Re-evaluating American Health Policy: A Catholic Democrat’s Perspective (Part II)
Dr. Peter Pronovost is a distinguished physician known for his efforts to decrease the frequency of deadly hospital-borne infections. His remedy to the problem is surprisingly simple: a checklist of ICU protocols that directs physician sanitary practices (e.g. hand-washing). Hospitals that have put Pronovost’s checklist into practice have had immediate success, reducing hospital-infection rates somewhere between (estimates vary) well over a third to a whopping two-thirds within the first few months of its adoption. Yet as the story goes, many physicians have rejected this solution and Pronovost has struggled to persuade hospitals to adopt his reform.
The Centers for Disease Control and Prevention estimates that nearly 100,000 American deaths are caused or contributed to by hospital-borne infections. Blood clots following surgery or illness are the leading cause of avertable hospital deaths in the U.S., which by the most liberal estimates might contribute t o the death of almost 200,000 patients annually. Given such a hideous fact, why exactly does a doctor need to travel about and emphatically seek to persuade other medical institutions to adopt, in effect, a cost-free idea that could save so many lives?
How is that an industry which stridently decries the high cost of liability insurance or the absolute injustice of our tort system(which does need reform) need such petitioning to embrace such a simple technique to save thousands of lives? Moreover, in the United States it is not unheard of for a whole business to shut down due a single illness from some suspicious food—yet, we tolerate the killing-via-negligence on such a grand scale in our hospitals? Medical mistakes and institutional carelessness do not qualify as some must-be-accepted inevitability.
This reality has been almost entirely been neglected in the discourse on health care reform. Beyond the structure and financing troubles of our medical system, the institutional practice and governance of hospitals are in need of severe criticism. For example, in what alternate dimension does the peculiar scheduling of hospital work shifts in any way benefit the patient? A few weeks at the hospitals virtually guarantees a never-ending string of new personnel assigned to one patient’s care. If this can be avoided, should it not? It seems quite reasonable to presume that passing patients off from doctor to doctor, or nurse to nurse, might increase the chance of someone making a mistake? The effect of changing such a seemingly small problem could be huge. Or, take for example, the “sanitary” environment of hospitals in general, which contribute to the nearly 100,000 annual American deaths. Anyone who has ever worked in “corporate America” or in a large building in general might note that the trash is picked up once daily. Is it any different in a hospital? It takes some sort intellectual schizophrenia to insist on ICU sterility in a building if one has not the slightest care over how many times trash (never mind what is in it) is picked up in a day.
Any array of complaints about institutional malpractice must lead to the inevitable question: how is it that the most technologically advanced medical institutions in the industrialized world miss out on a just as modern, just as recent, revolution of quality control and customer-service that has pervaded every other consumer-based industry? The answer to this question is telling.
To put it simply (though it is hardly simple), every sector involved in health care from providers to insurers to drug companies to venders work in a firmly regulated and massively subsidized industry abundant in structural distortions. The American medical system has been built with incentives that inevitable yield poor and horrifying results—with emphasis on treatment over prevention, with terrible amounts of cost-shifting, that disguise true costs, and that favors irreducible complexity. This has played out over the last forty or so years to produce a generational pyramid scheme of “band-aids” and “quick fixes” rather than anything sustainable, financially or otherwise.
This is more than evident in current approach to reform efforts. Though the details are still being ironed out, the general principles are, more or less, a repackaging of preceding reforms and that is to deal with access to medical care by increasing government aid to those without adequate insurance, to control costs by centralized methods of cost-shifting, allocating medical resources and care, and disguising costs, etc. Essentially the reform efforts are anything but comprehensive—it merely cements the structural deficit of the current system in hopes that the structure will cease to crack. And this system that does not work is this: insurance-dependent, employer-dependent, and administratively a nightmare. The underlying problems get an oblique address, if at all and the real crisis is that crowding more people into the system will most definitely increase the cost of universal coverage—not that the system will be any cheaper if we don’t do anything. In other words, unless we fix the foundational problems which are largely by way of incentives, we will be revisiting this issue in the next ten to twenty years.
We must not isolate medical care in rethinking health policy because it is, of course, merely one component of our overall health. The obvious economic drivers for the need of care—nutrition, exercise, education, emotional security, the natural environment, and public safety—are very likely to be more crucial in producing results in quality of life than immediate system reforms. In 2005, it was estimated that nearly half of the deaths in the U.S. (abortion not factored in) resulted from heart diseases, diabetes, lung cancer, homicide, suicide, and accidents. All these things—eating habits, the way we exercise the virtue of prudence, and even criminal violence affects medical care and particularly its cost.
In regard to system success, many pro-life Democrats that view universal health care as a “life issue,” including myself, will criticize the medical system’s failure in this regard. But, in all fairness, this criticism cannot neglect the fact that such loss of life is influenced as much by lifestyle choices and living environments as by health care itself. Therefore, we cannot limit ourselves to reducing the incidence in only reforming medical care.
It might be time to think of new and innovative strategies. Health care spending is annihilating every concern in both personal and social budgets. As a nation, we spend almost 18% of our GDP on health care. Medicare and Medicaid in the 1960s encompassed 1% of government spending—now it is a staggering 20% and that will undoubtedly rise. In the last ten years, the U.S. economy grew by 4.4 trillion and of that, roughly one of every four dollars was spent on health care. As a result, numerous public priorities are taking the backseat to health care—and this issue is undoubtedly integral to the question of fiscal responsibility.
One must ask, on what presumption does America determine that an extra$100 billion in health care spending will make us healthier than that same amount divided into spending on cleaner air, water, nutrition advocacy, parks, recreation, supplementary vacation time and leisure? Why not work to contradict the materialist America, in which, everyone is “too busy” and overworked—what would this do for American health? A closer analysis suggests that many presumptions are baseless. New test and treatments simply find their way into Medicare and commercial insurance policies with little regard for costs. Obviously the money has to come from somewhere—government spending (i.e. borrowing) and private premiums simply rise. The wealth of the United States has increased in the last century and naturally we would allocate some of this wealth into our health industry. But why so much?
While I usually do not display what I call “symptoms of hysteria” at the idea of government intervention, a real lesson can be taken from the recent housing crisis. The government-coerced tax benefits and subsidized borrowing rates that forced banks to operate outside of their typical mode of prudential practices did not end without consequences. Government intrusion not only generated the construction of more houses, but it incentivized the American public to borrow (much of what they cannot afford to pay back) and spend more than they otherwise would have. The results are dreadfully clear. The greater point is that the same thing that occurred with housing is happening with health care.
A greater, perhaps pivotal, point of interest is with health insurance. Here, one must go beyond the typical Democratic complaints about the downright scandalous and dirty practice of insurance companies. Previously, I noted that the center-left position asserts that a deep problem in regard to health care is a flawed reliance on private insurance. I contended that the analysis was only half-right. The most obvious question is the most radical and therefore, the most ignored. Why do we rely on health insurance in the manner that we do? The reason for financing some of our medical care with insurance is self-evident. Any sudden, unexpected serious illness might incur the need of pressing, extensive care that can impose a great monetary burden—hence, we have insurance. In the most basic sense, health insurance is like all other forms of insurance where many who share the risk pool together to share the cost incurred by the minority who suffer the risk.
Yet somehow health insurance evolved. It is the primary mechanism of payment of all care, period. This reality is the norm yet we somehow look passed the glaring absurdity of it. Could you imagine buying gas with your automotive insurances or paying household bills with homeowners insurance? Such thoughts are ridiculous. All-inclusive insurance is such a deep-seated aspect of our thinking that no one realizes quite how new the very reality of it is nor how imprudent.
The problem began with the sudden shift to employer-based, comprehensive health insurance to the neglect of any possible payment-methods. This is the same model used by the government, which after it commenced financing of health insurance for vulnerable populations covered 12% of the population within a year. This is not the problem itself; the problem is that the great inflation of costs followed soon thereafter. What is the problem—massive government financing of vulnerable populations or a poorly structured system built on vice after vice? The former seems to be a symptom, not the problem.
In one respect, comprehensive insurance has become a necessity because even routine, basic care is too expensive to pay for personally. But the inevitable irony is that the whole problem of cost control has for its foundation large-scale insurance which is itself a chief cause in high health care prices. This goes back to my point in my previous post about self-reinforcing problems.
Insurance is perhaps the most multifaceted, expensive, and distortional means of financing anything, which is really why it traditionally has been used to finance rare, unexpected, and large costs. Much of the health care monster could potentially disappear if we looked for new ways to finance care; one way to start would be to attempt to shift to paying for routine and predictable health care with no assistance or the least amount of assistance necessary.
Any comprehensive reform will have to do everything and anything to counteract the hardwired tendency we have to change our behavior, in terms of prudence, and become careless spendthrifts when we know someone is picking up the tab. Much of medical care is inevitable. People get sick and need medicine. Still, the health industry spends nearly $6 billion a year on advertising! Why? Every Medical ad one might see on television tells us that whatever is being offered is eligible for Medicare or private-insurance reimbursement. The message is clear: benefit from this product at someone else’s expense. One cannot help but be aware of the fact that every doctor’s visit is being partially or totally paid for. In practice this means that we give little to no attention to prices in our “medical shopping” as we do in other situations. Add this neglect to our pay-for-service incentive system where volume of care benefits our physicians’ practice, combined with the background of medical training and the advantage that confers onto providers over patients, one will end up with a system where the industry can create demand at will. The reality is that providers benefit from higher costs and patients do not fully bear them, thus, cost control is extraordinarily difficult. Even more so, demand in a market-system has no natural limit. Certainly new cures and treatments will come about and we might pay for these, no problem. Yet the cost of “comfort,” i.e. financial irresponsibility, is never calculated. We affirm the selfish impulse to get our share rather than the virtuous impulse to pay our part of the share (however limited) by shopping wisely and prudently. The subtle difference between the two makes an immense difference—in fact, a fortune.
This reality is doing unilateral damage to our economy. Both raises and potential hiring must be affected by rising health care costs. Are employers paying for health benefits or are people collectively giving up potential raises and new jobs? Where else could this money be coming from?
I want to reaffirm here since I suspect my criticisms and analysis are surprisingly conservative to some who have found me progressive, relative to their own views perhaps. Moreover, I want to insist (not that I have to) I am not a libertarian nor do I support any current trend of market idolatry that I very convinced exists in fiscal conservative circles. Yet it is unquestionably clear that cost control is more so a featured of decentralized, competitive markets than centralized bureaucracy; in other words, a battle of incentives versus mandates. Cost control, to work best, needs to be dynamic. Previously, I attempted to speculate what was a legitimate Catholic understanding of economic life and how to apply those principles. I think the conclusions of that speculation apply here. In a market one faces constant variation whether its costs for labor, facilities, or even capital and one can hardly compete if management cannot react quickly, efficiently, and competently. The more centralized this is, e.g. a government, the less likely such a thing will occur. The government has to set regulations and reimbursement rates through meticulously constructed and broadly applied rules. Market variations then have to be noticed, which then would require action to resource misallocations, often followed by additional regulations (which are usually subpar because they are contingent on the political climate) and changes in reimbursement rates. This is again is not an absolute argument against government assistance, but a plea for subsidiarity (not to the exclusion of solidarity!) and for the most efficient—as well as just—manner of delivering social goods.
With the ‘Baby Boomer’ generation aging, it is fair to say a significant part of the population is aging. Yet there is an incredible lack of geriatricians. Why? Well, a significant portion of the older population is insured by Medicare and under their reimbursement system, geriatricians generally do not make too much money because seniors are often directed toward, for a number of reasons (usually budgetary), doctors who are not trained specifically for their particular health needs. This only reiterates that this impersonal force of insurance, whether it is private or the government, is the real customer. It would seem that if seniors were given the choice, they would choose geriatricians and this might incentivize medical students to consider this field if the need were great.
There are definitely other examples of disorder in our medical systems. Health insurance regulation limits interstate competition. Many of such regulations can be large barriers to entry for both new facilities and new vendors that can equip and supply them, sometimes more cost-effectively. Though, there must be a safeguard (as is the reason for the current laws) to incentivize insurance companies not to flock to states with the most lax laws that benefit their profit-margins the most rather than their customer service.
Currently, numerous states require hospitals to obtain permission, by proving valid need, before making a major purchase of new equipment. This, again, is a patch. It is really curious, objectively speaking, that limiting supply is a “sensible” approach to keeping prices down. In fact, a real problem is that opaque prices are one way in which an industry, void of any real competition, can keep there prices insanely high. Indeed, health laws have come about for a number of reasons, including good reasons, but many laws simply remedy distortions rather than solve the underlying problems.
No single individual has the answers to this immense question, but some points are irrevocably clear. First, we ought to avoid passing sweeping legislation in a short time frame without extensive research and deliberation over how such policy will be implemented and how it will work within existing health laws. Second, we need a common format—a national standard for billing and coding, created not just by Congress, but by medical providers and insurers – what does each side need to know? It should be as simple as possible. Their solution could then be voted on by Congress rather than invented by the government. This may help reduce administrative costs and make medical bills more understandable. Third, we must reduce cost-shifting and promote transparency as much as possible. This will require an almost complete overhaul in the way we do care-financing.
To recap, the infrastructure of the American medical system is highly disorganized, contradicting every Thomistic principle a learned Catholic can think of. The insurance scheme is wasteful, incentives out-of-order, not enough emphasis on prevention, vicious spending-behavior on the part of patients and their financing agents (private sector or government), and unknown, hidden prices. These are a foundational issue that requires, as we have seen in the last forty years, money to be thrown again and again just to keep the system from collapsing in on itself.
The current Democratic mainstream, again, is pushing for a “public option” and has ultimately settled for maintaining the status quo in the institutional structure of our medical system, even as they seek to cram more people into it. To the reasonable mind, this is like playing a dangerous game of “Jenga”—trying to maneuver in a structurally unsound edifice as you continue to build it higher, perpetuating both government and private insurance addictions to Ponzi-scheme financing.
The goal of achieving universal coverage with quality worthy of human dignity, America will have to reduce rather than expand the role of insurance and focus the government’s role exclusively on things the government is capable of doing (this will obviously be subject to debate).
Here is a possible scheme, which I am sure will win its share of supporters, critics, and people who fall somewhere in between. Though, I would like to go the single-payer route, I cannot, on the basis that I do not have sufficient reason to assume that a single form of care-financing by government insurance will yield a just system. I will contend it would be better than we are currently dealing with, but I cannot say with certainty it would yield a just product.
Rather, I believe, it is in the interest of the American people to have a multi-payer system. Before any minds conjure the format, weaknesses, and strengths of the German multi-payer health system, I wish to make one distinction. A fundamental issue, I have argued, is that Americans rely on a single form of care-financing—and it is costing us a fortune. Any reform should seek to make use of various kinds of financing for different types of care.
It could work this way (and this, of course, requires some changes before this is practical): Routine care, e.g. check-ups, largely will be funded out of personal income; major, but predictable expenses (which include obviously end-of-life care) could be funded by savings and credit; and massive, unpredictable expenses could be funded by insurance.
To do this, the current network of employer and/or government-based insurance ought to be replaced by a single national catastrophic insurance program that automatically enrolls every American citizen upon birth—indeed all Americans should be required to buy it with fixed premiums based probably on age and income. The program would work best as a national pool, without underwriting for specific risk factors. Ultimately, Medicaid, Medicare, and SCHIP would not be renewed. Every American would be covered against catastrophic illness, throughout their lives. Health insurance too would not be contingent on employment and of course, would be portable. Of course, any proposal for catastrophic insurance rises and falls on its definition of “catastrophe.” We already spend so much on problems categorized as catastrophic, a new program, it might be said, is pointless. But typically today, a catastrophic insurance policy is anything over $2,000. The catastrophe-threshold is too low; it should be much higher and on top of that chronic, long-term illness that costs more than some lower threshold could also be entirely covered or partially subsidized.
Medicare is a formed of forced savings, the same way private insurance is. The government could create, aside from a single catastrophic insurance program, a new kind of Health Savings Account. Every American should be required to maintain a HSA and contribute a minimum percentage of their income (which again, is a subject of debate) with a scale that rises the percentage reasonably over working life, as wages typically do. It should remain constant, if not.
Noncatastrophic care, whether it is routine or not, could be funded out of HSAs. Account-holders should be allowed (since it is theirs) to withdraw money for any reason without penalty once the funds exceed some established ceiling, which shifts from age to age (since statistically, health starts declining as you get older) and all remaining funds at death should be disbursed through inheritance—but the precise details are not essential to our purposes here. Current methods because of budgetary issues all over the place create a “use it or lose it” incentive against families, which encourages waste and imprudent spending. It would be better to encourage families to put money aside for future expenses, but not obligate them to spend it only on health care, since as I pointed out—health means more than just medical care.
Major care that might exceed someone’s account balance that isn’t considered catastrophic can be dealt with in a variety of ways. These can be funded the way we pay for many expensive purchases that confer long-term benefits: credit. Americans could borrow against their future contributions to their HSA to cover major health needs, even to having a ‘Checking’ and ‘Savings’ aspect of the account so that available funds are not contingent completely on having paid back one’s dues entirely. In fact, one might only be allowed to have available funds in this regard if one is consistently contributing some percentage to paying back borrowed funds. This simply an idea, a direction—the details do not need to be there. But if this is absent any effective cost control measures, this is only the beginning of fiscal disaster. Credit could be an option for expenses until they amount price reaches a certain point. We should not have high borrowing ceilings that we know Americans cannot afford to pay back. This argument is obviously contingent on price controls, if that goes, the argument fails.
Private health insurance will not have been obliterated and could become similar to other forms of insurance—life insurance, auto insurance, etc., in that it pays for unexpected needs that are not catastrophic, but still expensive. This could be essential to avoiding a system of borrowing. Moreover, it would be interesting—though this would have to occur through the market to avoid unwanted backlashes—if insurance began to merge into a form of HSAs, or rather, a supplement to it, where several kinds of insurances are offered—life, auto, health—together in single packages depending on need and this can help alleviate burdens when HSAs are not sufficient. In other words, so that people are not paying into a vast multitude of insurance and savings accounts. The institution that enables these (here I’m talking about HSAs) could be quasi-public, quasi-private or some of each. The essential thing, I think, is that expansion will lead back to institutionalized chaos of some sort while becoming too centralized will create a similar problem.
For lower-income Americans who cannot fund all of their catastrophic premiums or minimum HSA contributions, the government can fill the gap and in some cases, provide all the funding—state governments first, the federal government last. Additionally, there might be an incentive to put off routine care if Americans are required to pay for it directly. The government could provide vouchers to all Americans for checkups every two years or so; if everyone participated, the annual cost would still be but a mere fraction of current government spending of medical care. Additionally, there could be a of quasi-public, or rather, public-private cooperative (‘co-ops’) insurance programs — lacking the government’s bargaining power — that could be set into motion to check the less than ideal tendencies of private insurance. Of course, the work of charities and local safety nets we could not possibly do without, to catch those at the margins of society—with clinics, in private institutions, assisting people in finding resources to purchase insurance and/or religious groups coming together in community insurance pools (e.g. the Knights of Columbus providing health insurance or being able to buy into a pool with one’s own diocese).
These are simply some ideas and admittedly, they are not perfect (and I tried to save the single-payer system, if you weren’t paying attention). The primary point, beyond any suggested models, is that any suggested models of reform that lacks these things—solutions to deeper structural problems—are like cracks in a large body of glass. In the final analysis, I have never seen a sizeable grassroots conservative moment seeking to reform the nation’s health care system nor any legislation (aside from two bills that have appeared this year) that are not responses (or perhaps, reactionary reply) to Democratic intiatives rather than an independent analysis of a great problem and potential solutions. But my own party has failed in terms of morality by insisting that taking a life not be distinguished from healing one and failing ultimately, in my view, to be “radical” enough to actually change the status quo like they claim they wish to do rather than preserve a crumbling edifice. Truthfully, it is just a shame that our national discourse on this issue could be more than a sensational, emotional back-and-forth soap opera drama.