The Healthcare Debate
In July, 2009, over a period of three days several thousand of tired and desperate people crowded around an aid worker with a scratchy bullhorn, straining to hear the instructions and worried they might be left out. These people had lined up as early as two days earlier, often travelling hundreds of miles to take part in this Remote Area Medical (RAM) Expedition, which has turned fair grounds into a makeshift medical operating theater. On could be forgiven for mistaking the operation as being a makeshift military hospital - with mobile X-Ray machines, dental chairs, and the like. Stan Brock, RAM's founder, has organized similar medical expeditions in Asia, Africa and South America. In this case, it took 1,800 volunteers and $250,000 to put together this operation - providing about $1.5 million worth of healthcare to those who are less fortunate. However, this isn't a third world country; this is in Wise, Virginia. And eight more of these RAM Expeditions are planned across America this year.
In America, which produces a full quarter of the world's GDP, one would think the shame of having the largest, riches, and most powerful nation on earth be forced to provide emergency third world style medical care to our own citizens would be cause enough to create change. Universal health coverage has been much talked about in healthcare reform, but is only one part of a solution. Any legislation must address the big three: universal coverage, reduced costs, and improved quality. And the three pillars of healthcare are codependent on the others.
Unfortunately, the Healthcare debate has turned into a shouting match. If we take a minute and calm down the rhetoric, and look at the data we can have a real and rational discussion about healthcare. The GOP, now led by Rush Limbaugh, wants no change in healthcare and oft sites that any change is a budget buster. This isn't much different than the Democrats, which took the nihilist view when the President George Bush and the GOP dominated congress attempted to tackle the very real and growing Social Security problem. In both cases, the most insidious lie is that there is no problem. Without recognition of a problem, we can't move forward with any real debate on the steps needed to be taken to fix the problem.
According to the OECD most recent health data (unless otherwise noted, most statistics for this article can be attributed to the OECD), France has 3.37 doctors per 1,000 people, while the US has only 2.43. In France life expectancy is 80.7 years, while in the US it is only 78.1. The World Health Organization currently ranks the U.S. 37th in health-care efficiency/effectiveness, just ahead of Slovenia and just below Costa Rica. Guess who was ranked #1? That's right, France. Yet, in America we pay $7,290 per person, while in France they only pay $3,601. And that is pretty much in line with the average OECD country of $3,075 per person. But Americans still pay far higher than the next highest nation, Norway, which spends $4,763 per person. And this data accounts for all spending, regardless of source: individual, government, company, or non-profit.
So why do we pay twice as much and get so much less?
The answer seems to lie in the details of the data. Americans spend $878 per person on drugs, while France only pays $588. Americans get 25.9 MRIs per million people, while the French only get 5.7 MRIs per million people. The US has 34.3 CAT Scanners per million Americans, while the French only have 10.3. Well surely we must have more practicing physicians per 1,000 people than other OECD? No. At 2.34 we are understaffed than the average of 3.04 and far behind Belgium which has over four practicing physicians while spending only $3,595 per capita in that nation. It does make sense that we have fewer doctors, as we average 3.8 doctor's consultations per year per person, vs. an average of 6.8 and a far cry from 13.6 times that an average Japanese person visits their doctor.
Of course our doctors are better paid - because they are over proscribing and over utilizing for the purpose of getting richer, at the expense of America, without any visible benefit. Who is going to argue when a doctor send you to the doctor owned imaging facility for a CAT scan? Since it's paid for by your insurance company - who cares? Free markets at work. But keep in mind that only half our population is in the work force (according to the US government Dept of Labor), so each worker has to pay for themselves and one other individual. So that's $14,600 that has to be paid one way or the other (by the employer, through taxes, by the individual, etc...). If were more like France, and were able to cut that in half, that would be another $7,300 per worker that could be invested or spent on other goods and services - instead it's wasted.
It's unfortunate that there are many that believe that since America pays the most per capita, that America must have the best healthcare in the World. Even if you don't believe the World Health Organization, if you look at the OCED data, which doesn't have an overall ranking, but by almost every measure, whether longevity of life, neo-natal survival rates, or any other measure, when compared with the OECD (the 30 most industrialized nations) we hardly first, and at time worse than 50% of our peers. With one exception - we are first in cost.
So how do we fix it?
Part of the problem in Healthcare is unequal knowledge in the negotiation. A good example would with car mechanics. Let's take an example: you hear a rattle in your car and take it in to be fixed. The mechanic takes a look at it and realizes there is a loose bolt that can be fixed in about two minutes. He has three possible outcomes: He can be completely honest, tell you it was a lose bolt, fix it and perhaps not even charge you for the two minutes he spent on the car. He can stretch the truth. Perhaps thinking about the declining business, the need to make rent, and keep food on his family's table, he can mentally justify that would be safer if he replaces the entire bracket, and in the process garnering some profit on parts and an hour or so of labor. Finally, he could be an outright crook and claim a completely unrelated part needs to be swapped out at great cost. In the healthcare world, the "part" is almost always under warranty, however, in the automotive world that's not always the case. So what would the consumer do if the parts aren't covered under warranty? Would they ask to get a second opinion? Or ask if there are there alternatives? Perhaps ask: What are the consequences if it doesn't get repaired? These are questions that healthcare consumers almost never ask their healthcare providers, but could go a long way to controlling costs.
This brings us to the first interesting suggestion to fixing Healthcare. An interesting article in The Atlantic Monthly by David Goldhill suggests that the problem is similar the car mechanic problem above. That healthcare coverage is so complete, that we fail to question the authority of the medical staff and with no real financial stake in the picture, and put up with unnecessary and costly waste. He suggests a high deductible premium that would cover truly catastrophic health bills, but then make people responsible for all other procedures. In response to the claim that this would not encourage preventive medicine, he would provide for a single medical check-up per year. For those more disadvantaged, there would be subsidies. Doctors, like mechanics, aren't all crooks, nor are they saints - however most are trying to make a living and operate in the gray area in between.
The question is: would this change behavior? Would the overzealous mother be more reluctant to take their kids to the Doctor for every sniffle? Would we be more likely to be more careful, or take better care of ourselves knowing that if we do get sick it is out-of-pocket? Would those that are responsible and get cancer screening, see it like changing your oil every six thousand miles - a small cost to head off greater problems down the road? His theory is that costs would plummet and quality would rise as Doctors "compete" for business, and people ask for second opinion, options, and the like. It would cause something grossly missing from healthcare today - price transparency. Perhaps that bum shoulder isn't so bum that it is worth several thousand dollars of surgery, or perhaps it is worthwhile to try something less expensive such as physical therapy. Perhaps the parents of a child who fell off their bike and broke their arm would question why a CAT is necessary if the child didn't report hitting their head and there are no other signs of head trauma. The one problem I see is that in an emergency situation, when you don't have time to shop around, how are prices set? Does the emergency ward become the profit center for the entire hospital?
The next interesting suggestion on fixing Healthcare comes from the June, 2009 issue of the New Yorker called The Cost Conundrum by Atul Gawande. A doctor, Dr. Gawande sits down with some fellow medical doctors in McAllen, Texas, the second most expensive per capita market in the country (after Miami which has higher labor costs). The data shows that in spite of the high spending almost fifteen thousand dollars per person, the residents of McAllen are no more healthy than those of other counties. At first the doctors he interviewed cited defensive medicine and tort lawsuits, but Texas has a law limiting damages in medical malpractice lawsuits and these have gone to virtually zero. Finally, the doctors agreed the cost are likely a result of overutilization. A network of perverse financial incentives encouraged doctors to prescribe unnecessary and wasteful amounts of procedures and tests. For example, a doctor owned hospitable attracted other profit minded doctors. As an example of how to make it right, he cites the Mayo Clinic, routinely recognized globally as one of the best hospitals in the world. In an attempt to improve quality and customer service, they salaried their doctors, with bonuses based on patient satisfaction and outcome. As a side effect, costs went down, not up as expected.
A third perspective is from T.R. Reid, who has a new book called The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care (August 2009). He travelled the world and looked at healthcare systems. What he found that is America's is a crazy quilt of practices that evolved over time without enough thought - ultimately, adding up to an inefficient system. In America, the military runs socialized medicine through the VA. We have single payer programs, such as Medicare and Medicaid. And we have private health insurance. In addition we have hybrids, things like "managed healthcare" which seems to have managed down risk for the private insurance risks while not providing the substantial savings promised. Although he doesn't promote any single plan, he does detail plans around the world - all of which cost less and produce better outcomes then here in America. Not that these aren't without problems. However, in each country he asks "how many people have gone bankrupt because they are in need of healthcare?" In each country, the answer is zero. In the United States, the answer is 700,000. This brings to fore the question: should healthcare - the wellbeing of its citizens be the responsibility of the government? There are those on the Right that suggest not - however, we here at The Party of Common Sense suggest it is. But if we leave that debate for another day and another rant, let's assume it is.
In examining these countries, T.R. Reid shows how Japan has limited costs by having annually negotiated rates between the government and healthcare providers. If the number of CAT scans goes up radically, the government lowers the cost per scan to bring the costs in line. Which is why a CAT scan in Japan costs $100, while in the U.S. it costs over $1,000? However, there is an abundance of healthcare facilities in Japan, and they are running into financial difficulty. In Canada there is government run healthcare that is being underfunded, thereby creating costly waiting periods - often cited by those opposed to healthcare reform in America. In Germany, it is completely privately run healthcare providers - however, these are non-profits - with private companies offering healthcare to lure in comprehensive for-profit policies such as home and automotive policies.
So, although there is no simple and easy cure to healthcare, there seems to be some good ideas that could help improve the quality of our healthcare allowing America to provide the ultimate goal, the three pillars of healthcare: universal coverage, reduced costs, and improved quality.
