Health care reform = Bizarro World, part 2

If only health care reform was as easy as comic book heroes can jump tall buildings or stop the earth from spinning.  Superman had to fight Bizarro World, where ugly was pretty and stupid was rewarded and smart punished.

The second Bizarro World happening in the health care debate is the introduction of the “Public Option” as an alternative to private health care.  The NY Times had an interesting article on this topic, pointing out that the debate on whether the Public Option is a good idea is occurring because there are two details missing.

First, will the government’s insurance plan be forced to break even?  While the President has encouraged a comparison of his public insurance plan to the US Post Office, every time the US Post Office runs into fiscal trouble, Congress bails it out.  “We can’t afford to deliver mail on Saturday”, they say.  This leads to obvious pressure on Congress, followed by money to keep such money losing services.

The second, will the government’s insurance plan get special deals with providers?  If it can use it’s leverage to extract special deals, then it’s not competing with the private insurers on level ground.

With these two advantages, the government plan is more likely to force out private insurers.  Without these two concessions, the NY Times argues, the public option will be unattractive enough that no one will use it and it will be a small sideline in the overall reform program.

Without the details, it remains a political football.

Healthcare reform = Bizarro World

The latest round of debate on health care reform reminds me of Bizarro-world.  You know, the reverse world of Superman comics, where ugliness is preferred to beauty, and salesmen do a brisk business in bonds “guaranteed to lose you money!”

The first bit of bizarre comes from an article in the NY Times, discussing regional reforms in the healthcare system:

If the rest of America could achieve the performances of regions like these, our health care cost crisis would be over. Their quality scores are well above average. Yet they spend more than $1,500 (16 percent) less per Medicare patient than the national average and have a slower real annual growth rate (3 percent versus 3.5 percent nationwide).

I hope you can see the flaw in this quote.  No, it’s not that it assumes that regional reforms can be rolled out nationwide to similar effect.  No, it’s not that it uses Medicare patient data instead of the nation’s broader demographic.  It’s that a 16% reduction in costs with a 3% growth rate per year DOESN’T SOLVE the health care cost crisis.  It merely delays it for five years.  After those five years, the costs will be exactly what they are today, and will still be increasing.  And that doesn’t consider the cost of achieving the reforms, which will reduce the savings even more.  Sure, some administrative changes could be made and there would be savings, but let’s not assume that the health care cost crisis will be over.

Part of the dialogue on costs savings is missing, and that’s because they are touchy subjects.  The first is tort reform.  Doctors are afraid of lawsuits, and according to the “Fear of Litigation Study,” conducted by Harris Interactive, (Final Report, April 11, 2002), because of fear of litigation, of doctors surveyed:

• 79% said that they had ordered more tests than they would, based only on professional judgment of what is medically needed, and 91% have noticed other physicians ordering more tests;
• 74% have referred patients to specialists more often than they believed was medically necessary;
• 51% have recommended invasive procedures such as biopsies to confirm diagnoses more often than they believed was medically necessary; and
• 41% said that they had prescribed more medications, such as antibiotics, than they would based only on their professional judgment, and 73% have noticed other doctors similarly prescribing excessive medications.

These costs are incurred because America has a uniquely American legal system.  Reports of the costs of “defensive medicine” vary, but using the oft quoted study by Daniel P. Kessler and Mark B. McClellan, the current $1.4 trillion yearly healthcare spend in the U.S. could be reduced by $143B with no impact on quality of care.

Another source of cost is closely related to the recent discussion on “death panels”.  While the President’s proposals do not include death panels but rather end of life counseling, the Centers for Medicare and Medicaid Services reports that 27% of Medicare costs are spent in the last year of life.  With variations from one hospital versus the other as high as 100% according to Dartmouth Atlas Project (Portland versus Miami), it is clear that there is room for improvement in this politically sensitive area.

Taken together, end of life costs and defensive medicine consume 40% of the US economy’s healthcare budget.  If we avoid these political hot-buttons, we’ve already written off 40% of the budget as untouchable.  And given estimates that the total cost of healthcare could TRIPLE by 2017, nothing can remain off the table.

Second bit of Bizarro World upcoming.