|Our health care system is too far gone for treatment with a single pill.
We need a stiff cocktail of meds - a collection of solutions . . .
for a Sick Health System
From the Introduction:
Many Americans think they have a cushion: “Well, I have health insurance,” and in fact a majority of Americans still do, mainly through their employers.
But they’re kidding themselves if they imagine they’re exempt from trouble. Job losses have swept America in the last year, but aside from economic downturns, that risk is always there. Many people who would like to change jobs, or quit to start a business, can’t or won’t because of health insurance loss. Many people who are insured don’t get health care because they’re concerned any visit to the doctor might in the future become an excuse for an insurer to drop or limit coverage.
Speaking of which, increasing numbers of employers have been dropping or limiting coverage, or shifting more of the cost onto employees. How could they not? The high costs have to be paid by someone. From one report by the Kaiser Family Foundation: “From 2000 to 2007, the employee share of the premium costs more than doubled and out-of-pocket costs increased. In 2004, nearly 17 percent of those with private employment-based coverage faced out-of-pocket costs that exceeded 10 percent of their family income.”
Statistically, the cost of health care overall has been running around two percentage points higher than inflation over the last decade. That probably doesn’t sound enormous. But it adds up quickly, especially when the base numbers are so high. Within the next few years, health care will consume about a fifth of all the money the United State has. That’s a massive, massive siphon changing the country – and not for the better.
It marks a change from a very different kind of reality in this country.
When I entered the workplace in the mid-70s, working for (eventually) several newspapers, the picture was different. As part of the standard benefits package, I received health insurance, paid for basically by the employer, which in rough terms covered most medical issues, had a small deductible (by today’s standards) and covered 80% of costs up to $10,000 and everything over that. We could do that then; what would we give to return to such economic nirvana now?
Or let’s put it another way. Things have changed. They have changed for specific reasons. If we can isolate the changes and the reasons, we can start to work toward something better. Not perfection – that’s beyond our grasp. But something better.
You can look at this in many ways.
Four former members of the Senate, Republicans Robert Dole and Howard Baker and Democrats George Mitchell and Tom Daschle, in June 2009 delivered a report on health care citing core problems: “Today, the nation’s health care system focuses primarily on treating illness and not improving population health. Additionally, health care spending and premiums are rising at a rate that is unsustainable for our nation’s families, businesses, and governments. Growth in health care costs is much higher than growth in wages and gross domestic product (GDP). Consequently, despite a wider range of better medical treatments becoming available, more and more people are struggling to afford even the most basic levels of care.”
Many advocates for health providers would have this as their first immediate response: Medical technology and our ability to do more things to deal with health problems have driven up costs.
There’s some truth in this.
But only up to a point.
In most places in our economic society, technology advances have the effect not of raising costs and prices, but (over time) of lowering them. (Think about the marketplace for almost anything electronic.) More advance tech, in itself, probably is at most a minor contributor to higher costs. The availability of this technology, and the uses to which it’s put, is another matter.
The Kaiser Foundation ran a series of polls asking “experts” and “the public” about (among other things) their perceptions of why costs are so high. The experts cited technology and the lack of direct involvement in paying for services by consumers (patients).
The public’s response: Costs are high because drug and insurance companies are making so much money. Again, there’s some truth in the public’s view, in that many drug and insurance companies have been making money. But, as large as those reported profits often are, they aren’t that large. Several estimates suggest that if all the annual profits from drug, health insurance, and hospital companies were ripped away from them and tossed into a common pool to pay for health care, they would pay for somewhat less than a week’s worth of health care. Again, it’s not that profit-taking isn’t a relevant subject; it’s that the problem is a lot more complex and bigger than that.
But complexity does not have to mean hard to understand. The mass of research (some of it scrupulously neutral but tightly focused, some broader but more agenda-driven) into health care costs leads most generally to this conclusion:
We’re all responsible.
And we’re all going to have to pay in to any solution that ultimately works.
Think about the many contributors to the mess:
Insurance companies. Most people’s favorite target, for obvious reasons: Policy dropping, claims denials, complex bureaucracy. For every two doctors in the United States (roughly, there are a million docs in the United States) there’s one insurance company employee, with a mandate to keep the books in the black. We could go on for pages reciting the list of horribles associated with the insurers, but we’ll get to them later. Moving on . . .
Hospitals and other large care facilities. Sit in the insurer’s shoes for a few minutes, and – even without acquitting the insurers of their many sins – a whole new raft of cost-raising issues show up. You want to talk administrative and unnecessary tacked-on costs? (I will be, shortly.)
Physicians. Yes, mostly they really do take their obligations as health providers seriously, and mean the best for their patients, and I’ll stipulate to the very high levels of training, skill, and raw competence American doctors typically display. But they’re also human, they can be pulled or shade into some bad directions by bad incentives, and they work in a poorly-structured environment.
Lawyers. If you’re a political conservative, you probably put “tort reform” at the top of your medical to-do list, and if you’re a political liberal, it probably isn’t there at all. On one hand, malpractice judgments drive up health costs by no more than a tiny sliver. But malpractice insurance rates have been rising. And more important is an atmosphere of legal defensiveness on the part of health providers that in turn probably drives up costs in a big way.
Patients. That’s right, us – we’re in this too. (What politician is ever going to tell you this truth?) We patients do hardly anything to help keep costs down (not that the other players in the system make it easy). Too many of us are hypochondriacs; too many of us abuse our personal health and drive ourselves into chronic ailments; too few of us adhere properly to treatment plans, or bother to get decently informed about health care.
But we could and should do a lot more, and we should be a lot more thoughtful about the health care we do receive.
There are two basic problems in our health care system.
One is that the cost of it is rising too fast.
The other is that large parts of our system have become dysfunctional (problems such as those causing an estimated 100,000 Americans annually to die in medical facilities because of mal-care).
These problems are inter-related, which becomes clear when we look at the largest reasons the costs have risen so fast. If there are two biggest single problem centers in American health care, the two biggest reasons we are spending and wasting as much money as we are, you have to come down to these:
Close to a third of all medical care in the United States is unnecessary.
This may be hard for many people to wrap their minds around, because they’re more familiar with another piece of the reality which is also true: High prices and other considerations are causing a lot of people in America to be seriously under-treated.
Our reality is that both over-treatment and under-treatment are parts of the problem.
The idea that so much (30% – the standard estimate) of health care that is provided isn’t needed, may be hard to believe on its own merits. But it is fact. It has been documented in many ways in many places. My first recommend for a book-length read on the subject (the next book you should read, if you haven’t already, after you read this one) is Overtreated by Shannon Brownlee. My first recommend for a single magazine article (out of many outstanding ones in recent years) would be “The Cost Conundrum: What a Texas town can tech us about health care,” by Atul Gawande in the New Yorker, June 1, 2009. I’ll be making references to both of these in the pages ahead. Our massive overage of health care is not an abstract analysis, or a fringe or marginal viewpoint. It is, simply, fact.
It is happening partly because of uncertainty (and sometimes legal ass-covering) by physicians, because of the peculiarities of local medical cultures (some parts of the country spend far more than others), because of inadequate information exchange and sometimes (we’d like to hope this is a smaller factor) outright greed by hospitals and physicians. Solutions for these issues are implicit with a moment’s thought.
The core point is that unless unnecessary care is massively cut back in this country, there’s little hope of seriously curbing our immense medical costs, and whole sectors of our country will be doomed to bankruptcy and ill-health as a result.
Oh, yes: The more medical procedures performed, the higher the risk – over time – that people will become unnecessarily ill. If you don’t know at least one person who doesn’t have a story about getting much sicker after going to the hospital for some minor and easily-treatable problem, then you need to broaden your social circles. Or you have extraordinarily lucky friends.
Part of the reason we don’t have better health outcomes (statistically, for all the med money we spend, the United States ranks low in medical outcomes) is that there’s very little good information about what are preferred treatments for various conditions. Absent that, there’s a tendency to believe that more treatment and more extensive treatment and more money spent, is better.
Frequently, it isn’t.
More than a quarter all money going to the overall health care system (insurance being included) goes to administrative costs, overhead and profit-taking on various levels.
This is immense, and it has been growing fast in recent years – along with the fast growth of unnecessary medical expenses, the biggest reason for the explosive rise in costs.
In the sections ahead, I’ll get into some of the reasons.
But think about this: Overhead of 25% or more? That’s mind-blowing. How many organizations of any sort, public or private, have overhead on that kind of scale? The businesses I’ve worked for would never have put up with it.
Medicare’s overhead is under 2%. Even that is probably higher than it should be. Writer T.R. Reid, who has lived widely abroad, reported in the Washington Post that “In Taiwan, a leaner version of the Canadian model has administrative costs of 1.5 percent; one year, this figure ballooned to 2 percent, and the opposition parties savaged the government for wasting money.”
These two factors together represent somewhere close to half of all of our health care dollars going to wastage. Might, say, affording a trip to the doctor or a health insurance premium become an easier proposition if we got rid of at least a chunk of that?
If you’re looking for another overarching theme, consider this: There are many incentives for increasing costs (ranging from health fears to outright greed), but hardly any economic pressures to push costs down.
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