Thursday, November 05, 2009

The Healthcare Reform Risk Obama Should Have Taken

If Obama wanted to swing for the fences, to have a chance to really make a difference, to leave his mark, here's the speech he could make on healthcare reform...

America has a healthcare crisis. This healthcare crisis has a moral dimension, and an economic dimension. The moral dimension is that our great and rich country does a poor job of providing 'health security' for its citizens. Many lack coverage, many more can barely afford coverage, and others face medical bankruptcy. In the meantime, almost all of us worry about our coverage.

Then there is the economic dimension. Healthcare costs claim one-sixth of our nation's output. And this number only continues to rise. This is simply unsustainable. For a full generation, we have seen that healthcare expenses are devouring our standard of living, but we have continued to postpone the day of reckoning. Fellow Americans, that day is fast approaching. As President, I plan to do something about it.

For too long, as a nation we have stuck our head in the sand, looked the other way, pretended the problem wasn't getting worse. The failure to face up to this problem and attack it has been disastrous. It has led us to the place we are now, where most families have seen zero or negative real wage gains for two decades, because healthcare inflation has consumed everything. It has led to all but the very richest Americans living in fear, fearing that one major illness could bankrupt them.

The healthcare crisis is a national problem, and to an extent, the entire nation shares in the responsibility for letting it grow un-checked for so long. Political leaders have increased expenditures without asking hard questions about the value being delivered, and have allowed ideology get in the way trying new ideas to bring down healthcare expenditures. Physicians have not been good stewards of the resources entrusted to them--too often, they have chosen expensive treatments which are not effective, when patients would have been better served by less invasive treatments. Insurers have not been good gatekeepers--while they may scrutinize individual claims, they have been happy to allow premiums to skyrocket, because their profit margins tend to be fixed, so the larger the premiums, the bigger the profit. Drug companies have spent far more resources on marketing and patent protection than on R&D, resulting in too few breaththroughs, and far too many "me too" medicines at high prices. Finally, patients have not been good stewards of their own health and healthcare dollars--as long as insurance paid all or most of the bill, individual patients had little motivation to pay attention to costs.

So we are all part of the problem, and we all have a part to play in a solution. But it is the elected politician's job to lead, and as your President, that is what I intend to do. So tonight, I am going to lay out a simple plan and proposal that can halt, and start to reverse, the endless upward-slope in healthcare expenditures.

I said the healthcare crisis has two dimensions: coverage, and cost. My party has traditionally been focused on the coverage crisis, and rightly so. It is indefensible that a country as rich and blessed as ours rations healthcare by letting it become unafforable for the working poor and, increasingly, much of the middle class.

However, this crisis has been a long time in the making, so if a real, lasting solution requires giving up a short-term goal, no matter how cherished, then I am willing to make that sacrifice. So I am going to propose a program that attacks the twin heads of this crisis. But as I said, we are all in this together, and a real solution requires real cooperation between both political parties. In order to reach out to my colleagues on the other side of the aisle, I am willing to offer a plan that I think puts two of their biggest concerns ahead of covering the uninsured.

It has been often asked by Republicans where we will get both the money, and the healthcare provider capacity, to extend coverage to uninsured Americans. My plan addresses both of these concerns. Numerous studies show that 1/3 of all medical procedures are unnecessary, and sometimes even harmful. While it may never be possible to bring that number down to zero, if we could cut it by 60%, that would free up dollars and resources that could productively be transferred to providing care for the currently uninsured.

Our opportunity is to create an environment that encourages and allows doctors to practice evidence-based medicine. Evidence-based medicine means selecting the right treatment, based on the best available medical and economic research. It means not ordering extra tests and procedures, out of fear that in the event of a lawsuit, the physician will be endlessly second-guessed, if they omit any test, no matter how weak the medical argument for the test may be.

This is where our greatest single opportunity lies. If we can eliminate "defensive medicine", we can unlock vast cost savings within the system. The reduction in malpractice insurance--currently $80,000 per physician--is only the tip of the iceberg. For every $1000 spend on malpractice premiums, $10,000 are spent in unnecessary, unjustified tests and procedures, pursued for the sole purpose of protecting the physician in a lawsuit.

So here is what I am proposing. My program will be 100% revenue-neutral. We will only provide subsidized heatlh insurance to the poor, once we actually produced the savings through our reforms. Therefore, in the first two years of my program, there will be no coverage changes. The complete focus will be on achieving radical malpractice reform. Damage awards will be capped, and will be set according to uniform standards, applied consistently, fairly and reasonably. In short--we will start by cutting the trial lawyers off at the knees.[1]

At the end of two years, we will measure the savings, and will begin to apply those to extending coverage for the uninsured.


[1] Of course Obama can't say it exactly that way. But his words should leave no doubt as to his intentions.


In making this proposal, Obama would be risking almost everything, including fratricide from fellow Democrats. The trial lawyers are the biggest contributors to the Democratic party. They would oppose him ruthlessly. But by taking on one of the Republicans' biggest bogeymen, combined with his offer to save first, spend later, Obama would be making an offer that would be very, very difficult for Republicans to ignore, both politically and--if they actually care about governing--morally. And if he did this soon (ideally, 4 months into his term), he might, just might, hang on long enough to actually reap some of the benefits and get re-elected. Maybe then he could apply his political capital to taking on global warming.


  1. Nice write up Erik. I always here about the unneeded procedures that are requested to CYA but is there someone really tracking and studying these 'uneeded' procedures? I assume someone/or group is but if they are, how do they get around the patient privacy issues, track/determine whether they were indeed 'unnecessary'?

  2. There have been studies. I couldn't speak to how good they are. Various techniques to avoid privacy issues, including statistical sampling.