Switching To A True Health Care Model

With the IRS scandal shining a much-needed light on the miserable agency that would be the majordomo of Obamacare, we should also examine the preposterous “reasoning” at the heart of the Patient Protection and Affordable Care Act (PPACA)… I refer to the quite foolish notion that making insurance more available, albeit not necessarily more affordable, is somehow the biggest problem facing our failing health care system.

Let’s try an analogy: Imagine for a moment that there were a horrendous crisis involving house fires. Destruction and injury were rampant. The root causes were manifold, and thousands of people were dying.

Imagine further that the brilliant political solution to this problem did not involve hiring more firefighters, nor even any efforts toward fire prevention. Rather, the Government decided that more fire insurance was the answer. To spread the burden, even if you did not own a house, you still had to obtain insurance or face a penalty (sorry, a tax). What if you really bought into this idea and decided to get a so-called “Cadillac” insurance plan? Well, then you would pay a penalty for that, as well.

A massive bureaucracy would be put in place to ensure that any work done to fix your home had to be performed in accordance with certain guidelines and for a certain price. Don’t try asking for anything off the page.

Meanwhile, houses would continue to burn, people would continue to die, and the underlying situation would not be improved in any measurable way. Some home rebuilding “providers” would find ways to game the system, so the bureaucracy would have to expand to monitor the fraud, while making it even more difficult to get your home rebuilt, at an ever-increasing cost. Likewise, honest providers would simply gear their projects toward those home-rebuilding “procedures” which were more remunerative, rather than what might be best for the homeowner.

The only possible result of this madness is ever-increasing costs for ever-worsening outcomes.

Now, imagine you’re not imagining. Except that instead of a house fire crisis, we have ourselves a legitimate health care crisis, that is being addressed in this same manner.

As I have noted before, there is simply not enough money in the world—under any conceivable scheme—to support the prevailing disease care model (as used here and everywhere else) of health care. This model exists only because under the current rubrics, there is far more revenue in treating acute disease than there is in health maintenance and disease prevention. As such, elaborate chicanery and pettifoggery has to be put in place to at least give the illusion that a disease care model is sustainable. Thus…the huge tax increase—finally called what it is— that is the PPACA.

OK, you say. But, what would true health care include, and how did the acute disease care model came to dominate the proceedings?

Once you recognize that virtually all human actions are inspired by the need to relieve distress or discomfort (euphemistically called “problem solving”), the ironclad and historical dominance of acute care in medicine is easy to understand. Yet, even in the 5th century BC, Hippocrates, in his Epidemics and other works, showed a strong interest in the cause, and by inference, the prevention of disease.

Unfortunately, preventive medicine would lie dormant until the Renaissance. Quarantine measures were invoked in the 15th century against the plague, and primitive epidemiology was introduced in the mid-17th century. As such, informal study of milkmaids’ immunity to smallpox led to the organized practice of vaccination by English physician Edward Jenner in 1796.

Enhanced sanitation—surely the best preventive measure of all time—would promote the control of many diseases, with the notable exception of polio (poliomyelitis). Being an enterovirus, poliovirus replicates in cells of the human gastrointestinal tract and is excreted in the feces. Inadequate sanitation assured that nearly all individuals would develop a natural immunity.

By the same token, as sanitation improved, and herd immunity was lost, polio became a frightening summer threat. At its peak incidence in the United States in 1952, approximately 21,000 cases of paralytic polio (a rate of 13.6 cases per 100,000 population) were recorded. For most Americans alive today, the Salk (1955) and Sabin (1962) vaccines represent the crowning achievement of preventive medicine.

Our love affair with preventive medicine would die in 1965 with the advent of Medicare, and its later embrace of Diagnostic-Related Groups (DRGs) and Current Procedural Terminology (CPTs) for billing purposes. Note that from the outset, Medicare greatly influenced how all medicine would be practiced in the US, especially when private insurance companies began to follow most of its policies. Overwhelmingly, the most money was to be made in procedural, rather than cognitive medicine (which includes preventive). Indeed, much of what is spent on “preventive” covers procedures such as colonoscopies and mammograms.

Money is the most objective rating system in the world since it establishes a value for everything, and health care is no exception. Procedural medicine and acute care are more highly valued, and thus dominate the system. Of course, it costs much more to treat a heart attack than to prevent it, but that’s the idea! There are only two problems with this model: Many people suffer a lifetime of poor health and we can’t afford it.

If we are willing to spend hundreds of thousands of dollars per patient on acute care, why not pay bribes to people to lose weight, stop smoking, and exercise? In the wake of enormous agricultural subsidies and artificial food prices, why not underwrite healthier foods? Why not offer lower corporate health insurance rates to those businesses that can prove they have reduced stress levels in their employees?

At present, hospitals generate the lion’s share of their revenue with billable acute care. Far too often, billability (a great 1960s term) drives treatment modalities and affects outcomes. Why not award bonuses to hospitals on positive outcomes instead?

Life insurance policies are rated, based on any number of lifestyle factors. Why should medical insurance be any different? Smoking and being obese are not really preexisting conditions, as that term in properly used.

The Government and the private insurance industry could easily incentivize better health, if only they wanted to. Drawing on the fire insurance analogy from last week’s article, the sorry state of fire safety in the US can, quite sadly, be attributed to the fact that there is way more money in fire than in fire prevention. Sadder still is that there is far more money in disease than in health.

We delay changing this paradigm at our peril.

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14 responses to “Switching To A True Health Care Model

  1. I dunno — it’s fuzzy to me whether our host is endorsing this or not.
    “Preventive” medicine in terms of things like communicable disease makes lots of sense. Thus sanitation and vaccination, many cheers for these accomplishments. I’ll go further: sanitation especially is something of a public good and merits government (meaning coerced) support.
    “Preventive” medicine in terms of safety has a place also. Encouraging safe driving, occupant belts, auto safety glass — all of these have their places in improving health by reducing injury. Reducing exposure to accident risks and toxins in the workplace have also had many health rewards. I remember a TV special about the Chinese and their expertise at moving digits around for people injured in accidents. I thought to myself, “Hey, it’d be cheaper to cover the moving parts.” Hatters no longer go mad.
    These preventive measures have had considerable health impact. Okay.
    Preventing cancer, heart disease, vascular disease and related problems seems to be mostly futile. Reducing smoking is probably having some effect. But most of the preventive advice about long-term, age-related disease seems to have very slight impact. Nearly all of the dietary recommendations seem to have value only for the few people sensitive to salt or dietary fats, for example. Everyone will die of something and most of us will try to delay that event. I think we have less trouble with deteriorating health than we have with increased capability — if that’s trouble. People with cancer are getting two good years and one bad year instead of one bad year — but at a cost of, say, $200k. People with hip trouble are getting four or five years of improved mobility with hip replacement — at $35k or so. These “procedures” weren’t available and didn’t cost anything 50 years ago.
    As for paying for the intervention or procedural model — heck, that’s how we pay for everything else. I pay my mechanic to PM and to repair my car. I pay the sprinkler people to PM and repair the sprinkler system. In health care, PM has a surprisingly small value and that value becomes less as we age and acquire more problems.
    In bright particular, I don’t want the government at any level deciding how the health care market should work because, you know, it’s been so effective with other markets.

    • @MT–

      “In bright particular, I don’t want the government at any level deciding how the health care market should work because, you know, it’s been so effective with other markets.”

      No argument, but they already control health care, and actually have since 1965.

      Let’s just say that emphasizing cognitive medicine more than is now done would be a good start.

      • Howdy MD Shaw
        There may well be a role for more cognitive medicine. My doubt is that it’s going to be much of a cost shifter. Cognitive/preventive medicine may shift costs to a later stage in life by delaying the onset of vascular disease or cancer, but the evidence for that is small.
        As for the government having too large a role in healthcare, I think we’d agree that enlarging it is the wrong concept.
        The greatest costs in healthcare fall into two overlapping categories: major intervention for catastrophic disease or injury and long-term care. We could reduce the costs of more routine care — at least probably — by removing them from third-party policies generally and letting the market operate more freely. But the care we’re talking about is a small driver of overall healthcare costs. Since very few of us are willing to accept palliative care in place of trying for a cure for a major medical problem, I don’t see the big drivers getting smaller anytime soon. Nor am I sure they should. We have a church member who was cured of leukemia when she was six and I’m sure it was expensive.

        • I can vouch for the cost of curing leukemia. I was diagnosed in 1991 at the age of 37, and after chemotherapy worked initially, then failed, I had a bone marrow transplant in 1993. The total cost at that time was around $250,000, of which I paid around $35,000 out of pocket. The remaining $215,000 was paid by my insurance co., BCBS – I happen to be one of the few who pay directly for their own insurance, making coverage truly “portable”.During my treatment, I discovered that the home health provider service was ripping me off by charging me $13,000 for the same chemotherapy given by my oncologist at his clinic for 1/3 the cost. They dropped the entire charge when I protested the amount, which only proved my point that I was being overcharged – no legitimate business would write off that amount in its entirety if it were valid.

  2. I think this thesis has great merit. The insurance has never been the problem, the cost is simply a mathematical indicator that the prices paid for the covered good are too high. Prevention has a place but must be improved. “The End of Medicine” is a good doscussion. http://drhelen.blogspot.com/2006/06/podcast-on-end-of-medicine_27.html

    Most importantly, medical care must be subjected to the same rigorous cost reduction pressures all other competitive services go through. Has anybody kept track of vision improvement medicine? (e.g. LASIK surgery?) Elimination of third party payment, which leads both the doctors and patients into a situation where they don’t care how much anything costs, must be reformed to health care savings accounts or pay go systems while health insurance is reserved for catastrophic care issues.

    I’ve been working in industry for over 30 years and have been keenly aware of the costs of goods and services over time. For those things that government gets heavily involved with, price usually skyrockets and often, quality declines. Healthcare is an example. For those things people really need and want, something else occurs. Refrigerators for example, in the early 20′s a new refrigerator cost about $800.00. Today, a new similar refrigerator costs…about $800.00.

    Think of your own examples, but in those areas of society dominated by regulations or corrupted by government funding the effects are nearly universal that prices eventually become prohibitive.

    • Third party review is good, but would be better if all involved did not engage in “substitute” behavior anticipating the other’s action. History teaches. We need better self-regulating systems – like the doctor run hospitals under the 1946 Hill-Burton Act that brought better and more wide spread care, including to less metropolitan areas, that existed before, in 1973, Kaiser & government [Nixon Administration] bought into “HMO managed health care” when they saw government was over promising handouts [and fostered by big business executives who saw in the HMO system skimming fat dollar bonuses from the medical system - previously finding it difficult to share in doctors' fees however indirect - and illegal; attempt in 1993 [Clinton Administration] at reining in the looting was summarily smashed]. We need to push hard against the loss of money [through managed care skimming] for actual care and fight the power that keep expanding the greed. Two examples.
      We had elective minor surgery for our son, a simple ½ hour in the OR outpatient procedure at a hospital. The hospital asked for $500 deposit that we paid. During the month before the surgery we asked several times for an estimate of hospital OR cost, including at the hospital the morning of the surgery. No response. We could either go home or have the surgery that day without estimate or fixed amount. The surgeon billed $584 and the anesthesiologist under $500. The initial hospital bill was $6500, an overreaction to bill review. The insurance review cut the bill to $560.
      In a non medical situation, our local USTA tennis club offered to match the City on costs of 12 new lighted tennis courts to be shared with the highschool, and the club produced a top quality reputation contractor who would do the job for $30,000 per court. The city accepted, but when it went to build and went through its bureaucratic SNAFU, using another contractor, the courts cost $50,000 each; 3 years later the surfaces were falling apart and had to be redone. Oh, and of course, the City could only afford to build 8 courts at the inflated cost.

  3. The fire analogy doesn’t work. All houses don’t all eventually burn down. We are all going to eventually get sick and die.

    Acute care of a smoker at age 55 saves money. There are reasons to prevent disease, but saving money isn’t one of them. If you got the smoker to quit smoking at age 45, they would still have acute care requirements, just 20-30 years later. So you would have an additional 20-30 years of medical expense, in addition to the inevitable acute care.

    I think the best approach is to make insurance insurance. Get rid of the third-party payer system. Require a large minimum deductible before insurance pays anything. It should protect you against catastrophic loss. It should not pay for you doctor visits.

  4. The PPACA is filled with all sorts of preventive wellness pseudoscience — it not only makes money for special interests (selling lab tests for “risk” numbers; drugs to treat the numbers; diets and organic health foods; fitness products; regulations on food producers, restaurants and schools, etc.) but is used by the government to compel compliance with all sorts of junkscience-ridden “healthy lifestyle” mandates purportedly to prevent chronic diseases of aging and save healthcare costs…except none have much credible science behind them. If you are aging, you will also be far less likely to receive health care under PPACA.

  5. i recommend reading “The Freedom Plan” by Dr. John Perry (available on Amazon) for a practical, well thought out approach to the health cost crisis in the country.

  6. Just eliminate medical insurance all together.Buying medical services should be like buying loaf of bread.Give three dollar get bread.In this model baker knows he can not go too high or consumers will go for other food items. Medical insurance creates these fancy web of medical code billing and fraud.Plus the medical establishment knows the consumer has no direct say in prices and it is only matter of working with insurance codes etc.

    • realestatepup

      I agree. All health “insurance” does is actually drive UP costs, not reduce them. There are probably millions of people employed by health insurance companies that need to be paid, billers, coders, customer service, etc. and don’t forget the big-wigs at the top making six figures and more with “bonuses”. Where does that money come from? Duh! Health insurance fees!!! Think about this: Do you, or even your doctor, KNOW how much they charge for, let’s say, a physical? Ask them. I bet they don’t. How is this possible? Have you ever looked at an invoice showing payment, co pay, etc? It’s mind-boggling and clear as mud. Typically, a doctor or doctors will join some kind of insurance “network”. They agree to certain payment amounts for certain services. You, the insured, have no idea what that is. Would you buy a car like this? Or even a TV? Of course not! We pay over 500 a month for a high-deductible plan and have an HSA. We have to pay 30% out of pocket before out insurance even kicks in, which we use the HSA money for. We are both in good health, non-smokers. I would LOVE to KEEP that 500 a month, put THAT in a tax-deferred HSA, and negotiate directly with my providers for services. I probably would never even use that much, as we go once a year for a physical and maybe for flu or something like that. Then, you carry a low-cost catastrophic plan for hospitalization or long term care, critical care, etc. We are paying for all the uninsured (which, by the way, get charged WAY more for the same services because they 1. usually don’t know they can negotiate the fee 2. Don’t care because they aren’t going to pay anyway.) And, as usual, there is NO MONEY TO BE MADE IN HEALTHY PEOPLE. For all the so-called medical “advances” we have (and really, folks, have there been? It’s all just vaccine this and vaccine that for stupid things) we are the fattest, sickest people on the planet who consume the lion’s share of pharmaceuticals. Quo bono. Think about it.

      • Much agree with you, except we pay $420 a month [plus another $100 for one on medicare], have an HSA, but our insurance deductible keeps increasing ["raising the honorable quota"] such that we pay for absolutely everything ourselves – minor thanks for the HSA and hope it does not become phased out in the OC momentum.

  7. It all has to end sadly no matter the implementation. Personal responsibility is dead. Too many folks are choosing to believe that a magic pill/procedure/treatment must and will always be available to fix any consequences of longterm sloppy or destructive personal care. Not only shall the “magic cure” always be available, now it will be expected to be magically paid. If (surprise, surprise) dis-ease develops from poor personal choices and if that condition results in some level of permanent physical damage – at least we shall have the “fundamental right” to a lawyer to bring suit for the failure of the “fix”. Coupling that with the “responsibility” of the government to backstop all citizens’ negative consequences, we have the comfort in knowing we will “always” have magic funds to compensate for any disability. It’s all good. No personal behavioral changes required. Thank heavens. God Bless the U.S.

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