Sunday, May 31, 2009

Article: The Healthcare Cost Problem

Long, very interesting New Yorker article that pinpoints physician-driven over-utilization as the primary cost driver of our expensively broken national healthcare model. Almost everything in it makes sense to me.

Regarding "Single Payer"
Activists and policymakers spend an inordinate amount of time arguing about whether the solution to high medical costs is to have government or private insurance companies write the checks. Here’s how this whole debate goes. Advocates of a public option say government financing would save the most money by having leaner administrative costs and forcing doctors and hospitals to take lower payments than they get from private insurance. Opponents say doctors would skimp, quit, or game the system, and make us wait in line for our care; they maintain that private insurers are better at policing doctors. No, the skeptics say: all insurance companies do is reject applicants who need health care and stall on paying their bills. Then we have the economists who say that the people who should pay the doctors are the ones who use them. Have consumers pay with their own dollars, make sure that they have some “skin in the game,” and then they’ll get the care they deserve. These arguments miss the main issue. When it comes to making care better and cheaper, changing who pays the doctor will make no more difference than changing who pays the electrician. The lesson of the high-quality, low-cost communities is that someone has to be accountable for the totality of care. Otherwise, you get a system that has no brakes.
I might even take that point a step further. It can be hard for government to provide tough love and take a hard line on benefits (look how Social Security benefits have broadened over the years). So I think a national government single-payer might be less successful in focusing on "evidence-based" medicine than are private insurers. (Disclaimer: I work for a health insurer.)

The third class of health-cost proposals, I explained, would push people to use medical savings accounts and hold high-deductible insurance policies: “They’d have more of their own money on the line, and that’d drive them to bargain with you and other surgeons, right?”

He gave me a quizzical look. We tried to imagine the scenario. A cardiologist tells an elderly woman that she needs bypass surgery and has Dr. Dyke see her. They discuss the blockages in her heart, the operation, the risks. And now they’re supposed to haggle over the price as if he were selling a rug in a souk? “I’ll do three vessels for thirty thousand, but if you take four I’ll throw in an extra night in the I.C.U.”—that sort of thing? Dyke shook his head. “Who comes up with this stuff?” he asked. “Any plan that relies on the sheep to negotiate with the wolves is doomed to failure.”

So does this mean that Consumer-Driven Healthcare (aka, High Deductible / HSA plans) is just the latest fad, likely to go by the wayside just as HMOs did? Well, much of that quote rings true to me, but I think having consumers more directly feel the price signals from the market can at least help around the edges.

Congress has provided vital funding for research that compares the effectiveness of different treatments, and this should help reduce uncertainty about which treatments are best. But we also need to fund research that compares the effectiveness of different systems of care—to reduce our uncertainty about which systems work best for communities. These are empirical, not ideological, questions. And we would do well to form a national institute for health-care delivery, bringing together clinicians, hospitals, insurers, employers, and citizens to assess, regularly, the quality and the cost of our care, review the strategies that produce good results, and make clear recommendations for local systems.
This is a really interesting point, and provides the article's concluding thesis. It makes me think about the success of Japanese automakers such as Toyota and Honda. They established a dominating cost and quality advantage not by deploying more advanced technology, but rather by creating an entirely new system for manufacturing automobiles.

1 comment:

  1. Anonymous17:47

    Article sounds interesting. I'll have to read. The HSA section, does not seem to make sense to me. That scenerio there is covered by the HDHP. Items large in scale get covered by insurance, but the vast majority of expense is covered by the people who are using the service.
    That idea has always seemed to make th emost sense to me.