And Another One

I know there have been a lot of posts lately about health care, but this topic in particular really impacts all of us, and whatever is put into place by our current legislature will be very difficult (read politically impossible) to rectify if it is messed up.

I think that way too few out there are able to clearly state the problems as I see them with Health Care. That is why when I read this great article (though perhaps a bit too long) I thought: "This guy has said it better than I have or could have."

Here is the article.

If you want the cliff notes version keep reading, but as with any cliff notes, you are missing the real story.

There are many problems with Health Care in America. Few if any of which are being addressed by the current "debate" on capital hill. In fact, the methods currently being discussed really perpetuate the problem. Health Care professionals are disconnected from their patients (they are forced to be in many respects). Health Care professionals in fact are more clients of the insurance companies than the patients are of the medical profession (Did you know that for every 2 doctors there is one insurance agent?). This lack of connection between doctors (again, despite the doctors and other professionals best efforts) and patients quality of care is way down. While I don't agree with him spouting this as if it were the norm and I especially don't think doctors concsiously think like Medicare is the client, I do know that plenty of people out there have similar experiences:

"What amazed me most during five weeks in the ICU with my dad was the survival of paper and pen for medical instructions and histories. In that time, Dad was twice taken for surgical procedures intended for other patients (fortunately interrupted both times by our intervention). My dry cleaner uses a more elaborate system to track shirts than this hospital used to track treatment.

Not every hospital relies on paper-based orders and charts, but most still do. Why has adoption of clinical information technology been so slow? Companies invest in IT to reduce their costs, reduce mistakes (itself a form of cost-saving), and improve customer service. Better information technology would have improved my father’s experience in the ICU—and possibly his chances of survival.

But my father was not the customer; Medicare was. And although Medicare has experimented with new reimbursement approaches to drive better results, no centralized reimbursement system can be supple enough to address the many variables affecting the patient experience. Certainly, Medicare wasn’t paying for the quality of service during my dad’s hospital stay. And it wasn’t really paying for the quality of his care, either; indeed, because my dad got sepsis in the hospital, and had to spend weeks there before his death, the hospital was able to charge a lot more for his care than if it had successfully treated his pneumonia and sent him home in days."

The way to get rid of this disconnect is bringing insurance back to what it should be; something to cover the costs of emergencies. He also points out something very interesting, the debate has changed the meaning of health care to be something synonymous with health insurance. Have you noticed how when individual members of the senate, etc. stand up to talk they talk about all those who don't have health care? What do you mean they don't have health care? The problem is they don't have insurance to cover the costs of their regular and emergency care. In what other area of our lives do we expect our insurance to cover the costs of routine things? Home insurance doesn't pay our electic bill and car insurance doesn't pay for gas.

The author also feels, and I personally just haven't done the research but find his arguments compelling, that hospitals are taking a huge chunk of the costs pie. This is part of his argument:

"Consider the oft-quoted “statistic” that emergency-room care is the most expensive form of treatment. Has anyone who believes this ever actually been to an emergency room? My sister is an emergency-medicine physician; unlike most other specialists, ER docs usually work on scheduled shifts and are paid fixed salaries that place them in the lower ranks of physician compensation. The doctors and other workers are hardly underemployed: typically, ERs are unbelievably crowded. They have access to the facilities and equipment of the entire hospital, but require very few dedicated resources of their own. They benefit from the group buying power of the entire institution. No expensive art decorates the walls, and the waiting rooms resemble train-station waiting areas. So what exactly makes an ER more expensive than other forms of treatment?

Perhaps it’s the accounting. Since charity care, which is often performed in the ER, is one justification for hospitals’ protected place in law and regulation, it’s in hospitals’ interest to shift costs from overhead and other parts of the hospital to the ER, so that the costs of charity care—the public service that hospitals are providing—will appear to be high. Hospitals certainly lose money on their ERs; after all, many of their customers pay nothing. But to argue that ERs are costly compared with other treatment options, hospitals need to claim expenses well beyond the marginal (or incremental) cost of serving ER patients.

In a recent IRS survey of almost 500 nonprofit hospitals, nearly 60 percent reported providing charity care equal to less than 5 percent of their total revenue, and about 20 percent reported providing less than 2 percent. Analyzing data from the American Hospital Directory, The Wall Street Journal found that the 50 largest nonprofit hospitals or hospital systems made a combined “net income” (that is, profit) of $4.27 billion in 2006, nearly eight times their profits five years earlier."

He then goes on to debate the validity of how much of the costs of health care is made up from the new technology. This is another area where I would disagree with him to an extent. I don't think technology, as some suggest, makes up the majority of the rise in costs. He argues that he buys other innovative and new technologies all the time and they don't rise in costs, they lower costs. This argument doesn't take into account the scarcity of the technology available. It come to supply and demand and honestly the supply isn't great and demand has risen and will continue to.

His summary of the problems:

"A wasteful insurance system; distorted incentives; a bias toward treatment; moral hazard; hidden costs and a lack of transparency; curbed competition; service to the wrong customer. These are the problems at the foundation of our health-care system, resulting in a slow rot and requiring more and more money just to keep the system from collapsing.

How would the health-care reform that’s now taking shape solve these core problems? The Obama administration and Congress are still working out the details, but it looks like this generation of “comprehensive” reform will not address the underlying issues, any more than previous efforts did. Instead it will put yet more patches on the walls of an edifice that is fundamentally unsound—and then build that edifice higher."

Then his solution is a radical one. He suggests that we all contribute, paying a fixed premium rate dependent on age, to a catastrophic insurance program. By catastrophic he refers to it costing more than $50,000 (I would tend to think that too high and I also believe he sets it that high based on current costs). The rest of our care would be paid for out of income and savings. He suggests that everyone be forced to contribute to an HSA account (I am not a big fan of the forced part but I highly recommend that everyone get an HSA if you can). That HSA account would pay for the care that is more than mundane and less than catastrophic. The mundane care would be paid for by you out of pocket.

It is a radical solution and radical solutions tend to have bad up front results, but this kind of solution does actually address what the problems are.