Verbs without Subjects in Health Care Reform
Remember, “mistakes were made.”
The health care equivalent is, “costs can be controlled.”
The first statement is an attempt to avoid responsibility. The second is based on the belief that responsibility is unimportant.
To state the obvious, action requires actors. The first question to ask about goal-seeking behavior is not “how?” The first question should be “who?” followed by “why?” Things don’t get done unless somebody does them. And somebodies don’t usually take on difficult tasks unless there is some reward or payoff for doing so.
With that in mind, think about how many times you have heard that health care costs can be controlled by adopting: electronic medical records, preventive care, coordinated care, managed care, etc. Think Barack Obama on last summer’s campaign trail. Many Republicans are just as bad. They never mention the “who” or the “why.” It’s as though reforms are going to be carried out by disembodied ghosts. I think of these proposals as reforms that don’t require people.
“People Who Need People”
In a previous Health Alert I noted that health policy is dominated by people who take an engineering approach to health care. Applied to cost control, this approach seeks mechanical, by-the-book routines — while ignoring the interests and motivations of the people who spend the money (patients) and the people who receive it (doctors and other providers).
The Business Roundtable’s advice on cost control is one example of an engineering approach. Thomson Reuters is another. Both groups ignore doctors’ and patients’ motivations in spades. The latest foray into this milieu is by the RAND Corporation. Since it employs real economists, you would think it would know better than to propose reforms that ignore actors and their motivations.
RAND researchers began by investigating 75 cost-control ideas (Why 75? More on that in a minute.), and whittled them down to the 12 most promising. To their credit, they dismiss as unworkable the favorite cost-control ideas of the Obama Administration, including comparative effectiveness research, pay-for-performance, prevention, disease management and medical homes.
From that high point, things deteriorate quickly. The most propitious of RAND’s 12 cost-control ideas is “bundled payments,” but without any explanation of who would do the bundling or why. They add this caveat:
The total amount would theoretically be set high enough to allow profits to be made but low enough to discourage the overuse of services, such as duplicative medical tests.
(If anyone made a similar statement about the market for steel, automobiles, or personal computers, no one would take it seriously. It’s like saying to MBA students: skip the course work and just set marginal revenue equal to marginal cost.)
There are, of course, not 12 ways to control costs, nor 75. The possibilities instead are infinite. More than 300 million potential patients spot opportunities to control costs every day. Ditto for the 800,000 doctors, 2.5 million registered nurses and all the other personnel who work in the nation’s 5,815 hospitals.
But the “who” are not taking advantage of these cost-control opportunities because under the current system there is no “why.”
Excellent post. Very clever.
Right on.
Another good post. But we’re all still missing critical understanding of the industries that make up delivery and financing out health system. One critical misconception is that without individuals feeling the financial pain of spending their own money, there are no cost control activities taking place because, as the misconception goes, there is no motivation to do so.
Well, I have worked in the medical insurance industry for 28 years and 18 of those years working directly for an insurance company, and I spent and continue to spend virtually all day every day trying to find ways and means of removing costs from the system. And what is my motivation? When I was with the insurance company, a Blue Cross/Shield affiliate, my motivation was to be cheaper than my competing insurance carriers, who were fiercely trying to get my business or keep me from getting theirs. Beyond the claim payment, IT, and sales departments, here is a list of the other departments in the company: Medical provider network development, tasked with getting lower prices from providers through competitive bidding, hosptial reimbursement systems, tasked with developing reimbursement systems that lowered costs through properly aligned incentives such as paying fixed amounts per episode of illness (DRG, for example), physician reimbursement systems, same role as its hospital brother, prospective medical managment review, tasked with eliminating unnessary medical services, retrospective medical management review, tasked with eliminating payment for services performed that were unnessary, alternative medical services, tasked with finding cheaper services (typically earlier discharge to the home, for example)for, medical policy management, tasked with eliminating payment for experimental services that had not been proven effective, fraud and abuse investigations, needs no explanation. So virtually the entire company was and is geared to cost control and removal. And it was entirely because we needed to be more cost competitive than other insurance carriers to stay in business.
The entire notion of consumer’s personal financial pain leads to more cost effective decision making is anecdotal at best and more likely inaccurate. Rather, the effect is to defer needed medical services because they are unaffordable.
Paul, I believe that every study that has ever been done of actual patient behavior has concluded that consumer driven health care plans reduce spending vs. traditional insurance coverage.
Right. I’ve never understood why anyone would think a “bundled payment” would save money over an “unbundled” payment for the same services. I suppose buying a dozen eggs is somewhat cheaper than buying one egg at a time, but those are virtually identical items, so there is some efficiency of scale.
Applying the analogy to health care, it would be like buying decorated Easter eggs. Mr. Jones wants to buy two pink eggs with the squiggly decorations and three blue eggs with the stripes, and four orange eggs with the green polka dots. We could bundle them into a carton of nine eggs.
But Mr. Smith wants six small purple eggs and four big chocolate eggs. We need to order a customized carton for his ten eggs.
I won’t belabor the metaphor, but I could go on — and on, and on. In health care each of us wants — and deserves — a package of services specifically customized to our individual needs. Nothing else will do.
I am a senior citizen who contributed to social security from each and every paycheck in order to assure that my retirement years would be lived with the peace of mind that my needs would be met. I was not given a choice. I could not afford to invest. I was a single mother at the mercy of self-involved males (in the person of an ex-husband and the representatives who professed to care about my welfare and the welfare of my children. I was duped! I was lied to in both areas. Although I worked hard to support my family, I do not have the hard-earned benefits I paid for. These same “representatives” in Washington D.C. now want to manage my money further and “provide health care” which amounts to forced euthenasia for seniors with ailments! Is this the answer to the wrongs they have done?–to get rid of the problems caused by their irresponsible misuse of tax dollars?
It is too late to save today’s seniors; our money has already been spent. We had faith in promises and in those who “represent” us. My sole response is that I am fortunate to be near the end of my life, because I am broken-hearted at the evil that has taken over this world and I dread what is in store for America as a result of such dishonorable behavior. May God have mercy on us all!
You are right that we hear no suggestions of ways to resolve the problems. We hear the childish babbling of accusations and see finger-pointing instead of concrete efforts to resolve the causes of the failure of the American government. Nobody wants to sacrifice personally in order to benefit their fellow man. Our society finds such thought to be foolish. Unfortunately, by our very nature we are doomed; unless we look out for the good of one another, we will continue to self-destruct through our selfishness–there IS no other outcome–look at history for the proof. A Godless society deprives itself of life, because GOD IS LIFE!
Shirley;
You are correct that you were not given a choice in your Social Security and Medicare contributions.
The government calls these forced transactions “non exchange transactions,” as opposed to “exchange transactions.”
An exchange transaction is one that arises when each party to the transaction sacrifices value and receives value in return.
Public and private sector retirement plans would be exchange transactions, 2 willing parties, both making sacrifices.
A non exchange transaction is one that arises when one party to a transaction receives value without giving or promising value in return or one party to a transaction gives or promises value without receiving value in return.
An example of a non exchange transaction would be your contributions to Social Security and Medicare.
A second example would be donations.
According to the government, you “donated” your contributions, although, as you said, it was not voluntary.
The government was the party receiving value. It does not promise value in return.
The fact that you are receiving benefits is a political decision, based on the good graces of your government.
It is not a contractual obligation, and the liability the government incurs to pay benefits is for only the current year.
The sacrifice for our fellow man you so eloquently wrote about is desperately needed.
But let’s get something straight.
According to the government’s accounting standards, your Social Security and Medicare contributions are not sacrifices; they are more akin to donations, not for Social Security and Medicare, but for whatever the government deems for the general welfare.
Don Levit
Ken,
No question about it. The studies clearly make that conclusion. However, what I have not seen is a truly independent study (the studies have been conducted by entities that will benefit from increased enrollment in those types of plans) that is adjusted for age/sex demographics (enrollment is overwhelmingly younger in consumer plans), relative health (consumer driven is typically offered by an employer as one option and enrollment is overwhelmingly healthy), or the difference between cost savings associted with better decision making vs. deferred costs associated with going without needed treatment.
Greg,
I think we are mixing some terms w/ respect to bundled payment and fixed payments per episode of illness. There is some conceptual appeal to a single payment per episode. Such a system can and does encourage efficiencies. However, we are still fixated on paying for the illness. We are not paying enough attention to the fact that 70% of our medical resource consumption is driven by conditions that arise from lifestyle choices. Lack of exercise and poor diet are the chief causes, and we need to create financial and other incentives within a benefit plan or insurance policy that differentiates the risks presented. I have to go now, because it’s time for me to begin exercising!
Who? Patient and Physician, not bean-counters in the Docs office and at the Payors. We do the work and guide our patients.
Why? Better outcomes and decreased cost. Physicians are the ones that order the tests (many unnecessary b/c they are covering themselves and they don’t have a direct relationship with the patient) ie: we control the costs
How?
Primary care/direct practices where patients have a trusted physician (a project manger to guide them through the system). We keep our patients out of the hospital be 50-60%. It is a fee for service problem.
Paul,
The RAND Health Insurance Experiment was a large federally funded experiment as close to “truly independent” as one is ever likely to get. It tested whether higher deductible policies influenced health care spending.
Broadly speaking, its results agree with what we see in the consumer directed plans today, and there was no evidence that the higher deductible resulted in poorer health. There are also data from the Robert Wood Johnson Foundation’s Cash & Counseling program that show that people are much better off with consumer directed policies than with traditional Medicaid, at least with respect to spending for attendant and personal care.
Paul Natchewey tells us, “The entire notion of consumer’s personal financial pain leads to more cost effective decision making is anecdotal at best and more likely inaccurate. Rather, the effect is to defer needed medical services because they are unaffordable.”
Aren’t we playing a bit with motivational concepts when we draw a distinction between “personal financial pain” in terms of making a decision to buy steak or chicken vs. making a decision involving healthcare? Perhaps it is presumptuous to assume that (a)personal decision making usually leads to “deferring treatment”, and (b)when it does lead to “deferring treatment” that it is a bad decision.
Why is the concept of a consumer making a decision to purchase steak or chicken different than a consumer making a decision on healthcare? And who is better qualified to make such a decision?
Frank,
So true….
That said, CDHP’s are the way to go if you have a guide..
John, nice song pairing. I wouldn’t have thought of using Babs to give these bozos a poke in the eye.
People with coverage make personal decisions to forgo covered procedures every day. People eligible for Medicaid don’t sign up.
People have a right to choose what they want to do and accept the consequences.
Having a primary care guide only allows someone else to decide for you when you need a specialist. That may not be in your best interest. Ask some people in England and Ireland.
If people are unwilling to make a small sacrifice to pay for medical care, will they make an even bigger sacrifice to lead healthier lives?
Don Levit
The idea of physicians being responsible for delivering beneficial care tailored to the individual needs of the patient would be the corner stone of real health care reform. We know that about $700 billion is spent yearly in this country on non-beneficial irrational care. If organized appropriately physicians could tackle this problem. See my blog, http://drkennethfisher.blogspot.com for greater detail. Thank You
I made this observation a few years ago while attending a conference on consumner driven healthcare. I asked a panel, where are the consumners in all of this? I believe John’s point is valid – to have any hope of controlling costs or bending that curve, the people delivering the healthcare (physicians and others) and the receivers (the patients) need to be activley involved and their motivations taken into account. Paul mentions numerous efforts within the insurance industry to reduce cost, but again every one of those ignores the patient receiving the care. So do all of the ObamaCare initiatives I have seen.
Linda,
Thanks for your thoughtful points. Interestingly the Rand study was based on co-insurance cost sharing, not deductibles. It was also conducted some time ago and while certainly an interesting guide, its applicability to today’s environment likely has some limits, which the Rand authors themselves admit. I was unaware of the Rober Wood Johnson Foundation’s program, although do see that it’s directed at Medicaid recipients and wonder if the is biased. In any case, my remarks were directed at more recent studies surrounding what are generally referred to as consumer driven products such as higher deductible health plans that are backfilled with employer funding through Health Reimbursement Accounts and particularly High Deductible Health Plans, as defined by law, that are coupled with Health Savings Accounts. The studies I am aware of were conducted by insurance carriers and would not stand up to the scientific standards of the Rand study, for example.
Frank,
Excellent points. I agree with you that making difficult choices at the consumer level about what services to get and how and where to get them, is not a bad thing at all. But deferring treatment, particularly for catastrophic conditions, is not typically beneficial nor a good decision when the desired outcome is freedom from pain and suffering.