Health Insurance For The Long Run
As the Senate now takes up the task of health care reform, there’s an “inconvenient truth” that, over the past decade, both Democrats AND Republicans have managed thus far to hide from. This truth can NOT be ignored forever. At some point the piper must be paid or the music stops. And, unfortunately, neither the Affordable Care Act, nor the present strategies that we hear might replace it, go far enough to handle the “inconvenient truth” that looms on the horizon.
One might think that this “inconvenient truth” is quite obvious, but it seems, often, to surprise the governmental policy makers that really should know better. The inconvenient truth? Simply put: HEALTH CARE IS EXPENSIVE. That’s it. One doesn’t need a PhD in economics to grasp this fundamental truth. Good medical care is labor, time and technology intensive. It is carried out by practitioners (such as nurses, physical therapists, pharmacists, physician’s assistants, certified nurse anesthetists, and others) that have had extensive amounts of education and training. In the case of doctors, many have had ENORMOUS amounts of education and training. If one looks at post high school education, doctors will have spent 10 years minimum, in the case of a general practitioner, (4 years college + 4 years medical school + 2 years internship) and, in many specialties, up to 15 years (4 years college + 4 years medical school + 6 to 7 years of residency/specialty training) or sometimes even more. In addition to the enormous expense of equitably reimbursing such highly educated and trained practitioners, many medical therapies require advanced (and very expensive) technologies (chemical, electronic, computer and mechanical). And to make matters worse, all of this is reimbursed by a byzantine insurance bureaucracy that would have difficulty managing a lemonade stand, let alone a trillion dollar industry. And to make matters even worse, the system is policed by government “watchdog” agencies that wouldn’t know which end of the stethoscope to put on a patient. And to make matters even worse than than that, there are legions of attorneys whose contribution to the healthcare system results in an additional (at least) 55.6 BILLION dollars annually (source: a 2010 study by the Harvard School of Public Health. The figure is likely to be significantly higher today). These attorneys claim that they uphold the quality of care, and in some cases they do. But, in many cases of wrongful or wrongheaded suits, they uphold mostly their bank accounts. Witness, for example, the current TV and radio solicitations of Xarelto patients with bleeding complications. To understand the wrongheaded nature of these suits, the reader will need to know that Xarelto is an ANTICOAGULANT whose PURPOSE is to lower the blood’s ability to clot in order to prevent conditions such as stroke, pulmonary embolism and heart attack. Bleeding risks, under these circumstances are, to some degree, unavoidable. However, Xarelto (and other similar medications) continue, rightfully, to be used to treat patients, because it is has been demonstrated that the conditions they prevent or treat are MORE dangerous than the side effect of bleeding, for the majority of patients. It’s a calculated risk. And the inherent risks, by the way, are explained to patients and are also clearly explained in the package insert. Yet, the suits continue, and the costs continue to mount.
So, ladies and gentlemen, for all the reasons described above, health care is expensive. Unavoidably. Inevitably. And, unfortunately, many proposed nostrums will NOT help. For example, implementation of the Electronic Medical Record was supposed to lighten a doctor’s workload and improve care. Instead, it increased doctor time in the documentation process, and resulted, in many circumstances, in “muddling” a patient’s most important medical information in a quagmire of “populated” computer fields, leading to less efficient and less competent care. (The missed Ebola case in Atlanta is a very good example of this effect: the information that the patient had recently visited Libera was actually IN the electronic medical record, but was overlooked because of too much other, less important, information “populating” the record). Other methods that were supposed to increase the efficiency of medical care have had similar disappointing results.
Now, I am not one of those who feel that the high cost of medical care must be trimmed. To me, quality, efficacy and availability are more important than cost. Aside from food, shelter and defense, what, after all, is more important than one’s health? And, where would our money be better spent? More flat screen TV’s? Faster cars? Higher salaries for athletes?
The American populace, however, shows little enthusiasm for increased medical spending, especially on a personal or family level. And, under these circumstances, some type of cap on medical expenditures will be inevitable. So, whether anyone likes it or not, it will be IMPOSSIBLE for the United States, as affluent as it is, to provide unlimited medical care to a virtually unlimited number of people.
When the above reality sinks in, finally, to America’s collective consciousness, there will, inevitably, be limitations proposed on access to health care. And, without doubt, these limitations will, in time, be enacted. It’s possible, however, that the initial limitations will be of a “gentle” nature (allowing, for example, only 10 rehab sessions for a broken hip recovery, instead of, say, 20). Later, however, more stringent limits will apply, and eventually draconian measures will be enacted to keep costs in check. Some of this is happening already. Most health care consumers (patients) have already noticed increased wait times to see their doctor (and the wait times increases I’m speaking of are NOT a matter of hours or days, but rather, weeks, months or more), as well as increased premiums and increased deductibles. Extremely long waiting times for needed procedures have already become standard operating procedure for the notorious Canadian health care system. Many Canadians (including the PRIME MINISTER) already come to America for procedures such as heart surgery or hip replacement. Many more WOULD come if they could afford it. And, possibly, in the not to distant future, certain patients will be encouraged to choose “death with dignity” (euthanasia) instead of costly medical treatment. Preservation of life procedures, such as kidney transplants, will (as in today’s England) not be performed beyond a certain age. Quality of life interventions such as hip replacement may lose funding funding entirely, with the government labeling them “elective”, “optional” or some other similarly dismissive appellation that doesn’t take into account how important they would be to those in need of them. Certain valuable procedures and treatments will be “reassessed” and falsely determined to be without merit. Limitations of ICU stays will become increasingly common. “Appropriate Use” panels (death committees) will eventually hold sway.
Not a pretty picture to contemplate, is it? Understandably, frightened citizens might ask if this scenario can be somehow be prevented. And the answer to this question is a resounding “maybe.” But it won’t be easy.
Some policy makers harbor the delusion that switching to single payor system will be the answer. Unfortunately, switching to a single payor system will NOT, in my opinion, help substantially. I say this because, although a single payor system will change the WAY health care is funded, it will not change the economic reality of trying to provide unlimited health care to a virtually unlimited number of people. And, what’s worse, having only a “single payor” system will make it easier to usher in unpalatable measures (such as “Appropriate Use” Committees/Death Squads), simply because there would be NO alternative.
So, if a single payor system won’t solve the problem, are we “doomed?” Maybe not, but the way out of the frightening scenarios discussed above would involve embracing something that has been a taboo subject in discussions of American health care for many years: a Two Tier payor system. Although such a proposal will sound, at first blush, to be inegalitarian, un-American, or otherwise unacceptable , I believe that it can be structured in a way that’s fair, transparent, and reasonable. And that it may allow us to avoid the harsh rationing strategies discussed above.
Before describing one possible two tier model, let me list a few premises that pertain to this issue.
First, I think we should acknowledge that America has increasing come to something of a consensus that some form of medical care should be provided to ALL citizens, regardless of their ability to pay. Wether conservatives or libertarians like it or not, there is a zeitgeist that some level of medical care should be available to all. And this position is favored by not only Democrat policy makers and their supporters, but also favored by many of the constituents of the conservative representatives that, on principle, oppose such a notion. Let’s face it, folks: NO ONE wants to see an impecunious citizen die of a pneumonia that would take five dollars of amoxicillin to cure.
Now, despite the consensus for some type of universal medical coverage mentioned above, Americans WILL NOT, however, agree to the ever increasing expenditures required to make that universal health care possible, as explained above. In 2015, America spent 17.8% of its GNP on healthcare. Increasing access to health care, or merely maintaining access at its current levels going forward (as our population ages) would, inevitably increase the percentage of GNP needed to provide this health care. Whether it comes out of citizen’s wallets directly through a private insurance provider, or whether it comes out of citizen’s pockets indirectly through taxes, there’s a limit as to how much health care spending the American people will allow.
So, although the American people, for the most part, believe that everyone should have access to medical care, that doesn’t mean that they believe that everyone should have access to UNLIMITED medical care. Although, as mentioned above, I think just about EVERYONE (even the most enthusiastic supporters of limited government) would be willing to save a life with five dollars of amoxicillin, there are many Americans that would rightly question whether society has the obligation to fund extremely expensive and exotic treatments to all. Consider, for example, that a bone marrow transplant is estimated to cost roughly EIGHT HUNDRED THOUSAND DOLLARS. Yes, you read that right! $800,000.00 (source: Medigo). Similarly, a liver transplant is estimated to cost FIVE HUNDRED AND SEVENTY SEVEN THOUSAND DOLLARS (source: transplantliving.com.) And, by the way, this estimate is for an uncomplicated liver transplant, in other words, a “best case” scenario. I am aware of a liver transplant that was beset by complications, recently, that generated a 3 MILLION dollar hospital bill!). Is society obliged to provide similar treatments to EVERYONE? Is society obliged to provide the 3 million dollars of coverage to individuals that may have earned less than that amount in their ENTIRE LIVES? Or to those that have never earned anything in their entire lives? Or to those that have NEGATIVE life time earnings (chronic welfare recepients, or even outright thieves)? Or to violent felons? Rapists? Murderers? Many of us would, I think, object to such expenditures. And rightfully so.
If we look at this issue in terms just of dollars and cents, it’s easy to see that if we limit access to just 1 bone marrow transplantation, we would be able to provide sufficient money for enough antibiotic to cure the most common form of pneumonia for 160,000 people. In essence, limiting access to an expensive and exotic bone marrow transplant allows the treatment of160,000 patients with pneumonia l. Looked at in this way, the bone marrow transplant exclusion doesn’t seem quite as egregious.
This type of limitation is what, in essence, the First Tier of a Two Tier system would do. By limiting extremely expensive and exotic treatments, a Tier One plan would provide effective healthcare to an extremely large number of people. Such Tier One plans would be funded by the government, so the level of care they provide would be available to ALL. They could, in theory, be administered by private companies, and MODEST premiums and deductibles and copays could be left in place to curb over utilization, but they would be kept very low so that people could afford real insurance (NOT like the current Obamacare plans with exorbitant premiums, deductibles and copays). There would be no exclusions for pre-existing conditions. There would also be no cap, so they would function as what used to be called “major medical” policies that would protect citizens from losing their home or savings in the case of a catastrophic injury. But Tier One plans would not cover the extraordinarily expensive procedures such as bone marrow transplants, liver transplants, heart transplants, genetic testing and the like.
Now, if a citizen feels that he wants to make sure that very rare, exotic and expensive therapies remain available to him or her should they become necessary, he would then purchase (with his own funds) a Second Tier plan created for exactly this purpose. And an individual would be free to decide for himself exactly how many rare, exotic and expensive therapies he wants to have access to, and this expanded coverage would be reflected, of course, in increased premiums. People would, in essence, ration their health care THEMSELVES. It would take a good deal of the costs of extraordinary/high expense medical care, and place them in the hands of the consumer. It would also take the decision making process and put it where it belongs, in the hands of the consumer. Tier Two plans would compete across state lines, helping to keep premiums low. Market forces would also result in hospitals and doctors working to keep the expenses of exotic procedures as low as possible to make sure these procedures get included in as many second tier plans as possible. And, plans could be tailored to a person’s specific situation and specific needs (seniors would not need plans with maternity benefits, for example). Exclusions for preexisting conditions would be MANDATORY to provide maximum incentives to purchase such policies. They would be non-cancelable, however, so companies could not boot out stricken patients after a specified policy period (a YEAR in some cases) as some plans, much to their shame, had done in the past.
These suggestions are, of course, a very rough outline of what a Two Tier model might look like. Obviously, much work will be required to work out the details, and I anticipate that implementation would hardly be easy. But, such a plan just might allow America to avoid the rationing nightmares discussed above, and still provide substantial choice to consumers. Although the Two Tier solution is not something we are used to considering, I hope it’s not dismissed out of hand, as, unfortunately, the alternatives are worse.