It's been nearly two years since the passage of the Patient Protection and Affordable Care Act, and the debate over this controversial piece of legislation is as contentious now as it was when it was being voted upon. Since PPACA was signed into law, we have seen the Republicans gain control of the House and acquire additional seats in the Senate. We have also seen a number of court cases either confirming PPACA as Constitutional, or ruling that it violates the Constitution. All of this has led us toward an inevitable showdown in the 2012 election season.
Repealing "ObamaCare" has become a major campaign platform for each of the Republican presidential candidates. In my opinion, something very important is still missing from the discussion. We haven't heard any substantial details on what each of these candidates would do to replace it. Remember, all of the troubling factors that brought us to this point have not gone away. We still have a health care system that is breaking the bank and desperately needs to be fixed. With this in mind, and with the upcoming elections just around the corner, there's no better time than now to once again examine this problem, and come up with real solutions.
A combination of professional and personal factors places me in a unique position to weigh in on this critical debate. First and foremost, I don't profess to have all the answers; I don't think anyone does. These problems are just too complex to be easily solved by any one person. What I will say is that I believe I have a perspective that differs from others that we've heard. I hold a Master's Degree in Economics and a Bachelor's Degree in Business Administration. I have 18 years of experience working for various managed care companies, and have held senior management-level positions with some of the largest managed care companies in the nation. I have also worked for a vertically integrated delivery system where the insurance company, hospital, and physicians were all under the same ownership. In 2004, I founded a physician advocacy group called Fulcrum Strategies, which has provided me with more than 7 years of experience as a physician consultant. In my role as President of Fulcrum Strategies, I now provide business consulting and managed care negotiating advice to more than 1,000 physicians in various specialties across the country. I am a small business owner who struggles with the cost and challenges of providing health insurance for my employees. On a personal note, I am the father of a son with autism. Since the therapies for autism are excluded from coverage under most insurance plans, I am painfully aware of what happens when a loved one needs care that insurance doesn't cover.
Much of the health care reform debate has focused primarily on how the current system is broken. The discussion typically focuses on two main faults: high cost and inadequate coverage. The supporters of PPACA talk about the rising cost of health care and how our country pays more for health care than any other - and yet we are no healthier for it. They also point out that before PPACA 47 million Americans didn't have health care coverage, either because they couldn't get it or because it was too expensive, with the implication that they didn't have access to health care at all. Finally, they point out that if we don't do something the current cost trends, given the current levels of coverage, will eventually break the federal budget. Each of these statements has a varying degree of truth to it, but they do not tell the full story.
Let's start with an honest look at the current state of health care in this country. Without a doubt, the United States has produced a health care system where quality and access are second to none. The vast majority of the people in this country have access to state of the art care given by highly trained physicians without any of the waiting that many other countries face. For these people, money plays little or no role in the decisions that are made about their health care. If you have cancer and there is a very expensive drug or treatment that will help, you get it. If you need an advanced test like an MRI or PET scan, you get it. If your baby is born premature, you will get advanced and very expensive treatment; everything possible will be done to save the child's life. Simply put, for the vast majority of Americans there is no better place on earth to be if you have any medical need. The American health care system is like the finest five-star restaurant. The atmosphere is fantastic, the service is excellent, the food is out of this world and the wine list is extensive. All-in-all, it is a wonderful experience if you can afford it. Even for those who can't, a place will be made for you in case of dire need. In an emergency, anyone can still get in. We should be proud of the advances in medicine that we have pioneered and for the quality of the care our system can and does provide every day. The problem is that we Americans are victims of our own success. We have pushed the quality and access levels to such an extent that we've increased costs to a level that is not sustainable.
The challenge facing this country is how to keep the quality and access that we have built in our health care delivery system, while extending coverage to as many people as possible, all the while controlling costs at a level that is sustainable. This is a complex challenge that will require a very delicate balance. It is obvious that we can't have all three. It's just not possible to maintain the same level of quality and access that we have now while extending coverage to millions of additional people and reducing costs at the same time. Something simply has to give. It is also very clear to me that the current legislation will not accomplish this goal.
ObamaCare:
The current legislation provides a number of changes to our system of insuring and financing health care in this country. Some of these changes like insurance reform are long overdue. The plan will increase the coverage so that when fully implemented, more Americans will have insurance coverage of some kind than ever before. Where it fails is in the cost control arena. Quite simply, if changes are not made, PPACA will accelerate the cost problems with health care in this country and will cause the inevitable train wreck sooner than later. It doesn't take a nobel prize winning economist to tell you that adding millions of people to the insurance system, increasing benefits and eliminating things like life time maximums will increase costs. Anyone who disagrees with this assertion should go back and take a refresher course in Econ 101.
The Problems with ObamaCare:
There are a number of problems with the legislation that was passed last year. There are also a number of areas where the debate about health care is failing to address the real issues in an intellectually honest way. Two of the major failures of the current legislation are its lack of cost control and its ignorance of the market's likely response. I'll discuss both of these problems and what we could do to help solve them.
Quality and Access:
The supporters of PPACA say that it addresses quality and access by not changing anything in the current delivery system. They hang their hat on the assertion that since they are not changing the delivery system in any meaningful way there should be no impact on quality and access. Simply put, they are counting on the current system to continue to deliver the same high quality and easy access that it currently does. In a vacuum this would be a logical assumption, but as an economist will tell you, nothing happens in a vacuum.
Let's examine PPACA and what it may mean to our future if fully implemented. Then we need to examine some better alternatives.
Coverage:
When fully implemented, PPACA extends coverage to millions of Americans that don't have insurance right now. The plan is likely to extend coverage of some kind to as much as 98% of these people. This was one of the big talking points for the administration and something that the plan is actually likely to accomplish. There are several factors that drive this. The plan creates significant tax penalties for all but the very smallest businesses that don't provide insurance coverage for their employees. It also provides penalties for individuals who do not purchase coverage when it is available. There are also tax breaks for the working poor to help cover the cost of purchasing coverage. These three factors alone, however, would probably not be enough to extend coverage to the 98% level. The final parts are the creation of State Exchanges and the expansion of Medicaid. These last two pieces will bring coverage to most Americans, and will reduce the uninsured in this country to a very small percentage of the population.
The problem of the uninsured:
Before we continue the discussion on coverage of the uninsured, it would be helpful to truly understand the characteristics of the uninsured populations. By now, everyone has heard the number: 47 million uninsured Americans. Right up front, we need to recognize that there are not 47 million uninsured Americans. It's true to say that according to the latest census data, there are 47 million "people" living in this country who are "currently" uninsured. Roughly 10 million of those 47 million people are not American citizens. Now, it's an entirely different debate to address what, if any obligation we do have for providing insurance to people in this country who are not citizens. The point is, if we're to subscribe to the belief that health care is a right of all Americans, and that it is our obligation to provide affordable health insurance for every citizen, then we need to begin with 37 million uninsured Americans. Once we accept our new starting point, we'll need to further dissect that number. Again, according to the most recent census, there are some interesting statistics about this population. First, 60% of the uninsured population reported that they were in "excellent health." How many of these people could afford health insurance but are choosing not to buy it because they won't be using it? 16 million of the uninsured population reported a family income that is over $50,000 per year, which is higher than the mean family income in this country, and half of those 16 million reported making over $75,000 per year. I think it's fair to say that most, if not all, of this population could afford health insurance given their income levels. Another interesting statistic is that 45% of the uninsured population is uninsured for less than 4 months. These are people who are uninsured for a very short period of time while they change jobs or carriers. According to the Kaiser Foundation, the number of people who are uninsured for more than 1 year, do not qualify for Medicare or Medicaid, and make less than $50,000 per year numbers about 8 million. This represents about 3% of the population in this country. Now that we better understand the population that we want to impact, we can develop more efficient plans to address the problems.
Better Options for Coverage:
1. Transitionally Uninsured:
To address the issue of the 45% of Americans who are uninsured for a short period of time (less than 4 months), I propose that we use a format similar to unemployment benefits. It would be fairly easy to set up a benefit for those people who are losing or changing their jobs to provide a short-term coverage option. The government could pay individuals' COBRA premiums for a limited period of time to cover this transition. This would ensure that existing coverage is continuing to bridge the employment gap. In order for this to work, legislation would need to be passed that would make COBRA the same premium cost as the employer plan it is based on. This simple change would eliminate 45% of the uninsured problem.
2. Long Term Uninsured:
Addressing the issue of how to help the 8 million people who are uninsured for more than a year and are caught in the gap between Medicare, Medicaid and the employer sponsored system is a bit more complex and would require several steps.
a. First, we need to create insurance options for this population. This can be accomplished by making some changes to the current system rather than trying to create an entirely new system we'll call "GovCare." One possibility would be to require all insurance companies to offer and sell both individual and small group plans in every state where they are licensed to operate. Essentially, creating the individual and small business options would become part of doing business in that state. These plans would have very basic benefits that could be established by state or federal mandate. In addition, the plans would have to be community rated and the rates approved by each state's department of insurance, much like they already do for the rates charged by many other types of insurance. Finally, there would be no ability for carriers to deny coverage for any clinical or pre-existing condition. These basic benefit plans would be designed to cover primary care, preventative care and catastrophic coverage, and would help hold costs down. With this simple change, not only do we create options for the population most at risk, but we also create choice and thus free market competition and efficiency.
b. The next big hurdle is how to help this market segment afford insurance once a plan is made available to them. Given a plan like the one described above, and with a population of 8 million instead of the bloated 47 million figure, paying for it actually can be solved through tax credits and subsidies. How much would it cost? In 2009, the average per capita health care expenditure was just over $8,000. That includes the Medicare population, which is significantly more expensive than the non-Medicare population. However, if we use the number of $8,000 per year - which we know is overstated - and provide 100% coverage - which we also know is overstated - and apply it to the 8 million people who fit the category of long term uninsured, we come up with a price tag of $65 billion per year. Again, this projection is grossly overestimated given the assumptions above, but we use it to point out that covering the uninsured population is not that difficult, nor is it terribly expensive.
Cost Control
Where PPACA fails dramatically is in the area of cost control. PPACA is woefully short on details relating to cost controls, and in my opinion, doesn't get at the root causes for health care inflation in any meaningful way. This kind of wishful thinking and praying for the best is what created things like a $14 trillion national debt. People, it's time to stop praying for a miracle and to start dealing with the hard questions and difficult issues. If we wait much longer, we may lose the chance to be the agent of change and rather have change thrust opon us. The market will react and respond to PPACA, and we may not like the outcome.
How Can We Control Costs?
Controlling costs is where the rubber will really meet the road in this discussion. It's not only the most critical aspect of the problem with health care in this country, but it is also the most difficult to solve. The fact of the matter is that there is no way to provide the highest levels of care to everyone that wants it without breaking the bank. Every country rations care in some form or another. Some do it by access, some by quality; in the U.S. we do it by income level. There is simply no way to provide universal coverage without having to cut back somewhere else. Many people talk about making the system more efficient, citing the elimination of redundant tests, or the cost reductions garnered by giving access to preventative care to the currently uninsured as a means to pay for expanded coverage. While there may be some level of savings from each of these, it's nowhere near enough money to address the real financial concerns present in our system. To address the fundamental issues of cost in our current system in a long-term and sustainable way, we need to make some very difficult choices about how we want our health care rationed. Before we get to these difficult questions there are some less controversial changes that we can make that will help.
Tort Reform
One of the first things I believe we should do is pass major tort reform. A negative outcome in health care should not be a lottery ticket nor should attorneys make a career out of looking for such a winning ticket. I was talking to an executive of a large malpractice carrier who told me that his company spends more money on successful defense of malpractice cases than it does in all of its payouts put together. Let me restate that; a malpractice carrier spends more money on successfully defending frivolous law suits than it does in its payouts when a real case of malpractice occurs. Can you imagine how high your auto insurance would be if this were the case in that industry? It's time to deal with this issue and to limit non-compensatory damages to a realistic amount. This would not only reduce malpractice premiums, but will also reduce some level of defensive medicine, which is one of the drivers of unnecessary testing and procedures.
What About The Hard Questions?
Some other adjustments that needs to be made are an increase in the age of eligibility for Medicare and making Medicare an income-dependent benefit. The average life expectancy in this country has been steadily increasing, thanks in large part to our incredible health care system, and we are eventually going to have to reflect this change in the qualification age for Medicare. Moving the age from 65 to even 66 or 67 produces significant cost savings and will help shore up the Medicare fund. In addition, the coverage should be tied to income level, including the amount saved for retirement. This can be done by making those retirees with significant retirement savings pay an additional premium for Medicare coverage. I know that these ideas are not going to be popular and are not without controversy, but again, it's important to keep in mind that we cannot provide everything for everyone. The changes that I suggest are much better than the alternative kinds of rationing we see in the Canadian or British systems.
The final adjustment that I think we need to make will most definitely be the hardest to swallow. We need to develop a way to ration coverage through clinical effectiveness and outcomes, rather than by simply cutting access. Currently, our country spends a staggering amount of money on care that is provided during the final few months of a person's life. We go to heroic measures to extend life even when the hope of saving that life is non-existent. These efforts by dedicated and talented health care professionals, while laudable, are also something that we simply cannot afford to cover if we are to try and provide essential care to everyone. At this point, I can imagine the thoughts that are running through your mind. Am I suggesting that we just let people die rather than provide care? Who decides who lives and who dies? How can anyone suggest such a thing? Before you start to judge, please consider the following details behind this idea.
Every day in this country people die while life saving care is withheld from them for clinical rationing reasons, and no one objects. Let me say that again. We are currently letting people die when life saving care is available and everyone involved understands. I am talking about the current process for organ transplants. We have a limited number of organs available for transplantation and the supply of organs is not great enough to satisfy the number of patients that need them. We have developed a rationing system where candidates are evaluated and then put on a list and prioritized. The system includes factors such as the likelihood of success and the potential for long-term survivability. Many of the organ transplant protocols will eliminate candidates based on age, comorbidities, and even things like harmful personal activities. For example, an active alcoholic will be removed from the list for a liver transplant. This is a form of rationing and it directs the system to logical, non-financial choices of who may live and who may die. It is done to try and maximize the benefit given a limited supply. My question to you is how does rationing a limited supply of organs differs from rationing a limited supply of money?
So, my proposal for fixing the cost issues surrounding health care and for putting Medicare back on track so that it doesn't consume the entire federal budget before I even get a chance to make use of it, is to develop similar clinical protocols to help physicians and hospitals know when heroic efforts to extend life should be undertaken and covered by insurance, and when they shouldn't. I don't think these decisions should be left up to the insurance companies or to the government. I also don't think it's fair to leave them up to individual doctors and families. Rather, I would look to the various clinical specialty societies to develop these coverage guidelines based on the most current data and information. Further, these coverage guidelines would be updated regularly as the science of medicine advances.
I completely understand that talking about withholding coverage feels very much like withholding care. In the abstract it is easier to consider, but it becomes very difficult when it's your loved one. I also understand how uncomfortable and morbid it can be to have any discussion on this topic. We want to provide everything for everyone, but I think we have proven that this approach leads to financial ruin and is no longer sustainable. If the system collapses, tens of millions of Americans would be left to their own devices to pay for the health care they need, making the current number of uninsured – no matter what number you start with – look miniscule. This idea isn't a great option; it's not even a good option, but rather, it is the best option among a number of unattractive ones. It really is the lesser of several evils.
So, as we watch the Supreme Court deal with the question of the individual mandate, and as we approach the 2012 elections, I think it's time we take a serious look at PPACA, what it will do, what it won't, and ask ourselves: can't we do better than that? I don't know about you, but my fear is that the cure of PPACA may be worse than the illness it was intended to treat.
Repealing "ObamaCare" has become a major campaign platform for each of the Republican presidential candidates. In my opinion, something very important is still missing from the discussion. We haven't heard any substantial details on what each of these candidates would do to replace it. Remember, all of the troubling factors that brought us to this point have not gone away. We still have a health care system that is breaking the bank and desperately needs to be fixed. With this in mind, and with the upcoming elections just around the corner, there's no better time than now to once again examine this problem, and come up with real solutions.
A combination of professional and personal factors places me in a unique position to weigh in on this critical debate. First and foremost, I don't profess to have all the answers; I don't think anyone does. These problems are just too complex to be easily solved by any one person. What I will say is that I believe I have a perspective that differs from others that we've heard. I hold a Master's Degree in Economics and a Bachelor's Degree in Business Administration. I have 18 years of experience working for various managed care companies, and have held senior management-level positions with some of the largest managed care companies in the nation. I have also worked for a vertically integrated delivery system where the insurance company, hospital, and physicians were all under the same ownership. In 2004, I founded a physician advocacy group called Fulcrum Strategies, which has provided me with more than 7 years of experience as a physician consultant. In my role as President of Fulcrum Strategies, I now provide business consulting and managed care negotiating advice to more than 1,000 physicians in various specialties across the country. I am a small business owner who struggles with the cost and challenges of providing health insurance for my employees. On a personal note, I am the father of a son with autism. Since the therapies for autism are excluded from coverage under most insurance plans, I am painfully aware of what happens when a loved one needs care that insurance doesn't cover.
Much of the health care reform debate has focused primarily on how the current system is broken. The discussion typically focuses on two main faults: high cost and inadequate coverage. The supporters of PPACA talk about the rising cost of health care and how our country pays more for health care than any other - and yet we are no healthier for it. They also point out that before PPACA 47 million Americans didn't have health care coverage, either because they couldn't get it or because it was too expensive, with the implication that they didn't have access to health care at all. Finally, they point out that if we don't do something the current cost trends, given the current levels of coverage, will eventually break the federal budget. Each of these statements has a varying degree of truth to it, but they do not tell the full story.
Let's start with an honest look at the current state of health care in this country. Without a doubt, the United States has produced a health care system where quality and access are second to none. The vast majority of the people in this country have access to state of the art care given by highly trained physicians without any of the waiting that many other countries face. For these people, money plays little or no role in the decisions that are made about their health care. If you have cancer and there is a very expensive drug or treatment that will help, you get it. If you need an advanced test like an MRI or PET scan, you get it. If your baby is born premature, you will get advanced and very expensive treatment; everything possible will be done to save the child's life. Simply put, for the vast majority of Americans there is no better place on earth to be if you have any medical need. The American health care system is like the finest five-star restaurant. The atmosphere is fantastic, the service is excellent, the food is out of this world and the wine list is extensive. All-in-all, it is a wonderful experience if you can afford it. Even for those who can't, a place will be made for you in case of dire need. In an emergency, anyone can still get in. We should be proud of the advances in medicine that we have pioneered and for the quality of the care our system can and does provide every day. The problem is that we Americans are victims of our own success. We have pushed the quality and access levels to such an extent that we've increased costs to a level that is not sustainable.
The challenge facing this country is how to keep the quality and access that we have built in our health care delivery system, while extending coverage to as many people as possible, all the while controlling costs at a level that is sustainable. This is a complex challenge that will require a very delicate balance. It is obvious that we can't have all three. It's just not possible to maintain the same level of quality and access that we have now while extending coverage to millions of additional people and reducing costs at the same time. Something simply has to give. It is also very clear to me that the current legislation will not accomplish this goal.
ObamaCare:
The current legislation provides a number of changes to our system of insuring and financing health care in this country. Some of these changes like insurance reform are long overdue. The plan will increase the coverage so that when fully implemented, more Americans will have insurance coverage of some kind than ever before. Where it fails is in the cost control arena. Quite simply, if changes are not made, PPACA will accelerate the cost problems with health care in this country and will cause the inevitable train wreck sooner than later. It doesn't take a nobel prize winning economist to tell you that adding millions of people to the insurance system, increasing benefits and eliminating things like life time maximums will increase costs. Anyone who disagrees with this assertion should go back and take a refresher course in Econ 101.
The Problems with ObamaCare:
There are a number of problems with the legislation that was passed last year. There are also a number of areas where the debate about health care is failing to address the real issues in an intellectually honest way. Two of the major failures of the current legislation are its lack of cost control and its ignorance of the market's likely response. I'll discuss both of these problems and what we could do to help solve them.
Quality and Access:
The supporters of PPACA say that it addresses quality and access by not changing anything in the current delivery system. They hang their hat on the assertion that since they are not changing the delivery system in any meaningful way there should be no impact on quality and access. Simply put, they are counting on the current system to continue to deliver the same high quality and easy access that it currently does. In a vacuum this would be a logical assumption, but as an economist will tell you, nothing happens in a vacuum.
Let's examine PPACA and what it may mean to our future if fully implemented. Then we need to examine some better alternatives.
Coverage:
When fully implemented, PPACA extends coverage to millions of Americans that don't have insurance right now. The plan is likely to extend coverage of some kind to as much as 98% of these people. This was one of the big talking points for the administration and something that the plan is actually likely to accomplish. There are several factors that drive this. The plan creates significant tax penalties for all but the very smallest businesses that don't provide insurance coverage for their employees. It also provides penalties for individuals who do not purchase coverage when it is available. There are also tax breaks for the working poor to help cover the cost of purchasing coverage. These three factors alone, however, would probably not be enough to extend coverage to the 98% level. The final parts are the creation of State Exchanges and the expansion of Medicaid. These last two pieces will bring coverage to most Americans, and will reduce the uninsured in this country to a very small percentage of the population.
The problem of the uninsured:
Before we continue the discussion on coverage of the uninsured, it would be helpful to truly understand the characteristics of the uninsured populations. By now, everyone has heard the number: 47 million uninsured Americans. Right up front, we need to recognize that there are not 47 million uninsured Americans. It's true to say that according to the latest census data, there are 47 million "people" living in this country who are "currently" uninsured. Roughly 10 million of those 47 million people are not American citizens. Now, it's an entirely different debate to address what, if any obligation we do have for providing insurance to people in this country who are not citizens. The point is, if we're to subscribe to the belief that health care is a right of all Americans, and that it is our obligation to provide affordable health insurance for every citizen, then we need to begin with 37 million uninsured Americans. Once we accept our new starting point, we'll need to further dissect that number. Again, according to the most recent census, there are some interesting statistics about this population. First, 60% of the uninsured population reported that they were in "excellent health." How many of these people could afford health insurance but are choosing not to buy it because they won't be using it? 16 million of the uninsured population reported a family income that is over $50,000 per year, which is higher than the mean family income in this country, and half of those 16 million reported making over $75,000 per year. I think it's fair to say that most, if not all, of this population could afford health insurance given their income levels. Another interesting statistic is that 45% of the uninsured population is uninsured for less than 4 months. These are people who are uninsured for a very short period of time while they change jobs or carriers. According to the Kaiser Foundation, the number of people who are uninsured for more than 1 year, do not qualify for Medicare or Medicaid, and make less than $50,000 per year numbers about 8 million. This represents about 3% of the population in this country. Now that we better understand the population that we want to impact, we can develop more efficient plans to address the problems.
Better Options for Coverage:
1. Transitionally Uninsured:
To address the issue of the 45% of Americans who are uninsured for a short period of time (less than 4 months), I propose that we use a format similar to unemployment benefits. It would be fairly easy to set up a benefit for those people who are losing or changing their jobs to provide a short-term coverage option. The government could pay individuals' COBRA premiums for a limited period of time to cover this transition. This would ensure that existing coverage is continuing to bridge the employment gap. In order for this to work, legislation would need to be passed that would make COBRA the same premium cost as the employer plan it is based on. This simple change would eliminate 45% of the uninsured problem.
2. Long Term Uninsured:
Addressing the issue of how to help the 8 million people who are uninsured for more than a year and are caught in the gap between Medicare, Medicaid and the employer sponsored system is a bit more complex and would require several steps.
a. First, we need to create insurance options for this population. This can be accomplished by making some changes to the current system rather than trying to create an entirely new system we'll call "GovCare." One possibility would be to require all insurance companies to offer and sell both individual and small group plans in every state where they are licensed to operate. Essentially, creating the individual and small business options would become part of doing business in that state. These plans would have very basic benefits that could be established by state or federal mandate. In addition, the plans would have to be community rated and the rates approved by each state's department of insurance, much like they already do for the rates charged by many other types of insurance. Finally, there would be no ability for carriers to deny coverage for any clinical or pre-existing condition. These basic benefit plans would be designed to cover primary care, preventative care and catastrophic coverage, and would help hold costs down. With this simple change, not only do we create options for the population most at risk, but we also create choice and thus free market competition and efficiency.
b. The next big hurdle is how to help this market segment afford insurance once a plan is made available to them. Given a plan like the one described above, and with a population of 8 million instead of the bloated 47 million figure, paying for it actually can be solved through tax credits and subsidies. How much would it cost? In 2009, the average per capita health care expenditure was just over $8,000. That includes the Medicare population, which is significantly more expensive than the non-Medicare population. However, if we use the number of $8,000 per year - which we know is overstated - and provide 100% coverage - which we also know is overstated - and apply it to the 8 million people who fit the category of long term uninsured, we come up with a price tag of $65 billion per year. Again, this projection is grossly overestimated given the assumptions above, but we use it to point out that covering the uninsured population is not that difficult, nor is it terribly expensive.
Cost Control
Where PPACA fails dramatically is in the area of cost control. PPACA is woefully short on details relating to cost controls, and in my opinion, doesn't get at the root causes for health care inflation in any meaningful way. This kind of wishful thinking and praying for the best is what created things like a $14 trillion national debt. People, it's time to stop praying for a miracle and to start dealing with the hard questions and difficult issues. If we wait much longer, we may lose the chance to be the agent of change and rather have change thrust opon us. The market will react and respond to PPACA, and we may not like the outcome.
How Can We Control Costs?
Controlling costs is where the rubber will really meet the road in this discussion. It's not only the most critical aspect of the problem with health care in this country, but it is also the most difficult to solve. The fact of the matter is that there is no way to provide the highest levels of care to everyone that wants it without breaking the bank. Every country rations care in some form or another. Some do it by access, some by quality; in the U.S. we do it by income level. There is simply no way to provide universal coverage without having to cut back somewhere else. Many people talk about making the system more efficient, citing the elimination of redundant tests, or the cost reductions garnered by giving access to preventative care to the currently uninsured as a means to pay for expanded coverage. While there may be some level of savings from each of these, it's nowhere near enough money to address the real financial concerns present in our system. To address the fundamental issues of cost in our current system in a long-term and sustainable way, we need to make some very difficult choices about how we want our health care rationed. Before we get to these difficult questions there are some less controversial changes that we can make that will help.
Tort Reform
One of the first things I believe we should do is pass major tort reform. A negative outcome in health care should not be a lottery ticket nor should attorneys make a career out of looking for such a winning ticket. I was talking to an executive of a large malpractice carrier who told me that his company spends more money on successful defense of malpractice cases than it does in all of its payouts put together. Let me restate that; a malpractice carrier spends more money on successfully defending frivolous law suits than it does in its payouts when a real case of malpractice occurs. Can you imagine how high your auto insurance would be if this were the case in that industry? It's time to deal with this issue and to limit non-compensatory damages to a realistic amount. This would not only reduce malpractice premiums, but will also reduce some level of defensive medicine, which is one of the drivers of unnecessary testing and procedures.
What About The Hard Questions?
Some other adjustments that needs to be made are an increase in the age of eligibility for Medicare and making Medicare an income-dependent benefit. The average life expectancy in this country has been steadily increasing, thanks in large part to our incredible health care system, and we are eventually going to have to reflect this change in the qualification age for Medicare. Moving the age from 65 to even 66 or 67 produces significant cost savings and will help shore up the Medicare fund. In addition, the coverage should be tied to income level, including the amount saved for retirement. This can be done by making those retirees with significant retirement savings pay an additional premium for Medicare coverage. I know that these ideas are not going to be popular and are not without controversy, but again, it's important to keep in mind that we cannot provide everything for everyone. The changes that I suggest are much better than the alternative kinds of rationing we see in the Canadian or British systems.
The final adjustment that I think we need to make will most definitely be the hardest to swallow. We need to develop a way to ration coverage through clinical effectiveness and outcomes, rather than by simply cutting access. Currently, our country spends a staggering amount of money on care that is provided during the final few months of a person's life. We go to heroic measures to extend life even when the hope of saving that life is non-existent. These efforts by dedicated and talented health care professionals, while laudable, are also something that we simply cannot afford to cover if we are to try and provide essential care to everyone. At this point, I can imagine the thoughts that are running through your mind. Am I suggesting that we just let people die rather than provide care? Who decides who lives and who dies? How can anyone suggest such a thing? Before you start to judge, please consider the following details behind this idea.
Every day in this country people die while life saving care is withheld from them for clinical rationing reasons, and no one objects. Let me say that again. We are currently letting people die when life saving care is available and everyone involved understands. I am talking about the current process for organ transplants. We have a limited number of organs available for transplantation and the supply of organs is not great enough to satisfy the number of patients that need them. We have developed a rationing system where candidates are evaluated and then put on a list and prioritized. The system includes factors such as the likelihood of success and the potential for long-term survivability. Many of the organ transplant protocols will eliminate candidates based on age, comorbidities, and even things like harmful personal activities. For example, an active alcoholic will be removed from the list for a liver transplant. This is a form of rationing and it directs the system to logical, non-financial choices of who may live and who may die. It is done to try and maximize the benefit given a limited supply. My question to you is how does rationing a limited supply of organs differs from rationing a limited supply of money?
So, my proposal for fixing the cost issues surrounding health care and for putting Medicare back on track so that it doesn't consume the entire federal budget before I even get a chance to make use of it, is to develop similar clinical protocols to help physicians and hospitals know when heroic efforts to extend life should be undertaken and covered by insurance, and when they shouldn't. I don't think these decisions should be left up to the insurance companies or to the government. I also don't think it's fair to leave them up to individual doctors and families. Rather, I would look to the various clinical specialty societies to develop these coverage guidelines based on the most current data and information. Further, these coverage guidelines would be updated regularly as the science of medicine advances.
I completely understand that talking about withholding coverage feels very much like withholding care. In the abstract it is easier to consider, but it becomes very difficult when it's your loved one. I also understand how uncomfortable and morbid it can be to have any discussion on this topic. We want to provide everything for everyone, but I think we have proven that this approach leads to financial ruin and is no longer sustainable. If the system collapses, tens of millions of Americans would be left to their own devices to pay for the health care they need, making the current number of uninsured – no matter what number you start with – look miniscule. This idea isn't a great option; it's not even a good option, but rather, it is the best option among a number of unattractive ones. It really is the lesser of several evils.
So, as we watch the Supreme Court deal with the question of the individual mandate, and as we approach the 2012 elections, I think it's time we take a serious look at PPACA, what it will do, what it won't, and ask ourselves: can't we do better than that? I don't know about you, but my fear is that the cure of PPACA may be worse than the illness it was intended to treat.
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