By TOMMY BEVERIDGE
Just like the Holy Roman Empire was none of those things, America’s health care system is neither health care, nor a system. Both are in fact decentralized commercial arrangements clothed in things that sound good, like Holy-Romanness, or Consumer-driven Health Care. Rather than health care, we have a patchwork of consumer products and government subsidies designed to pay a vast cadre of individuals and interests to perhaps incidentally provide health care. To even call it a system would imply something centrally coordinated, which no one in their right mind would do.
It feels hopeless. Health insurance is expensive, arbitrary, and capricious. It profits off of slices of an ever-growing pie, regardless of margins. The providers we cannot live without often charge whatever the market will bear. On top of this, the government, directed by laws written by politicians unwilling to upset powerful interests, has spent the past two decades pushing complex payment ideas with little result except a growing ecosystem of consultants specializing in gaming such incentives. Then there are the consultants— arms dealers in both sides of a war, selling hospital systems software that helps them bill as much as they can for their work, and health insurance companies software that helps them deny claims wherever they can.
We all know this. It’s the learned helplessness about it all that gets me. Sometimes a sob story about chemotherapy denied enters the zeitgeist, or the tale of a lone vigilante taking out a health care executive, but mostly we just take the 7 percent annual premium increases and deductible hikes with a stiff upper lip. Meanwhile, few of the players: payer, provider, government, or software slinger, put American’s health at the top of their agendas. Customer satisfaction? Maybe. Public ire? Occasionally. Shareholder value? Certainly. But our actual health?
Something that isn’t health care or a system can’t be a health care system. Not when this how we pay for care:
People with steady work usually get employer-sponsored coverage. This is about 54 percent of America. These plans negotiate with providers in thousands of separate and discrete settings, with the natural incentive to maximize their own percentage in the deal. A family facing a surgery or cancer diagnosis can easily shell out $10k or more, on top of their growing monthly premiums.
Old people, and certain sick and disabled people get Medicare. That’s about 19 percent of America. It’s federally run and it’s a good deal, except that it covers only 80 percent of costs, and you need to buy a separate Medicare plan to cover prescription drugs whose prices are largely dictated by the sellers, plus a commercial plan that fills in all the gaps of its antiquated insurance coverage. Or a fully commercial Medicare Advantage plan that may or may not cover all your costs, but will make its money through a mix of annoying-to-lethal administrative frictions.
Poor people, certain sick people, and some lower-middle-class people get Medicaid. That’s about 18 percent of America. Low rates, coupled with the administrative headaches common to all health plans lead to considerably fewer providers taking Medicaid.
Ten percent of people buy individual coverage. All the claims of impending socialist doom, or a coming golden age sixteen years ago were about this sliver of the population. The problem is that it’s expensive, negotiates like employer-sponsored coverage (i.e., badly) and the government just cut subsidies for a lot of people. And the politics still burn.
People who are ineligible for coverage, can’t afford it, or don’t want it remain uninsured. This is about 8 percent of America (and growing, again). They show up at the ER and cost us all.
Then there’s the VA and Military Health System. About 1.2 percent of America is enrolled for health care with the VA. Active-duty military, their families, and retirees get TRICARE and the Military Health System. That’s about 2.8 percent of America. They both own large portions of the care delivery as well. These programs barely communicate with one another, and are perennial policy basket cases.
Each of these plan types have various subtypes, their own state and federal legal structure, their own billing and administrative procedures, and their own constantly churning client base. Each provider must individually contend with each of these complications with every claim or patient interaction. This is not a system, nor is it really health care. Against all this, how will small-ball, often voluntary payment reforms fix these problems?
Market utopians imagine that the right economic incentives will create the just and rational distribution of health resources. Some people even believe that health care will be better if we expose the patient to more costs— give them high deductibles and they’ll shop for care. I can’t believe that I would be a better buyer of chemotherapy than an expert who works on my behalf. But hey, what do I know?
This market conceit has been convenient for academics and politicians to dance around tough choices, hoping that the utopian’s light touch will be enough. Well-meaning economists thought up complex incentive structures like Accountable Care Organizations; where providers willingly enter contracts with insurance plans to pay them less. If I hear about one more clever economist’s approach to changing consumer or provider behavior, I’ll invoke the spirit of Uwe Reinhardt upon them.
In the end, the only non-theoretical ways to control health care costs are things like negotiated fee schedules and global payments, and we still act as if they’re entirely novel. The only way to improve health is to restructure care towards prevention, but that’s a hard sell for committees of cardiologists and CEOs. The fact remains that market logic on its own has never and probably never will guarantee anything close to a “system,” where health care is delivered on behalf of people.
But there’s a lot of good too. There’s no better place on Earth for someone with a weird cancer or in need of a transplant (plus the money/coverage). Payers do good work too, when their incentives are aligned to helping the patient above all else. Medicaid managed care is a good example. Then there’s the drug industry, who does amazing things, but should be paid according to the marginal value of their new products, just like everyone else across the world does. Old power structures must be challenged, but they also need a role in the new order.
That’s a lot. Let’s think big again. Big and different. Medicare for All is a good slogan for a lot of different ideas. Taken literally, what you really get is a mid-1960s health plan design, some administrative simplicity, lower rates, and tremendous political baggage. Matthew’s Concierge Care for All concept offers a robust rubric for reform, reorganizing how both payer and provider operate in a thoughtful way; sort of a laissez faire NHS that takes advantage of what already works here in America. Agree or not, it’s an idea whose scale matches the challenge. Any way we do it, the road to reform is through prices and reorienting incentives away from hospitals, specialists, and pharma. The world is full of options:
- We could impose various forms of fee schedules and global budgets, reorienting providers to serve populations with heavy emphasis on primary care. That’s how much of Europe works.
- We could abolish most private insurance, directing the government to set prices and process claims, leaving the care to provincial and regional authorities. That’s how Canada works.
- We could change payer incentives so they’re more interested in collectively bargaining on our behalf instead of taking a percentage of the ever-growing pie. That’s how Japan works.
- We could attempt a consultant’s dream where heart surgery is just another consumer product. That’s the consensus of what entrenched interests think would work.
Options abound, but no system will provide every service to everyone for cheap. Someone, whether it be government, a private insurance company, or ourselves, will need to judge that a particular back surgery is not necessary or too expensive for its value. The politics are dark and full of demagogues. But we can’t say we have health care, a system, or a healthy civil society until we look at the whole thing and make some fundamental changes. Bring your own ideas, and let’s get to work.
Tommy Beveridge is a longtime health care policy wonk who has worked in the .org, .com, .edu, and .gov worlds. Due to present employment constraints, Tommy is sticking to a nom de plume. His picture above is actually Asclepius, the Greek god of medicine. Because why not?