In his latest 'Thoughts From The Frontline' newsletter, John Mauldin brings us a very useful study of the US health care system, Obamacare, and options for the future. It's by Dr. Michael Roizen, a well-known medical expert. I've picked out this excerpt to whet your appetite.
We want to make something very clear right at the beginning. The US healthcare system as it stands is dysfunctional and can no longer continue as it currently operates. With or without Obamacare, profound change is required to deal with the dysfunctionality, and that change will happen, one way or another. Obamacare is simply one method for 'encouraging' that necessary change.
. . .
Perhaps the best way to illustrate the problem is by means of a rough analogy. Let’s imagine an older, 50-story office building in a big city. New office buildings have grown up all around it, and the business tenants are beginning to vacate. Because of the lower rents available to individuals, people have started renting space and converting it into apartments. But as is typical in office buildings, there are very few bathrooms and no showers to speak of, so residents rework the
plumbing to provide bathroom and kitchen supply water and drains for their living spaces. On a small scale it works. One floor after another soon converts, until the building is now an apartment complex.
But at some point the plumbing becomes a huge problem. Not everybody can get enough water at the same time; sewage backs up on some floors at inconvenient moments; and if someone flushes a toilet, someone else gets scalded by hot water in the shower. Depending solely on where you live in the building, you may have access to much better service, while others get none. Because of the plumbing problems resulting from poor infrastructure, many of the apartments no longer receive adequate water or get it only on an emergency basis and at great expense and trouble.
The cost of maintaining the system becomes significant, so the residents get together and decide that the building must have a completely new plumbing system. No one wants to keep the old plumbing, but everyone has a different idea about how to go about creating a new system and what it should accomplish and how much it should cost and who will pay for it. Do you do one floor at a time? All the kitchen sinks at once? And can there be different sinks, or must one type fit all? Do you separate the water for the toilets from the potable water?
In a very contentious vote, the occupants of the building narrowly decide on a plan that requires all of the plumbing in the building to be changed simultaneously. Walls will be knocked out, and new pipes and equipment will be installed. The new system is going to be a marvel of technology and efficiency, but the process has the potential to be very messy, as the all-too-human occupants will be going about their day-to-day business in the midst of the construction. They will need fresh water and sewage disposal even as the plumbing is being reworked.
The United States, by analogy, is changing the plumbing of its healthcare system.
There's much more at the link, or if that link doesn't work for you, at the Adobe Acrobat version of the newsletter. Highly recommended and very thought-provoking reading.
Peter
8 comments:
Bad analogy, because everyone cant have their own different plumbing. And because health care is massively different and far more complivated than plumbing.
I have multiple issues with this analysis (for example the epidemiological assumptions – read guesses) but rather than waffle on, here's one:
“value-based system (being paid the same amount per patient no matter how well or sick she is, so the goal will be to motivate people to stay healthy)”
This is an idealistic but incorrect assumption. A value based payment schedule exists here in the UK NHS and what are the results? Patients receive less care/treatment because 'the hospital is paid the same whether sick or well'. A patient with condition requiring an expensive therapy gets a less expensive and less effective treatment instead – the hospital gets paid the same either way. Old people left in the 'Liverpool pathway' because the hospital has no incentive (and considerable financial disincentive) to get them well.
Oh 'We' wouldn't do that, I hear you exclaim, when a hospital faces bankruptcy or do so – we'll just see shall we?
Costs to patients 'will' go up, treatments offered 'will' be cheaper alternatives rather than the most effective, payment costs 'will' go up – so, a worse service which costs more and won't treat any more 'uninsured' patients than are now treated. What a wonderful idea!
He may be an excellent physician, an exemplary manager, .... but he's still blowing politically biased smoke up your ...
(of all the systems available, you decide to copy a broken one? Why not the French?)
Just sayin'
@Able: I don't disagree with your comments. I think Obamacare is an unmitigated disaster. Nevertheless, I think the cited article's premise is unchallengeable:
"The US healthcare system as it stands is dysfunctional and can no longer continue as it currently operates. With or without Obamacare, profound change is required to deal with the dysfunctionality, and that change will happen, one way or another."
The article is an attempt to analyze where we are, understand how Obamacare seeks to change that, and look at alternatives. There are only so many ways to go. If one can afford one's own health care, regardless of cost, that's just great . . . but for most of us, that simply isn't going to happen. We're going to have to find a way forward that balances the need of the many with the availability of funds to pay for those needs. I'm afraid the latter is going to trump many of the former, no matter which way we go.
That's a depressing thought for someone like me, partly disabled due to injury and having suffered one heart attack already as a partial result of that injury. I'm battling health problems that will almost certainly kill me before I reach the age my parents did. I can only hope that health care will be available to give me as much life as possible, of a quality sufficient to enjoy it - but that may not happen, no matter how strongly I dislike the thought. Reality trumps wishful thinking, every time.
Could somebody PULEAZE tell me what is so damn dysfunctional about the US health care system?!?!!? All I hear is this whining groundswell that IT IS BROKEN!!!
Well, is it and how is it? Does it cost too much....compared to what? Does the doctor not deserve to be compensated for his services?
Do the drug companies make too much money? Who are you, you socialist pig, to determine the amount of profit that a company receives?
Do goods and services cost too much for those that are at their end of life? Who are you to decide when and if a person dies from their illness?
So I ask again WHAT PART OF THE HEALTH SYSTEM IS SO BROKEN, THAT WE HAD TO DISMANTLE THE WHOLE THING...........
Steve
Full disclosure; I'm an oncology nurse, also I worked for 10 years in an ER, And NOBODY I ask these questions of, can answer them.
One problem I see is that everyone keeps referring to it as a "system". In the US, our healthcare is not a system. It is polyglot of arrangements made between providers and suppliers - which includes pharmaceutical companies and device manufacturers; insurance companies, employers, and of course, government.
As I see it, the biggest cost inducing problem we have today is the rise of the medical cartels, which were wholly enabled by our government. One example is the merging of formerly independent hospitals into large hospital "groups". These cartels, because of the lack of competition within their area, have a virtual lock on pricing.
Certificates-of-Need, and laws passed in 2007 which require certain imaging services to be affiliated with hospital groups in order to get equal reimbursement via medicare & Medicaid, are but two examples of government enabling of this sort of thing.
The ACA will only make matters worse. Costs will inevitably go up, while services and quality will inevitably go down.
And who pushed for the ACA the most? Insurance companies, large hospital conglomerations, big pharma - you get the picture.
I read the letter and thought about you and which part you would post. Well, let me add a couple of paragraphs, if you don't object, from pp 13 & 14:
"I must also note that after a few years there will be a massive tax increase on the middle class as all the costs of Obamacare kick in. Yes, you get healthcare in return, but this still rearranges consumer spending patterns. Again, you can create models that will yield any results you find politically and philosophically appealing, but in a few years the truth will out. When Obamacare was being first proposed, I and others criticized it as a giant incentive for businesses to move staff from full-time to part-time work. We were told that we did not understand how business worked and that it would not make any major difference.
It does not give me any pleasure to note that we were right. That does not mean that those of us who are concerned about the unintended incentives embedded in the ACA are necessarily right about the future. One correct observation does not qualify you as an infallible prophet......."
No one wants to be on the record for mentioning this major tax increase, but it is the one item that will affect the middle class, and I believe, accomplish for President Obama what he ultimately seeks - the impoverishment, the defeat, of the middle class, thus the United States.
I believe in G-d. I believe in what our Constitution was meant to do. But, I, also, believe in Satan.
Interesting analysis, but it misses what I think is THE core issue: aligning incentives of the players with the desired goals. The further anyone is from the real costs or benefits of their actions, they less they care about them. When you feel the cost of doing something stupid hit before the adrenaline-high of doing it wears off, you have a much better assessment of the risk-reward model you are facing; if you saw the fat bulge out while you drink that 32-ouncer full of HFCS, you’d likely do it less, no matter how good it tasted.
What we have now isn’t insurance, it's pre-paid medical attention for when things go obviously wrong. Your car insurance is cheap because it doesn’t cover tire wear, oil changes, new upholstery, or regular detailing. Your health insurance is expensive because it may cover part of every little thing, so everything is set up and priced *expecting* to process a lot of defensive paperwork for everyone that walks in the door, rather than a quick service paid for in cash (or credit card) with little non-service overhead. When you know the emergency room is required to treat you, you don’t feel you have to buy insurance. When the ER knows it won’t collect from half its patients, it has to bill a lot, and hire bill collectors, and all the rest, which drives up costs and is all but designed to build a sense of contempt for everyone else in the system. When insurers are not ALLOWED to offer high-deductible, catastrophic-only care, and are required to offer lots of questionable services that encourage their use by the policy buyer, it drives up use and therefore costs. When an insurer isn’t allowed to discriminate based on poor policy-buyer choices, then there isn’t an incentive to change said self-destructive behaviors. I’ve lost track of how often I have seen a 300 pound Jabba the Hut impersonator (slowly) working at a desk in some large institution (hospital, school, PO, government building, etc.). Why are they allowed to get coverage when they do that to themselves?
What’s Insurers motive, their goal? Make money – pay out less than they bill. They can do that by good actuarial analysis. They can offer cheap plans only to low risk people. That’s what insurance is supposed to do. The problem is they are not allowed to do that.
What’s society’s (government’s) goal? A healthy, hard-working, motivated population; acceptable care for the elderly and indigent; NOT spending money where there is little or no return on the investment. (For example, public school, though flawed, has some economic utility, whereas spending $50k on a hip replacement for a 98 year old with leukemia is not likely to have much payoff for society at large, even if the doc makes a profit).
What’s a health-insurance policy buyers goal? Be healthy, and have unexpected problems be taken care of at a reasonable price.
These three are not mutually exclusive – the problem is that public policy has taken the money out of being healthy through over-regulation, and THAT simple fact skews all the incentives from there.
Anon: those who say it’s broken are either espousing “critical theory” (be critical of everything about the current system in order to try to destroy it, so they can “rebuild it” with themselves conveniently at the top), people seeking to demagogue the issue to gain personal power or other personal gain, people seeking to attempt to get something for nothing, or people who don’t know anything at all about economics (which includes the first three categories).
I'd like to offer my .02 on the ACA ...
Previous monthly premium was $315; okay that's not a trivial amount but I can live with that.
Today I find out the new ACA-induced premium is $492....
I know I'm feeling better already that this great thing is contributing to health services equalization... :(
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