I promised a report on what I believe can and should be changed in health care in America. I have to warn you of a few things. First, I am will focus only on what I believe should be done NOW, by the federal government. This leaves out many other worlds of health care reform, such as state and local governmental action, change driven by professional societies and hospitals, changes in health care education, for profit drug and equipment manufacturers – the opportunities for improvement in any industry this massive are endless. Second, I assume that all good ideas for change are ALREADY ON THE TABLE. People of all stripes have been studying this to death for decades; I’m not going to come up with any brilliant new plan. Third, my number one goal is to improve our society’s prospects for the future – not just in health care, but overall, answering the question, “What kind of a world do I want my (as yet non-existent) grandchildren to live in?”.
So with that as a goal, how does health care contribute to the future? Primarily, of course, by providing the country with healthy citizens, whose productivity and happiness are not overly burdened by bodily dysfunction. I think we actually do a pretty good job at meeting this target, but at potentially too great an economic cost. In other words, as a proportion of our national income, we spend (or, more properly, will spend in the future) more than necessary. The problem we need to solve is not how to REDUCE health care costs, but to STOP the excess growth in costs, relative to our overall national income.
Physicians, nurses, hospitals, drug companies, equipment manufacturers, and patients (citizens who are actively using the health care system at a given time) all believe – and they are right – that if we spent MORE money, we would get a HEALTHIER population. And they are right. The same is true for transportation, defense, education, housing, food production, criminal justice, every basic area we spend our resources on. The question is not how can we achieve the best result possible, but how to balance all of these important underpinnings of a successful, growing society in a way that doesn’t break the bank of the future (if there are any banks in the future!).
Our new President has stated, numerous times, that health care reform encompasses three things: reduce the rate of rise of costs; ensure the ability to pay for care by most if not all citizens (euphemistically known as “health insurance”), and improve the quality of the outcomes of the care provided. In short, Pres. Obama wants reform to make more of our citizenry healthier, at no greater cost. What can the federal government do, this year, to make progress towards that goal?
Well, if you want to do something this year, you really can’t be talking about significant changes to how the system is structured and paid for. Like Sect’y Rumsfeld said, “You go to war with the army you have, not the army you wish you had.” (Doh! Even Homer Simpson can understand an idea that simplistic; amazing how many people forget it when they talk about health care reform.) So, whatever we do, THIS YEAR, can’t really overhaul our model(s) for paying for care.
Now, towards specifics. I believe the FIRST set of steps we should take must focus on costs, and expanding coverage, within the systems we already have for paying for care. To understand where to tinker with the system, let’s start with a few facts. Fifty percent (half – FIVE-OH) of health care is paid for through government funding sources, e.g., Medicare (33%), Medicaid (10%), Federal, state, and local government (don’t forget those school teachers and police!) employees and under 65 retirees, and miscellaneous programs such as active duty military, military retirees and veterans, Indian Health Service, etc. (As an aside, this means if you work in health care, you are a net TAKER from the tax trough – you get more back from government then you pay in taxes.)
To paraphrase Willie Sutton, “Go where the money is”. If Medicare is the largest single purchaser of health care in the country AND it is controlled by the Federal legislative and Executive branches, maybe we should start there. Among the many ideologically driven BAD decisions made by the previous administration, choosing NOT to develop drug purchase contracts with Big Pharma as part of Medicare drug coverage may be one of the most wasteful of national resources. I’d have Congress change that – allow Medicare (and Medicaid, at the state level) to use its purchasing power to lower drug costs. Believe me, the drug companies can afford it; don’t listen to their whines about this starving the research pipeline. Two facts: the industries with the highest average profit margin over time are oil companies and drug companies. And those drug companies spend more on advertising and marketing than they do on research and development. Excuse me, but as a physician, I feel INSULTED that they spend $10-100K per physician per year to tell us what drugs we should be prescribing. What, I’m not smart enough, or professional enough, to learn and figure that out on my own? Tobacco companies seemed to do just fine when their advertising was curtailed decades ago; I’m sure the drug companies will do very well if they get less revenue from the government, and reduce their marketing budgets accordingly.
I’m not done with Medicare. It has been exhaustively documented over the past two decades that overall spending varies by up to a factor of 2 across the various regions in our country. For example, average annual health care costs per person in Miami are over $13,000; in Seattle they are $7200, and $6700 in the Twin Cities. Even within states, there are large disparities, for example between LA (high) and San Francisco (low). In the 90s, plans were hatched to do something about this. The next administration, of course, abandoned all pretense that they even cared about the differences. So, I would have Congress write into law that Medicare payments would be normalized across the land, over a ten year period. The starting pegs would be an average of the lowest five of the largest 50 regions, and the rate of rise allowed would be an average the lowest five in each given year.
There’s a problem with this second plan: the numbers are per capita, and the payments are per service – how to resolve this? Easy: doctors and hospitals want to be paid fee for service, and practice in a high cost area? Fine, but the fees for each service will need to be LESS than the fees for similar services in, say, Seattle, or North Dakota, or (gulp!) central Texas.
Similar approaches can be taken in other government entities, especially in the Federal Employees Health Benefit Plan (FEHBP). I mention this one, because it is a centerpiece for another change I would make THIS YEAR.
We should retain our employer based system of paying for health care, for those who work, and actually expand it. I’d go with “pay or play”. Require all employers over a certain size (10?) to provide as a non-wage benefit coverage for a standardized package of health insurance benefits, based on the FEHBP. The minimum value of this benefit would be equal to, say, to 80% of the lowest priced local FEHBP plan. Or, they can pay to the worker, tax free, an amount equal to that same 80%. AND, ANYONE could sign up for health insurance through the FEHBP. (Want to know more about this program, which already covers millions of Americans? http://www.opm.gov/INSURE/HEALTH/ or http://en.wikipedia.org/wiki/Federal_Employees_Health_Benefit_Plan )
Finally, I would extend both COBRA and Medicaid, with funding at the federal level, to anyone who has lost a job since December 2007, and is not currently working (see “pay or play”!) through 2011, so that anyone who wants to work can be covered as well. This would cost more, but, as Bono sang, “The rich stay healthy, and the sick stay poor.” Sick, poor people are less productive that healthy people; healthy people are more likely to seek and eventually get hired, and thus ADD to our national wealth. Remember “supply side economics”? Ronald Reagan’s theory: reducing taxes increases productivity would, eventually, increases tax income through higher wages and more jobs. Likewise, reducing the burden of illness would increase productivity, and, eventually increase tax income through higher wages and more jobs.
That’s it. That’s my plan, for change we can believe in NOW. That’s more than enough for all of us to swallow now. It would reduce the rate of rise of health care costs, it would cover more people, and it would NOT change any of our current care or insurance models.