First Class Health
Reform
Will there be more healthcare for everyone when we get universal insurance coverage?
No. There will be less healthcare for everyone. And the care we do
get will be more expensive.
Providing
additional insurance as a means of making all Americans
financially able to handle their own health care
expenses will have the following unintended
consequences:
1. Demand for health care will increase, while supply will remain about the same.
The supply of healthcare professionals is almost constant in the short run. It takes years to educate new health care personnel.
That means that prices will increase even faster than the 10% they tend to increase every year. If prices then become more strictly regulated, rationing will
occur — health care will be withheld or postponed. Queues will form; you will have to wait longer for surgery or treatment. This will
happen if we only decide to put more money into our current system. And it will not matter whether public or private plans are chosen as the means
used to make wider insurance coverage available.
2. Will competition increase among providers of care?
That depends. Opportunities will open up for even more than the 1,200 mini-clinics already operating seven days a
week in drug stores, supermarkets and discount stores around the nation. This will serve to expand the use of physicians’ assistants and nurse practitioners, who can
deal with the majority of clinical needs for a small fee (around $60.00). But most of these will have been hired from the rest of the health sector, and quite likely
replaced by more expensive labor.
People also will resort to new / old treatment modalities such as massage, meditation, yoga, acupuncture and other
therapies. These alternative care options already attract more visits than do conventional providers.
Expanding the number of community clinics will help meet demand for care and spur more competition, but to make that
happen will require a larger financial investment than what has been budgeted so far. And health care personnel to staff these clinics will still have to come from the
same pool.
Addressing and resolving our health care crisis is more complicated
than simply making more money available. A lack of competition is not the root cause of our health care crisis. And it is not enough to focus only on the demand
side of health. Managing demand for health care has created co-pays, lifetime restrictions on coverage, denial of care, cancellation of coverage,
favoring of healthy people over unhealthy people, and unaffordable insurance. Attending to the
supply
of health care encourages us to improve the productivity of health care providers — focusing on doing the right
thing, in the right way, all the time — and reaping the vast payoffs that result from such a focus.
Diagnosing the Crisis
There is
no question that the health care crisis in this country
will be solved. Because if it is not
solved, health care will consume the entire GDP in the
United States by 2060.
Until
recently, calculations showed the anticipated date of
the debacle to be 2080 because, like clockwork, the
health sector could be counted on to increase its share
of real GDP by 2.6% per year. But in this new century,
the annual increase figure is now 3.4%, bringing the
projected calamity a little closer.
Had the
health sector been as productive as the rest of the
economy over the last decade, we would not have needed
to add to the health care work force at all in order to
meet today’s demands. The additional productivity would
have enabled the same number of people who worked in the
health sector ten years ago to provide health care to
all Americans today at a cost 10.3% less in real dollars
than it cost ten years ago. That means that 36% more
care could have been delivered at a cost that would have
been 14.1% — instead of 18% — of our 2008 GDP. In a
$14.3 Trillion economy, that represents a savings of
$558 billion (21.5%) over the $2.6 Trillion we actually
did pay out.
The simple
increase in productivity would have enabled the health
sector to handle the increased demand flowing from
insuring all Americans. Furthermore, it could have been
done with no increase in prices, while still allowing
for the same increases in pay that health professionals
enjoyed over the last decade. But because most
reimbursement practices reward inputs (procedures)
rather than outputs or outcomes, productivity
improvement has been a taboo concept in health.
We
can expand health care delivery in the United
States by improving productivity instead of adding more
workers! But productivity improvement is the only
strategy that will allow for continuous increase in pay
as health care costs stabilize or go down. There are
more benefits than increased pay and greater access that
accrue to improved productivity. As a result of
productivity improvement, health workers will experience
dramatic reductions in job stress and job
dissatisfaction (2/3 of all stress and dissatisfaction
in the work place comes from being unproductive). And a
corresponding increase in the satisfaction of patients,
doctors and support staff will become evident as
productive behaviors replace unproductive activities and
processes..
Productivity is a ratio (output divided by input). In
the healthcare sector of the U.S. economy, this value of
this ratio has become smaller every year over the last
decade. Financial incentives have favored the expansion
of inputs relative to outputs; hence, productivity
improvement has become negative in the health sector.
And it is this negative productivity, fueled by
misaligned incentives, that is the key reason for the
dramatic and unsustainable cost increases we have
experienced in health care
Were
financial incentives to be shifted from inputs to
outputs (or outcomes) — or, better still, to benefits —
the correct incentive structure could be put in place
and the health sector would reap larger financial
rewards the healthier its clientele became. Transparency
of results would reward the best hospitals and clinics
with increased market share.
Insurance
alone cannot solve the current cost problem because the
problem is caused by a perverse incentive structure.
That incentive structure results in the predictable
annual negative productivity “improvement” we have seen
for more than thirty years. This structure must be
reversed. Health care professionals must be on the same
sheet of music as their patients, and there must be
rewards to both the health sector and its clients when
the health of the nation is improved.
Resolving the Crisis
Health care in the United States
is the largest remaining bubble in our economy. When
it does burst —and it will— rethinking health care could
well transform this country. Massive efforts should be
made to increase effectiveness, efficiency and occupancy
in the health sector to put the health sector at par
with other sectors in the economy. Does anyone doubt
that the brilliant and highly educated people who work
in the health sector cannot be as productive as the
average American worker? Of course they can!
So, let me
be specific. The United States should aim for these high
and attainable goals:
1. The
longest life expectancy with the highest quality of life
in the world;
2. The
lowest maternal and infant mortality rate in the world;
3. A
focus on prevention in all feasible areas that affect
the health of the public;
4. The
elimination of iatrogenic disease (hospital- and
clinic-induced disease); and
5.
Achieve
significant gains against the five biggest killers in
the U.S. Smoking, alcohol and drug abuse, accidents,
and obesity — addressing them kindly and from an
understanding of them as the true health problems they
really are.
For the
money we pay, we deserve that.
Financial
rewards should be tied to actual and measurable
improvements in these goals, and a uniquely American
health care delivery system developed to do so. Goal
oriented, health oriented, making optimal use of its
resources and technology, it should capitalize on Yankee
ingenuity for continuous innovation and positive change.
Can you
imagine this new country? This is a country of people
who stay healthier longer. This is a country with a work
force that is healthy, competitive and able bodied. This
is a country of people who decide, in their own
enlightened self interest, to choose lifestyles that
favor fitness, enjoyment of the outdoors, and healthy
diets; who can readily access information that will save
their lives when their health is challenged. And it is a
people with no fear that their health care will not be
there and affordable whenever it is needed.
What I
have just described is the lifestyle of the upper
classes in the U.S. and in most developed countries of
the world. It is also in harmony with the findings of
longitudinal studies on health that together validate
what it takes to reach a healthy old age.
Let’s
travel to this new country! And let’s travel first class
for a change. We can afford it, because even before we
get there, we shall have saved enough money to pay the
ticket price to go there many times over.
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