Tommy Beveridge
The United States’ health care system is neither health care nor a system, any more than the Holy Roman Empire was anything like that. Both are in fact decentralized commercial arrangements dressed up in good-sounding clothes like Holy-Romanness or consumer-driven health care. Instead of health care, we have a patchwork of consumer products and government subsidies designed, perhaps incidentally, to pay numerous individuals and interests to provide health care. To even call it a system would imply something centrally coordinated, and no one in their right mind would do that.
It feels hopeless. Health insurance is expensive, arbitrary, and capricious. Regardless of the margins, you benefit from an ever-growing slice of the pie. Providers of services we can’t live without often charge more than the market will bear. Moreover, governments have been pushing complex payment ideas for the past two decades with little consequence other than the growth of an ecosystem of consultants specializing in incentive games, driven by laws enacted by politicians who don’t want to upset powerful interests. Then there are consultants. As arms dealers on both sides of the war, we sell software for hospital systems to help them charge as much as possible for their work, and software for health insurance companies to help them deny claims as much as possible.
We all know this. What preoccupies me is learned helplessness. Occasionally a sad story of chemotherapy being denied or a lonely vigilante usurping a health care executive enters the zeitgeist, but mostly we accept the 7% annual premium and deductible increase with a stiff upper lip. Meanwhile, a few players – whether payers, providers, governments or software slingers – have made Americans’ health their top priority. Customer satisfaction? maybe. Public outrage? sometimes. Shareholder value? Absolutely. But what about our actual health?
What is not health care or a system cannot be a health care system. Here’s how we pay for your care:
People who work consistently often have employer-sponsored insurance. This amounts to about 54% of the United States. These plans negotiate with providers in thousands of separate, individual settings and have a natural incentive to maximize their own share of the deal. Families who undergo surgery or are diagnosed with cancer can easily spend more than $10,000 on top of increased monthly premiums.
Older people, certain sick people, and people with disabilities can sign up for Medicare. This represents about 19% of the United States. It’s a good deal, except that it’s federally run and only covers 80% of the cost, and you have to buy a separate Medicare plan to cover prescription drugs, whose prices are determined by the seller, and a commercial plan that fills in all the gaps in outdated insurance coverage. Or a completely commercial Medicare Advantage plan that may or may not cover all costs, but makes money through annoying and potentially fatal administrative friction.
The poor, certain sick people, and some middle class people get Medicaid coverage. This represents about 18% of the United States. Low rates and administrative challenges common to all health plans significantly reduce the number of providers using Medicaid.
10% of people purchase private insurance. All the claims about the imminent destruction of socialism or the coming golden age of 16 years ago were about this small portion of the population. The problem is that it’s expensive, negotiates like employer-sponsored insurance (i.e., badly), and the government cuts subsidies for many people. And politics still burns.
People who don’t qualify, can’t afford insurance, or don’t want to get insurance don’t get insurance. That’s about 8% of the U.S. (and growing again). They showed up at the emergency room and made us all pay.
Then there is the VA and military health care systems. Approximately 1.2% of Americans are enrolled in health care services with the VA. Active-duty military members, their families, and retirees receive TRICARE and the military health care system. This equates to approximately 2.8% of the United States. They both own a significant portion of the care provision. These programs rarely communicate with each other and are ongoing policy basket cases.
Each of these plan types has different subtypes, their own state and federal legal structures, their own billing and administrative procedures, and an ever-changing customer base. Each provider must address each of these complications individually in every claim or patient interaction. This is not a system or really health care. In the face of all this, how can we solve these problems through small-ball, often voluntary payment reforms?
Market utopians imagine that the right economic incentives will create a fair and rational distribution of health care resources. Some people believe that making patients pay more will lead to better health care. If you offer high deductibles to patients, they will purchase health care. I can’t believe I could be a better buyer for chemotherapy than the professionals working on my behalf. But what do I know?
This market hubris has been convenient for academics and politicians to dance around difficult choices, hoping that a utopian light touch will suffice. Well-intentioned economists have thought of complex incentive structures such as Accountable Care Organizations. If the provider is willing to contract with your insurance plan to pay less. Hearing about another clever economist’s approach to changing the behavior of consumers or suppliers will evoke in them the spirit of Uwe Reinhardt.
After all, the only non-theoretical ways to control health care costs are things like negotiated fee schedules and global payments, and yet we still act as if they are brand new. The only way to improve your health is to reframe treatment around prevention. But this is a difficult task for a committee of cardiologists and CEOs. The fact remains that market logic by itself has not and will not guarantee anything close to a “system” in which health care is provided on behalf of the people.
But there are also many good ones. There is no better place on earth for someone with a strange cancer or in need of a transplant (including money/coverage). Payers also do good things when their incentives are geared toward helping patients first and foremost. Medicaid Managed Care is a good example. And then there’s the pharmaceutical industry, which does amazing work but, like everyone else in the world, has to be paid according to the marginal value of its new products. Old power structures need to be challenged, but they also need a role to play in the new order.
That’s a lot. Let’s think big again. It’s big and different. Medicare for All is a good slogan with many ideas. If you take it literally, what you really get is a mid-1960s health plan design, some administrative simplicity, lower rates, and a ton of political baggage. Matthew’s Concierge Care for All concept provides a powerful baseline for reform, reimagining how both payers and providers operate in thoughtful ways. A kind of laissez-faire NHS that leverages what’s already working here in the United States. Agree or not, this is an idea that is sized for the challenge. One way or another, the path to reform is to redirect prices and incentives away from hospitals, specialists, and pharmaceutical companies. The world is full of options.
- We can impose various forms of fee schedules and global budgets to reorient providers to focus on primary care and serve the population. This is how much of Europe works.
- We could abolish most private insurance, telling the government to set prices and process claims, leaving management to local and regional authorities. This is how Canada works.
- We can change payer incentives so they are more interested in collective bargaining on our behalf rather than taking a slice of an ever-growing pie. That’s how Japan works.
- We could attempt the consultant’s dream of heart surgery becoming just another consumer product. It’s a consensus on what solid interests think works.
There are many options, but no system can make all services affordable to everyone. Someone, whether the government, a private insurance company, or ourselves, will have to decide that a particular back surgery is either not necessary or too expensive for its value. Politics is dark and full of demagogues. But we cannot say we have health care, systems or a healthy civil society until we look at everything and make fundamental changes. Get to work with your own ideas.
Tommy Beveridge is a health policy expert with many years of experience working in .org, .com, .edu, and .gov. Due to current employment constraints, Tommy is sticking to his nom de plume. His picture above is actually Asclepius, the Greek god of medicine. Why not?
