Summary
The authors of the article build their case for healthcare reform on assumptions that may not be correct, but nevertheless accept the assumptions as givens. The authors outline a system of reform that relies heavily on government interventions and the supply side of the healthcare industry without adequately considering the demand side. Finally, the authors would like to pay for expanded coverage by a formula driven reduction in the current health expenditure growth rate and efficiencies gained from integrated systems without quantifying the cost of expanding insurance coverage to the un-insured or the savings to be achieved.
Analysis
The assumptions included in the author’s call for healthcare reform are: 1) we can achieve high-quality, affordable healthcare for all Americans. 2) The change our country needs to fix the healthcare industry is healthcare delivered in integrated systems and expansion of healthcare coverage to the un-insured. 3) Physicians will accept a 1.5% expenditure growth reduction either through a slowing of fee increases or a drop in utilization. A lot of public policy is developed based on statements that most Americans agree with, and that sound good but are flawed. For instance, you will not find many people in the healthcare industry who disagree with the goal of “high-quality, affordable healthcare for all Americans.” The problem with this statement is that the laws of economics run counter to this goal. Countries that have universal coverage and communist countries have found out that you cannot have high-quality, affordable anything for all the citizens without significant shortages developing. The Canadian and English healthcare systems are good examples of the shortages and delays that develop in delivering healthcare when it is available to all the citizens at an affordable price. In our country, the wage and price controls of the 70’s under Nixon’s administration showed how shortages develop when prices are not allowed to float and the resulting skyrocketing prices that naturally come after such controls are lifted. No country has ever been able to enact a system of controls that result in supply meeting the demands at an artificially low price such that all the citizens have access to the good or service. James Ukockis, a Treasury department economist in the early 90’s working with President Clinton’s healthcare task force was quoted in the Wall Street Journal as saying “you can’t repeal the laws of economics sufficiently enough to control both price and quantity.” We can fix the healthcare price problem, or we can fix the healthcare access problem, but you cannot do both simultaneously through a system of controls. To fix the healthcare price problem, all we would need to do is eliminate all third party payers and enact strong tort reform. However, this would create a huge access problem. We can give quality healthcare access to all citizens in a timely manner; but in order to marshal the resources to meet the demand created by such a system, healthcare costs would skyrocket. The second assumption is that integrated systems are the answer. “We need organizations large enough to be accountable for the full continuum of patients’ care.” I have worked in smaller integrated systems and while I believe that smaller integrated systems offer good communication between departments and better hand-offs of the patient, until laws and regulations are changed that the healthcare community has to comply with or is subject to, integrated systems will never achieve all the efficiencies and cost reductions for an episode of care that the authors are relying on. Significant tort reform needs to be enacted to reduce over utilization of healthcare resources. A physically integrated healthcare system can still under perform if it is not virtually integrated. The real key to creating greater efficiency in healthcare delivery is virtually integrating providers. The provisions of the ARRA requiring integrated information systems offer more promise to increasing the efficiency of healthcare delivery than creating large physically integrated systems. The third assumption that has problems is having providers accept a formula driven fee reduction if utilization is higher that a planned amount. This kind of price control, making physicians and hospitals take reductions in pay if utilization increases, has been tried before and found to be ineffective. Currently, physicians are subject to formula driven price reductions. However, every year the physicians lobby congress successfully and the formula driven reductions are repealed for that year. To assume that you can trade formula driven expenditure growth reductions for providing universal coverage is counting your chickens before they hatch. Physicians that I talk to are universally upset with the way the government is managing healthcare and are advising their children not to pursue medicine as a career. Physician recruitment is becoming increasingly more difficult as there is developing a shortage of physicians, especially internal medicine and family practice. If the authors of this article would like there to be enough physicians available to meet the demands created by universal coverage, then payments to physicians will have to increase, not decrease. Otherwise, the supply of physicians will dwindle. Physicians, traditionally, are among the brightest students in universities. They do not have to go into medicine, they can pick other careers and be successful. If they are not compensated adequately for the years of training and school debts they incur, then they will not choose medicine as a career.
