Thinking About Dr. Atul Gawande’s Congressional Testimony Part 1: Why Health Care Reform Will Require Additional Spending

Some
of President Obama’s critics have expressed disappointment with
his plans for healthcare reform. Why is the president raising taxes
to sink more money into an already bloated healthcare system? Why
isn’t he doing more to cut wasteful healthcare spending?

Earlier
this week, New Yorker writer and surgeon Dr. Atul Gawande
testified before the House Committee on Energy and Commerce
Subcommittee on Health.
 

As
usual, he was eloquent, and, as it happens, much of what he said
speaks directly to the critics’ objections.
But
first, consider what the skeptics have to say about the budget. Not
long ago The HealthCareBlog’s Matthew Holt declared
“There is NO
reason to put more money into the health care system.

Holt
argues that the president should be able find the dollars needed to
fund reform by making aggressive cuts to Medicare and Medicaid
spending. Instead, the president proposes raising taxes on couples
earning more than $250,000 (less than 2 percent of the nation) in
order to raise half of the administration’s $645 billion “down
payment” on health care reform. The other half comes from what
Holt describes as “modest cuts around the edges of the
[healthcare system] system.” This is “limited reform”
Holt grumbles. “This is not the “big bang we need to do
the job.”

Writing
on the Health Affairs blog, Bob Laszewski agrees:
“In
his first budget message, President Obama hasn’t made anywhere
near the hard decisions that need to be made . . .. Laszewski
believes that the president just
isn’t “facing up to the health cost reductions necessary
to fix our economic system
—whether through
direct cuts to what providers and beneficiaries would have received
otherwise or incentives with real teeth to force behavior changes
toward smarter spending.”

Laszewski
acknowledges that in his budget message, the president does say that
Medicare’s “current physician payment system needs to be
reformed . . . Medicare and the country need to move toward a system
in which doctors face better incentives for high-quality care rather
than simply more care.”

But the president
doesn’t go into details. The budget explains where the
administration would find a “down payment” for
reform—roughly half to two-thirds of the funds that will be
needed—and the president asks Congress for suggestions on where
to find the rest of the money. “The Obama administration has
basically abrogated health care reform,” Laszewski charges,
“leaving the heavy lifting to Congress.”

Why
Health Care Reform Requires More Money

Begin
with Holt’s first objection: why are we pouring more money into
an overpriced and inefficient system? The answer is simple: covering
everyone will cost more. Over time, we can make the system more
efficient, but the
upfront cost of providing care for all will be steep.

In the
past, well-meaning reformers have suggested that if we just rolled
out “health care for all,” our national health care bill
would shrink. automatically, After all, they reason, if everyone is
insured, everyone will receive more timely care, and fewer people
will wind up needing expensive hospital care.

But the
research points in the other direction: “Studies consistently
show that when a large
portion of the previously uninsured population becomes insured,
total health care spending rises by 10 to 13 percent
.,”
observes Paul Ginsburg in “High and Rising Health Care Costs:
Demystifying Health Care Spending.” 
a report published last fall by the Robert Wood Jounson Foundation.

This is
because, once they
have coverage, the uninsured will live longer
. Today,
they die sooner than the rest of us, saving society the money that
might have been spent treating them for Alzheimer’s or other
diseases of old age.”

Indeed,
Ginsburg acknowledges the
ugly truth: “over the past decade, the
decline
in the percentage of Americans who have insurance has slowed the
rate of health spending growth.”
If everyone had
been insured, the cost of healthcare would have climbed even faster.

Moreover,
keep in mind that
many
of the uninsured
—as
well as the
underinsured—are
poor
. We know that
the poor are sicker the rest of us, which means that once they have
comprehensive coverage they will become expensive patients.

Healthcare should help them live longer, but it won’t end the
anxiety, depression, and self-medication that so often accompanies
poverty. Health insurance will not provide a nutritious diet, a place
to exercise, or better air quality. In other words, modern medicine
cannot “cure” poverty.

If
51-year-old alcoholic who has been drinking for thirty-five years
begins seeing a doctor, and receives hospital care, he might live to
60 or 65, but chances are he won’t stop drinking
altogether—not unless his life changes. And during those extra
nine years, he is likely to require more care than the average
50-something.

Granted,
many of the uninsured are children; good preventive care could spare
them from falling victim to some of the diseases associated with
poverty, but not all. And in too many cases, poor pre-natal care
combined with a chaotic sometimes violent home has set them up for a
lifetime of mental and physical problems.

Why
Raise Taxes? Why Not Just Redistribute Healthcare Dollars?

We
know that profit-driven healthcare spawns unnecessary treatments;
research suggests that one out of three of our healthcare dollars is
squandered on ineffective, often unproven, sometimes unwanted
products, tests and treatments. Why can’t we find the money to
cover the uninsured by excising that waste?

The
answer is that the excess cannot be found in any one place. There is
no single culprit. The
problems
that drive senseless spending are structural
,
and they involve not just
what
we cove
r but how
we deliver healthcare
and
how we pay for it.

It
is crucial to recognize that our fragmented
fee-for-service system encourages both over treatment and destructive
competition
. At its worst, it creates a Hobbesian
marketplace which pits healthcare providers against each other as
hospitals compete with other hospitals by investing in equipment that
they don’t need; doctors vie with hospitals by opening yet
another cardiac surgery center; doctors compete with each other by
installing diagnostic imaging equipment in their offices, making it
more convenient for patients to have an MRI. In order to pay for the
unit, they use it. Insurers troll for young, healthy patients by
competing on price. No one wants to advertise that their doctors
provide better, more effective management of chronic diseases: this
might attract chronically ill customers. Meanwhile, drugmakers
battling for market share invest their research dollars in products
that they hope to develop quickly and sell easily—even if they
are not the products we most need. And if any company has made even a
tiny bit of progress in understanding Alzheimer’s, it certainly
will not share that knowledge with its rivals.

In
such an environment, “competitors
do not create value, they divide it. And sometimes they destroy it,

writes Michael Porter, a Harvard Business School Professor well known
for his writings on market competition.

Twenty-first
century medicine calls out for collaboration. Today, most patients
are seeing at least three doctors— often more. But in a system
where the 80 percent of care is provided by physicians working in
small practices, co-operation becomes difficult. Doctors play phone
tag with each other. Medical records never seem to make it from one
specialist to the next unless the patient hand-delivers them. Many
small practices cannot afford electronic medical records.

Resarchers
at Dartmouth

have shown that the most effective and efficient care often can be
found in large multi-specialty practices like the Cleveland Clinic
where physicians work together in a collegial environment using
electronic medical records that help them practice evidence-based
medicine. But we cannot simply round up the nation’s doctors
and ship them to large medical centers where they can learn how to
practice medicine the way they do in Minnesota.

Nor
can we force good hospitals to close down entire wings—even
though the Dartmouth research

has shown us that in towns where there are more beds, patients are
more likely to find themselves in one of them, whether or not they
really need to be there, racking up big bills. The same research
reveals that a surfeit of specialists in one region also leads to
unnecessary tests and procedures, but we cannot force one-quarter of
the physicians in Massachusetts to move to Montana, Maine or Idaho.

This
brings me to Dr. Atul Gawande’s testimony: “Structural
problems like ours cannot be fixed with a flip of a switch,”

Gawande told the House committee earlier this week.

Dr.Gawande
began his testimony by underling the enormity of the challenge in
front of us: we are trying to overhaul a $1.6 trillion dollar
absolutely Byzantine
health care system
that has grown to a point that clinicians are exhausted and
overwhelmed, on a daily basis, by its complexity and irrationality.

As
a clinician, public health researcher, and medical-watcher, this is
what I see: our health system is failing—on cost, coverage,
safety, and value—because the complexity of health care itself
has exceeded our abilities as individual clinicians.

The
Nature of the Problem

Let
me explain,” Gawande continued. “The new edition of the
International Classification of Diseases identifies more
than 68,000 diagnoses
—68,000 different ways in
which the human body can fail. And over the last half century,
science has given us beneficial remedies, if not outright cures, for
nearly all of them. But these
remedies are rarely simple. Each involves different steps in care,
vexing uncertainties, often expensive technologies, complicated
systems, and coordination.
We have relied on training
and ever greater specialization of individuals, but no
industry in the world has to deliver on so many different service
lines
. We have some 6,000 different drugs and more
than 4,000 different kinds of procedures, and providing them
currently entails 35 million hospital admissions, 120 million ER
visits, 400 million imaging procedures, almost 1 billion office
visits, and 3.5 billion prescriptions each year. What science has
given us is extreme complexity. And our system cannot handle it.”

(Here
I cannot help but think of Matthew Holt’s suggestion that what
we need is “big bang reform to do the job.” When you
consider the size and sheer complexity of the industry we are trying
to fix, I’m afraid that Matthew’s somewhat impatient
approach would, indeed, create a “big bang”—an
implosion.)

Rather
than regulating our health care system, the way other developed
countries have, we have left the monster to grow on its own,

putting profits ahead of patients until it now devours 17 percent of
our economy. The result: what Dr. Jerry Avorn, author of Powerful
Medicines
calls “the general disarray in the marketplace of
ideas and products that marks American Medicine as a whole.

Gawande examines the
failures of our laissez-faire approach:

Failures
of coverage
:
Whether uninsured or inadequately
insured, fifty-seven million Americans reported difficulty paying
medical bills in 2007, up 14 million from 2003. . ..

Failures
of decision-making
: Over and over again, studies
find that medical decision-making
is not nearly as consistent or reliable as people deserve
.
To take just a few examples: Forty
percent of patients with coronary artery disease receive incomplete
or inappropriate care
; sixty percent of patients with
pneumonia do; and so do ninety percent of patients with alcohol
dependence.

Failures
of execution
: Even when good diagnosis and
treatment decisions are made, our
execution is inconsistent
. The failures can be of the
simplest kind imaginable—each year, almost 2
million patients pick up infections in hospitals, and 99,000 of them
die
, most because someone failed to just wash their
hands. And they can reach realms of care that are extraordinarily
complex: each year, we estimate that at least one
million Americans suffer disabling complications from surgery, and
more than 100,000
die—and at least half
of these cases are known to be avoidable
..

(To
find the evidence for all of Gawande’s statements, go to the
heavily footnoted pdf of his testimony.)

In
part 2, of this post, I will comment on the rest of his testimony,
explain why the President could not include the structural reforms
that are needed in his budget—and why Congress cannot legislate
the hundreds of changes required. Nor can it set financial targets.
We have tried that before, and failed miserably.

Reforming
health care is a process
that should focus on making sure that we are getting value for our
health care dollars, by measuring
what works and what doesn’t
while creating an
organized, accountable health care system
. This means
revising the way we pay for care, and the way we deliver that care to
the patient, building
in incentives for providers to collaborate
while
practicing consistent
evidence-based medicine. As the Congressional Budget Office observed
in a report I wrote about here
,
some reforms will cost money at the outset; some will provide only
small savings; some will not “pay back,” as President
Obama said at the health care summit last week, “for 10, 15 or
20 years.”

But,
together, these structural reforms will lift the quality of care
while reining in the monster, leaving us with a sustainable, safe and
effective delivery system that really deserves to be called a
“system.”

Some
ask: why worry about health care reform in the middle of a devastating
recession? Because as White House budget director Peter Orszag has
warned, if we don’t, over the long run, an out-of-control
medical system will take the economy down with it.

29 thoughts on “Thinking About Dr. Atul Gawande’s Congressional Testimony Part 1: Why Health Care Reform Will Require Additional Spending

  1. “Many of the under-or-uninsured are poor.” I have to ask, how do we know? I’ve never been censured regarging health insurance. We don’t have (can’t afford) health insurance and I doubt we’re considered poor…we’re too wealthy for any public assistance. Many of my co-workers can’t afford health insurance and don’t have it, either…and they wouldn’t be classified as “poor” or indigent. This has been the trend over the past 4-5 years I’d say.

  2. Maggie- I agree with you and Gawanda. Matt Holt is wrong.
    We need up front money for the immediate immorality of 48 million uninsured and growing as people lose jobs.
    Then we need more systemic solutions leading to sustainability
    My favorites in the latter category are more-
    - primary care
    - chronic disease mgt
    - home care
    - prevention
    - public health
    - ethical and compassionate rationing especially toward the end of life
    By the way I have literally walked out of meetings when health economists would state publically that we “could not afford prevention because people would live longer” What??????
    Be Well,
    Dr. Rick Lippin
    Southampton,Pa

  3. Lisa–
    Thanks for your question.
    We actually have very good research on this.
    Just one report: the Kaiser Family Foundation reports that 2/3 of the uninsured live in families of four with Joint Incomes below $44,000–Before Taxes.
    Or below $32,000 for a family of three.
    This is just twice the rock-bottmon federal poverty level, and qualifies you as “poor” when compared to the rest of the population.
    $44,000, joint, might sound like quite a bit of money in some parts of the country–even for a family fo four.
    But the truth is, wherever
    you live, if you’re trying to save to send children to college, and trying to save to retire, this income leaves you with virtually nothing to spend on healthcare.
    Finally, the Kaiser Family Foudantion reprots that many of these uninsured families are “working poor”–they have jobs, but work in industire like construction and agriculture where there are a great many small businesses that cannot afford to provide insurance for their employees.

  4. There is a lot of good in this post. As I read it, I kept thinking: this is one long argument for why physicians should be part of multi-specialty groups and paid by salary, with bonuses for high value of care.
    It’s remarkable that in all the talk of reform ideas, I never hear concrete proposals for how to make practicing in multi-specialty groups more appealing. It is just sort of written off as not part of physician culture. Well, sure, so what incentives can be changed to fix that?
    As for the claims about increased coverage leading to higher costs in the RWJ study (which were taken from other studies), a few points.
    First, the reference to 10-13% increase in cost on p.13 was a historical claim about the impact of lower cost sharing in health insurance from 1987 to 2001 as a result of the influence of the HMO model. It was not a point about the additional cost of insuring the uninsured generally, and in any case the increase in cost as a proportion of the total would of course have to depend on how many uninsured there were relative to the insured, so it couldn’t be a fixed range like 10-13%.
    Also, to the extent the increased cost comes from living longer, most of that cost will come years down the road. That speaks well for the strategy of getting UHC now if it can catalyze deeper reforms than you could get without UHC. By the time the longer-lived folks are high utilizers, the per unit cost will have gone down.
    But of course, there is also an immediate jump in cost from people who have put off care because it was too expensive when they were uninsured. No one anymore disagrees on that point.
    In your favor, Maggie, the RWJ report says that the cost impact of increased coverage can be very high indeed. They cite the advent of Medicare as spurring growth in hospital spending far out of proportion to just the increase in insurance expenditures for those over 65.
    That just underscores the need for payment and delivery system reform–deep reform that undercuts some of the key cost drivers that focus care on hi-tech treatments that aren’t proven to be better than cheaper substitutes, on late-stage care rather than prevention, on redundant care, etc.
    And of course, one model that is ideally suited to do this is that of multi-specialty groups that can coordinate care, particularly when providers are paid for quality of outcomes rather than quantity or expense of treatments.
    We don’t disagree on any of that stuff. We disagree only on how to get there.
    By the way, I don’t think Matt is arguing that we won’t have to pay more for UHC in the short term. He and I are arguing that we don’t have to pay more (as a percent of GDP) in the long term. That is still obviously true, and really does need to be the bedrock position of reformers. Is America really so ridiculous that it can’t approach the efficiencies that every European country achieves? I’m not talking about 10% of GDP…I’d be happy to say the goal is 13%.

  5. That was an interesting read. I do get the premise of pouring more money to Health Care.
    The question is, can we really afford it without sinking into more debt.

  6. there seem to be two separate questions here with the answer to each being yes.
    1. should all have access to needed care?
    2. should system be recast in a more efficient fashion?
    the two needn’t be related unless you think there’s some cap on the % of GDP that can be spent on health. there probably is, but we don’t know where it is.
    insuring folks is really easy. you just write a check.
    making the system is very hard. appears that no one has yet figured out how to do it.
    the idea of holding the uninsured hostage to force systemic efficiencies is straight out of Blazing Saddles. it isn’t fair and won’t work.

  7. Maggie and Lisa:
    Thanks for providing the information on the uninsured and your concerns.
    The Kaiser Foundation reports the average annual group premium for a family is over $12,000 a year.
    If you take the median household income, of around $50,000, you will see that premiums are about 24% of income.
    While health care may be 16% of GDP, it is even higher for the median household.
    And, this is before out-of-pocket costs.
    When I was growing up, there were 3 essentials: food, clothing, and shelter.
    Now, if you consider health an essential, you’re looking at another mortgage.
    I wonder if the authorities will take an arm and a leg instead?
    Don Levit

  8. One small point. People worry about increasing spending, especially when we are running a deficit. You hear this from GOP pols trying to score political points now even though they said little during the Bush era.
    You hear it from libertarians who are opposed to taxes in general. And you hear it from those whose understanding of economics comes from their personal experience.
    In point of fact the US never pays off its debt. Here’s a good graph to illustrate:
    http://zfacts.com/metaPage/lib/National-Debt-GDP.gif
    (The site belongs to one of the misguided, but that’s irrelevant.)
    There are times when the outstanding debt declines, but it never gets paid off. Clinton managed to make the growth in the debt go negative, not the debt vanish. In fact there would be serious dislocations in world finance if the US had no outstanding debt. Many entities are required to invest in only risk free instruments like Treasury bonds and would have no place to put their money in such a situation.
    So, if it is a “good thing” to spend more on health care in the near term, either because there is unmet needs or because it is needed for a transition to something new, then do it and don’t worry about “paying it back”.
    For those who want a wonky explanation of why the US, especially, doesn’t need to pay back its debt I recommend James Galbraith’s recent book, “The Predator State”.

  9. Rob ert
    You’re confusing the “deficit” with govt “debt”. Here’s a description of the difference between the two:
    “The U.S. Federal Government collected $2,524 billion in FY2008, while spending $2,979 billion, generating a total deficit of $455 billion, which was added to the United States public debt. Since 1970, the U.S. Federal Government has run deficits for all but four years (1998-2001)
    While the debt has been rising, the deficit rose under Regan, then began to fall, falling significantly under Clinton (which is why we had no deficit fro 1998 to 2001) and then rising sharply under Bush as he poured billions into the War while lining the pockets of his contractors. This is the worst kind of deficit spending; we got nothing for it.
    The “defici”t is what is important in terms of the value of the dollar world-wide.
    This is what budget director Peter Orzsag worries about–rightly–as does Paul Volcker.
    In order to reduce the deficit, Clnton raised taxes (while giving tax relief to the poor.)During the Clinton years and so during the Clinton years the deficit came down.
    The rise of the deficit during Bush’s reign has contributed to the weakening of hte dollar, and some loss of confidence, world-wide, in U.S. Treasuries.
    We depend on foreigner to buy our treasuries so that we can stay afloat.
    That buying has slowed.
    Ultimatley, this means that we may have to raise interest rates (in order to make our Treasures more attractive.)
    In a recession, we don’t wantt to do that.
    The fact that Clinton reduced the defict is credited with lowering interst rates by two full points, making both mortgages and student loans more affordable.
    The growth or reduction of the deficit is what is important.
    Finally, I know Jimmy Galbratih and enjoyed and reviewed his book. But on the question of the deficit he is a complete outlier because at this point in time, he is a nihilist. (This doesn’t come out in the book, which is very good.)
    He believes the world is headed for total economic disaster, so it really doesn’t matter with the deficit is– it’s all play money.
    In other words, the dollar is only worth the paper it’s printed on.

  10. Robert:
    Thanks for your reply.
    Could you summarize one of Galbraith’s main points about why it is not necessary for the U.S. to pay back its debt?
    Does it have any relationship to how other countries handle their debt?
    Personally, I think the government sets a bad example for its citizens. Notice how personal debt has grown with our collective debt.
    I find it interesting how economists tend to compare our current debt to our current GDP, rather than the accumulated debt to our current GDP?
    It’s almost as if past debt is immaterial.
    My grandfather had a saying: “What you own, you may not own.
    What you owe, you owe.”
    He was pretty successful.
    Maybe that philosophy is not that applicable today.
    Don Levit

  11. Maggie:
    You are confusing the trade deficit with the national debt. A lot of the national debt, it is true, is held by foreigners, but this is irrelevant.
    If the trade deficit remains high and if (a big if) foreign countries become skittish about this then the dollar will weaken with respect to other currencies. This is neither here nor there as far as financing new health spending.
    My point still remains that there is no point in worrying about “paying back” the increased money needed for health care, since there is no reason to think it will be paid back.
    I checked and the debt limit of the US (the thing congress votes to increase) has gone up consistently since 1940. Now some of this is because it is expressed in current dollars and doesn’t account for inflation, but not all of it.
    As to Galbraith’s views, yes he is almost alone in his views, which only shows how little variation in thought there is from everyone else. Wasn’t it his father who coined the phrase “conventional wisdom”. Copernicus was an outlier, but was correct.
    Don:
    Galbraith’s point about the deficit is that the US dollar is the world’s reserve currency and this gives it special properties in that we can dig ourselves out of a hole by printing more money. Other states can’t do this or they suffer the devaluation that Maggie is concerned with.
    The best way to get into his views may be from his interview by Bill Moyers:
    http://www.pbs.org/moyers/journal/10242008/profile.html
    Galbraith’s web site also has a list of all his recent writings and interviews.

  12. According to the nonpartisan Congressional Budget Office, under President Clinton, the U.S. government had its first budget surpluses since 1969, and its largest surpluses on record. Not only was there a total budget surplus of $176 billion, the Clinton Treasury actually paid off $362.5 billion of debt held by the public.
    President Bush reversed this trend, racking up a record $422 billion deficit. Instead of paying down the debt, the Bush Treasury had needed debt ceiling increases in each of his years in office. If the extension of Bush’s tax cuts for the rich are allowed, there will be a total debt of $14.5 trillion by 2014

  13. Robert jd, robert (2nd comment), jim, Don, johanne-
    Robert–
    I knwo what the deficit is. (I realize you didn’t intend your comment to sound the way it did, but it did come out soundng like a man saying to a woman:”Now Maggie, just don’t understand economics.”
    Let me put it to you this way, I wrote about the deficit for Barron’s.
    These were cover stories.
    If I was confused about what the deficit was, I think someone (like Paul Volcker) would have phoned us . . . .
    As for JG: When only one person holds a view it probably doesn’t mean he is a genius; it probably means he is wrong.
    (Other brillian scientists agreed that Eistein was right–they just couldn’t figure out how to build on his work.)
    If you think the deficit doesn’t matter–and that we can just print money–why do you link foreign purhcases of our treasures have stalled? Why do you think the price of gold has soared? (Hint: governments like China are selling dollars and buying gold.) At some point, the oil producers will no longer price own in dollars–they will use anotehr currency. (Why should they accept a currency that is losing value?) At that point, energy will become much, mucy more expensive in the U.S.
    Why do you think Budget Director Peter ORszag is so worried about the deficit?? Do you think he doesn’t understand what it is?
    Much as I like JG (and adore his father) JG is an academic and can afford to be out of touch with reality. He is not responsible for dealing with the health of the economy, unemployment, etc. on a day-to-day bais.
    jd-
    Thanks for the comment. I
    agree on many points.
    In fact, there is a lot of work being done figuring out how to get phsyicians to join large accoutnable groups. (Sometimes they ar called “accountable care systems.)
    Our Working Group on Medicare REform has been talking aobut it (and will be reporting on it) and many members of the group
    have been writiing about it.
    When you hear people talk about “bundled payments” they are talking about providing incentives for doctors and hospitals to join together and accept bundled payment (one lump sum for the doctors and hospital involved in a given episode of care) that would be higher when outcomes are good.
    Typically the bundled payment includes everyone who saw the patient 30 or 60 days before being admitted the hospital adn 30 to 60 days after leaving hte hospital.
    Divvying up the payment is complicated, but people are figuring out ways to do it.
    Doctors would not be forced to join these groups- they could continue to take fee-for-service.
    But under bundled payment they would have an opportunity to earn more–while also taking the risk that they would earn less (if outcomes are not so good.)
    Probably outcomes would be measured against benchmarks at places like Mayo. You wouldn’t have to have outcomes equal to Mayo’s-but you would need to approach that point.
    And everyone would have an incentive to collaborate to the fullest extent possible, since how much you make depends on how well everyone else does his job.
    I’ll be writing more about this as the Working Group comes out with its reports. (This is one of four areas we are covering.)
    The Mayo Clinic is holding a conference on reforming medical education at the end of April, and i’ll be moderating a panel on training doctors and nurses to work collaboratively . .
    On why the U.S. will continue to spend much more than Europe (as a percentage of GDP):
    this is Because We Continue to Tolerate Such High Levels of Poverty that simpley are not tolerated in the rest of the developed world.
    (I know I sound like a broken record. Why is it that no one talks about poverty anyore? We’ve gotten many of the homeless people off the streets, and now we’re trying to pretend it doesn’t exist. In the next couple of years, we’re going to be seeing more poor famlies back on the street–unless we start lockign them up simply for being poor.)
    As I’ve explained in numerous posts, citing charts and studies, poverty is the major factor behind poor health in the U.S. and the major reason that we look so bad when compared to other countries on virtually all measures of health.
    Poverty is much more important than access to care. (See Dr. Steven Schroeder’s Shattuck Lecture–you should be able to google it, or search for my discussions of it on HealthBeat).
    Poverty is all tied up with smoking, alcohol consumption, drug addiction and obesity.
    Obesity is greatest in the poorest states. This is no acccident.
    The citizens of other countries pay much higher taxes in order to create a social safety net — and the amount they spend on that safety net is directly correlated with the health of the nation.
    When is ccmes to social spending, we are an outlier and when it comes to health, we are an outlier.
    It’s good to give the poor access to healthcare.
    It would be even better to give them access to education, safe housing,clean air, nutirious foods and safe places to exercise as well.
    As long as we tolerate poerty, the poor will be very expensive patients.
    Yes, we can hold down health care inflation by restructing how we deliver care-and by being much more selective in our use of advanced medical technologies, while also refusing to overpay for those technologies.
    So I think we can hold health care spending steady as a % of GDP while covering everyone—and lifting the quality of care for all of us. That will be an accomplishment. (Keep in mind: we will be coveing not only the 15% of the population that is uninsured, but the millions more who don’t get care because they are UNDERinsured.)
    But the poor will still be poor, suffing all that comes with being poor–including mental illness. (When it comes to percent of the poulation suffering from mental illness we are once again an outlier, and mental illness is all tied up with smoking, drinking, addiciton. People self-medicate wthen they are
    exremely depressed or anxious.
    Finally, the fact that the poor will live longer with access to care will affect us immediately:
    If universal coverage began next year, the 65-year-old man who would have died of x, y, or z that year stands a better chance of being admitted ot the hospital in time to be saved.
    So he lives to 71. And starting next year, we begin paying for his care for the extra six years.
    Meanwhile we’re paying for the pent-up demand from not only the uninsured but the underinsured.
    It is, of course, good that these people will be getting care. But it will be very expensive.
    We will have to pay higher taxes.
    We do have a choice: we can either pay higher taxes to provide more medical care for the poor (who will continue to be the sickest part of the population) or we could pay higher taxes to weave an entire social safety net (and then the poor would no longer be sicker than the rest of us.)
    I would prefer that solution.
    Don–
    In general, you’re right. Though the $12,000 figure for a family plan includes both what an employer pays and what an emplyee pays (most peoole still have employer-based insurance.)
    Typically teh employee pays only $3,000 to $5,0o00 of the $12,000–plus co-pays and deductibles.
    This is why people are reluctant to give up their employer-based insurance.
    Jim-
    Actually, we do know how much of GDP we can afford to spend on healthcare.
    For the past 20 years, we have failed to invest in public edcuation, the environment, etc. because healthcare is taking a disporportionate share of GDP.
    Various studies show that when healthcare reaches 19% of GDP (it is now at 17% by the way, as of this year) we will actually have to cut back on how much we spend on education, environoment, the arts, etc.
    In other words, it’s not just that these budgets won’t grow, they will have to shrink.
    To say it doesn’t matter what % of GDP we spend on healthcare also ignores the facts that much of that spending is hurting people.
    Did you read this part of Gawande’s statement: “million of patients pick up infections in hospitals, and 99,000 of them die, most because someone failed to just wash their hands. And they can reach realms of care that are extraordinarily complex: each year, we estimate that at least one million Americans suffer disabling complications from surgery, and more than 100,000 die—and at least half of these cases are known to be avoidable.”
    It’s estimated that at this point, more people die needlesssly as a result of being in a hospital or undergoing surgery as die because they didn’t get access to care.
    By throwing people into this broken dangerous system, you are not necessarily doing them any favors.
    Johanne–
    We don’t have to go into more debt to increase coverage. Obama has made it clear that he will not finance universal care with deficit spending.
    But he will raise taxes on teh wealthy (while cutting taxes for 95% of Americans.)
    Right now the rich pay a much lower percentage of their income and wealth taxes than they have in the past. This is a major reason why, over the past 29 years, the rich have grown super-rich while the middle-class has grown poorer, and the gap between the middle-class, the upper-middle class, the rich adn the super-rich have wiedned.
    This has been bad for the economy, and for the society.
    Obama will continue to raise taxes on the s upe-rich and the rch as he tries to stablizie the economy and he will be redistributing that money to the bottom half of the ladder in the form of health care as well as investing more in public education, and funding for college.

  14. It’s important to keep the publicly held federal debt within reasonable bounds so that we can continue to service it without unduly crowding out other public spending priorities. I’ve heard economists suggest that a prudent maximum level for the publicly held federal debt is about 60% of GDP. If the real economy grows at a long term secular rate of 2.5%-3.0%, in theory, we could run annual federal deficits of 2.5%-3.0% of GDP without increasing the aggregate federal debt relative to the size of the economy and as long as interest rates don’t rise to an unaffordable level. This also assumes that we refinance maturing debt at reasonable interest rates by issuing new treasury bonds, notes or bills. Assuming outstanding federal debt of 60% of GDP and an average annual interest cost of 5% (about the long term average), we would spend 3% of GDP per year on interest costs. If total federal spending averages 20% of GDP, it implies that 15% (3/20) would go for interest. There is a point at which investors, both domestic and foreign, will no longer be willing to buy treasury debt, at least at affordable interest rates. However, nobody knows where that point is just as nobody knew exactly when the housing bubble would burst or when the tech bubble would burst.
    We cannot afford to just deficit spend without risking significant adverse economic consequences. The largest deficit during the Reagan years was a bit over 6% of GDP. This year, the deficit is likely to exceed 12% of GDP. To add another 1% of GDP to the deficit in the current environment to cover the uninsured in the short term is probably not a good idea. Raising taxes significantly is not a good idea right now either though it might be OK once economic recovery takes hold. I think we would be better served by reforming payment and coverage policy within Medicare and let private insurers follow CMS’ lead in order to reduce the unsustainable growth of medical costs and, perhaps, free up resources to cover the uninsured.

  15. Maggie:
    Last comment on this (I promise) since I didn’t mean to get your dander up.
    It is not adequate to cite authority as a reason to believe conventional economic wisdom as the current crop of criticism of how wrong economists have been shows. Galbraith is refreshing in his claim that most of what is taught in schools is bunk and not born out by any solid scientific research.
    That this is received badly by the economics community is not surprising, its like telling the Pope there is no God. Perhaps Galbraith is better as a critic than as a builder of new theories, but one person doesn’t have to do it all.
    We don’t expect a radiologist to perform the surgery, but we do expect the surgeon to look at the X-rays.
    As for China and other places buying gold, this just shows how firmly obsolete ideas can retain their hold. It is part of the leftover idea that things have an inherent “value”. The same mistake is being made by Geithner and Bernanke when it comes to valuing “toxic assets”.
    We live with a financial system which is based solely on trust, nothing has any inherent value, but hundreds of years of passing bits of metal back and forth have made it hard for us to adjust to this.
    As to your point that overspending by the US will lead to higher interest rates, I’m in complete agreement. In fact I’ve been predicting a return to runaway inflation as a way to get us out of our current debt. This is parallel to the situation with LBJ when he also refused to pay for his war and left Carter and Nixon with the inflation that was an inevitable result.
    However, when this happens and to what degree is impossible to forecast, while the need for immediate increases in health spending is pressing. So, all I’m saying, is don’t let future worries act as a deterrent to what is needed now.
    I can’t put my hands on the right figures at the moment, but I’m pretty sure that we could afford a higher percentage of GDP being spent on health care (even inefficient health care) if we took the money from militarism. There is no a priori reason why it would need to come out of other social service spending.
    On the other hand, given the 60 year spending spree on militarism, there is no reason to expect that reformers will have any more luck cracking this nut than anyone else has had in the past. Obama seems disinclined to cut down on military spending.
    We won’t be the first empire to crash because of excessive militarism and foreign adventurism.

  16. There have been quite a few thoughtful comments to Maggie’s post by people who know what they are talking about. Congratulations, Maggie, on attracting this kind of discussion to one place.
    To me, the conversation brings to mind Isaiah Berlin’s famous division of analysts into two sorts –foxes and hedgehogs, after the line from some ancient Greek that “the fox knows many things, but the hedgehog knows one big thing.” I’m a hedgehog regarding healthcare: before we figure out how to pay for what we’re buying and who to buy it for, we simply must make sure we’re buying something that’s worth it. So to me, effectiveness research is the key to everything.
    It should be possible to convince voters and legislators that, just as we shouldn’t buy an ineffective item of military hardware, we shouldn’t buy an ineffective (and certainly not harmful) medical treatment. That’s the One Big Thing. Once it is chiseled into stone, the fighting can begin over what “effective” means and how to discover it.

  17. Chris– You are entirely right: this is an interesting thread, and I am very proud of HealthBeat’s readers–even if I occasionally become a little testy. (Sorry to everyone– just overworked.)
    I’ll be back to respond to everyone else this week-end.
    Robert & Chris:
    Galbraith defends deficit spending only insofar as it is spent on something that adds to the wealth of the nation–something, I hesitate to use the phrase, but Galbratih uses it “of value.”
    This is the point that Chris is making: “we simply must make sure we’re buying something that’s worth it.”
    Health care that is not effective –and that hurts people– is not “worth it.”
    (All health care, even a test, carries some risk; if there is no benefit, the patient is, by defintion, exposed to risk without benefit.
    See what Gawande said at the end of his testimony on how many people are killed or disabled by hospital-acquired infections and surgeries . . .
    These are deaths and injuries that are avoidable.
    Robert –on Galbraith verus the “current crop of economists”– a great many people have recognizzed that the notion that markets are efficient and self-correcting is wrong–for a great many years.
    I’ve been writing about this–and quoting economists and financial folks on these facts since 1986.
    When I published Bull! in 2003 –and the paperback editon in 2004- I quoted many sources in my final chapters warning we were heading for a serious melt-down. In 2000, the first shoe dropped–at some point in the not too distant future, the second shoe would drop. And, because we had put off paying for the excesses of the 1980s and 1990s, it would be that much more painful.
    So Galbraith is not unique as you suggest when you write that he is “refreshing in his claim that most of what is taught in schools is bunk and not born out by any solid scientific research.”
    As I have said, I admire Galbraith, but he is far from alone in that claim. Many people have disputed the convetional economic wisdom this for the past 30 years (including his father who wrote a wonderful small book about bubbles.)
    Most of them were economists and financial people in the real world–not academics. Even I could see it–and I’m not trained as an economist.
    Health care economists like Uwe Reinhardt also understands this.
    Where we all part company with Galbaith is on the notion that there is “no such thing as fundatmental value.”
    This is a statement that only a nihilist can make. And nihilism really isn’t a viable philosophy–it is the philosphy of a college sophomore whose girlfriend has left him– or a brilliant man who has given up on the world.
    Galbraith is entirely right that paper currencies have no fundamental value– Right now, they are backed by nothing but “trust” in the nations issuing those currencies.
    But to say that Nothing has fundamental value–that the concept is meaningless–is to give up.
    Real estate is an example of a commodity that has fundatmental value.
    The value turns on how many people it is able to shelter, how desirable the location is in terms of safety, convenience, nearby opportunities for employement and finally, aesthetics. How beautiful is it?
    Some land holds value,and increases in value over very long periods of time (typically ocean-front and lake-front.)
    Real estate and land can be over-valued for a period of time–and then
    the price drops–but it “holds value” –it doesn’t become worthless–and barring natural catastrophe (a hurricane that destroys everything ) or a man-made catastrophe (extreme and tacky over-development) 10 or 20 years later it will be worth more than it was when it was overvalued.
    Despite over-development, land and well-built properties in Manhattan have continued to hold and gain long-term value since the island was first settled.
    As for gold: for centuries, gold, diamonds, etc. have held value that paper currencies can never match. Governments come and go (along with their currencies) — but people continue to recognize gold and diamonds.
    Ask anyone who mangaged to save his life by bartering for it with bits of gold jewelry in a concentration camp– or anyone who bribed his way out of Europe with the diamonds in his pocket (or, depending when he left, sewn into his clothes.)
    In terrible times, people only trust gold, diamonds and other assets that are both portable and universally valued.
    Of course “value” is subjective–It takes a sentient being to perceive value: it is something that humans confer on things.
    But as this article
    http://74.125.47.132/search?q=cache:1cSABMucF8YJ:www.strike-the-root.com/82/allport/allport2.html+gold+and+%22intrinsic+value%22&cd=5&hl=en&ct=clnk&gl=us
    points out: “Not only has gold’s value never vanished,*** it has remained high (relative to most physical things on a per-weight basis) for thousands of years; ancient Egyptians and others mined and used gold over 5,000 years ago. This brings us to the second answer for our question: yes, gold does have what can loosely or colloquially be be termed intrinsic value, because gold has intrinsic properties that humans value – and the “to humans” part of the statement is obvious, inherent to the nature of value, and may therefore be assumed. The reasons for humans to value gold, while not as fundamental as the reasons for cats to value mice, are nonetheless powerful and inherent in the nature of man and in the ability of gold to satisfy certain of man’s needs and desires. There are many such needs and desires that gold satisfies better than anything else, and unlike paper money or tech stocks or most other things one might name, gold is also nearly indestructible – the gold you own today will likely still be here on Earth when the planet itself is destroyed by our dying, expanding sun billions of years from now (or by whatever does destroy this planet).
    “Near-universal and timeless appeal combined with near-indestructibility and genuine rarity make gold special indeed. To the extent the phrase “intrinsic value” means anything at all, gold thus qualifies. The commonplace, informal, shorthand use of the phrase may be technically inaccurate, but it nonetheless conveys a basic truth, and an important one, where gold is concerned.”
    I’m hardly a gold bug. BuI do know there is such a thing as “fundamental value.” Human beings reocgnize it–not just in “things”—but in each other. Without that recognition, we are lost.
    Finally, after the end of the Cold War, during the Clinton administration, we were not spending a fortune on militarism.
    Yet, we still could not afford the spiraling cost of Medicare. And we weren’t able to make the investments in public education, the environment and global warming, that many in the Clinton administration believed we shold be making.
    Finally, on debt and deficit:
    it’s not about the size of the debt, it’s about the GROWTH of deficit spending and INFLATION in the nation’s health care bill.
    Former CBO director Peter Orzag explains:
    “In
    the absence of significant changes in policy, rising costs
    for health care and the aging of the U.S. population will
    cause federal spending to grow rapidly. If federal revenues
    as a share of gross domestic product (GDP) remain at
    their current level, that rise in spending will eventually
    cause future budget deficits to become unsustainable. To
    prevent deficits from growing to levels that could impose
    substantial costs on the economy, revenues must rise as a
    share of GDP, or projected spending must fall—or some
    combination of the two outcomes must be achieved. . . .
    “the nation’s looming fiscal gap is driven primarily by rising health care costs.”
    Healthcare inflation cannot be ignored, Orszag added, because “If we fail to put the nation on a sounder fiscal course. . . we will ultimately reach a point where investors [will] lose confidence and no longer be as willing to purchase Treasury debt at anything but exorbitant interest rates.”

  18. When I said there was “no reason” I was wrong. I should have said that there was “no rational reason”. Of course politics being politics, we will spend more and not get what we need.
    However, I was once like Maggie–saying let’s spend now to cover the uninsured and deal with the system inefficiency later.
    I now think that if we just spend to cover the uninsured, the rest of the economy — which seems to be suffering a tad — will not be able to sustain the increase in health care spending. Leading to a serious meltdown later.
    Meanwhile we have shown that various sectors of the economy can almost have a managed meltdown. (My favorite example is British Steel in the 1980s, but banking and autos are 2 current examples)
    I may understand the need to keep credit going–but if auto workers can take massive pay cuts and see lots of job losses, why can’t (say) orthopedic surgeons enjoy the same process? Why in a time of crisis do we need to be locked into our dreadful current system, when man of us (including you) know what the right answers ought to be? (Less specialty care, more primary care)
    It’s because of politics alone, but a) it’s not rational even if it is understandable, and b) unless the economy gets rich in a big hurry in the next 5 years, it’ll lead to a longer bigger meltdown in health care.
    Auto sales & revenue are off 40%. That could happen to health care too, if the Chinese want their money back.

  19. Matthew–
    Thank you for commenting.
    First, this is part 1 of my commentary on the Gawande testimony. Part 2 talks about internal changes that will save money.
    Secondly, I definitely am Not saying cover everyone now–and worry about structural reform and saving smoney later.
    I don’t expect that we’ll try to roll out full universal coverage before 2013 –as Obama has said all along, he hopes to achieve this by the end of his first term.
    In his testimony ,Gawande also uses 2013 as the likely date.
    Between now and 2013, we can be making many structural changes– including adjusting Medicare’s physician fee schedule.
    (see end of this comment)
    In his New Yorker article a few weeks ago, Gawande emphasized that we need to do healthcare reform in “stages” He emphasizes that we need to be able to experiment and make changes as we go along.
    Gawande says we can’t do with with “a flip of a switch”
    I totally agree.
    This is a huge country, with great regional variationos in how doctors practice medicine (and what patients expect) and it’s a $1.7 trilion industry.
    Plus, it’s a democracy, and Americans resist being told what to do. This is going to be a lot messier than reforming healthcare in Singapore.
    And, as a practical matter, I’m told that it is very, very unlikely that Obama will have the votes in the Senate for
    universal coverage with a
    public sector insurance alterantive this year.
    Assuming he holds out for the public-sector insurance, I’m told that most likely he’ll try
    to get “phase 1″ of universal coverage this year. Maybe a mandate that all children must be covered by 2010. Plus Medicare reform. (though that may not require legislation) Conceivably, he’ll push for legislation that allows 55 to 65 year olds to buy into Medicare or a public-sector “Medicare for all”. Though that would require expensive subsidies–I would rather wait until we’ve made some reforms to squeeze some of the wasteful spending out of Medicare.
    In terms of putting more money into healthcare to seed reform–and the effect on the economy in the midst of a recession/depression.
    Everything depends on WHERE the new money is coming from.
    I am absolutely against deficit spending to fund healthcare reforom
    If we do that, we can say goodbye dollar, hello inflation.
    But Obama is raising the money by hiking marginal rates on those earning over $250,000.
    This is not going to hurt the economy. Reaganomics is a myth. The wealthy will bitch and moan, but they’ll keep on working, continuing to be just as productive (or unproductive in the case of the baby bankers who helped create the current sitaution)as they are today.
    Moreover, it is clearly part of Obama’s long-term plan to reverse the direction of Reaganonomic, and to begin to distribute income downward.
    Having so much wealth concentrated at the top of our economic ladder led to the specuation that got us into this mess–too much money chasing too few things creating stock market and real estate bubbles.
    Redistributing income by taxing the wealthy and investing the money in health, education, infrastructure etc will help stablize the economy, long-run.
    As I see it this extra money is the “seed money” needed to
    a) cover pent-up demand from newly insured people entering the system and
    b) fund incentives and programs needed to improve quality.
    Finally, in terms of structural reforms, I expect Medicare will lead the way by revising the fee schedule for physicians, hiking fees for cognitive care and lowering fees for many very expensive treatments that are marginally effective and overdone.
    Some very powerful doctors’ lobbies will fight this, but given the terrible state of the economy, combined with the fact that Medicare is running out of money, I think Congress will stand up to the lobbyists and let Medicare do this (just as Congress stood up to the insurance lobbyists last summer)
    Also, American voters are not as enthusiastic about the idea of some people hauling home huge salaries they were in the 1990s. Lobbies representing wealthy surgeons will not draw a lot of public sympathy or support.
    (I also don’t think new legislation will be needed to let the RUC committee make these adjustements in the physician fee schedule.
    I’m told that RUC knows that the time has come when it is going to have to respond to the overwhelming consenus that we must raise fees for cognitive care “in a budget neutral way” (MedPac’s language)–while making cuts in fees at the top of the ladder.
    You might ask: If the changes in the fee schedule budget neutral, how will they save money?
    If we pay less for some very lucrative and expensive servcies, we’ll soon find that doctors are doing fewer of these procedures.
    I also expect Medicare wil begin hiking co-pays and lowering fees for less effective treatments (using the comparative effectiveness reserach we already have) while lowering co-pays and raising fees for more effective servcies.
    Medicare also is going to be running pilot programs, providing incentives for doctors and hosptials to join together in large groups and accept “bundled payments” that reward them for better outcomes. Medicare knows that “fee-for-service” helps drive overtreatment.
    Private insurers will be happy to follow Medicare’s changes in terms of fees and higher co-pays. It just wants Medicare to provide political cover.
    Medicare also will be using financial carrots and sticks to get hospitals to take safety, errors and infections far
    more seriously. .
    I also see certificate of need requirements coming back. We may even follow Don Berwick’s suggestion (particuarly if he is heading up CMS) adn begin paying hospitals to keep beds empty. This is much cheaper than paying them for all of the things they do to people once they get them in those beds.
    By 2013, we should be in a postion to cover everyone, and provide higher quality care, for the same 16% to 17% of GDP that we do now.
    And the end of his testimony, Gawande talks about the huge internal savings he expects by 2013. (And I’m assuming no growth or very slow growth in GDP in the next few years.)
    We’re never going get healthcare spending down to 9% or 11% of GDP–not as long as we have so many very poor people. There healthcare will always be expensive because they will continue to suffer from the many diseases that accompany poverty.
    And cultural expectations in the U.s. are very diffient from expectations in Europe; for the foreseeable future, many Americans will demand “do everything possible” end of life care.
    Over time, with more pallaitive care, I hope this will change, but the American Fear of Death is deeply embedded in the cutlue. (People claim we’re a reglious and specifically Christian country, so you’d think everyone would be looking foward to going to heaven. But apparently they’re not.)
    But if we could hold healthcare spending steady as a percentage of GDP, get healthcare inflation down to GDP growth, cover everyone and lift quality by making these structural reforms, we will have done very well.

  20. Don, thanks for the arm & a leg analogy. I just re-checked, as of last May to insure my family of 4 with the “catastrophic” insurance, y’know, the high-deductable doesn’t really cover much of anything insurance the employee cost is just over 10k a year. The decent insurance is $12,700, this is the employee cost and this is a huge corporation. This is slightly cheaper than my previous employer. My mortgage payments total $12,900 a year, so you’re exactly correct it’s like a 2nd mortgage and I can’t afford that, either.

  21. Competition for the insurance dollar and competition for the providers dollar must be part of reform.
    Transparency of the cost of insurance and transparency of the cost of docs, hospitals and other providers must be part of reform.
    We can make a restaurant or food manufacturer post the ingredients on the label or wall, but we can’t get docs, hospitals, other providers to do the same?
    Insurance companies can easily post plan experience, target loss ratios and other pertinent data used to derive pricing.
    The biggest hurdle to competition among insurers is the removal of state regulation of insurance. Federal regulation will allow insurers to compete across state lines and eliminate the redundancy of 51 different sets of laws, filings and plan requirements.
    Further, group laws need to be amended to allow other groups to form beyond Unions, Government Entities and Employers.
    Competition will drive down price. The margins made by all stakeholders may decrease, but the cost of care and the cost of insurance will not increase at the rate that we have seen since the introduction of Medicare. Costs may even go down.

  22. Maggie, This was an exellent post. You clearly get it.
    The idea that insuring more people will save society money is wrong, as you noted. The savings from decreased ER visits and preventable hospitalizations and so on is out-weighted by the increased costs elsewhere.
    I would add that prevention does not in general save money. Of course it is worth doing because it often benefits people, but I am surprised by how many observers assume, in the absence of data, that it will save money. Longer lives mean more HC costs. The conventional wisdom is in for a rude shock in this matter.
    You write that competition in HC often increases cost. Spot on. HC is characterized by asymmetric information and consequent provider-induced demand. Weird how some free-markets types can’t get their mind around this. Of course this fact explains why such things as consumer choice in HC are doomed to failure.
    Gawande said that HCs failures are multi-factorial.Very true. Analysis of this complex system can’t be done in a 1-hour TV special, no matter how well-produced. I would add that congressional hearings also will not get to the bottom of things. With all due respect to our political class, dispassionate scientific analysis is not their strong suit. A white paper (or a series of them)by the National Academy would be a better bet.
    Gawande also writes about the sheer complexity of medical practice. As a family doc I live this every day, both clinically and administratively. And I believe (although I can’t prove this) that one of the reasons med students are abandoning primary care is that the complexity is simply too much.

  23. JRossi, Scott, Lisa–
    Thank you all.
    JRossi–
    Yes, universal coverage and more preventive care will not reduce the nation’s health care bill.
    People will live longer–and so will need healthcare for many more years. It is good that we will have fewer avoidable prematuredeaths, but we must prepare for the higher costs.
    As you suggest, to reduce healthcare spending we should do two things:
    a) replace competition with collaboration; this would create a far more efficient heatlhcare system
    b) use comparative effectiveness research to squeeze out over-priced, sometimes not fully tested products and services that provide no greater benefit for most patients– reserving those treatmetns for cases where medical evidence suggests that patients who fit a particular medical profile will benefit.
    Scott– I agree:
    Federal regulation of insurers would e greatly preferable to state regulation.
    Too many states are too lax.
    You write “Transparency of the cost of insurance and transparency of the cost of docs, hospitals and other providers must be part of reform ”
    I think this is true–but only up to a point. If insurers are going to charge more for certain treatments unless the patient fits a profile showing that he/she will benefit, then your insurer cannot tell you, on the phone, what the co-pay will be until you see your doctor and he determines whether or not you fit the profile (and provides documentaion to the insurer.)
    More importantly, if you call a doctor and say “I’m experiencing back pain–what will it cost me to see you” he really can’t know until he takes your history, examines you, and figures out whether he needs to order tests. He also can’t know how much time he will need to spend with you until he sees you.
    In some cases, of course, doctors should easily be able to quote a price: “what does a mammogram cost?” “I think I have strep throat and need antibiotics: what would it cost to come in?”
    “How much do you charge for an annual physical?”
    “How much to you charge for an eye exam for a first-time patient?”
    But in many cases, the patient really can’t describe the size of the problem; at most, he/she can describe their symptoms which could describe a wide range of problems that might take a 15 minute appointment, a 45 minute appointment, no tests, 4 tests, etc.
    The ambiguity of medicine makes transparent pricing problematic in many situations . . .
    Still, we could do a much better job of letting patients and insurers know which doctors and hosptials are more expensive.
    Lisa– I do think your insurance is so costly because you live in a state that has done very little to regulate insurers . ..

  24. Maggie, in general I agree with much of what you say here, and I love your blog. You are one of the few big government advocates that understands that universal coverage will result in dramatically increased costs.
    A minor point: Remember that when you quote the much maligned Institute of Medicine study figure of 100,000 deaths, half of which are preventable the methodology is very unreliable. Basically doctors in training read medical charts and guessed whether a mistake was made, and how important that mistake was in the outcome. If we repeated the study, who knows how reliable this measurement is. Who knows if this is a high number or a low number compared to ten years or twenty years earlier.
    Someone else may make a different guess, especially if the reviewer was an experienced doctor familiar with actual outcomes.
    Our view of medical care has gone from well meaning but ineffective when my grandfather practiced, to astonishing cures during my father’s career. Now we see it as consumed with error and fraud.
    Mind you, medical care, especially the intense medical care you routinely disparage, has never been more successful. Unfortunately, we seem to be going back to a modified HMO mentality with the first dollar spent on the sniffles that go away by themselves, and no money left over for heart and cancer surgery that is often very successful.
    That said back surgery, most interventional cardiology, most imaging, most end of life care is a colossal waste of money, no matter who pays for it.
    Drastic cuts (without expanding coverage)are necessary, but the public will be very resistant..not just the wealthy surgeons. ( We don’t have them out here in the hinderlands. Plenty of wealthy lawyers, though.)The public bears some resposibility for the vast majority of its health problems.
    In ten years we will tumble to the fact that primary care is a low tech version of back surgery. Instead of paying a lot of money for surgery on a few patients to small or no effect, we will spend a small amount of money on a huge number of patients to small or no effect. Both will end up being a huge drain on our system with little benefit. What we know how to treat is acute illness.
    In regard to “quality”: we have two hospitals in town, a Protestant hospital with wealthier patients, and a Catholic hospital with working class patients. The medical staffs are virtually the same for both hospitals. Which one do you think has better outcomes?

  25. Health Wonk Review: Spring has just about sprung

    Welcome to Health Wonk Review, where everyone is above average. We enjoy above-average health care costs per capita, above-average uninsured rates, and above-average obsession with health care reform. That’s what it’s like today in America. Our preside…

  26. Christopher–
    Thanks for the kind words.
    I agree with much of what you say about ineffective preventive care. We need to be careful in overestimating what preventive care to do.
    Even if someone has access to health care, that does not mean he will stop smoking, stop drinking, or being exercising.
    As I keep saying, these behaviors are closely correlated to poverty, lack of edcation, and the stress, depression and self-medication that follows.
    We can help the poor if we provide good pre-natal care, nurses that visit the home after the child is born, good public education, and other programs to lift them out of poverty and free tobacco clinics.
    When it comes to middle-class people, we don’t want to encourage people to call their medical home when they have a cold.
    As to whether the agressive care that I disparage is all that it is cracked up to be:, there is quite a bit of evidence that about half of all heart patients who undergo surgery (here I am thinkin go bypasses and angioplasties) derive no benefit except temporary relief from angina.
    In the past, we overpaid for heart surgery, and it became what I can only describe as a racket– too
    many heart surgery centers,
    leading to more surgery, too many patients attracted to the idea of a “quick fix”.
    (And yes, many pgin patients will be just as upset as welathy surgeons will be if we cut down on overtreatment.)
    The other half–patients who do benefit–benefit greatly. Lives are saved.
    But we definitely waste a great deal of money on overly aggressive care for heart patients.
    I don’t know as much about cancer surgery. Obviously lives are saved–or at least lenghtened.
    But I do know that there is a great deal of unnecessary, ineffective surgery for prostate cancer. (We just don’t have evidence that any of our treaments for early stage prostate cancer works, and in many cases, the patient never would have suffered symptoms and would hve died of something else.)
    We also know there are many unncessary lumpectomies–and even mastectomies–thanks to “early detection” of leisons that, in some cases, would just have gone away.
    Also, 92 year old women who are dying of something else are having matectomies that they dont’ survive.
    In general, I am convined by Welch, Woloshin and Schwartz that we have gone overboard with the whole idea of “early detection”.
    Pap smears are great–we’ve made cervical cancer a rare disease.
    But in the case of so many other cancers– we overtreat.
    I’m not saying that great advances haven’t been made in recent years– cataract operations, for instance.
    Finally, on how many people are killed, inadvertently, by medical care. I agree that’s a very squishy and subjective number. But whether it’s 20 percent too high or 20 percent too low, the point is that healthcare is killing way too many people.
    One of my favorite sources–a doctor in the midwest–tells me that he tells his residents: “if you want to be healthy, do everything in moderation, and stay the hell as far away away from people like us as you possibly can.”

  27. Although there are significant opportunities for cost of care savings, it will be necessary for universal coverage in order to activate those broad reforms for achieving cost reductions in care. The risk pools now are too fragmented to enable any one payer to achieve cost savings, or encourage the payees(consumers) to engage in health behavior.

  28. The risk pools now are too fragmented to enable any one payer to achieve cost savings, or encourage the payees(consumers) to engage in health behavior. I couldn’t agree more. Well said, sir.

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