The health care debate

Rochester’s Mayo Clinic is getting plenty of attention as the health care debate has eclipsed the economy as the number one domestic issue.

President Obama holds a news conference tonight (7 p.m. CT with live-blogging here) to try to win support for his proposals, amid growing punditry that his entire presidency is on the line.

Mayo Clinic, and particularly its CEO Denis Cortese, doesn’t like the president’s proposals. In a story on National Public Radio on Tuesday’s All Things Considered, it was described as “one of the health-care industry’s great bargains, with costs 28 percent below the national average.”

So when Mayo speaks, people in high places tend to listen. Here’s the clinic’s blog speaking:

“The proposed legislation misses the opportunity to help create higher-quality, more affordable health care for patients. In fact, it will do the opposite.”

… and …

“Unless legislators create payment systems that pay for good patient results at reasonable costs, the promise of transformation in American health care will wither. The real losers will be the citizens of the United States.”

Dr. Cortese told NPR further that “by higher value, we mean better outcomes, better results, better safety, better service — at lower cost over time.”

How to do that isn’t exactly spelled out. But in a response to a New York Times blog post on how much health care really costs ($15,000 a year per family), a Mayo physician, Randall Walker, offered his idea.

It’s a lengthy comment that deserves a full reading (several times, in my case. Such is the nature of the health care debate).

The government simply needs to do what it has always done best: to obtain money from those who have more to help those who have less.

The key is to structure this within a frame-work that nonetheless gives everyone, across all levels of income and employment conditions, more first-dollar responsibility for health care expenses, with the opportunity that comes with it to directly retain the savings of their wiser health care choices.

Dr. Walker says later in life, health savings accounts could be tax-free gifts to heirs…

In this way, many consumers would forgo a lot of the futile, expensive medical interventions toward the end of life that do not significantly improve the quality or duration of one’s life — knowing they and their heirs can directly enjoy the financial benefits of these choices.

It all starts, quite simply, with comprehensive means-adjustment — for both the below-deductible payments to providers and the premiums to insurers that consumers would pay in relatively high-deductible / low-premium insurance policies.

At the heart of much of the health care debate, it seems to me, is the notion that people are simply wasting the health industry’s time by seeking treatment without regard for its true cost. Perhaps, but is that what you”re seeing at the end of the health care food chain?

I don’t dismiss the logic, but I also don’t see how it meets the intent to raise the quality of care. There are plenty of stories about people who die of heart attacks because they didn’t choose to go to the ER when the chest got tight.

The other day, a family member told me the story about getting hit in the head during an athletic contest. His head hurt and his vision was blurry and common sense dictated a trip to the doctor was in order. But he didn’t go because he knew a CT-scan would be prescribed and those cost too much.

I fell off a roof last year and didn’t go to the doctor for exactly the same reason. That might make financial sense, but it doesn’t make medical sense.

And that’s the issue that’s making everyone’s head hurt in the health care debate. How can a system do both?

Writing on the Health Care Blog, Matthew Holt suggests the question doesn’t matter, because the legislation being considered doesn’t do either.

Of course we’ll be back here in a few years because the fundamental problems of the health care system–employment-based insurance & fee-for-service medicine–will remain whatever happens this summer. And they continue to be a recipe for disaster. Although of course it’s a disaster that has lots of supporters.

It’s almost enough to make you tune out and turn on Fox. Almost.

  • Jennifer

    Bob, did you see this NY Times article by Peter Singer? He’s really good at making people really uncomfortable, but he makes some really good points.

  • David Brauer

    I have an Health Saving Account (because many years ago I decided I didn’t want to tie my coverage to a job, and the HSA was cheaper).

    HSAs have some advantages – two of the biggies are you can get out of gov’t mandates for pregnancy and chem-dep coverage; it’s good for you but bad for society, in that costs go up for anyone without those conditions.

    I have 10 years of experience with the HSA dynamic Dr. Walker touts, and I’ll tell you, it takes *extreme* discipline not to deny yourself coverage. When I had chest tightness earlier this year, I *almost* hesitated before calling an ambulance (a $1000 out-of-pocket expense), doing so mostly because my wife would be pissed if I died from stupidity.

    Of course, HSA users know it’s damn near impossible to shop for services and reap benefits – I’m leery of plans that talk about more transparent pricing/results because if you also don’t want to disrupt the patient-insurer relationship (see Michael Steele) there will be a million prices and great results data is tricky.

    The only thing I’ve truly been able to shop for is prescription drugs, where Target/Walmart generics are cheaper than the alternative. But that’s something I have time to shop for, and is truly apples-to-apples.

    I’m not opposed to the HSA concept, obviously, but there are some real-world limitations. People should retain as much skepticism about this as they do about ObamaCare.

    That said, pay-for-outcome makes a ton of sense, and it seems stupid to memorialize unequal Medicare reimbursement rates for areas that have driven down costs, so those things bear watching.

  • Anne O’Connor

    As a medical student with a master’s in health policy, it is disheartening for me to see that people still buy in to the idea that exposing patients to the cost of their health care will make them consume care more wisely.

    I know from my own experience that people aren’t good judges of whether their injury or symptoms merit a medical visit, particularly as the symptoms become more complicated. After all, doctors train for a long time to get the skills necessary to figure out if someone is really sick or not. To put this onus on the patient is bad medicine and bad economics. It causes undue worry to our patients and makes them avoid the doctor until they are very sick and treatment is less effective and more expensive.

    I know from research – most notably, the seminal RAND Insurance Study, a gold-standard randomized controlled trial of insurance status and cost – that exposing patients to their health care costs increases health spending rather than controlling costs. This theory holds up in practice – when health savings accounts were introduced in Singapore, health costs skyrocketed as patents chose care based on factors they could accurately judge – such as fancy technology, nice waiting rooms and well-known doctors – rather than the less knowable factors of cost and quality.

    The CEO of Mayo Clinic is correct that the role of the government is to collect and fairly distribute health care funds. However, he is wrong that HSAs are part of the solution. The vast majority of the responsibility for reducing costs does not lie with the patient, it lies with us, the providers. We need to work with the government to create reform that makes it easier for physicians to balance quality and cost. A centralized, private or public center for evidence based medicine – including non-biased information on pharmaceuticals – could help improve quality by reducing variation across physicians and hospitals and decrease costs by giving cost-effectiveness information. Restructuring the physician reimbursement structure to focus on primary care, not specialty procedures, will also help us move toward a more effective, equitable and affordable health care system.

  • Gman

    August 7, 2009, 8:13 pm

    Weekend Opinionator: A Sick Debate

    By Tobin Harshaw


    12. August 8, 2009 1:57 am

    I have lived in Europe, the USA (NYC and FLA) and currently live in Canada. I am a reasonably well-informed financial executive. I make my living as a capitalist.

    I wouldn’t know where to begin re: the health care debate but I will make a couple of observations:

    1. The USA has the finest health care in the world — bar none — provided that you have a no-limit gilt-edged money is no object health plan. Or you are rich. In my experience the 2 go hand in hand.

    Failing such insurance or such boundless wealth how any rational human being with an IQ over 75 and an income below, say, $250k (forget the social compassion argument) could defend the existing system is beyond comprehension.

    2. The outright lies — yes lies — that critics of health care reform spew is disturbing. The intentional misrepresentation of the Canadian and European models is outrageous. The Canadian model is flawed. There needs to be greater access to ‘private-delivery’ alternatives (which currently exist in some fields.) Having said that, since I returned to the province of Ontario in the late 1990’s until now the improvement in standards and care is staggering and in most cases matches anything I witnessed or experienced in NYC. Yes, health care is rationed here (hence a need for ancillary private care) but it is rationed everywhere — including the US. The exception being as per point #1 above. Per capita Ontario spends approximately 65% of what the consumers/taxpayers of the US/NY spend. However Ontario delivers 90% — or more — of the US standard. That is one very big financial/efficiency/productivity gap. That money gap goes to the US insurance companies, doctors, malpractice lawyers and lobbyists. The common canard about Canada etc is that “faceless bureaucrats make life or death decisions” (as opposed to, say, faceless HMO clerks). The truth is that in Canada the ‘gatekeepers’ who allocate critical care are the physicians themselves — the specialists.

    3. Aside from private-payment plastic surgeons it is true you will not see many doctors in Canada driving a Rolls Royce. But you will see an awful lot driving a Benz or a Jag. Doctors here work hard and are well compensated. What we lack here is the concept that a medical degree should be attributed Venture Capitalist returns.

    4. Lastly, a general observation/question (again, I really am a capitalist). Why is it that in the USA (a country I genuinely love) millions of people who barely make a living or are working class and/or just holding on to the ‘middle class’ are the most vocal — hysterical wouldn’t be an exaggeration — in defending the privileges of the rich and the corporate? Against their own self-interest I might add. Anywhere else in the western world the existing US health care tyranny would have people in the streets demanding reform — not ‘debating’ it.

    — jon c

  • Randall Walker

    I just now see this reference to an earlier NYTimes blog post I had made.

    High-deductibles, to create greater first-dollar responsibility for health care expenses, need to be means-adjusted. The examples cited above, such as balking at the $1000 cost of calling an ambulance — would be adjusted or covered with sliding scale subsidies: someone with an income of $50,000 a year would pay half of what someone with an income of $100,000 a year would pay. Thus, everyone would “balk” to the same degree — and the provider would get paid the same irrespective of what the patient/consumer’s individual income was — and this collective “balking” would, in turn, exert collecttve pressure on providers to keep costs down, and quality up. At the same time, consumers might understand the difference between calling for an ambulance for chest pain and sprained ankle.

    The fact is, over the past 30 years (since I graduated from medical school), the proportion of first-dollar payments for health care has decreased from 30 percent to 15 percent — in direct correlation with rising costs. The RAND study cited above, while demonstrating that expenses went up with greater first-dollar coverage DID NOT TAKE INTO ACCOUNT differences in patients’ means. It was the poorer patients who delayed care, and ended up having higher costs, in the RAND experiments on first-dollar responsibility.

    That is why the first term in my proposal is called MEANS-BASED free-market health care.