Summing Up
This month's exchange of ideas regarding U.S. healthcare reform ranged far and wide. Some of us were interested primarily in the issue of cost escalation and how to contain it. Others addressed issues of quality. For still others, it was a matter of inequality of treatment. If this is a microcosm of current concerns and suggested solutions, does it bode well for the formation of a consensus, political or otherwise, leading to progress? But a number of respondents raised the question of whether the most feasible solution may lie primarily in the free market, with perhaps some help from government.
Suggestions of causes of the current challenge of rapidly rising costs in relation to quality of outcomes, at least by the imperfect measure of life expectancy, included waste in the system (Julie Maire, Edward Hare, and Jack Flanagan) as well as fraud (Kate McClelland), risk avoidance on the part of physicians, a litigious society, and inadequate protection from it for physicians (Rowland Freeman), "defensive" medicine leading to unnecessary tests and treatments, an insurance system that is costly and inadequate for those who really need it (Amar Sahay and David Albert Newman), the high cost of new technology, artificial restrictions on the supply of drugs (Sergey Mirkiin) and healthcare providers (David Stahl and Michael Robbins), the size and complexity of the problem itself (James Sullivan), government involvement (Paul Jackson), and uninformed or unnecessarily needy consumers (Hakan Hillerstrom).
In addition to these issues, Elizabeth Benbrooks reminds us that (healthcare) "comes freighted with a host of fundamental moral, ethical, and emotional issues that simply don't exist for other industries." Perhaps this is why Hakeem Yesufu asserted, "I am an ardent free-market capitalist who realizes capitalism has no place in healthcare provision." But Tery Tennant asks what is perhaps the ultimate philosophical question: "… when did an individual's medical needs become an inalienable right that the government has to insure?"
A number of responses suggested various free market mechanisms for addressing these issues. Where to start? Paul Jackson suggests that "The only thing the government should be involved with is controlling the drug, insurance, and medical industry advertising spending which would bring down costs." On the other hand, Wayne Baldwin argued that "Containing costs will come at the expense of something … technological advances, profit, access to certain services, and patient choice are likely candidates …." One line of thinking would make both talent and drugs more competitive. Sergey Merkin asks, "Why not open the country to foreign medications?" In citing the need for more doctors and nurses, David Stahl comments that "it could be a way to help open immigration in this country." Michael Robbins adds, "Healthcare has been a closed guild." David Othmer cited "the maze of regulations that keep, for example, nurses from using all their skills" in providing basic healthcare. And Hakan Hillerstrom implied that consumer education and choice may be an important response to many of these challenges.
In spite of the issues' complexity, Richard Fallis offered the observation that "Reform is coming … because Wal-Mart and GM want it." He thinks it could come in the form of a "Two Percent Solution" in which everyone would pay 2 percent of their income to be held by the Government for their healthcare, with "competition … maintained through private providers" and the bills of those unable to contribute paid by the Government. Keith Butler believes that it could come in the form of a two-tiered system of private treatment at personal expense layered on a service free to all with protections for healthcare givers and the elimination of third party insurance. Are these the free market answers we've been waiting for? What do you think?
Original Article
Healthcare will grab more and more headlines in the U.S. in the coming months. Any service that is on track to consume 40 percent of the gross national product of the world's largest economy by the year 2050 will be hard to ignore. Business management already feels the effects of healthcare costs more acutely than most consumers. Several recent studies and proposals shed light on the problem and possible solutions. They leave us with questions, too.
To put things in perspective, U.S. healthcare currently costs about $2 trillion per year. Of this, more than $600 billion (31 percent) is never seen by recipients. It goes for administration. On a per capita basis, it is roughly $280 billion more than is spent for administration in the other twenty-one countries whose life expectancies exceed those in the U.S., all of whom have some form of taxpayer-financed, single-payer system, the kind that used to be referred to by detractors as "socialized medicine." Worse yet, the current system leaves more than 40 million Americans without health insurance. Because many are not employed or have very low incomes, programs that provide incentives through employers and tax relief don't help them. With this much room for possible improvement, the incentives should be sufficient to foster changes in behavior.
A recent McKinsey study estimates that more than half of the $98 billion of excess administrative costs it identified goes for insurance company marketing and underwriting. Its estimate does not include the costs of sorting out acceptable applicants or denying payments under existing policies, another substantial amount. And it does not include the costs that doctors and hospitals incur in denying applications for payment, often in the form of payments to consultants who specialize in this kind of responsibility-shifting activity. By contrast, McKinsey estimates that it would cost "only" $77 billion per year (or about $1,900 per person) to provide healthcare to all of America's uninsured. If made available along with consumer education, others have suggested that all of this amount could be recouped eventually through the elimination of healthcare expenses incurred by those unable to pay now.
Now comes Robert Frank, a Cornell economist, who has proposed ways of overcoming opposition to some kind of government- (and therefore taxpayer-) funded solution to the problem. He has put his finger on the two main obstacles to major change in the current system, insurance company opposition and higher taxes. He suggests that insurance companies, who have acted in good faith to respond to incentives provided by the market, could be subsidized for their losses while their managements shift their health insurance strategies, perhaps to provide only supplemental private coverage. A portion of the $280 billion in annual savings suggested above could be used for this purpose. He proposes that the other obstacle, higher taxes, could be overcome through an effort to educate the public about the long-term economic benefits of such a move. How his proposal would fare in the face of previous failures is a real question.
Given their magnitude, failure to solve these problems in the U.S. could have global economic impact. But are we addressing them with the creativity they deserve? For example, to combat opposition to a tax increase, could tax credits for later use (when savings kick in) be issued to individuals and businesses in the amounts by which their taxes are increased? To provide universal insurance, could the government provide vouchers (along with consumer-oriented education) to all uninsured to be used at their discretion for their own care? In other words, could a consumer-driven solution be combined with a single-payer system? What can the U.S. learn from other countries in the delivery of high-quality healthcare? What is the government's role in U.S. healthcare? What do you think?
To Read More:
Robert H. Frank, "A Health Care Plan So Simple, Even Stephen Colbert Couldn't Simplify It," The New York Times, February 18, 2007, p. C3. He is the author of a book, The Economic Naturalist, to be published this spring.
McKinsey & Co., "Accounting for the Cost of Health Care in the United States," January 2007.
- Merrill Goozner
- Blogger, GoozNews
Glad to see a Harvard B-School prof endorsing singler-payer health care, which, as he points out, represents a huge potential savings by eliminating the duplicative administrative costs of the current insurer-based system. However, these are one-time savings whose elimination would do little to reduce underlying health care inflation. In recent years, Medicare has been no more successful than the private insurance market in holding down health care spending.Why? I would argue that provider control of health care is the major contributing factor. It results in excessive deployment of "innovative" technologies that often are either useless, no different than previous therapeutic interventions or, at best, marginally effective.
Moreover, single-payer in and of itself would do nothing about monopolistic pricing that characterizes the sector, ranging from patent protected pharmaceuticals to the guild-protected physician salaries, which are the highest in the world, as the same McKinsey study pointed out.
Not only do we have to create a systematic national presence in health care (like every other advanced industrial nation) to make the system affordable for the Baby Boom's retirement, but we have to give that national authority the power to both engage in science-based rationing and price negotiations.
- Anonymous
The simplest change to ensure reasonable care for all at an affordable cost would be to adopt universal single payer care for everyone INCLUDING members of Congress. If Congressmen and their families have the same coverage as "the least of these" under the plan, you can be sure the care will be as good as we as a society can reasonably afford.- Jim Ruen
- President, Edge Communications Inc.
In 1990 I was a loaned executive to a United Way campaign in St. Paul, Minnesota. One of the executives I worked with was with a multi-national company (active in 80 countries). He described going to an international forum of his fellow HR executives from the other countries with his list of concerns. He quickly discovered that none of them were interested in insurance costs or workers compensation as these were taken care of with national health insurance.We are being held hostage to health insurance companies, health care systems and pharmaceutical companies with a vested interest in opposing a national health insurance program. Until the business community gets behind the economies and efficiencies of a national program, it simply isn't going to happen.
Unfortunately, the business community's position to date has been to attempt to divorce itself from the problem by shifting costs to the employee. That is a short term solution and doesn't address the long term costs that will be faced as more and more workers go without insurance and are impoverished by what health care they have to have.
We need some creative solutions such as that suggested in this discussion. Another one suggested in the past year by Charles Murray, a self described Libertarian at the Center for the American Experience, is to give every man and woman in the country a set amount each year with a requirement that a portion be used for health insurance, but leaving it to them to invest in the policy (see: www.americanexperiment.org/uploaded/files/murray050306.pdf).
This would be in lieu of existing social programs such as medicare, medicaid and social security.
Whether either of these suggested solutions is the right one is immaterial. We must for the good of our competitive status as an economic power, and for our national interest, find a solution. We can no longer afford the status quo.
- Anonymous
Name one thing the government does well, nay efficiently and effectively. Privatized healthcare encourages competition carriers, acts as a watch dog over unnecessary or overly inflated claims, and maintains quality of care. Entrusting the federal government to administer our nation's healthcare would mean slower claim handling, more bureaucracy, and greater abuses of the system.- Gary Halpin
- President, Agency 225
I'm always amazed that business sites and business people have little faith in the free market. Constantly, these same folks who had to have some economics in school believe a socialist system (like single payer) can possibly work.There are numerous problems causing the skyrocketing prices in health care, and almost all of them can be attributed to government interference. From the AMA using the power of the state to limit the number of doctors and students in medical school to the obvious pure socialistic systems we call Medicare and Medicaid.
One thing that is rarely argued is the fact that health insurance is anything but true insurance. Insurance is to cover people from catastrophic events that would otherwise bankrupt them, such as your house burning to the ground or your car being totaled. Contrast this with health insurance, which tries to cover everything, and in many cases, is FORCED to cover everything (addiction, birth control, colds, etc.) If automobile insurance were like today's health insurance, we would all have to fill out insurance forms every time we got an oil change.
If everyone had a better understanding of economics, I think they would see the error in our ways of insisting that government can solve it. (Think -- have they ever made anything better and more efficient?) All other industries that operate in more of a free-market environment (none or limited govt interference) continually provide us with many options, higher quality and lower prices (e.g. computers, phones, food). So why when it comes to important things such as health and education do we constantly get suckered into believing socialism will work?
- Robert Cassidy
- Resultant
It is prudent to keep in mind that "the current system leaves more than 40 million Americans without health insurance" and similar statements often quoted (or 45 million or 47 million but what's 7 million more or less other than seventeen and one-half percent) are misleading in the extreme. They promote the "poor unfortunates without healthcare" agenda which makes millions selling books, speeches, papers, MSM, et al. and is a main pillar of liberal platforms but stealthily ignores the 15 million without health insurance who earn more than $50,000 annually, of whom 7.3 million make more than $75,000.These statements also ignore the fact that a significant number of the 4X,000,000 are in the 19-34 age range where they consider themselves invincible, and would much rather spend their discretionary income on automobiles or whatever, while a family age 34 and under can get a [major company] insurance plan for under $200/month.
They also ignore the people that use other healthcare options such as Medicare, Medicaid, VA hospitals, etc., and ignore the fact that children, who rarely have a need for health insurance (free or low cost vaccinations are universally provided in addition to free clinics) make up a significant percentage. And, virtually no one is denied emergent care.
- Hakan Hillerstrom
- Owner, Advisory business
Everywhere in the developed world, the problem of (too) high health care costs is tackled in the wrong way. We have to get people to take more responsibility themselves and over time make them healthier (not just physically) and thereby become less sick.This will be the solution; and if you think it is too simplistic, just wait for a couple of companies that are now being created that will tackle this huge problem.
In about 10 years time we will start to see the first real results of these efforts.
- Anonymous
Life expectancy will become the most critical factor when calculating the future cost of health insurance. More people living much longer should be a bigger concern than insurance company marketing cost. How long should we the people expect our life to be sustained and preserved by government supplied health care? Is the magic number 100?When will the financial strain of preserving so many elderly citizens (or non-citizens) become a point of anger and disillusionment to younger voters and taxpayers?
With the purchase of an automobile, the financial liability for parts and labor for warranted repairs are limited to a specific time or mileage. What is the reasonable age limit for big government's responsibilty to extend longevity?
Our life span expectations are growing faster than our ability to pay.
I also have life style expectations. Do I have to pay for those myself or will Uncle Sam pick up my golf club dues so I can stay active and have the friendships I need?
- Anonymous
I have been a healthcare worker and administrator for over 15 years and agree that the system has some serious issues. Unfortunately, not all of the issues are caused by hospitals or physicians nor are they easily controlled by either one.The cost of health care has risen exponentially over the years but only a small portion of this is directly related to inefficiencies or waste. Let us look at the economic drivers of most health care systems, surgery and cardiology. Luckily for our aging population, the surgical implants are getting better. This does not mean they are less expensive or even the same cost. They continue to rise with each new screw, implant, suture or antibiotic. Does this mean that the screw we implanted last year is any worse then the one implanted today? I doubt it, but it costs significantly more. What about Pacemakers or Implantable Defibulators? The cost of these devices is 85% of the entire Medicare payment, leaving no room for nursing care, medications or overhead. What about the drug eluting stents? The cost for these new stents is significant and the medications that patients receive in the hospitals and then must continue for years afterwards are huge.
Since Boston Scientific is in the news for their purchase of Guidant and the associated liability for device failures, let's talk legal costs. Have you turned on the TV today? Have you seen an ad to sue your doctor, hospital, Drug Company or Device Company? I know I have. The fear of a lawsuit forces physicians to implant the latest device or stent. Why? Because if they put in a bare metal stent and the spot blocks off again, a lawyer will ask, why did you not put in a drug eluting stent? The TV ads say it is better.
It does not matter that the patient was non-compliant or could not afford the drug regime; it is the physician's fault for choosing a more appropriate and cost effective device. Same goes with Pacemakers and Defibulators. These companies have now come out with devices that will send an update via RF signals to a base station in the patient's bedroom. This is a great idea, but the physician's office must purchase new equipment and the hospital is expected
to pay a higher price. What if we don't put in one of these devices? Will the doctor and the hospital be defending the decision in court? More than likely.
How does a hospital stay competitive? If the system is a not-for-profit, the money it makes is funneled back into the hospital to buy capital. When a surgical suite, cath lab suite, MR, CT, etc costs exceed a million dollars a piece, it becomes increasingly difficult to stay on top of technology improvements, let alone be on the leading edge. Seen an ad for a heart CT? Medicare won't pay for it so the cost must be shifted to other payers.
Who is going to pay for the continued increase in costs and reductions in Medicare payments? Hospitals are lucky to earn a low single digit margin where suppliers and insurance companies are basking in double digit margins. Is there money to be made in healthcare? You bet, and it seems that the device companies, drug companies and equipment suppliers are it.
As for the assumption that physicians are rolling in the money, let's remember the hours that they work, the educational costs (past and ongoing), liability costs that are rising yearly and must be maintained years after they stop practicing, and the quality of life. If we looked at a physician's take-home pay compared to the hours worked, they are doing a little better than minimum wage. How much did the CEO of Blue Cross make last year? CEO of Boston Scientific? CEO of J&J?
There is no easy answer; but as long as Medicare continues to cut, the vendors advertise the latest drug, implant or "breakthrough" and the public demands it, and insurance companies reduce payment to fatten their margins, we will continue to have cost issues across the board.
- CJ Cullinane
The cost of healthcare will be a problem that will increase in multiples unless something is done that is radically different from what we are doing now. The cost of healthcare is rising faster than inflation, new costly procedures are being discovered daily, and the present system of the health care practitioners investing in the equiptment to give these tests are all pushing costs higher.Increased taxes would solve the problem but could put a damper on the economy. Business is having an increasingly tougher time competing with countries that have subsidized healthcare (automotive companies), so business is not the answer. The individual cannot aford much more healthcare cost without a cut in their standard of living. Multiply this with the demographic increase caused by the 'baby-boomers' and we have a crisis that standard methods will not solve.
For our industries, government, and individuals to survive this healthcare crisis, a radically new approach has to be looked at. This will most likely be a combination of all the above participants with the 'suffering' (excuse the pun) spread to all. Certain high cost infirmities may have to be subsidized, for want of a better term, with government and industry helping the people with these high cost medical problems.
This is without doubt a problem that only get worse as the population ages. The tough part will be determining what to do and then doing it. Considering politics, lobbies, interest groups, and our increasing life spans, I do not know if we have the will to take on this enormous task.
- Paul T. Jackson
- Information Consultant, Trescott Research
First I would like to say that government involvement in health care is the problem. When the major company that helps the drug companies is also contracted by the government to run the Medicare drug program, there is a conflict of interest and should not be allowed. Any subsidies add to the cost of everything.Why do drug companies do so much advertising to the public, who are not doctors? Why do drug companies draft legislation? Why do drug companies and doctors fight natural remidies and want to make natural herbs into regulated drugs? Why do some insurance companies still not allow payment for chiropractic or naturopathic services? Why does Medicare cover eye surgeries but not hearing? It appears we have an industry that does not want us to be well at any cost.
Our buy more, eat more, eat bigger sandwiches culture may be driving people to be sick, but the medical institutions are making us worried to sickness. Education is not necessary to the extent that people who don't have insurance to pay for things tend to do better health wise ... but the corporations, the government, and the health profession don't do studies on those healthy people. They keep telling us all our poor uninsured people are desperately sick and need insurance, when perhaps they don't.
One honest doctor told me that, of the male population that gets prostrate cancer, only 3% die from it, and with all the testing that we've been conned into taking, it hasn't improved (decreased) that figure in over 10 years. So what is going on? We are being conned into testing and other procedures that don't change the problem, or are unnecesary, or just give the medical and drug companies something to do that they don't need to do, but get tax money to do.
Several books now cover the problem of worrying about health that can actually make us sick, and I believe that's what the medical industry (drug companies, insurance companies, and medical profession) wants us to be ... a sick nation ... asking the government for help in their endeavors, not the people's.
The only thing the government should be involved with is controlling the drug, insurance, and medical industry advertising spending, which would bring down costs of healthcare considerably.
- David Albert Newman, CGA
- Internal Auditor, Government
It is very interesting to see that in the USA, where there is a pay for service system, there are supporters of and pressure towards universal single-payer health care (albeit with resistance from taxpayers and insurance companies) and in Canada the opposite is true. In Canada, there is pressure from businesses, the media, and Conservative governments to have private medical clinics that would create a 2-tier medical system, differentiating services received by the rich and the poor based upon discretionary income levels and subsequent purchasing power (albeit with resistance from our social democratic governments, the NDP).The shift away from a universal health care system is problematic insofar as those who need health care the most, namely the impoverished, would be the least likely to be able to afford health care services. They need more health care services since studies show that the poor are more likely to be ill for longer durations and at greater frequencies.
This is probably attributable, in part, to the stress of being impoverished that diminishes the immune system... Studies have shown the individuals with mental health problems are much more likely to be impoverished. However, to get health care, the poor need money which they lack because they are poor.
Thus, not having universal health care is a catch-22 similar to the employment market. That is, the poor need more care since they are poor, but their poorness would preclude them from getting care. For the employment market, you need experience to get a job, but to get experience you need a job. Therefore, as we can see, the catch-22 is very powerful and the true market failure that occurs is often overlooked.
- Wayne Baldwin
- President, MD Services
The healthcare problem has many angles. A national health plan is not a panacea. It will never replace private coverage for those who can afford it. At the same time, it may help alleviate certain issues. But, if the healthcare dialogue is going to be productive it must account for many factors.Assuming that substantial administrative savings would result is far from clear. There will not likely be a single national health plan. Those who can afford better coverage will buy it. The administrative costs for private plans will still be there. A single government sponsored payor system will have substantial administrative costs, too. Under the current Medicare system, the expense of regulatory compliance is substantial. Medicare regulations are complex. Failure to follow the rules can result in substantial criminal and civil penalties, but the compliance obligation is a substantial portion of the budget of most medical providers and health plans.
Demographics demonstrate an aging population fueling an increased demand for medical services. Healthcare costs will increase just because there are more people with healthcare issues consuming healthcare services. The population with healthcare coverage have come to expect a certain level of service. Can this level be maintained by a single payor system, and if not, is that acceptable?
Technological advances march forward. Thirty years ago, MRI's were almost unheard of. Stents did not exist. Multi-detector CTs that scan the entire body in seconds sounded like science fiction. A multitude of other advances make treating disease more effective. Healthcare vendors (drug companies, equipment manufacturers, medical equipment suppliers, etc.) make these technologies available at a price. The benefits have been substantial in the way patients are treated and diseases are managed, but the cost is substantial. If the profit motive is reduced, will the research and development for these advances also be reduced?
FDA regulations for the development of new drugs are necessarily strident. The cost of bringing a new medicine to market cannot be overlooked. We are protected by this process, and a single payor system will not change it.
Healthcare providers face a financial crisis in many arenas. Hospital closures are more prevalent now than ever. Physicians are reluctant to take call at certain facilities because of the malpractice risk. The Deficit Reduction Act has reduced provider reimbursement, resulting in a reduction of certain services. Provider incomes have actually declined while expenses continue to rise. Decreasing the reimbursement to these facilities and providers will certainly be an objective of the proposed single payor system. As demand increases, supply may actually decrease.
Access to healthcare services is at the heart of much of this discussion. Will a single payor system increase overall access? Is it acceptable to wait for certain services while the request is pre-authorized, as is now the case in Canada and certain European countries?
Containing costs will come at the expense of something. As the economist would say, "There ain't no such thing as a free lunch." Advertising, research and development, administrative services, technological advances, profit, access to certain services, and patient choice are likely candidates, but it is unlikely that any system will effectively dictate which of these (and other choices) will be the cost control victims.
- Ned Roman
I would recommend the actions advocated by your own Michael Porter in his (and Elizabeth Teisberg's) book entitled "Redefining Health Care." The main thrust of that book is competition at the provider level with the government and health plans assisting. It's the only way I know of to eliminate the zero sum game.- Rowland Freeman (HBS MBA '53)
- retired
One of the biggest problems with health care is the legal profession, who sue at the drop of a hat for monstrous sums. Thus a cap on legal fees, and a cap on malpractice awards. Having been through too major surgeries recently thanks to tests orderded by my physician, I was astounded at some of the charges for small and common services, such as x-rays, CT scans and MRIs, as well as drugs. As a consultant I reviewed the hospital's logistic systems, and was again appalled at the inefficiences; but when pointed out, the medical staff went undercover and nothing happened.My point is that most of the seguements of the health care system need cost benefit analysis in the worst way. Plus a detailed analysis of procedure costs with a view to cost reduction; but please keep the government out of it. The government's participation is more likely to increase vice and decrease the costs of health care.
- Elizabeth Benbrooks
Many of the commenters here have touched on different facets of the problems facing the healthcare industry, all of which are valid points; but they have so far ignored a central fact. The healthcare industry is fundamentally unlike other industries. Its stock in trade is in alleviating the sickness and suffering of human beings. It therefore comes freighted with a host of fundamental moral, ethical and emotional issues that simply don't exist for other industries.One commenter says that virtually no one is denied emergent care, without following that up by stating that this is because hospitals are legally required to provide that care, and that cost therefore becomes a secondary consideration in that case.
Another commenter suggests that the economic burden of caring for the aging members of our population is becoming too large for the system to handle. True enough, but following that sort of logic, the most economically efficient solution would be to euthanize people once they reach retirement age. Or perhaps simply store them somewhere handy until we can bring our new Soylent Green manufacturing facilities online.
Another commenter brought up the issue of the many illnesses that are the result of poor lifestyle choices to which the US population is increasingly prone--things like diabetes, high blood pressure, heart disease, lung cancer. Yes, people with these illnesses should have taken better care of themselves. And if that 70-year old diabetic is our mother? What do we suggest then? That she diet and exercise, but not receive any other treatment, because it's costing us too much? That it's OK for her to lose a foot to gangrene, because she should have known better? What do we do when our own child is diagnosed with leukemia? Say, "Sorry, kid, worse luck, but you're destroying the efficiencies of the system?" rather than do everything in our power, insisting on any treatment, if it would keep the child with you for one more year, one more month, one more day?
Purely economic models will never supply a complete solution to the problems addressing the US healthcare industry because they do not and cannot address these issues.
- Charles Carroll
- Consultant, independent
You can't legislate reality. There are only so many people who are both talented enough and willing to spend their youths becoming proficient in the more complex health treatment disciplines. If not expressed in dollars, access to them will be expressed in time or access.Amazingly, I had a Canadian acquaintence who lost both parents while they waited for treatments my own parents and parents-in-law (middle class, all) received in days and weeks. I am not nor am I related to any doctors or surgeons.
The U.K.'s National health Service nears receivership and so the powers-that-be determine that some conditions will NOT be treated or some people placed outside eligibility for treatment. Also, not having health insurance is NOT the same as not having access to healthcare.
What is the proper role for national government?
1. To protect against outright fraud through organizations like the FDA and prosecutors.
2. To encourage mechanisms for prudent (read "catastrophic" and "continuous, significant") health care situations. I realize it is not the same but I believe it is analogous to automobile warranties which do NOT cover air filters, wiper-blades, brake shoes, etc. endemic.
3. To foster research into prevention and cures/treatments.
4. To provide education (in public primary and early-secondary schools) concerning health maintenance (wellness) and nutrition.
5. To provide tax relief to healthcare providers/insitutions for providing life-saving (immediate) services to indigents at the same time as auditing against fraud.
6. For providing a legal basis for voluntary healthcare savings accounts without unrestricted, mandated coverage subsequent to the onset of major life-threatening conditions.
- Bryan Suggs (IE, MBA 2004)
The past two years I have lived in Europe and experienced first hand a socialist healthcare system. It is not a system built on U.S. free market economic theory nor one I think most Americans desire.Currently there is proposed legislation regarding pharmaceutical price negotiation for Medicare recipients by the Secretary of HHS. I believe the proposal will have a negative impact on patient healthcare, specifically a reduction in the value and delivery of new, more advanced medications. The advances in medicine over the past fifty years have come through private industry investment in R&D, not the government. Government involvement in these Medicare "negotiations" is nothing more than price controls.
The U.S economy is a dynamic, homogenous economy, not one built upon price controls. It is the ability of the free market to dictate value which has led to a standard of living in the U.S. that is desired by the rest of the world. Allowing government price controls is the first step toward a static, heterogeneous, socialist healthcare system.
- Anonymous
I live in a US/Canadian border state. Canada of course has "socialized" medicine, and the one thing that all Canadians seem to agree upon is how bad their healthcare system is. Canadians are made to wait months for simple procedures and tests, and those who can make it to the United States for their treatment, go.Whenever there is a choice between an American solution or a Soviet/socialized one, I say let America lead the way. In other words, "Let the private sector figure it out."
- Anonymous
A tacit assumption made by posters who talk about the inevitability of continued private insurance for those who can afford it is that the life or health of a wealthy person is more valuable (sacred?) to society than the life or health of a poor person. Perhaps not an uncommon assumption given the suffering of the uninsured that we seem willing to tolerate, but not morally defensible, either.Everyone should have access to the same medical care. I don't care if the rich person gets a private room with a color tv while the poor person is in a ward ... but the actual medical care should be identical and there should be no way to buy your way around it.
- Sergey Mirkin
- Founding Partner, Mirkin Group
The solution to healthcare is the same as to most other market problems--entrepreneurship and open market. Why not open the country to foreign medications? The costs would dramatically come down, American healthcare monopolies would lose their solid dominance (and all administrative innefficiencies that come with that), and people would have broader access to care.Now, of course, there needs to be a system that ensures the safety of drugs, but who said biased government is the best way to do it? Why not let private companies take this role, and then let the people collectively decide what is best.
And as far as "the danger of foreign drugs" is concerned--I don't see Europeans, Israelis, Russians, etc, dying from their open medication policies ....
- Anonymous
Engage Alan Greenspan to formulate the solutions which can be fully funded and sustained by a Federal lottery.- David Othmer
- Media Consultant
HBS' Clayton Christensen et al. in "Seeing What's Next" suggest that the amount of money at stake is so large that "disruptive innovations" will lead to heretofore unthought-of ways to deliver most day-to-day, garden variety health care (you don't need an MRI to diagnose a hernia) much less expensively, thereby making the gee-whiz innovations, ironically, more available and less expensive as well. The only kicker is the maze of regulations that keep, for example, nurses from using all their skills.- Howard Dokua-Smith
- Patients Health Systems
The Ultimate Socialized Medicine For America:1. Everyone (citizens, legal aliens, illegal aliens, visitors, employees of U.S. multinational companies) will get FREE healthcare coverage.
2. The healthcare providers (physicians, dentists, hospitals, chiropractors, acupuncturists, faith healers, training schools for these professionals) get their money from the government.
3. The cost is deducted from everyone (billionaires, millionaires, employers, the middle class, the working poor, and a percentage of our foreign aid.
4. It opens the door for more healthcare providers.
5. These providers get paid standard salaries (they won't like that) from the government.
6. No incentives for them; therefore quality of practice is mediocre.
7. They cannot be sued so they are happy.
8. If you want private care, you pay the difference and you see a private doctor.
9. Item 3 will be a percentage increase on taxes and also a percentage on everything that we buy. Since everything that we buy (food, clothes, drinks, smokes--cigar, cigarette, marijuana--cars, personal care, house cleaning chemicals can make us sick.
10. We will be a happier nation.
- Saifol
- Executive, BSO
The fundamental problem is that this is the reality we have to face, in which the capitalism idea is prevalent, which also dominates the whole healthcare system, in the US in particular.Hence, the best approach to deal with this is a holistic approach. The US government has to create a total change in environment in which the government has its application and jurisdiction at play.
Spending on food is not laudable, which is the main contributor of chronic diseases on the rise. Hence, a tax on food, especially processed food, should be promoted further. This would discourage consumption in the short run, preceded by a nationwide campaign to promote a healthier lifestyle, like promoting an "eat as you starve and stop as you are tempted" campaign at all levels-- individual, family, and business society. Quite importantly, this sort campaign has to spearheaded by national physicians and all sorts of experts.
People in the health care system are compensated based on how much they contribute towards the prevention of illness rather than their innovation of the cure, which is relatively more expensive. This will create a new approach of countering the problem and encourage more creative solutions, with more cost-effective solutions in the long run. Offer a tax incentive to those physicians who play an active role and who most proactively outreach to the public about getting it right.
The system should be open, user-friendly and transparent enough to allow the recipients or public in general to give their feedback to the government in order to know the effectiveness. This could possibly be solved by leveraging the technology that is readily available and sold at competitive prices nowadays.
- David Stahl
- Consultant
Single payer systems help reduce the administrative costs and reduce the amount of time and money spent in communicating information across very different organizations. I for one think it is long overdue; for a laugh, look at the HIPPA data exchange requirements for allowing insurance companies to determine liability. As a consumer, realize what a nightmare ensues when you check on the box "other insurance"....That said, I also agree that single payer is a one-time improvement, one that is long overdue; but still it will only postpone further crisis (though postponing a crisis is almost always an improvement!). The real question is whether health care costs will continue to rise.
Part of the issue is the nature of the market. It is very difficult for individuals to choose a provider. There is little information, and of the variables in play in making a choice about a provider or service the price is almost never the primary consideration when engaging health care services.
Also, unlike many other industries, health care is a very personnel-intensive industry. As the demographics change and we age in America, we will need a huge number of nurses, technicians, and doctors to take care of the number of patients. The cost of training, hiring, and growing this workforce will continue to put a strain on health care budgets.
I am optimistic that we will solve this problem; and that it could be a way to help open immigration in this country and help the United States realize that it cannot solve all of its problems unilaterally. I am also not holding my breath.
Thanks for the wonderful site.
- James N. Sullivan, MD
- Internist, Meharry Medical College
I think that all of the comments so far have merit, but solving the problems of health care should not be done on an abstract level. No businessman would take any of the above into account.There needs to be an accounting of WHERE the money goes:
Insurance companies
Dealing with insurance companies
Legal fees
Practice insurance: liability, professional, etc.
Advertising
Entrepreneurs
Physicians
Pharmacies
Pharmaceutical middlemen
Pharaceutical companies
Nurses
Technicians
Imaging
Pathology
Teaching
Each of these entities has benefits. Then the benefits of each need to be examined INDIVIDUALLY to determine cost-effectiveness.
Then, based on cost effectiveness, the benefits need to be ranked.
Then, a budget needs to be determined, and the benefits assigned according to the cost effectiveness.
If there is controversy, then a trial can be set up to be monitored by competent, disinterested parties.
The REAL benefits of MRI scanning back pain are severely limited except under defined circumstances. The REAL benefits of hiring MORE RN's by hospitals are determined to be huge, and cost saving, yet they are cutting them as fast as they dare. The real benefits of brand-name drugs used in place of truly equally good generics are obviously nil. The real benefits of primary care physicians is established, yet they are being dumbed down by half-*ssed reform and run out of practice.
This is a business school. Approach it like a business. Start by determining why so few PRACTICING doctors are involved in the discussion above.
No one thinks that we ought to have "socialized medicine." The productivity of the people involved would plummet. Single-party payer eliminates the multiple regulations and formularies, but pays for work done. It can (CAN) be made to pay for work done well, but that is a very hard thing to assess.
- Gerald Berstell
- Self-employed Consultant
We've been hearing all week about the horrors of medical care at the Walter Reed Army Hospital. This is the way government runs healthcare. Nobody has said that the mess at Walter Reed is due to a lack of funding. It's just how government works. If you're unhappy with your current healthcare, go to Walter Reed and see what a government "solution" would do for you.- Anonymous
A few questions: 1) What is the health cost curve during the last 0.5, 1, 2, 5, 10 ... first 0.5, 1, 2, 5,10... years of life? 2) What are the published statistics/scenarios for when diagnostic equipment, the "next test", should be used? 3) Are there any current cost/benefit data collection efforts/protocols for every health intervention decision, reflective of future entrepreneurial, technology, and public policy decision-making issues? 4) What of a 5% chance of finding a dangerous cause for a potentially dangerous symptom with the next test and the risk of waiting? 5) How do we go beyond fear and hope in public policy decisions for global warming, health, or terrorism? 6) How do we talk of comparative costs and risks in early nutrition, terrorism, death? 7) What of a national health court?- Julie Mairs
Waste is the first, last and always root cause of out of control and excessive cost. Going to a single payer will only address the layers of paper involved in getting patients in, keeping them out, getting them paid or denying them pay.There is a whole supply chain full of expired drugs and single use sterile items, compromised protection covers, equipment damage attributable to human error or lack of training, drug error attributable to inability to write cursive or to spell or to read. Dig deep. Do not rely only on administrative reports or systems. Get into the medical records and look at what is really going on.
Consider that the clinicians of today do not even blush when they ask the PATIENT to help them to not make mistakes or to forget to wash their hands! The patient is now a "member of the team" not the patron who is PAYING with money and trust for the advice and judgement of the clinician, who still holds themself out as a medical professional and expects to get paid accordingly.
"Where's the meat?" is now "Where's the outcome?" DIG DEEP!
- James N. Sullivan, MD
- Faculty, Meharry Medical College
Attempted answers to the above:1) Cost curve at the end of life is very steep. Problem is USUALLY that there is not a way to know when the "end of life" is, so we keep on plugging away. Elderly patients usually no more eager to die than you or me. Many elderly are severely debilitated and the likelihood of success is small, the REAL benefit small, or both. The patient and family make the decision about when to quit, not the "system".
If we were better informed about advance directives, end of life decisions, etc, it might be better in some cases. In cancer patients, it is not certain who will respond to what very expensive medcine, treatment of complications, etc. Again, we doctors can't quit until they say so or we know nothing else will work. Are we willing to say that we will stop therapy when there is less than a 1% chance of success? 10%, 25%? They do in other countries. Similarly, in other countries there are rules that say no diaysis after age 65 or 70, etc. In other countries, it's just decided diaysis too expensive for the nation to pay for, so there is none.
Don't know about infants. Lots of money is spent when likelihood of success is small. Willing to say 1%, 5%, etc.? We do say that a "nonviable fetus" gets no care (less than 21 weeks). Even then, some will try with 0% likelihood of success if family threatens to go public or sue.
2) Lots of data on what test next. Not binding in lots of cases though some payers try to make it so, but takes hours (literally hours) for an MD to plea an exception.
3) Cost benefit available for a lot, not all. NO affect on entrepreneurs, little on families and patients, some on doctors who are easily overridden.
4) Lots of data, in general abided by if MD aware of the data. It comes at us from LOTS of different sources and so is hard to keep up with.
5) Take the decisions out of the hands of politicians and put it into the hands of experts with EXPERIENCE.
6) Same. In current system, all ignored.
7) In US, health is personal, doctors are largely independent. Need a commissioin to make cost/benefit decisions, local baords to enforce. Problem is separating former from politics, and latter has to act immediately (or sooner) to rule on individual cases. Retrospective look at functioning of MD or community when out of the norm could be done, and better and worse courses to take could be found. If there is a legitimate question about what's best (and there frequently is) then trial could be set up and run by commission.
This is not rocket science. Just too big for anybody to take on. What politician is going to take on big insurance, big PHARMA, big AMA, etc.? What business school is???
- Kate McClelland
- Corporate Communications, basusa.com
Ask ten experts what the major cause of rising healthcare costs is and you'll get ten different answers.Advocates agree that healthcare costs are out of control, but offer varying opinions on the best ways to stem the tide of rising healthcare expenditures and health insurance premiums. Some cite a growing obesity epidemic coupled with the advancing age of the Boomer generation as a major contributor; aging, flabby, out of shape workers put a strain on their cardio-vascular systems, and, consequently, on the economics of healthcare.
According to Emory University researchers, obesity contributed to 27 percent of the increase in healthcare costs over 15 years.
If this is true, then it seems fair to say that if all Americans were to adopt healthy lifestyles, fewer visits to doctors and hospitals would result, and healthcare costs would drop 27 percent.
Another study prepared by Pricewaterhouse Coopers (PwC) found that "43 percent of the increase [is] fueled by factors such as increased consumer demand, new and more intensive medical treatments and defensive medicine, as well as aging and unhealthy lifestyles. Price increases in excess of inflation accounted for 30 percent of the increase."
Those appear to be the result of factors including provider consolidation, higher labor costs and more expensive medical technologies.
Now, take Emory's 27 percent, subtract it from PwC's 43 percent--accounting for the poor fitness causality offered by both--and we're left with 16 percent of costs attributable to the expense of more aggressive treatments. Add this to the 30 percent increase due to new technology and the higher costs of doing business in general. That would lead us to believe that 54 percent of the higher healthcare price tag is the result of inflation.
However, according to the National Coalition on Healthcare, over the past five years "employment-based health insurance premiums have increased 87 percent, compared to cumulative inflation of 18 percent and cumulative wage growth of 20 percent during the same period."
The point is, there is a breadth of latitude among the researchers and a dearth of intelligible information available to the employee/consumer.
But, most startling is what isn't being discussed in all these studies. There is a shockingly high and preventable amount of waste. One source of this inefficiency is the vast number of companies, organizations and institutions who have historically paid billions of dollars in healthcare premiums for deceased employees, non-certified dependents, and divorced spouses of employees.
The North Carolina Department of Justice found overpayments of more than $20,000 that were made for workers who had died. One officer had been dead more than two years.
The City of Syracuse, New York paid health insurance premiums for six dead retirees, one who had passed away three years earlier.
In Albany, New York, "Nine local governments paid $786,481 for health insurance for 65 retirees or dependent spouses of retirees who had died, some as many as 12 years ago, because they had inadequate systems for identifying when retirees pass away."
In 2005, Northampton County, Pennsylvania paid health plan premiums for 47 deceased employees. Some had been dead since 1997. An audit also uncovered premium payments in the amount of $74,886 for two people who had been fired, six who could not be identified as employees, and $49,387 in administrative fees for spouses who were listed as primary insureds, rather than as dependents.
A 2006 audit of a Nassau County, New York sanitation district uncovered massive overpayments in insurance premiums for "employees and dependent spouses after they had died."
San Diego allegedly continues to pay pensions to the dead and the state of Tennessee spent $6 million on dead enrollees to its well-intentioned TennCare health care reform system.
These are just a sampling of the estimated thousands of large and small businesses, government agencies, school districts, colleges and universities across the nation that waste billions of dollars in health insurance premium overpayments each year. Saving those billions could, conceivably, put a dent in the cost to the employers, who could then pass along the savings to their living employees. Now, there's a trickle-down effect we'd all welcome.
- Michael Robbins
- Executive Coach, Executive IQ Company
Healthcare has been a closed guild. Doctors must abandon their illusions and un-circle their wagons. The war between medicine-as-a-guild and medicine-as-a-service desensitizes doctors to the sins of cost-shifting, mindless waste, defensive practices, corruption and malpractice in both its forms: bad medicine and painful litigation.The guilded age of the doctor has shattered. Doctors can now bring light to healthcare or continue to hide in the shadows. We need them to lead us with sincere concern for our healthcare system. They must hold their peers and their community accountable to lofty principles. Only then will society give the delivery system back to the doctors - to whom it naturally belongs.
Meanwhile, corporations and lawyers make the rules. That can never be good. When doctors turn up the lights in healthcare, corporations will shink back to their proper roles and lawyers will scatter like cockroaches.
Patient responsibility is part of the solution. But, doctors are the real customers of healthcare. The cash register is in their shirt pockets - a stack of cards or a personal digital assistant is the real cash register in healthcare. More than enough money is being spent to keep us all healthy. We need our doctors to spend it on our health and to stop wasting it.
- Anonymous
A few ground rules:That the basic facts about healthcare costs must be agreed upon in order to allow for a framework for discussion of the issues.
That discussions about universal coverage, universal access and single payer be segregated and not confused.
That we recognize that the only payer for whom the ROI of prevention and health makes sense is society.
That insurance is about risk mitigation, and individual coverage has yet to prove affordable due to this issue.
That decisions about resource allocation at the moral, ethical and societal level (the aged vs. the young) are necessary and at the core of the issue.
That we recognize that cutting waste means cutting jobs which is difficult in any large sector of the economy (esp. the one where growth in good/non- outsourcable jobs is occuring).
That everyone watch the state of NY who is actively trying to do major reform.
- Richard Fallis
- Business Development Director, Acumium
The discussion here is helpful only because there is a discussion. For the longest time, the health care issue has been treated like the offspring of incest locked in a closet. Sometimes spoken about, but always in hushed terms.Reform is coming. Not because of the government or well-off really giving a damn about people who don't have health care ... but because Wal-Mart and GM want it.
Question: Is one-tier socialist medicine the only way to go? Is it truly one-way or the doorway?
Answer: I don't think so. First, as a Canadian transplant who endured the torture chamber called healthcare north of the border, I can affirm that solution is NOT the way to go!
Question: Okay smartie-pants ... what is the solution?
Answer: Well, I could talk in generalities of sharing the burden and so on. State control versus freedom of choice and so on. But I'll get right into it:
Here is a solution that was turned down by the Canadian government because of political optics, when it considered how to provide healthcare to its citizens. It is called the Two Percent Solution.
Everybody pays two percent of their income to the government for health care. The money is banked in what Al Gore might call a "Lock Box". Competition is maintained through private providers. Which also means, so is convenience and state-of-art responsiveness, which are two great hallmarks of the American system.
Since most of us use half our health dollars in the last two to three years of life, most of us will find our bank of health care dollars quite robust when it comes time to fulfilling our need for care in the last moments of our lives under such an approach.
In instances where a person exhausts their health care bank through catastrophic illness, for example, at an early age, then the government will kick in, taking from general revenues to do it. Will it cost less than is the case now overall? Absolutely! For some.
Will it cost more than is now the case? Again. Absolutely. For others.
But the burden will be shared. Pools of people without insurance will get it. Pools of people with crappy insurance will get better service, and people with more money than God will still get the best health care service on the planet.
And my ... Wal-Mart and GM will be happier than pigs in poop.
The Two Percent Solution.
- Hakeem Yesufu
I am an ardent free-market capitalist who realises capitalism has no place in healthcare provision.The central idea of the free market is choice: people demand based on their tastes and incomes, and companies compete to fulfill that demand, resulting in price and process efficiency.
Demand for healthcare is not driven by taste, income or the desire to keep up with the Joneses. The poorest can need brain tumor surgery while the wealthiest suffer nothing worse than a cold. The only moral option is free, universal coverage financed by the general tax burden.
Also, the very notion of health insurance is oxymoronic. In an efficient insurance industry, those at greatest health risk pay the higher premiums. So making the current system more efficient will mean the sickest people (or their employers) will pay the most for healthcare. Not the richest as in any other free market, but the sickest. Is this morally acceptable?
If universal healthare were financed by progressive taxation, the rich would bear a higher burden of the total cost. Yes, this is socialist. If that means subsidising the healthcare of your poorer neighbour, then socialism is a good thing in this case. This proposed system already works in Canada, the UK and South Africa.
Are there inherent inefficencies in this proposal? Of course--it simply cannot be as efficient as a normal free market. But there are ways to introduce competition. First, private hospitals could compete with public ones. Reimbursement for costs could be based on efficiency benchmarks (the most efficient hospitals get rewarded, while those with bloated costs get penalised).
Patients could be given choice of hospital. Hospitals with bad service would be shunned, and thus would lose government-reimbursable revenue.
It will not be perfect. But there will be 100% healthcare coverage in America.
- Amar Sahay
- Student, Babson College
As an international student in the US, staying here with wife and two kids, I have experienced first-hand the inefficiencies of the costliest healthcare system in the world. Even after paying a premium of nearly $1,000 every month, we feel uncovered because of the large copays and deductibles. And worst of all, because I am a student, I do not have the option to not have an insurance policy.I am greatly intrigued by the role of insurance companies in all this. Are they bringing in more efficiencies and cost-reduction in the system or have they become an unnecessary cost today? With the innovations in IT and proliferation of web-based communities, is it possible for healthcare providers to come together and offer an insurance scheme to the consumers directly? In my view, this will greatly reduce the cost of intermediaries like specialist health insurance providers, and also help in reducing the administration unwanted extra care provided by hospitals--because they will know that the cost of every treatment is not going to be paid by an outside insurer but by themselves. Probably this will also allow hospitals to customize the premium for individual consumers based on their medical history and future potential risks.
The health insurance companies had great value when it was not possible for one hospital to aggregate a sizable number of customers to be able to provide any sort of insurance scheme and it was not possible for a large number of consumers to come together on a common platform and diversify their risk by pooling resources. But in today's world, do we need to be tied to the old-fashioned health insurance model or will it be worthwhile for healthcare providers, IT enablers and consumers to rethink their strategy?
A quick look at the amount of premium revenues generated by insurance companies from consumers and the claims paid by them to the healthcare providers will definitely tell a compelling story.
- Shrinivas S.
- Consultant
Healthcare systems have three competing objectives: 1) Wider access 2) Lower Cost 3) Higher Quality. Ideally these should be balanced either by a self-balancing system or with the help of government policies. Government can provide a framework of subsidy, tax rebates to speed up the process and achieve equilibrium.In a mature free market economy, the corporate and social agenda should converge in the long run. Therefore government intervention should be for a limited time and work as a catalyst in balancing/stabilizing the system.
People going for tele-drug options or opting for surgery in Asian countries will continue or [it] may grow further till the system is re-balanced.
- Anonymous
The HBS forum on healthcare, many of the political "platforms" and much of the discussion in the popular press suffer from the same shortcoming--if only we would do (or not do) a few significant things, everything would be just fine and dandy. Almost every writer, academic, politician and journalist has a preference as to what would be most significant.The US healthcare environment (we should be wary of calling it a system) is incredibly large, complex, convoluted, intertwined, laced with disincentives and mis-incentives and the bread-and-butter for numerous special interests (everyone has a favorite target here also). While there are numerous areas of significant success, the problems that we all note did not arise overnight--they are the result of over a half-century of choices at the governmental policy, market and individual levels, both providers and users. While many of the recommendations noted above have real merit, "one-off" solutions will probably have minimal positive impact and could make the situation worse.
So while we're at it, let me throw in my two cents.
The US healthcare environment has at least five major components. The one that is most often addressed is the coverage and payment system--who pays, how much is paid, how payment is rendered, the fairness and efficiency of the processes and whether one scheme or another will restrain a sector inflation that is far worse than any other in our economy. A second and more sensitive element is what is covered, to what extent and for whom--for example, preventive care vs. corrective care; beginning and end-of-life care; basic vs. state-of the art full bells and whistles care. The third component is the development and diffusion of medical technology, approaches and solutions to healthcare providers.
Forth, and my personal favorite, the delivery of appropriate, accessible, affordable, high quality and safe healthcare. Although there is an often unstated assumption to the contrary, addressing the first component (coverage and payment) will not necessarily help solve the forth element (delivery). Finally, the roles, responsibilities and empowerment of patients, the consumers of healthcare, in application of available healthcare resources to their own and their family's well being. For many years we have been told that restricting funding in one way or another will make consumers smarter and more economical.
Obviously, each of the five major elements has significant sub-components. Among the key issues in healthcare delivery is the role and resources for primary care vs. corrective care, for local multi-disciplinary local care vs. highly focused regional specialty care, for the traditional focus on single or small group organization vs. multi-specialty clusters, and for the use of physicians vs. nurses and nurse practitioners and other providers in numerous settings to assure appropriate, accessible, affordable, high quality and safe healthcare.
One of the most important requirements will be the transformation from manual healthcare records to electronic systems at the patient, regional, disease and solution levels. If properly implemented, electronic patient records will positively impact far more than healthcare delivery. Providing "appropriate" access to their own healthcare records (this includes far more than medical codes and jargon) will make consumers far smarter and economical than merely restricting coverage. And of course, information technology will provide far better information on which to base most of the issues which this forum has enumerated.
As the early adopters already know, electronic patient information systems will be a costly, complex, sensitive and time consuming endeavor. Setting standards, providing access, resources and incentives, assuring meaningful and secure electronic interchange will be critical. Only the government can provide the needed leadership.
- James N. Sullivan
- Point of Data Entry, Meharry Medical College
Spoken like an "end-user". Push a button and get the answer. Who designs the software? Who puts the data in? Who interprets it? What is the quality? How much time does each take? How much time does it take from whatever else the data entry person has to do? A week ago my U.S. Representative was telling me how "efficient" electronic data had made the Veterans Administration! Bet he won't say that today.I can cut and paste your history, medicine list, and drug allergies a thousand times, get paid more, and look good. Would that make you healthier?
- Edward Hare
- Retired Director Planning and Strategy, Fortune 250 Mfr.
Professor Heskett has obviously hit a nerve with this topic! Americans are growing increasingly frustrated with healthcare, in spite of the "miracles" that attibuted to it. I have to agree with many of the observations posted to date. But not with some of the argued "solutions".Seems to me that US healthcare long ago morphed from a personal service into a large, overly complex, wasteful, and inefficient big business ... with no shortage of fraud to boot. Along with that metamorphosis came several natural outgrowths, including the disposition of consumers to sue when the "service" proved unsatisfactory. Our legal profession is merely an accomplice ... following the money trail to the deepest pockets.
One of the central problems is the opacity of the pricing model. Who out there hasn't experienced something like this: you're billed $10,000 for a procedure only to find out that a third party payer manages to settle the account for $2,000. It's accepted by the doctor or hospital and labeled as "reasonable and customary". Does anyone know of any other business who can long survive doing this?
Yet ... doctors and hospitals keep doing the same thing. And protest when they've themselves have DESTROYED any semblance of trust in that aspect of their business practice. In turn, they're forced to add layer after layer of support personnel to continue their pricing fictions to whoever is responsible for payment.
Last time I looked, IRS data suggested that 9 of the 10 highest paid professions in America were healthcare specialists of one kind or another. It would be interesting to examine the net worth of doctors today and look at the trend over the last fifty years ago.
It doesn't take a brain surgeon to figure out what's going on in my opinion. "Free market" forces haven't worked in healthcare for decades now. Think a bit about Michael Porter's five forces in competition ... and how healthcare behaves.
If physicians, and I've met many who clearly put money before medicine, can't heal themselves then that's when governments have little choice to intervene in the public interest. That time passed long ago in America. But the effects of special interest lobbying of politicians has, so far, kept us married to the mess we now have. Although it's not an optimum choice, I see little hope of any solution that doesn't involve government to end the massive drain on America's wealth by our healthcare delivery sytem. Somebody's ox has to get gored....and it can no longer be consumers and taxpayers.
- John Rollins
- Rollins Resources
First, this is my first input into such a forum but I am astonished by members from this audience expressing opinions without the courage to identify themselves. Strong opinions from such should be given little attention.Modern medicine promises much more than in the past and denial of reasonable access to our citizens promises only to add further to the store of the common discontent. Too great a share of the population do not have access to preventative or corrective care. Denial of even a base level care solely on the basis of the ability to pay is not a sustainable strategy for a government.
Our strength and competitiveness as a nation are not improved by the present system. We experience a system wherein the artificial or apparent price for products and services provides support of an hugely inefficient administrative infrastructure, which adds nothing to the performance of the system's purpose.
In other countries, failure by a patient to follow doctor's orders relieves the doctor of liability. Such instructions include diet and exercise as well as medications and abstinence from some actions.
Based on my past experiences, as much as half the cost of medical treatment regimens originates from tests and measures taken primarily to protect the physician legally, not for medical reasons.
Limitation of the financial risks for physicians to actual damages and administrative efficiencies by transparent pricing would offset some of the added costs for coverage. Including preventative care and an obligation for patient behavior conformance would go even further.
- Adam Hrtung
- Managing Partner, Spark Partners
There is often an overriding thought that anything the government works upon cannot be done well. Two commenters even specifically said they couldn't think of areas where government involvement has been successful.That is easily challenged. Just look at the much-maligned U.S. Postal Service. They come to each and every home and business in the U.S. 6 days/week on the hope of receiving $.40 in revenue. And if you never buy, they still come. The service is remarkably reliable, and remarkably inexpensive. And, if it weren't for the good service and low pricing of USPS, we would be gouged by FEDEX and UPS who are forced to meet the USPS standards. The Post Office offers a great set of services at a great price--as the vast bulk of eBay users know.
Secondly, the Tennessee Valley Authority made improvements in the lower midwest that lifted the entire area out of prolonged economic malaise. By creating cheap and reliable power, what was an economic backwater was changed and is now a very powerful home for businesses and extensive manufacturing.
These are just two examples of effective use of government-supplied services. Those who would dismiss any effort to have government involved in solutions in the health care space are driven by their own dogma--not reality.
- Jack Flanagan
- Poseidon Consultancy LLC
Any number of credible studies have shown that 40% to 50% of current U.S. healthcare expenditures are waste (e.g. they result in no improvement and frequently worse patient outcomes up to and including nearly 100,000 needless deaths, worse quality of work life for healthcare providers, etc.).Rather than socialize, and therefore institutionalize, this high level of waste, government would do well to start incenting the rapid identification and elimination of the root causes of this waste.
- Anonymous
I've worked with over 25 hospitals in the last ten years. Yes there is waste and yes there are some that are run better than others. However, waste is only a very small part of the problem. The major problem is that people have an insatiable demand (some would even say irrational demand, for example spending $100k on a procedure with a 5% survival rate for someone with no hope of productive recovery) for healthcare when it comes to life and death of themselves and their loved ones. Combine this demand with the belief that nobody should be denied care just because they don't have the funds to pay for it and it leads to just once conclusion, healthcare is a resource that will have to rationed. Will the government do an excellent job of rationing it? No, but who would do a better job?- Lee H. Igel
- Assistant Professor, New York University
Almost every scholar, politician, practitioner, public advocate, and member of the press who has proposed a "reform" has overlooked the simple fact that partisan politics and economics cannot resolve what is actually an issue about the advancement of change in the institutions conserved in our free society. And, just as important a point is that these proposals mistakenly deal only with surface social phenomena and dismiss social analysis.For example, a minimum of attention has been paid to the transformation of the physician workforce. The one that existed in the United States before the last quarter or third of the 20th century had been male-determined from the start; it is now becoming female-determined. Or another factor of something to which not even a handful of people are even beginning to pay attention: the older population of physicians assert different expectations about their work compared to the younger generation of physicians. Or that over the past quarter century, while the demanding modes of change experienced by physicians and patients have not radically altered the elements of health care, the clearest indication that health care is no longer composed of "mom-and-pop" type outfits is that what used to be a "physician" is now a "provider" and what used to be a "patient" is now a "consumer."
The point is, medicine today is defined by the reality that health care continues to operate on old world sensibilities and the persistence of nostalgic beliefs. So, to counteract any system-based dissatisfaction, the "health care reformer" has dreamt up all sorts of regulatory designs. Neither together nor alone could any of these "answers" be optimally effective in redefining health care in the United States because not one of them fundamentally undercuts the devolvement of health care into its present jumble of individual and collective government, business, and society interests.
Up to now, we've been given nothing more than redactions of "safe think."
- Keith Butler MD MBA
- Practicing MD, Affilion
This is a very interesting discussion. Solutions that have worked in other countries will not work in the U.S. A single payer system would not be the kind of system that most Americans would be happy with.Our biggest obstacle to reform is the position that many take that health care is a 'right'. Once we get over that obstacle, and determine that it is a privilege, and one that we want to extend at some level to all of our citizens, it opens the door to solutions.
I believe that a solution that would work in the United States does not involve 'insuring everyone' a la Massachusetts. Insurance does not equal health care.
A two tier system would accomplish all of the goals mentioned in previous posts in a very cost effective way, while allowing those of us who want 'the best neurosurgeon in the country' to have the freedom to work with that individual.
The system basically involves rolling all Medicare recipients, Medicaid recipients, the VA hospital network, and the current 'county' hospital networks into a single payer system. This system would be free to all citizens. (Immigration issues are huge in this discussion, but this is not the forum). There would be strict limits on malpractice and rational limits on care (based on the English NHS of 'not buying the equipment' and Oregon's rationing list of procedures). End of life care would be limited just like in Germany, Spain, Canada and England (e.g. No four vessel bypass when you're over 90, etc.). This would eliminate billing costs, overhead, and the profit motive. It would also align the governmental incentive to improve 'health'. The disincentives for using this system would include the limitations on structure, equipment, malpractice options, and delays in receiving care.
By and large, we know that a single payer system will look just like Walter Reed, Canada, England's NHS, or your local VA. For those who suggest that a U.S. Single Payer system would be different is completely unsupported by reality both here and abroad. The system will adapt to its incentives.
The second tier (which England is just beginning to really adopt) allows those who wish to pay out of pocket to do so. These individuals would be able to have a four vessel bypass if they wanted, no matter how old. Current community and 'for profit' hospital systems would then cater to this commercial market and compete on outcomes, price, etc.
However, this tier will not work with the current insurance structure that is in place. This distorts free market forces to the point of making them almost irrelevant, which has greatly contributed to our current system's decline.
Eliminating the third party purchasing of health insurance will go a long way towards curing this ailment. Currently, the gap between the patient and the provider is too wide. For example, as a practicing physician, I can care for a patient, be rude, perform just this side of malpractice, and submit a claim to their insurer with all of the t's crossed and the i's dotted and I will be paid the 'usual and customary' or 'contracted' rate. On the other hand, if I treat the patient to the utmost of my abilities, have excellent bedside manner, and a tremendous track record of success, I can submit a claim, and get paid this same usual and customary rate. Or I can forget to dot the i, and I won't get paid at all, regardless of the patient's level of satisfaction with my care. The concept that all doctors and that all care is uniform is eroding health care at its base.
In years past, patients had a harder time deciding if they truly 'needed' an MRI or a gall bladder surgery. Now, patients visit their doctors having researched it on the internet. Modern patients are much better able to decide if a given service was satisfactory and appropriate. A simple solution would be to eliminate the corporate or business tax deductibility of health insurance, thereby encouraging all health insurance to be purchased by the user (or the head of the household). This would remove at least one step between provider and patient.
Furthermore, health insurance has drifted too far from its mission of 'risk pooling'. With a backup 'free' tier (as described above), insurers therefore would gravitate to only insuring the lowest risk individuals. Therefore, health insurers should be required to offer the same price for the same 'plan' for all purchasers. This will then allow for risk pooling and will bring back enough benefit from private health insurance to make it a feasible component of our system.
A two tier system can be implemented simply, with only a few major changes. It would provide a basic level of care to all without eliminating the opportunity for others to purchase a higher quality of care if they so choose. The cost savings from the current government programs, the decrease in defensive medicine, and the decrease utilization of tests and procedures that wouldn't be available under the single payer system would pay for the system.
Simple steps to take now would include the following:
1. Develop a consolidation plan to bring county and VA hospitals under the same roof.
2. Implement tax and legislative strategies that greatly discourage 'group' purchasing of health care insurance.
3. Legislatively remove the ability of health care insurers to risk rate purchasers on anything beyond that individual's control (e.g. genetic tests excluded, smoking included).
- Tery Tennant
- Partner, Attainment, Inc.
One argument is--everyone else (e.g., industrialized countries) is doing it, so we should too! I am another person marveling that our country, the champion of free markets, is looking so strongly at another big government system! Do we really want this additional cost? And when did an individual's medical needs become an inalienable right that the government has to insure?Even now the insurance companies add a layer between the provider and the end customer. This layer takes away the personal responsibility and desire of the customer towards keeping an eye on costs. Currently free market mechanisms (invisible hand) are pretty much nullified in our system of insurance and legal constraints.
I agree that medical insurance would be better if it was designed more for catastrophic instances. As a small business, we set our deductibles high so that our premiums are lower. This way we have an interest in keeping out-of-pocket medical expenses low, and therefore watch costs more closely to see if there is a better way to handle things. I would dare say it also affects lifestyle decisions relating to physical health in wanting to keep costs low!
Advocates of the big government system say things could be different if it was approached right, but the layer of control the government would bring seems to be a continuously refillable prescription for more and more inefficiency and higher admin costs. The federal government very rarely gets its hands into an operation without infecting the patient worse than the disease it was trying to cure! What makes this so different?
- Anonymous
With the current turmoil surrounding the treatment of veterans at Walter Reed Army Medical Center and various VA hospitals around the country, I am amazed and appalled that anyone could reasonably suggest that government should play any role in health insurance. Having been, in the past, a participant in government-run healthcare (for over 20 years), I do not relish the thought of having the government take over and destroy what is undoubtedly the finest healthcare system in the world.- Stuart Koehler
- Operations Manager, Wholesaler
The present healthcare debate should be guided by one simple statement: The quality or availability of care should NOT be determined by the amount of money in your wallet or bank account. All of the nibbling around the edges of this problem do nothing to guarantee access or quality of care. A universal health coverage plan can be designed that guarantees coverage for all and utilizes the present insurance infrastructure for processing claims and also as a vehicle for providing low cost malpractice insurance to care providers. By requiring EVERYONE to participate in this system, coverage for all can be accomplished and costs will be reduced. Our present expenditures for veterans' benefits, Medicaid, Medicare, and related programs (approx 55% of budget now) cannot be sustained under the present arrangement.- Jim Zimmerman
- President, Sphereview LLC
I have run my own small business and two not for profit free clinics in Illinois, and as such have a first hand sense for how our current healthcare system penalizes the small business owner (group size too small and/or high risk) and leaves behind many of the working poor in our society (company doesn't offer insurance and employee can't afford or get it in private market). Regardless of perceived cause, I would submit that these two circumstances alone are socially and economically destructive if allowed to continue.The only fair and economically sensible thing to do for our valued small business owners (who create most of the jobs in this country) is to create a health insurance system by which they pay the same for healthcare insurance per person or family as any other large business.
The only fair and socially responsible thing to do for the working poor and indigent is to create an affordable (and if needed) subsidized insurance system that looks the same and pays the same as everyone else's insurance to avoid discrimination in access to quality care.
If one subscribes to these healthcare access and procurement principles, then these attributes seem required: National Single Payer System for transparency so no one can tell your insurance from my insurance; Age is the only factor in cost of insurance to eliminate group size and preexisting condition discrimination; All legal residents must enter the system at birth or at time of legal immigration and remain in the system for life; Everyone using the system must have proof of health insurance to ensure all care provided is being paid for and premiums are as low as possible; All physicians and healthcare institutions must participate in the system to obtain U.S. licensure to prevent private practices designed to serve the wealthy only.
In addition to the above I believe coverage design should emphasise preventive health measures, screening for and early detection of serious disease, and healthy lifestyle promotion. On the other hand, it should discourage extrordinary life extension measures in the elderly and terminally ill.
- Anonymous
Are there reports that the Walter Reed incident had to do with patient care in the traditional sense of the word? There are few people that will question that the in-patient care provided at Walter Reed is anything less than world class.- John Wilson
- Group Commander, Northern Ireland Fire & Rescue Service
It is both depressing and sobering to have one's bias confirmed--but alas sometimes that's the way it is: from what I read of the comments so far, too many Americans still believe they have the best of the best of the best and cannot see the reality of a system of healthcare that destroys lives, creates "third world"-levels of health care for vast numbers of its citizens--and still manages to cost more per capita than any other nations.Yes, "socialised" systems like the UK's are imperfect--like every other human system ever devised--but actually deliver a vastly superior level of care across the board at a significantly lower cost. I may have to wait longer to get a scan than you do--but that's only if the "you" is someone who "pays through the nose" for the priviledge and hasn't had the misfortune of losing their job or facing some other predicament that means they can no longer pay their massive insurance premium.
"Big" government in the U.S.--like in most countries--has a mixed record on service delivery but when it works it works better than anything else and the idea that the private sector is superior is a (sick) joke.
The great irony is that universal coverage funded by general taxation would actually cost the richest people less than they pay now for their far from perfect private insurance: seems strange you folk in the U.S. can't spot such a great bargin!
Wake up please before it's too late. You clearly have the talent, the imagination and the wealth to do this all so much better--though I suspect that for some, a little pride may have to be swallowed beforehand.
- Anonymous
The problem at Walter Reed started when the government wanted to outsource the services to private industry to a sole bidder--IAP Worldwide (which has deep political connections). The problems at Walter Reed are also related to government bureaucracy and Congressional failure to act, no doubt. But to say that it is entirely due to government ineptitude and that this is what government-run healthcare would look like is misleading.- Gerry Berstell
- Self-employed Marketing Consultant
At first, there seems to be a lot of validity in the argument that a single payer system will eliminate the huge amount of layers and overlap in the private sector system, and therefore promote efficiency and reduced costs. But then again, we know how the federal government works. I know that every health care bill will inevitably include more subsidies for peanut farmers and more bridges to nowhere. That's simply the political process--it's how it always has been and always will be. It's definitely NOT a process that will promote efficiency and reduced cost for health care.- Maggie Anderson
- CEO, Words That Work
Why is there such controversy about government-provided foundational, universal healthcare, when our society has accepted this as the norm for education since the first public schools opened in the 1820's? Everyone has access to a good basic education. If you want a higher level, and have the means, the marketplace provides options. The indignity of illiteracy is rare in this country. And regardless how you judge American public education, there is no doubt our economy and society have thrived because of it.Affordable, available healthcare for all would have the same salutary effect. Relief from worry about the health of a family member or the stress of working sick; prevention and earlier intervention in disease; and unnecessary loss of productivity due to poor health or untreated illness would all be cured! The government should provide universal healthcare because it has demonstrated it can lay a firm foundation of preventive care and treatment at a much lower cost. The marketplace would still hold options for those who want and could afford more. Spiritual and thought leaders would need to lead the discussion on issues of beginning and end of life care that could break the universal healthcare budget. But as we have seen with the acceptance of hospice care over recent decades, our society can find acceptable solutions.
What is not acceptable, and depletes our energy as a nation, is the indignity of our current system where very few, even if they have insurance, feel secure that they or a family member will be well cared for when they are most vulnerable.
- Bill
Why not move to a single payer system for food and housing too?Why can't we face the facts. This is an iron triangle problem. We can't simultaneously excel along the 3 dimensions of this service problem. We can't have low cost, universal access, and high quality at one time. Maximizing/stretch any one or [two] dimensions lowers our ability to maximize the third part of the service triangle.
Give an example perhaps from another industry that has solved this iron triangle problem.
- DTK
- Faculty
The bottom line is that the provision of health care should not be a business. It should be run like a business to gain efficiencies of operation, purchasing, marketing, human resources, etc. And yes there should be a profit, but as the revenues ideally would be earmarked to qualify as a non-profit business. In order to do this, there need to be controls on profits that manufacturers and suppliers can achieve. Similarly, health care insurance needs to be simplified. As noted there, administrative costs are high and this may not include the administrative costs/time that providers have to spend in working around the obstacles to obtain appropriate care/products for their patients.- Todd Justman
- Senior Consultant, Bank of America
The question presumes that the government should have some role in healthcare. Government's role in healthcare is simply to have as little role in healthcare as possible. Government doesn't have a great track record in running anything efficiently. Try waiting months for an MRI in Canada that can be obtained same-day in the States. Armed Forces healthcare can't hold a candle to privatized care and was a key decision factor for me to leave that profession.Government's role is to minimize barriers that create abnormal market conditions. Removing regulations on health insurance is an example. Government's role should be to carefully support sensible reforms in the healthcare system. We know we have a problem with consumer behavior relative to purchasing healthcare, i.e. as a consumer I have no incentive (or information!) to shop around for the best allergy screening for my toddler, so I go to my closest covered practice and I pay a flat co-payment.
Aligning the consumer and insurer to seek out the best-suited care at the best price will go a long way to fixing our current system. If I had incentive to find a cheaper plan I would surely take it! Conversely I will surely pay more for a quality job. Unfortunately I have no incentive to find a cheaper plan, so the role of cost-conscious consumer falls on the insurance company, who manages cost with a different perspective. Correcting this anomaly will provide our for-profit providers the all-too-familiar cues to create efficiencies and root out quality issues.
- chuck
- clerk, usace
For healthcare the gov'ts role should be minimal. But if it should get involved it should try to cap the varied high costs of mediciines etc. Or look at poorly managed hospitals etc. But let the free market dictate the rest.- Richard Crowder
In view of (1) the notion that we are somehow magically entitled to stop working at 65, no matter how old we are likely to get, (2) Americans' determination to be "free" even when the freedom means paying twice per capita what is paid for health care in Britain, Canada and France, and (3) the exponentially rising cost of a given unit of health care, I would suggest that within 30 years the traditional taboo against suicide will disappear. It has been estimated that half of all healthcare expenses are incurred in the last month of life. Any experienced health professional has a pretty good idea when that line has been crossed. We should be able to say, "When that moment comes, I want to be painlessly put to sleep." Life insurance benefits, of course, should be paid.- Bill
Regarding DTK's point "not a business": Please tell us what the edge of health care is. Does it include only clinical services? Does it include all procedures? Does it cover medical equipment costs? What about equipment that has uses in other industries? Does it include all related insurances (all liability insurance and fire insurance on medical buildings)? What about 3rd party accounting services that tend to specialize in medical practices? Medical suppliers ... what about companies that serve medical and veterinarian concerns?The more lines we draw, the more unnatural impedances we create across the margins. They'll be some serious loss of efficiences there.
- Sneh Asnani
- Asst. Systems Engg (Trainee), Tata Consultancy Services
It's high time the government realizes the importance of the heathcare sector and formulates policies and visualizes the future trends and concerns regarding this sector.In the years to come we will see an increase in life expectancy and an aging population. These will put tremendous pressure on the existing healthcare system. Hence what is needed is to put existing systems in place and provide a strong base to address the present as well as future needs as this is the next big thing that will affect the economy in both the developed and the developing countries.
It is required that measures be taken to control high inflation in the healthcare domain. The government can go in for a two-tier healthcare system where the richer get access to world class medical fascilities, while the poor at least get access to basic healthcare services. Moreover, the government should not only concentrate on insurance, finance, and necessary infrastructure, but also on basic healthcare education that is also needed at every level of society.
- Charlie Alter
- Sr. Consultant, MAGNET
This is certainly the never-ending debate in most of our personal AND professional lives. In my opinion, the U.S. has the creativity and experience to solve this dilemma and become a role model internationally. Part of the answer may be to apply mainstream continuous improvement tools like Lean and Six Sigma to the transactional nightmare that our healthcare systems has become. The U.S. is the best in world at these methodologies and it's time we "walk the talk."Of course the other intractable issue is money, or perhaps better said, who gets it and how, that drives all of the lobbying from the insurance, medical, and pharmaceutical interests. We can solve this problem not by turning to the government but by engaging individuals, companies, and government to fix this once and for all.
- Patrick Gibbons
- Director of Finance, Pinnacle Technical Resources
Many of the problems we have in today's U.S. health care system are the result of government involvement in health care. Governments have never delivered quality services efficiently. Let the markets solve this problem. After all, that's how the U.S. got to be the wealthiest country in the history of the world.Any suggestion that the government can cap costs reveals a profound ignorance about costs and prices. Governments can legislate prices, but never costs. The market will not supply services below cost.
[I do not agree that] government schools are a model for government healthcare. In DC they spend $19,000 per year per student and fewer than half the students read or count at grade level. How about the post office or the Veteran's Administration as models of what the government can do? Or Amtrak?
George Santayana was right.
The Soviet Union proved that even if you have a gun to the head of the people, socialism/communism won't work. No one has the "right" to health care and no government can "guarantee" it.
Markets allocate or "ration" scare resources among unlimited demands. Give me the market over "science based" rationing.
I'm an honors graduate of the business school who wouldn't trust an HBS professor with designing or running a business, let alone the 1/7 of the economy that health care comprises.
- Anonymous
If the government pays for healthcare, then the government becomes the doctor's customer. I for one would like to pay for my own health expenses or for an insurance provider that covers catastrophic costs. I want the doctor to serve me when I walk through the waiting room doors, not the government.Additionally, the level of care in a country with socialized healthcare is lacking, to say the least. Just ask Canada where the current wait for knee surgery is 6 months.