Health reform: throwing good money after the bad
The Huffington Post, August 24, 2009 – By Marcia Angell
Dr. Marcia Angell, Harvard Medical School senior lecturer on social medicine and former editor-in-chief of the New England Journal of Medicine, discusses her views on how healthcare reform should be approached.
http://www.huffingtonpost.com/marcia-angell-md/health-reform-throwing-go_b_266596.html

Marcia Angell, M.D.

Physician, Author, Senior Lecturer, Harvard Medical School

Posted: August 24, 2009 08:49 AM

BIO Become a Fan

Get Email Alerts Bloggers' Index

Health Reform: Throwing Good Money After the Bad

digg Huffpost - stumble reddit del.ico.us ShareThis

Read More: Barack Obama, Dr. Marcia Angell, Health Care, Health Care Reform, Health Insurance, Healthcare, Healthcare Reform, Marcia Angell, Massachusetts Health Care, Massachusetts Health Care Reform, Massachusetts Health Reform, Medicare, Obama Health Care, Obama Healthcare, Universal Health Care, Politics News

It's not just the right-wing crazies who oppose health reform. In addition, there are many sane Americans who worry about committing a trillion dollars to it. They have a point. We already spend more than twice as much per person on health care as other advanced countries, and our costs are rising faster. How much is enough?

Make no mistake, sky-high and rapidly rising costs are the core problem. If money were no object, it would be easy to provide full care for everyone. But even a perfectly designed system will fail if it is unaffordable, or rapidly becomes so.

So it's crucial to ask just why we are spending so much more than other countries. Where is all that money going? Yet, that question is seldom asked in the current debate, even though it's not logical to try to fix something without understanding why it's broken.

In the trenchant words of Deep Throat, let's follow the money. This year we will spend roughly $2.5 trillion on health care. Although about half that money comes from federal and state governments, most of the total is funneled to private insurers and entrepreneurial providers. Alone among advanced countries, we treat health care like a market commodity to be distributed according to the ability to pay, not like a social service to be distributed according to medical need.

For nearly two-thirds of Americans, we rely on hundreds of private insurance companies to set prices and benefits and pay providers. They profit by refusing to cover the sickest patients and limiting services to others. In fact, we have the only health system in the world based on avoiding sick people. Insurers cream 15 to 25 percent off the top of the premium dollar for profits and overhead (mainly underwriting) before paying providers.

Providers themselves have high billing and collecting expenses to deal with the Byzantine requirements of multiple insurers. The innumerable health facilities, both for-profit and nonprofit, also have high overhead expenses to cover their business costs, executive salaries, and the promotion of their profitable services. Altogether, overhead accounts for at least 30 percent of our health bill. If we spent the same percentage on overhead as Canada, we would save about $400 billion this year.

Our method of delivering care is no better than our method of paying for it. We provide much of it in investor-owned health facilities that profit by providing too many services for the well-insured and too few for those who cannot pay. Most doctors are paid on a piecework basis -- that is, fee-for-service -- which gives them a similar incentive to provide too many services for the well-insured. That is particularly true of specialists who receive very high fees for expensive tests and procedures (like cardiac angiography and MRI's).

Not surprisingly, our ratio of specialists to primary care providers is much higher than in other countries. There is no way to know exactly how much money is wasted in medically unnecessary tests and procedures, but it is probably on the order of hundreds of billions of dollars per year. Many people point to technology as a cause of our high health costs, but the culprit is not technology per se (all advanced countries have the same technologies), but the flagrant overuse of it for financial gain.

In sum, the answer to the question, "Where is all that money going?" is that much of it is diverted to profits and overhead, and to exorbitantly priced and medically unnecessary tests and procedures. Any reform that has a prayer of containing costs, hence being sustainable, must deal with these two massive drains.
Yet, most reform proposals would leave the present profit-driven and inflationary system essentially unchanged, and simply pour more money into it.

That's what is happening in Massachusetts, where we have nearly universal health insurance, but costs are growing so rapidly that its long-term prospects are bleak unless we drastically cut benefits and greatly increase deductibles and co-payments, or change the system. We're learning that health insurance is not the same thing as health care; it may be too limited in what it covers or too expensive to actually use. It is ironic that the President is said to have looked to Massachusetts as a model for national reform, even though the state has the highest health costs on the planet.

To control costs, the President is pinning a lot on electronic records, disease management, preventive care, and comparative effectiveness studies. But while these initiatives may improve care, they're unlikely to save much money because they don't deal with the underlying problem -- a system based on maximizing income, not maximizing health. Promises by for-profit insurers and providers to mend their ways voluntarily are simply not credible. Regulation of the present system is also unlikely to modify profit-seeking behavior very much, without a bureaucracy so large that it would create more problems than it solves.

Nearly every other advanced country has a largely nonprofit national health system that guarantees universal care. Even countries with private insurers, like Switzerland and the Netherlands, require uniform prices and benefits and limit profits. Not only are expenditures much lower in other advanced countries, but health outcomes are generally better. Moreover, contrary to popular belief, they offer on average more basic services, not fewer -- more doctor visits and longer hospital stays, and they have more doctors and nurses and hospital beds. But they don't do nearly as many tests and procedures, because there is little financial incentive to do so.

It's true that there are waits for some elective procedures in some of these countries, such as the U. K. and Canada (although hardly the long lines of desperately ill patients depicted by the Republicans). But that's because they spend far less on health care than we do. If they were to put the same amount of money into their systems as we do into ours, there would be no waits. For them, the problem is not the system; it's the money. For us, it's not the money; it's the system. We already spend more than enough.

Judging by the current debate, it would seem that Americans think they have nothing to learn from other countries, or perhaps that we are all alone in the world. Still, we might be willing to learn from parts of our system that are similar to systems in other countries. Medicare is a single-payer program very much like the Canadian national health insurance system. (Some of the more vociferous town hall meeting protesters seemed not even to know that Medicare is a government program.) The Veterans Health System is a socialized program very much like the U.K.'s national health service. Both deliver better care at lower prices than our private system.

I believe our best bet now would be to extend Medicare gradually to the rest of the population. We could begin by lowering the eligibility age from 65 to 55, then after a few years, drop it to 45, and so on. Medicare is the most popular part of our health system; unlike private insurers, it offers free choice of doctors, it covers all eligible beneficiaries for a uniform package of benefits, regardless of medical history or how much care is needed, and it cannot be taken away by job loss or illness.

But it would need some changes. Its costs are rising almost as fast as those in the private sector, despite the fact that its overhead is much lower, because it uses the same profit-oriented providers. If Medicare were extended to everyone, it should be in a nonprofit delivery system. In addition, fees would have to be adjusted to reward primary care doctors more and specialists less, or better yet, doctors should be salaried. There is now a bill in Congress that calls for exactly that -- H.R. 676 ("Expanded and Improved Medicare for All"), which was introduced by Rep. John Conyers of Michigan and has many co-sponsors. Unfortunately, given the power of the health industry lobbies, it's unlikely to make it out of committee without strong public pressure.

In economic terms, health care is a highly successful industry -- profitable, growing, and virtually recession-proof -- but it's a massive burden on the rest of the economy. I'm aware that phasing out private insurers would mean a loss of jobs. But I believe the job loss in that sector would be more than offset by job gains in the rest of the economy, which would no longer be saddled with the exorbitant costs of an industry that offers very little of value to justify its existence.

One thing is certain: We need a complete overhaul of our health system. Tinkering at the edges won't do it. Expanding coverage through government subsidies and mandates, as advocated by the president, won't either. Besides being a windfall for insurers and drug companies, that approach will just add to our soaring costs and be a temporary fix, at best. In my opinion, it makes no sense to throw good money after bad.

Marcia Angell, M. D., is Senior Lecturer in the Department of Social Medicine at Harvard Medical School. She was the first woman to serve as Editor-in-Chief of the New England Journal of Medicine, a post she stepped down from in June of 2000. She is also the author of the critically acclaimed book, Science on Trial: The Clash of Medical Evidence and the Law in the Breast Implant Case, as well as The Truth About the Drug Companies: How They Deceive Us and What to Do About It.

Forget Who Pays Medical Bills,
It’s Who Sets the Cost
(and it's not preventing any problems, anyway!)

By DAVID LEONHARDT Published: July 25, 2009

Related
Political Memo: Partisan or Not, a Tough Course on Health Care (July 26, 2009)
Obama Defends Proposed Health Office (July 26, 2009)
Obama Moves to Reclaim the Debate on Health Care (July 23, 2009)
Times Topics: Health Care Reform

WASHINGTON — Every fight over health care reform is different, and every fight over health care reform is the same.

In 1929, Michael Shadid, a doctor in western Oklahoma, proposed an idea for making medical care affordable to farmers. Rather than pay piecemeal for treatments, farmers would each contribute $50 a year to a cooperative. Dr. Shadid and his colleagues would pay their own salaries and expenses with the aggregate sum, and no farmer’s annual bill for family medical care would exceed $50.

Horrified by the plan, other Oklahoma doctors tried to revoke Dr. Shadid’s license. The conflict was soon duplicated across the country; cooperatives sprang up, and the American Medical Association tried to beat them back. The A.M.A.’s members, as the historian Paul Starr has written, felt threatened because the cooperatives “subjected doctors’ incomes and working conditions to direct control by their clients.”

The issue was clear: Who controls the doctor-patient relationship? That question has been at the core of every big subsequent battle over health care. Should doctors determine not only their patients’ treatment but also their own pay, through the fee-for-service system that has survived since the 1920s? Or should patients have more power in the relationship? And who could claim to act on patients’ behalf, monitoring treatments and bargaining with doctors?

A succession of presidents — from Harry S. Truman to Richard M. Nixon to Bill Clinton — volunteered the government for the role of patients’ advocate, and their grand efforts all failed. Now it is President Obama’s turn to try to remake America’s medical system.

Last week’s back and forth, when Congressional Democrats squabbled and Mr. Obama took his case to the public, highlighted how difficult his task will be. Reform of health care has the potential to threaten profits and incomes that make up one-sixth of the economy. More daunting, perhaps, Americans seem to have great trust in their doctors — more, certainly, than they trust the government on medical matters.

More than three in four Americans are “very satisfied” or “somewhat satisfied” with their own care, according to the latest New York Times/CBS News poll. But a substantial majority also say that the health care system needs fundamental change and that rising costs are a serious threat to the economy — a view that economists strongly share.

Thus the political challenge facing any effort at an overhaul: Americans say they want change, but they also want to preserve their own status quo.

The disconnect can be explained partly by the peculiar economics of health care. Because third parties — the government or a private insurer — typically pay the bill, many people miss the fact that the money originally comes from them. They see the benefits of medical care without seeing the costs.

But trust in doctors is a factor as well. Even when doctors order costly treatments with serious side effects and little evidence of their being effective, as studies find is common, patients are loath to question the decision. Instead of blaming such treatments for the rising cost of medicine, many people are inclined to blame forces that health economists say are far less important, like greedy insurance companies or onerous malpractice laws.

Mr. Obama is well aware of the public perception. This is why he directs his criticism not at doctors but at insurers and drug companies. In his news conference on Wednesday night, he advocated creating a government panel with the power to begin moving Medicare away from its fee-for-service model and emphasize outcomes instead. But he described it in doctor-friendly terms — as “an independent group of doctors and medical experts who are empowered to eliminate waste and inefficiency.”

His rhetorical choices highlight one of the least discussed but most important conflicts in the current health care debate. The fight isn’t just a matter of Democrats vs. Republicans, Blue Dogs vs. liberals or patients vs. insurers. It is also doctors vs. doctors.

That’s the same as in Oklahoma in 1929. And what has happened to Dr. Shadid’s model? It has survived. He built a team of doctors who collaborated closely and were not paid based on how many procedures they performed. Today, this description fits the Mayo Clinic and the Cleveland Clinic (which Mr. Obama visited on Thursday), as well as less-known groups around the country.

Medicare data shows that these groups generally provide less expensive care and appear to deliver better results. Armed with this data, the doctors who run the groups have been lobbying Congress to make their model a bigger part of health reform. Two weeks ago, 13 such groups released a letter saying that recent versions of proposed legislation did not control costs enough.

Their goal is to weaken the fee-for-service system. In its place, doctors might receive a lump-sum payment to treat a patient with a certain condition, based on average costs elsewhere and on what scientific evidence had found to be effective. Hospitals with especially good outcomes might earn bonuses.

Advocates say such a system could ultimately give doctors more control. Rather than having to organize their schedules around the tests and procedures that insurers agree to reimburse, doctors could opt for the treatments they deem most effective. “It’s a lot more accountability, which is why it’s scary for physicians,” said Dr. Mark McClellan, a former head of Medicare under George W. Bush. “But in some ways it’s also more autonomy.”

On Tuesday, doctors and hospital executives from 10 cities with below-average cost growth gathered in Washington for a conference called, “How Do They Do That?” They were a diverse lot, only some of whom hailed from providers resembling the Mayo Clinic. While crediting a range of factors for their success, they generally agreed about what ails American medicine.

When Dr. McClellan, who helped organize the conference, asked how many people thought the fee-for-service system was “archaic and fundamentally at odds” with good practice, most hands shot up. In effect, they were siding with Dr. Shadid and against a system that provides incentives for more and more care, regardless of its benefit.

“There are no consequences right now to over-utilization,” Dr. Anthony F. Oliva, chief medical officer of the Guthrie Healthcare System, in northeast Pennsylvania, said later. “If you don’t have consequences, you won’t change the culture. If you don’t have consequences, the people that are killing themselves to control cost are going to say, ‘Why am I doing this?’”

It is a message, of course, that a doctor can deliver more easily than anyone else.