Pastoral Musings from Rain City

it's about 'what is church?' it's about whether 'emergent' is the latest Christian trend or something more substantial. it's musing on what it means to live the city, in America, in community, intergenerationally, at this time in history...

Thursday, August 13, 2009

Health Care - more than sound bytes needed

The health care debate is in full bloom and so it's time to write about it and, I hope, get some discussion going. From what I've seen though, on the news this week, I'm skeptical that any real healthy discussion is going to take place for two reasons.

The first reason is because this issue is revealing just how addicted we are, as a nation, to our political categories, and the vilifying of whoever our opposition might be. We vilify through sound bites, as Sarah Palin has done by talking about an imaginary death panel who hold the rights to live or die in their power. We vilify through implying that Obama's health care logo has it's origins in Hitler's Socialist Party Logo. These stupid accusations and associations don't help the conversation at all. Such comments make it difficult for many to even listen to the very good and important things that the pro-free market people have to say.

Secondly, and related, it's increasingly clear that the average American wants sound bytes, rather than doing the hard work of digesting the complexities of this issue. For those inclined though, to do that hard work, I'd recommend this very lengthy article, written by a life long Democrat whose first hand negative experiences with the health care industry have led to his thorough study of the problems, and his worthy, decidedly pro free-market proposals. If you've no time to read the whole article, please read the bullet points and quotes, at the very least, before commenting.

This conversation is important, not because we want to become like Europe or be different than Europe (or Canada), but because health care is consuming more of our resources every year, resources not used for other things. The path is unsustainable, even for the insured, let alone those who are losing their homes or dying because they have no insurance. What are some of the major issues? Pour a cup of coffee... this is long post. But please read... it's important!

1. Health Care isn't Health or Happiness

Medical care, of course, is merely one component of our overall health. Nutrition, exercise, education, emotional security, our natural environment, and public safety may now be more important than care in producing further advances in longevity and quality of life. (In 2005, almost half of all deaths in the U.S. resulted from heart disease, diabetes, lung cancer, homicide, suicide, and accidents—all of which are arguably influenced as much by lifestyle choices and living environment as by health care.) And of course even health itself is only one aspect of personal fulfillment, alongside family and friends, travel, recreation, the pursuit of knowledge and experience, and more.

Yet spending on health care, by families and by the government, is crowding out spending on almost everything else. As a nation, we now spend almost 18 percent of our GDP on health care. In 1966, Medicare and Medicaid made up 1 percent of total government spending; now that figure is 20 percent, and quickly rising. Already, the federal government spends eight times as much on health care as it does on education, 12 times what it spends on food aid to children and families, 30 times what it spends on law enforcement, 78 times what it spends on land management and conservation, 87 times the spending on water supply, and 830 times the spending on energy conservation. Education, public safety, environment, infrastructure—all other public priorities are being slowly devoured by the health-care beast.

2. Health Insurance isn't Health Care

After explaining why health insurance is so obviously important as a means of protecting one from going bankrupt because of catostrophic illness, Goldhill writes, " insurance is different from every other type of insurance. Health insurance is the primary payment mechanism not just for expenses that are unexpected and large, but for nearly all health-care expenses. We’ve become so used to health insurance that we don’t realize how absurd that is. We can’t imagine paying for gas with our auto-insurance policy, or for our electric bills with our homeowners insurance, but we all assume that our regular checkups and dental cleanings will be covered at least partially by insurance. Most pregnancies are planned, and deliveries are predictable many months in advance, yet they’re financed the same way we finance fixing a car after a wreck—through an insurance claim. Comprehensive health insurance is such an ingrained element of our thinking, we forget that its rise to dominance is relatively recent. Modern group health insurance was introduced in 1929, and employer-based insurance began to blossom during World War II, when wage freezes prompted employers to expand other benefits as a way of attracting workers. Still, as late as 1954, only a minority of Americans had health insurance.

3. the Moral Hazard Economy

Every time you walk into a doctor’s office, it’s implicit that someone else will be paying most or all of your bill; for most of us, that means we give less attention to prices for medical services than we do to prices for anything else. Most physicians, meanwhile, benefit financially from ordering diagnostic tests, doing procedures, and scheduling follow-up appointments. Combine these two features of the system with a third—the informational advantage that extensive training has given physicians over their patients, and the authority that advantage confers—and you have a system where physicians can, to some extent, generate demand at will.

Do they? Well, Medicare spends almost twice as much per patient in Dallas, where there are more doctors and care facilities per resident, as it does in Salem, Oregon, where supply is tighter. Why? Because doctors (particularly specialists) in surplus areas order more tests and treatments per capita, and keep their practices busy. Many studies have shown that the patients in areas like Dallas do not benefit in any measurable way from all this extra care. All of the physicians I know are genuinely dedicated to their patients. But at the margin, all of us are at least subconsciously influenced by our own economic interests. The data are clear: in our current system, physician supply often begets patient demand.

4. There's no one else to pay the bill

"...Let’s say you’re a 22-year-old single employee at my company today, starting out at a $30,000 annual salary. Let’s assume you’ll get married in six years, support two children for 20 years, retire at 65, and die at 80. Now let’s make a crazy assumption: insurance premiums, Medicare taxes and premiums, and out-of-pocket costs will grow no faster than your earnings—say, 3 percent a year. By the end of your working days, your annual salary will be up to $107,000. And over your lifetime, you and your employer together will have paid $1.77 million for your family’s health care. $1.77 million! And that’s only after assuming the taming of costs! In recent years, health-care costs have actually grown 2 to 3 percent faster than the economy. If that continues, your 22-year-old self is looking at an additional $2 million or so in expenses over your lifetime—roughly $4 million in total.

Would you have guessed these numbers were so large? If not, you have good cause: only a quarter would be paid by you directly (and much of that after retirement). The rest would be spent by others on your behalf, deducted from your earnings before you received your paycheck. And that’s a big reason why our health-care system is so expensive."

5. The Government is NOT good at cost reduction

"...Cost control is a feature of decentralized, competitive markets, not of centralized bureaucracy—a matter of incentives, not mandates. What’s more, cost control is dynamic. Even the simplest business faces constant variation in its costs for labor, facilities, and capital; to compete, management must react quickly, efficiently, and, most often, prospectively. By contrast, government bureaucracies set regulations and reimbursement rates through carefully evaluated and broadly applied rules. These bureaucracies first must notice market changes and resource misallocations, and then (sometimes subject to political considerations) issue additional regulations or change reimbursement rates to address each problem retrospectively."

6. Uncompetitive

This lengthy section of the article explains that our heatlh care industry is, properly, one of the more heavily regulated industry. I say properly because it's of some value to know, for example. that your doctor has proper training, and that the equipment being used in your hospital is sterile. However, the reality is that the regulatory system is prone to enact laws authored initiated by lobbyists with the intent to kill the competition. Goldhill shares several examples of this, including a congress enacted moratorium on starting small clinics that specialize in one form of surgery. Killing the competition, as we all know, has the effect of elevating costs.

Here's an example of how our health care providers refusal to talk about prices stifles competition: "...Eight years ago, my wife needed an MRI, but we did not have health insurance. I called up several area hospitals, clinics, and doctors’ offices—all within about a one-mile radius—to find the best price. I was surprised to discover that prices quoted, for an identical service, varied widely, and that the lowest price was $1,200. But what was truly astonishing was that several providers refused to quote any price. Only if I came in and actually ordered the MRI could we discuss price.

Several years later, when we were preparing for the birth of our second child, I requested the total cost of the delivery and related procedures from our hospital. The answer: the hospital discussed price only with uninsured patients. What about my co-pay? They would discuss my potential co-pay only if I were applying for financial assistance.

Keeping prices opaque is one way medical institutions seek to avoid competition and thereby keep prices up. And they get away with it in part because so few consumers pay directly for their own care—insurers, Medicare, and Medicaid are basically the whole game. But without transparency on prices—and the related data on measurable outcomes—efforts to give the consumer more control over health care have failed, and always will"

7. On the technology front...

We live in a culture where the production of new technologies eventuates in increased productivity and eventually, a decline in prices. Thus do DVD players today cost one tenth of what they cost when they first came out. But in the health care world, the lack of competition makes this nearly impossible. For example...

" technologies don’t exist in the same world as other technologies. Recall the MRI my wife needed a few years ago: $1,200 for 20 minutes’ use of a then 20-year-old technology, requiring a little electricity and a little labor from a single technician and a radiologist. Why was the price so high? Most MRIs in this country are reimbursed by insurance or Medicare, and operate in the limited-competition, nontransparent world of insurance pricing. I don’t even know the price of many of the diagnostic services I’ve needed over the years—usually I’ve just gone to whatever provider my physician recommended, without asking (my personal contribution to the moral-hazard economy).

By contrast, consider LASIK surgery. I still lack the (small amount of) courage required to get LASIK. But I’ve been considering it since it was introduced commercially in the 1990s. The surgery is seldom covered by insurance, and exists in the competitive economy typical of most other industries. So people who get LASIK surgery—or for that matter most cosmetic surgeries, dental procedures, or other mostly uninsured treatments—act like consumers. If you do an Internet search today, you can find LASIK procedures quoted as low as $499 per eye—a decline of roughly 80 percent since the procedure was introduced. You’ll also find sites where doctors advertise their own higher-priced surgeries (which more typically cost about $2,000 per eye) and warn against the dangers of discount LASIK. Many ads specify the quality of equipment being used and the performance record of the doctor, in addition to price. In other words, there’s been an active, competitive market for LASIK surgery of the same sort we’re used to seeing for most goods and services. The history of LASIK fits well with the pattern of all capital-intensive services outside the health-insurance economy."

8. A Way Forward

It's difficult to offer a representative quote for this part of the article, but you can read this part here. The summary though, would be to suggest that if we were to make health care MORE of a free market reality rather than less, we'd all be better off. However, the author goes on to also declare that there's a great need for us to address the fundamental moral issue of accessibility for low income people. If both of these truths are taken into consideration, at least two truths become clear:

First: the current proposal will fall terribly short of achieving real cost saving reform

Second: any proposal that will ultimately work must stand outside both the socialist and capitalist paradigms that are presently driving this conversation. Of course, this latter truth is in keeping with all that God proposed when He spoke to Israel about economics in the Old Testament. That system defied categorization in that it was terribly pro-private property, pro-wealth creation, and pro-communitarian sharing of responsibility for the poor, whom Jesus said we would, "always have with us".

Until we can free ourselves from party loyalties and sound bites, we're going to be a stuck on a treadmill.

I welcome your thoughts...


At 15/8/09 10:40, Blogger Lee Williams said...

You weren't joking about the length! One thing stood out to me that I thought should be addressed: this issue of MRI costs and how not having the consumer pay for it keeps prices high.

First, the main cost of the MRI (is amortizing the cost of the machine itself. An MRI machine costs upwards of $3 million, plus whatever lease/loan financing fees the hospital needs to cover. A quick google search for LASIK machine prices puts them more in the $500k range - it's little surprising then that the procedural costs would less expensive.

Secondly, just because the consumer isn't directly negotiating for prices does not mean the insurer isn't. There is a huge amount of overhead that we are paying for right now caused by the back-and-forth between the hospital's billing department and the insurance company - the hospital fighting to recoup it's expenses and the insurance company looking to increase their profit margins. Sadly, I've yet to see a proposal - other than single payer - that addresses this issue.

Thirdly, there's massive information and power asymmetry here, and it's unlikely to be fixed. When I went shopping for a car I had several months to do research and negotiate for a great price. When I broke my elbow and they were debating surgery, who was I to decide that a MRI would be too expensive or unneeded? Or that I should take a moment to call around and price-match other hospitals instead of following the medical assistant down the hall? This comparison between DVD players and health care feels ludicrous - as if a working elbow might be a luxury item for me. And hey, in a fully free-market system, it probably would be.

In any case, it also looks less and less likely that any meaningful reform will take place. For many this has become not a fight about care, but a full politicized battle that they seek to "win" at any costs. Yesterday the House removed the end-of-life counseling proposal from the bill, citing the 'confusion over death panels' as if it were a real concern - a concern surprisingly absent when the same proposal appeared on the 2003 Medicare prescription drug bill. Or, in fact, when Gov. Palin herself proclaimed them an important aspect of Healthcare Decision day back in 2008.

The response to this has been, "if they weren't really death panels, why did they remove it from the bill?"

How do people move forward with this kind of division?

At 15/8/09 10:48, Blogger Richard Dahlstrom said...

good points Lee... all of them. The MRI - DVD comparison surely has it's limitations. However, I think the bigger point is this: if people need to pay for something themselves, they're careful to negotiate the best possible price. That's why some people travel to Canada to buy their drugs. For whatever reason, they're cheaper their than they are here. If people had to pay for an MRI out of their own pocket, wouldn't it make sense that they'd shop for the best deal, and the both the manufacturers and providers would work hard to provide the best deal at the lowest price.

That these kinds of free market restraints are lacking in our present system should be appalling to both the left and the right. Instead, as you rightly point out, both sides are looking at this as an opportunity to gain political capital, rather than deal honestly with this very real problem. The very people who wanted "end of life counseling" earlier are now calling the same thing a "death panel". That such rhetoric is peddled is tragic. That Americans buy it is even more tragic.

At 16/8/09 17:32, Anonymous Ken said...

I am encouraged to hear this rational examination of the health care problem. Living in Oregon and having private individual health insurance I can assure you that the government's "help" is very costly. This Holy State commands us to carry maternity coverage for my family when my wife had a hysterectomy 13 years ago. That is just one blatant example of the dozens of add-ons we are required to have whether we desire or need them. I would love to have a simple, high deductible policy to protect against a catastrophic event and cover the small stuff directly, but we are unable to do so.

The simple truth, as the author of the article pointed out, is that without people directly paying for health care there will be little market control of costs. We are at the mercy of the system in place. Current debate from both sides seems to simply reinforce one side or other of the present failed equation. 1,000 pages of government legislation is unlikely to improve anything.

The unfortunate truth is that education is part of the answer. Another element needed is a radical change in American lifestyle and thinking. Probably a key reason for better health in Europe is a very different lifestyle of moderation in eating and greater physical activity. Sad to say, but we Americans as a society are a glutinous bunch. We overindulge in many things, food and drink being among the worst offenders. The poorer members of our clan seem even more susceptible to the cheap calories available in refined food and drink. But there is precious little incentive for the powers-that-be to have an educated and restrained populace not swayed by the slightest wind of temptation or false promises. It is always much more difficult to dictate to people who understand the truth.

As I have said in previous posts, we must remember that the "health care crisis" is not really about health care, but about control by those currently waging the battle. I was struck this morning by a passage in John 11 regarding Judas' fake piousness objecting to Jesus about Mary's extravagant pouring of perfume on His feet. Judas says,

(vs 5) "Why wasn't this perfume sold and the money given to the poor? It was worth a year's wages." (vs 6) He did not say this because he cared about the poor but because he was a thief; as keeper of the money bag, he used to help himself to what was put into it.

I fear the great noise we are currently hearing over this "crisis" is nothing more than thieves fighting over our money bag.

At 17/8/09 08:48, Anonymous Andrew said...

A very thoughtful and pragmatic approach to an issue that needs so much attention, but as you noted is being drowned in the sea of empty "attack" news. Here is yet another example of how 24x7 "news" has greatly limited our ability to think thoughtfully about issues.

It truly would be beneficial if we were all (including our elected representatives) were willing to suppress our political leanings just long enough to listen to the real issues from all sides and then work together to come to a conclusion, rather than trying to negotiate a new/different level of mediocrity.

At 30/8/09 13:50, Blogger Krista said...

Thanks for this insightful article. I too am less and less hopeful that any meaningful change will come out of this current legislation.
At times I feel so powerless, even hopeless that I can do anything. Yes, I've written my members of congress, but until (as Ken pointed out) we are all educated about these things the very few in power will have the right to do whatever they want and we will just be stuck with the consequences.

At 30/8/09 17:38, Blogger Robin said...

Wow, thank you for this post! I'll be chewing on this for a while . . .

At 3/9/09 15:46, Anonymous Kara said...

I finally finished this article and there are definitely aspects of it that resonate with me. I am a recent nursing graduate, so the health care debate is near and dear to my heart. Although I advocate for a single-payer system, this article had some interesting things to say.

One aspect of it that didn't quite make sense to me, and that I would love to discuss, is the idea of us acting as health care consumers and choosing what we do and don't want/need. I think that there might just be too much power that comes from all of the education that doctors and nurses get for the patient to really be able to think through a situation (that may or may not be an emergency or urgent) and be able to say, "is there somewhere cheaper that I can get that MRI or that chemo or whatever?" Or even more difficult, "Is there something less expensive, but just as effective, that you can do for my sick child?" I just don't know if that will ever happen -- if patients can ever be that much of an empowered consumer.

When you are sick, everyone desires that someone will just take care of them, and being in that state, I think, makes it hard for people to rationally think through what they do and don't need, especially when they probably haven't even had time to educate themselves about their options.

I think it could work on a small level. For instance, when I go to the pharmacy to get my over the counter drugs, I choose the generic cold medicine or whatever because it is cheaper. I don't know, however, if people are able to do this during the stress of hospitalization. I guess, as a nurse, one might argue that this should be part of my role -- helping the patient to exert control over their situation and figure out what they do and don't need/want for what price, but it is a hard place to be in.

For instance, when you are trapped in a burning building, you aren't going to ask the rescuing fireman "excuse me, is there someone or something out there who could get me out for a cheaper price?" This may or may not be a bit of an extreme comparison depending on the situation, but I think that when people are in what feels like a very life-altering/threatening situation, it is hard to make a decision that seems to question or contradict that of your doctor, especially when you haven't had time to educate yourself.


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