The Amazing Maze of US Health Care

You have heard the arguments.

In the first corner:  “We have the best health care system in the world.  People travel to this country from all over the world to get the best health care.  the parking lots in hospitals bordering Canada are full of cars with Canadian license plates.”

In the second corner: “There are 100,000 deaths per year from hospital infections and a similar number from prescription drug errors, and an equally horrific number of people who need to be re-admitted to the hospital for complications.  And what about “Never Events”, those medical errors that are described as adverse events that are unambiguous (clearly identifiable and measurable), serious (resulting in death or significant disability), and usually preventable.

And there is a voice in a third corner: “We have the most expensive health care system in the world yet the United States is not ranked among the top twenty nations in infant mortality, maternal mortality, longevity, or hospital admissions avoidable with access to health care.”

It’s a bit like arguing who won the Super Bowl (this is Super Bowl weekend, after all) by comparing rushing yardage, passing yardage, first downs, time of possession.  Unlike football, in health care there is no touchdown metric, no definitive “points on the board” that decides health care quality.

Which corner would you pick?

It might depend on what your immediate need is.  If you have a rare and complex disease, you might be sympathetic to the guy in corner one.  If you are scheduled for knee surgery, you might be paying attention to corner two.  You would certainly hope that the doctor doesn’t commit a “Never Event” by operating on the wrong knee.  If you are paying the health care bill, the logic of corner three should be compelling.

But the three points of view are only mutually exclusive in political debate.  In reality, quality includes all three perspectives, and to ignore any one of them is to ignore and important perspective.

However, it is corner three that gets short shrift, because it is the perspective that requires the broadest viewpoint.  The primary feature of our health care quagmire is its fragmentation forcing all stakeholders to see and focus only on that which they appear to have some control over.

A while back there was an article in Health Affairs that asked the question, does access to specialty care mean better quality health care.  This question touches on the perspectives of all three corners, but in particular corners one and three.

The authors used broad quality measures and to compare areas with poor access to specialty care to areas to good access to specialty care.  This generally meant comparing rural areas with urban areas.  They found that there was little difference in broad measures of healthcare quality.

Quality and specialty care

The interesting part of the study from my perspective is that they took another step.  They looked inside the areas with good access to specialty care and examined outcomes of people who were referred to specialists by primary care physicians and those who self-referred.  The concluded that self referrals generally had poorer outcomes.

The hypothesis that they offered as an explanation is that specialists are trained to interpret symptoms from the perspective of their own specialty.  Primary care physicians are better trained to make a judgment as to which specialist should treat the patient.

My conclusion is that our fragmented approach to health care blocks effort at achieving quality outcomes.  Efforts to achieve quality outcomes is focused in narrow manageable categories.  Quality managers ask the question – did this care have a good outcome?  They don’t dare ask the question – how did this person get to the point where he/she needs this care?  Could we have intervened earlier to avoid this care?

Patients without access to the health care delivery system don’t get appropriate interventions.  Most patient health care is not managed in any meaningful sense.  Managed care does not mean managing care but instead means confining patients inside a pricing network, whether or not it is to the betterment of broad quality outcomes.

Next week:

Why an improved patient delivery system is a necessary pre-condition for affordable and quality health care.

Is health care reform dead?  Doubtful?  What will it look like?  Not nearly enough.

So I want to get a head start on the next round.

Moving ahead

Because whatever happens in this round, round 2 cannot come soon enough.  It is unrealistic to expect health care reform to be a once and done proposition.  The Model T was not invented with 4 wheel anti-lock disk brakes or fuel injection.

So over the next few weeks, I would like to take a look at some of the issues that will still remain even after health care reform legislation is passed.

But first let’s give some thought to what we want from our  health care system.

Universal access.

This has to be at the top of the list.  Universal access is important for several reasons.  To listen to the current debate, one might think that universal access is only about spreading the risk between the healthy and the sick.  If we can find a way to get more healthy people into the system it will spread the cost and make health insurance less risky for insurers.

Universal access is central to cost control.

According to a Commonwealth Fund study, the United States ranks 19^th among industrialized countries in deaths preventable by health care.  And as the number of uninsured increase our ranking slides.  Assuring all Americans that they can easily access health care is about a culture change.  Those on the margins of our health care system generally don’t have access to good primary care.

They delay treatment until their condition requires more acute intervention, and then they are more likely to go to an emergency room, the most expensive care setting.

Universal care is also about quality care.

There are those who argue that we need to focus on the delivery of care first.  Delivering quality care would lower the cost of health care, making it more affordable and consequently allowing more people into the system.  I maintain, that the most significant impediment to a high performance health care delivery system is a fractured and fragmented patient delivery system.

Affordable care

Care is not accessible if it’s not affordable. We must rethink what affordable means.  Let’s not focus on isolated groups with affordability issues.

How much can we as a society afford?  Is it 15% of our income or 5% of our income?

What is radical about this idea is that the financial exposure and risk is different.  Just as universal access permits the healthy to subsidize the cost of health care for the sick; so a revised understanding of affordable care will enable those with high incomes to support the health care costs of those with low incomes.

We do this in many ways now, and in later posts I will explore how we do that overtly and covertly.

Quality care.

Americans expect the highest quality of health care.  But do we get it?  What is quality health care?  What outcomes should we expect when we spend 16% of our economy on health care?  What does it even mean to spend 16% of our Gross Domestic Product on health care?  Is there such a thing as too much health care?

This will be the focus of my next post.

Photo:  Grassy Mounds and A Winding Path ©Peter Anderson/GettyImages

Dear President Obama

You seem to think that the reason the Dems did not do well in Massachusetts has to do with jobs. Maybe, but not quite.

It’s about how you don’t get it.  And the people in Massachusetts see that in the way you have handled health care.

Now look at the mess you created.  Your health insurance program is at risk.  The Supreme Court just handed your opponents a blank check and the likelihood of changing that court now is very much in question.

Massachusetts was a bad model for reform

ERISA ties the hands and the feet of state governments that want to solve their uninsurance problem.  The Commonwealth of Massachusetts came up with one of very few ideas left over to them.  If it works at all in Massachusetts, and people will argue that, it is because Massachusetts is a relatively high-income state with relatively few people uninsured.

To try and apply that model to states like Louisiana, Texas, or Nebraska is misguided at best.  To be blackmailed by the likes of Sen. Ben Nelson (D-NE) is insulting.  To ask the people of Massachusetts to pay for it?  Oops.

And if you can’t get something right that they understand, how can you get anything else right?

Do you think that everyone in the state of Massachusetts is as noble about health care as Senator Kennedy?  They don’t all live in Hyannis Port.

Try my job

If you want to understand health care and health insurance, I suggest you spend a day in my chair.

You can explain to the guy with a job but who can’t work, who can’t get a final decision on his workers’ compensation claim and therefore has no income, which he should pay, his rent or his health insurance for his family.

“I’m sorry, sir. Your short-term financial problems are not our problems. We play the hand we are dealt.  And that means no money, no health insurance.”  Maybe you can even explain to him how our employer –sponsored health insurance is the foundation of our health care system.

You can explain to the retiree, why she needs to enroll in Medicare.  You can say, “We can’t continue your employer sponsored supplemental retiree health insurance if our retirees don’t enroll in Medicare.  It’s too bad that your doctor doesn’t accept Medicare and that you were scheduled for surgery.  I understand you trust this doctor, and that this is a stressful time for you.  But find a doctor that not’s so greedy.  We all need to sacrifice in this economy.”  Maybe you can even explain to her why you think a single-payer system is a bad idea.

You can speak to the mother of the child who is too old to qualify to stay covered under the parent’s plan.  “Yes, ma’am, I understand that your child needs medical care to be well enough to enter the work force.  Yes, I understand that most of the jobs he would qualify for don’t offer health insurance.  But rules are rules.

“Besides, we certainly don’t want to force all employers to provide health insurance.  We want to force your son to buy health insurance or your employer to continue to cover your son.”  I’m confident, with your rhetorical skills, you can win her over.

Just like you won over the people in Massachusetts.

When you are up to your neck in alligators, its hard to remember that someone needs to drain the swamp.

The American Alligator

Last week, I wrote about the tax on “Cadillac plans”.  This past week, BHO reached an agreement with labor unions, the primary voice of the opposition to taxing so-called “Cadillac plans”.  The tax is still there.  My suggestion didn’t seem to make it into the discussion.  I was busy dealing with alligators.  That’s my day job.

One of our carriers had a computer glitch (a nice euphemism) that disrupted coverage for many people.  Here is a typical example of the kind of fires we had to put out – a woman went to the doctor’s office and the doctor could feel a lump in her breast but would not order a mammogram because the office had contacted the insurance carrier and had learned (incorrectly) that she had no coverage.

These incidents prompted me to wonder.  If we had a single payer health care system, couldn’t we have the same problems?

After all, we will certainly still have computers.

But we won’t have people moving from plan to plan because they changed jobs.  We won’t have people losing coverage because they lost their job, or because they got sick, lost their paycheck and therefore could not afford their health insurance premium.

Doctors and hospitals will know who is paying their bills and therefore might show a bit more patience with administrative errors.  After all, if a computer error like that should occur in a single payer system, it likely would affect a high percentage of their patients.

There would hopefully be a sense of shared crisis, not one that abandons people in a time of acute need.

Oh, and the tax compromise reached recently.  It is still a bad idea.  Now it is just an acutely complicated bad idea.

And it will do absolutely nothing to make our health care system less fragmented, less chaotic, and more humane.

It just lets in more alligators and stops up the drain even more.

I want to help the President and I need your thoughts.

Is President Obama about to follow the ignominious example of GB I, George Bush, The Elder?

Remember, “Read my lips.  No new taxes!”?

Remember, “John McCain will tax your benefits!”

Well BHO seems about to cave on his campaign pledge.

At least GB I could argue that the campaign promise was bad policy and the flip-flop was forced by economic realities.

Oh that BHO could make the same argument!

I have often railed against the taxation of benefits in this space.  I think it is bad politics, bad economics, and bad health policy. I am certainly not the only one.  Frankly, I think President Obama’s capitulation on this issue demonstrates profound political weakness and an astounding ignorance of health insurance.

A new idea.

But in the spirit of compromise, I want to offer a new idea.  It may not be the best suggestion for financing health care reform, but it builds on at least one stated goal of the tax my benefits people – containing costs.

But instead of penalizing people whose only control over costs is to use fewer services, my idea targets the folks who actually have some impact on the health care market – the insurance companies.

Tax the insurance companies

Wait, you say, we are already taxing insurance companies, and those just get passed along to consumers.  But alas, I say, let’s build on the “Cadillac” idea of an excise tax.  Tax the increase in the total cost of a Plan’s  book of business.  By imposing an excise tax on increases over a base level of costs, it could provide an incentive for insurance companies to manage their provider contracts and book of business costs.

This table illustrates how that would work.

The tax would be imposed on gross premiums and not on profits.  It would be payable just as any other cost of doing business, but would not be deductible as a business expense.  Space doesn’t permit me to dwell on the negatives of taxing benefits at the individual level.  I encourage you to click on the category “tax policy” to the right to see my earlier thoughts on this subject.

Taxing insurance companies achieves several objectives that taxing individuals does not.

As an employee benefits professional who has spent a career trying to “manage health care costs,”  I often find criticisms of insurance companies unjustified.  After all, they are only trying to do what we hire them to do.

An excise tax on total premiums could do what individual employers have failed to get their carriers to do – negotiate better prices with providers and manage utilization.  They are the only ones in the private market space who can do that.  Employers, despite many innovative efforts, have not succeeded.  And individuals are absolutely powerless.

Equally important, imposing the tax on a carrier’s (or a TPA’s) book of business, avoids the inequities inherent in smaller group pricing.  The myth of taxing “Cadillac” plans is that these are “rich” plans.  An employer’s cost is impacted first and foremost by the age and illness burden of its population, then by cost sharing and benefit provisions.

An excise tax on insurers and third party administrators (a phenomenon that BHO and Congress seem oblivious to)  is simpler, more equitable and is focused on entities that can actually impact the total cost of health care.

It would be payable even when the company otherwise made no profits.

Because it is focused on fewer entities, it would be less of an administrative burden on the system and easier to enforce.

The alternative – taxing individual plans – is an unforgivable political and policy blunder.

Your thoughts?