Wednesday, August 25, 2010

Healthcare & Cost Reduction, Market & Public Realities

To a former moderate Republican, the redefined and redirected Republicans of the last decade bear little resemblance to who and what they once were--and their actions even less so. What happened to the party of fiscal and budgetary responsibility? What happened to their instincts for compromise--and what little forward looking and adaptive capacity they once may have had?

The subject is health care reform, its importance to our nation and our economy, the cost-reduction and cost management commitment healthcare reform demands, and the lack of adequate Republican and Democratic cost accountability in cobbling together and passing the "Patient Protection and Affordable Care Act" (PPACA). In the end, it didn't do near enough to assure healthcare will be more affordable in the future. But it did what it could and still assure passage--and that was to establish the new Independent Payment Advisory Board (IPAD). But for reasons that escape reason and responsibility, the Republicans now want to rescind the provision that established it.

In her healthcare blog, What do you think about that?, Sandy Parker recently addressed "The Health Care Bureaucrats Elimination Act," the latest puerile tactic and misdirection play by the Republican leadership. An excerpt from her blog post: 
One of the benefits I hope you will gain from reading my blog is information you can and will use to dispel some of the falsehoods (dare I say outright lies?) you'll be hearing from friends and colleagues in the months leading up to the 2010 and 2012 elections. The "Health Care Bureaucrats Elimination Act" is one of those things.  I learned of it from an editorial in today's New York Times:
Republicans claim to be deeply worried about the deficit — their favorite political target, followed closely by President Obama's relentlessly demonized health care reform. So why are they so determined to overturn one of the central cost-control mechanisms of the new reform law?
Republicans in both the Senate and the House have introduced bills that would eliminate the new Independent Payment Advisory Board, which is supposed to come up with ways to rein in excessive Medicare spending — and stiffen Congress's spine.
Starting in 2014, whenever Medicare's projected spending exceeds a target growth rate, the board of 15 members (drawn from a range of backgrounds, appointed by the president and confirmed by the Senate) will have to recommend reductions in payments to doctors and health care providers to bring spending back to target levels. These recommendations would become law unless Congress — not known for its political courage in such circumstances — passed an alternative proposal that would achieve comparable savings.
None of this poses any real threat to Medicare beneficiaries. The law prohibits the board from making proposals that would ration care, increase taxes, change Medicare benefits or eligibility, increase premiums or cost-sharing, or reduce low-income subsidies for drug coverage. It cannot call for a reduction in payments to hospitals before 2020.
If anything, we fear that the board's power will be too limited. But its power to curb payments to other providers is projected to save $15.5 billion to $24 billion between 2015 and 2019.
That has not stopped Senator John Cornyn of Texas from trying to kill off the board. In July, he introduced the ever so cutely named "Health Care Bureaucrats Elimination Act." It currently has 11 co-sponsors, and a similar version, introduced earlier in the House by the Republican Phil Roe of Tennessee, has 54 co-sponsors.
Neither bill will go anywhere so long as the Democrats run Congress, but expect to hear a lot of hype about bureaucrats hijacking health care — and nothing about the needed savings — in this fall's campaign.
"Come Again,"  New York Times, Editorial (8.22.10)
What the Republicans also fail to acknowledge--never mind address--is that our patchwork-quilt of a healthcare system in no way resembles an efficient, accountable free-market process where healthcare consumers--that is, patients, not insurance companies or corporations--play a material, market role in levels of services provided and mechanisms of pricing. As you have already pointed out in an earlier post, it is unresponsive and unaccountable to patients, who usually have no idea what the actual cost of alternative services are--and quite often, neither do doctors. That is laissez faire turned on its head in the most bizarre fashion. It bears only the most distorted resemblance to a well-functioning market that is responsive to customers and efficiently drives services and sets prices.

It is a system whereby the hospitals, docs, and insurance companies blithely and happily shrug their shoulders as they allow their system to drive health care cost upward--to all their benefit, apparently. More and more, corporate employers just want out of the out-of-control system. Their mission and orientation is poorly matched to managing a public service. In the end, it is just another cost corporations manage by reducing, and most of that reduction comes in fewer services and more cost borne by employees. It's just the way it works. Small businesses just aren't interested at all. It's a huge burden to them. And taxpayer-patients just want competent healthcare services available at prices they can afford. And the number of patients without anything resembling that is large and growing--and in this time of the Great Recession, it's rate of growth is increasing significantly.

Politicians are loath to address the true complexities, needed private and government discipline, and necessary cost reduction in the system. And yes, that includes "rationing," intelligent cost-benefit trade-offs, by some well-informed, responsible, public policy standards. After all, we are already rationing health care services through the haphazard mechanics by which the system now provides or denies service to various classes of patients. And it is class-and-income based. 

Too often that means denying preventative and basic care to poorer children and adults, which is inexpensive and strengthening of our national health and productivity, while at the same time accepting unlimited costs--35-40% of all healthcare costs--to keep aged or terminal patients alive for another week, or month or so, in the last year of life. We routinely over-test and over-prescribe, and unnecessarily use the most expensive alternatives in diagnosing and treating many illnesses. Defaulting to this unaccountable system that makes those decisions is a most irrational and indefensible way to set public policy on providing healthcare. And make no mistake, it is a default policy--and one that does not serve our people or our country intelligently, cost-effectively, or well.

But then, even if we could achieve an efficient market-based healthcare system, one that more intelligently drives provision of services, quality and competitive pricing, it still would not do, would it? And the reason is that, for all its power, creativity and efficiency, markets do not provide equal, fair, or consistent service to all. By its very nature and mechanics, it provides more and better services, or less and worse services, across a spectrum of customers--or patients--based on their ability to pay. Markets just do not operate efficiently or fairly to provide public services of some definition on an equal basis to all. Because it is a public good, a public need, and arguably should be a public right--just like k-12 education, and for the same reasons--healthcare services must be overseen, regulated, and administered as a matter of responsible, accountable public policy. And to some material extent they must also be delivered as part of a public program and process.

Of course, wherever possible, market mechanisms and accountability must be embraced in the production and provision of healthcare goods and services. But they must also be available to all at a cost they can afford, which requires means testing--and it requires that the government is the payor for those who cannot afford all or even some of the cost.

Some combination of public and private insurance may be possible, although the self-interested machinations of private insurers (sometimes in league with corporate clients) have been the culprits behind many inequities and outrageous policies that have frustrated fair administration of today's "market-based" heathcare. For in the end, isn't it clear that it has been the private and public insurers, and the corporate employers, who have been the healthcare systems real customers, not the patients? In the end, only a public single-payor mechanism will likely serve us well. And remember, the customer--the patient--has to play a meaningful role in quality and satisfaction determinations, and that patient must also be aware of the cost and relative cost of alternative healthcare services provided. Responsibility and accountability must be the watchwords throughout.

A national health service? Well, we have a full-blown, fully-functional national heath service for the military and veterans, especially veterans with service-related disabilities. By all accounts, it works quite well. In my time of service, it worked well enough for me. But we are--politically speaking--at least a decade, perhaps a generation, away from taking seriously the potential superiority of such a system of delivering public healthcare. This is so even though advanced countries with national health services enjoy cost per capita of approximately half that of the U.S. And, it would also require a dismantling, or at least an enormous and completely disruptive restructuring, of our current healthcare delivery process, a daunting prospect. Any change of that magnitude would likely have to be incremental, and would take years, likely a decade or more. Of course, even moving to a single-payor (government insurer/payor) system would require significant restructuring and change in both private and government insurance structures and capability, requiring a years-long transition period.

But we've taken a step in that direction, an important step, actually--but mostly on the issues of access and equity, halting unfair practices of private insurers, etc. Very little has been done to materially reduce and control cost. But, as noted above, neither the Republicans (inexplicably) or some of the Democrats wanted to go there. We can only hope that there will be next steps, and those next steps will more effectively address cost reduction and control--and if it is still as apparent as it is today that a single payor system will serve us better, perhaps another step in that direction, too. But in the meantime, the least we can hope for is the reasonable success of the IPAD--and first, a full and fair opportunity for it to function as intended.

It took a long-term lack of public and market accountability for this godawful healthcare delivery system to evolve. It will take a long-term, incremental evaluation and change process to get it anywhere near as efficient, fair and accessible as the American people need, as productive as American business demands, and as wisely approached as American public policy should now dictate.

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