No meaningful progress
Until we address health care’s major issues, no ‘overhaul’ will work
Problem #1:
Employment and health insurance are linked but should be separated. The current system burdens both employers and employees. How did this come about? During World War II, wages were frozen, and so modest benefits got added to compensation. One of these was health care, and that decision spawned the health care insurance industrial complex. Now we think it’s written in stone that having health insurance must be connected to employment; it shouldn’t be.
I have personal experience with this, building and running a medical group practice. It started with just me and grew to over 90 doctors with 120 employees, and we bought health insurance for everyone. First, it was a challenge trying to figure out exactly what benefit plan would work for employees of different ages, different medical needs, and different family circumstances. Then we had to consider what the business could afford. I was the one who signed the $50,000-plus monthly premium check based on rates that started small but grew every year. I knew that 5 percent was paid to our insurance agent. Another 15 percent to 20 percent went to administrative costs and profits for the insurance company. Because our practice billed insurance companies for medical services, I knew that another 10 percent was spent on our billing and collections fees. In other words, a third of our premium dollars were not spent on actual medical services.
Our purpose was delivering health care, not buying health insurance. We were fortunate to have some inside knowledge of the process. I learned from other business people that they were facing the same challenges. Their primary task was running the business they were in, but too much time, effort, and money was spent deciphering health insurance.
As rates increased, companies began reducing benefits and shifting costs to employees in the form of deductibles and co-pays. Plans became limited; they might cover the needs of some employees and their families but not do well by others.
People stayed in jobs they didn’t like in order to keep their insurance. Others would have liked to become self-employed entrepreneurs but couldn’t risk losing their health benefits. When I’d hear that a friend just got hired, my first question was not if he or she wanted the job, saw an opportunity for personal growth or liked their colleagues. Instead, I’d ask if health benefits were provided.
All of the above hurts productivity and wastes time and money.
What’s the solution? The whole concept of insurance is to share costs and risks. The more people in an insurance pool, the greater the spread. But because our system segregates people into different groups, incentives become perverse. Insurance companies want to insure healthy people and not those with illnesses, especially chronic ones. So, why not have a pool that includes everyone?
There are several ways to do this. One way would be to create a Medicare-for-all system. Another way would be to create a widely available health insurance program that could have various tiers of coverage, with the lowest tier offering basic services available to anyone. More coverage would come at individual expense. Insurance companies would play a service role, connecting service to payment. But they would no longer make more money by denying care.
Problem #2:
No matter what insurance or payment scheme is created, there will never be enough money for health care without focusing on the primary clinical cost drivers. Emergency departments typically discharge 80 percent of the patients seen. But the 20 percent who are admitted account for 50 percent to 90 percent of the patients in the hospital. So if you want to know what’s feeding the hospital system, just take a look at the emergency department.
As an emergency medicine physician for over 40 years, I know that a few basic clinical conditions drive the vast bulk of hospital visits and admissions. Anyone on the front lines of patient care knows this whether they are a nurse, physician, paramedic or other staff member. Unfortunately their clinical perspectives are rarely included in our national discussions.
Until these clinical drivers are addressed, no system of health care reform or financial adjustment will save money or improve overall health. Yet each one of these clinical drivers is amenable to cost-effective solutions, and these could readily be implemented if we had the will do so.
Until these key issues are addressed, no meaningful progress will be made.