There is an old saying in Washington that really difficult political problems don't get properly addressed until there is "an action forcing event." Recall the growing and sometimes disruptive shortages of natural gas in the 1980s - they finally brought about the decontrol of natural gas prices and distribution constraints on the industry and its customers. Maybe the same thing is starting to happen today in the U.S. health care industry.
Politicians in Congress and the 50 state capitals now seem to realize they (and their predecessors) have created an extremely expensive, incredibly complicated and poorly performing (relative to other developed countries) health care system. Near-term extrapolations of the cost of programs such as Medicare make it abundantly clear that the end of the health care system as we know it is very near. The March 14 issue of JAMA (Journal of the American Medical Association) lays out many of the gory details in several excellent readable articles.
"Laboratory of the States"
One excellent piece of evidence of impending change is a burst of serious activity in state legislatures. Over the past 12 months Massachusetts, California and Pennsylvania have either passed or are seriously considering major legislation to address the issues. The "laboratory of the states" is hard at work, even if we know that most of the proposals advanced so far are likely to fail (as happens in most laboratories). In addition, one senses that pressure is building in Washington for a credible high-level commission to address the impending Medicare meltdown (to report after the 2008 election).
The danger in all this political activity is the potential to make a bad situation worse, which the bulk of the proposals would certainly do. But, with 51 legislative bodies at work, at least one of them should get it right - and become a model for others.
Michael Porter on Health care
The one that does get it right is likely to have been heavily influenced by "How Physicians Can Change the Future of Heath Care" in that March 14 issue of JAMA. Co-authored by Michael Porter, the highly influential business management professor at Harvard Business School and Elizabeth Olmsted Teisberg, the article is a synopsis of their recent book on the subject. The authors' basic point is that most current reform proposals wrongly focus on containing or shifting costs of the current system, rather than seeking to change its underlying incentives and structure. The result of most of these proposals is zero sum competition. For example, rather than move towards an anticompetitive monopoly "single payer" system, they argue for reforms that would create incentives for doctors, administrators, and patients to work towards better outcomes ("value") for patients. Competing on the basis of creating value means there can be multiple winners.
Accepting this principle as the basis for competition means that medical care should be organized around patients' medical conditions, not around narrow medical specialties, the hallmark of current practice and substantial federal spending. What we need are incentives for doctors, administrators and support staff to organize themselves around the entire care cycle so that better patient outcomes reward all parties.
The Case for (Cautious) Optimism
To a modest extent, this already appears to be happening. Elementary "walk-in" facilities are springing up to treat minor illnesses and injuries. Some of them are "cash or credit card only," thus eliminating the 25%+ bite that insurance administrators take currently. Some major medical facilities, like the Cleveland Clinic, are reorganizing around patient conditions rather than specialty-focused units.
The growing popularity of high deductible insurance policies is forcing providers to be more transparent about their charges (and to understand better their own cost structures). State laws willing, Wal-Mart and similar for-profit organizations may bring basic medical care to millions - at a cost they can afford.
Mandatory Health Insurance?
One of the biggest issues is whether or not governments should make health insurance mandatory for all ("universal coverage"). Some people, typically the young, take their chances - and rely on free care if they end up in a hospital. Statistically, they are behaving quite rationally. But the loss of their premiums increases the costs to everyone else. Massachusetts has started down this path, with a deadline of July 1 for everyone to be covered out of their own pockets or with state subsidies. Let's see if Massachusetts politicians can resist "coverage creep" - contact lenses for everyone?
The most important issue - why should government ensure that health care is available to everyone? - is seldom debated today. The debate over Medicare in the 1960's seems to have settled the issue, as opponents argued at the time, warning of coverage creep. If that is the case, universal coverage is a logical outcome (as Porter and Teisberg argue), however distasteful it is to those who see government as more of a problem in these matters than a solution provider.
Change is Coming!
The demographics and the arithmetic are inexorable: radical changes in the system are coming. Let's simply hope that Washington lets "the laboratory of the states" find out what works - and what doesn't - before the Federal government blunders ahead.
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