are plenty of thoroughly tested, completely proven cost control mechanisms we can directly borrow from other nations.
The problem is economists and policy experts in this country insist on only using what I call “free market economagic” to fix our health care system. Health care does not (and never will) truly work on free market principles. It works most closely on the principles of a hostage negotiation. I walk into a hospital with a gunshot wound, and I need them to perform surgery to save my life. What “fair market value” they can charge me for saving me life? Basically, they can charge me anything because I literally have no choice but to pay them what they ask.
What we don’t need is health care economists trying to figure out solutions that fit the “free market economagic” doctrine. We need people willing to make simple, practical comparisons between our incredibly expensive system and those of other nations. Looking around the world, one thing becomes clear: We pay more for everything. We pay much more for drugs, more for hospitals stays, more for tests, and more for almost all procedures.
While industrialized nations have many different health care regimes, almost everyone uses a centralized payment negotiating system. Normally, it is the government, but in some places, like Switzerland, it is a regulatory cabal of all the insurance companies. The centralized payment negotiator determines a fair price for a drug or procedure that most providers agree to accept. One should not be surprised that our system, where thousands of providers try to secretly negotiate reimbursement rates with hundreds different insurers and payers, is a recipe for waste and inefficiency. The multitude of different insurers don’t have the clout (or desire) to negotiate the best rates possible for everyone. And since each provider is being paid differently for the same procedure, the bill collecting paperwork is a nightmare.
I support looking into any potential new cost saving ideas, but we need to take off the “free market economagic” blinders. We don’t need some clever theoretical proposal because there are already proven ideas that are currently working. If we seriously want to rein in our out-of-control health care spending, we must start by adopting solutions proven to work elsewhere.
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amen.
or even those that work here. don’t agree with the first part of your post (there are good healthcare economists who could and should imo be consulted, our problem is that not that they don’t exist, it’s that they don’t have role in the reform design), but love the last part. and love love love your “economagic” — am going to have to steal that one (with proper attribution, of course).
Good God, yes! You really get to the source of the problem. We’re trying to get our plans to fit theories, so that we can apply them to reality. Why don’t we just plan for reality, leave the economic hermeneutics to the classroom (or, better yet, the scrapheap of history). Uwe Reinhardt would be one person I wish had the President’s ear. And Marcia Angell.
DOUBLE AMEN.
Finally someone who accurately portrays WHERE the costs come from, PROVIDERS. We can overturn insurers and take the billions in profits from them but once we’ve done that and they’re penniless we’ll still have a wasteful, inefficent system that in another year or two will be back to the same costs we’re at now and who do we blame then?
If we get to a set payment structure for everyone (the Swiss system) then also doctors won’t need 2 employees to deal with insurers for every doctor. Then they can get back to patient care.
Jon, I really liked this one:
I think this one is terrific. not so much the “economagic” term. That’s OK. But I think the real gold is the “hostage negotiation” analogy. That makes it very clear that the idea that that there can be a free market in health care is pure “dreamland.” The consumer has very little power to negotiate pricing. If you have the money you pay what they ask. If you don’t you die, and “die quickly.”
I also entirely agree that cutting costs isn’t “rocket science,” it begins by learning what others are doing to get a better result at a lower cost. Of course, that also includes health insurance, where others either have single-payer, or a very highly regulated insurance system which squeezes most of the profit out of providing insurance services.
Right…the old “Your money or your life”. Works every time.
its not just gunshot wounds but that’s a great example. Its everyday stuff anymore. Does anyone that has insurance realize that ER doctors don’t participate in ANY insurance anymore. Same for anesthesiologists. The reason? Because they don’t have to accept less from an insurer. people will come to them anyway and if you’re having surgery you need anesthesia. That’s why providers need to be regulated as to what they can charge and we need need to reduce their costs so that they can afford to be in practice.
I’ve come to the conclusion that the U.S. Federal government no longer has the intrinsic power to win any significant battle against large corporations. Effectively the business community has banded together to form a sort of universal American Zaibatsu. The big companies protect each other by voting as a bloc against anything that would endanger anyone’s profits. This is called “conservatism.” In reality it’s nothing but a cheap power play to achieve massive monopolistic power over every financial transaction anywhere in the world. And this agenda advanced greatly over the Nixonm, Reagan and Bush years.
As the American Zaibatsu grows in strength, it begins to have more power, stronger hegemony, than our elected government. Seen abstractly, such a situation is neither impossible nor illogical. National governments, as a political unit, rely for their power on unification of a geographic territory under either a single ruler or some kind of ruling group.
Corporations, as political entities, work differently. They are not necessarily tethered to a specific geographic area. The location of a business’s facilities often is not the deciding factor on its power. Every company completes monetary transactions which flow both in and out of the company. The transactions of a sufficiently large and successful company now routinely reach every part of the world. The constant flow of money in and out gives the economic unit we call a “company” or a “corporation” its power.
We are in the habit of assuming that nation-states are the most powerful actors on the world stage. Clearly in many respects that is still true of the major industrialized powers, but there are signs of change. As the size and reach of global corporations increases, their power continually grows. Meanwhile the economic power of nation-states is actually shrinking. The so-called “conservative” movement which began, in full force, during the Reagan administration, perhaps represents the political embodiment of the victory of corporations over countries.
Very good comment, ralph. It suggests that we need to work against globalization if we want to protect American Democracy