Dr. Goodman’s article is a fantastic foray into the dark history organized medicine, culminating with a brutally honest assessment of the cartel that resulted. He gives a great preview of the good stuff in Greg Scandlen’s new book, Myth Busters: Why Health Reform Always Goes Awry, summarizing the oft-repeated myths we hear about healthcare economics thrown around like dogma.
You can take this to the bank. Every innovation in the production of every good or service – anything that lowers costs or increases quality – originates on the supply side of the market. There has never been a successful innovation that originated on the demand side.
This principle applies to health care in spades. For as long as I have been in health policy – more than 30 years – I have been dealing with non-doctors who have a deep, abiding desire to tell doctors what to do. Yet I don’t know of any example anywhere in the world where this approach has ever worked.
If the definition of insanity is repeating the same thing over and over again and each time expecting a different result then “insanity” is the appropriate word here. The Obama administration has spent millions of dollars on pilot programs and demonstration projects in a fruitless attempt to discover how to better practice medicine. It has spent millions more trying to herd Medicare patients into Accountable Care Organizations – super HMOs with financial incentives to hit quality measures. That hasn’t worked either.
Look, there’s nothing wrong with the Triple Aim objectives. What’s wrong is that its most prominent advocates–some of the most influential health care experts in the country–have focused so heavily on that ideological approach to health care policy that they have absented themselves from the real battles over power, money, customer choice, and cost. They are losing ground every day. While they glance elsewhere, the Triple Aim is being turned on its head: The individual experience of care will degrade; the health of populations will decline; and the per capita costs of care for populations will rise.
President Obama recently stated that, “Congress could fix this whole thing with a one-sentence provision.” True: Repealing Obamacare in its entirety would only take one sentence. However, that is not likely what he meant. Congress would have the opportunity to propose changes to Obamacare, but they would have to be signed by a reluctant president who will never again face the voters.
Now that both chambers of Congress have Republican majorities, any legislative response will surely include eliminating the individual mandate, the most unpopular feature of the law. Victory for King would make Obamacare policies in most of the country “unaffordable” and thereby relieve 11.1 million people of the individual mandate. Any “fix” that re-imposes the mandate would be political kryptonite for this Congress.
However, the most popular provision of the law is the prohibition against health insurers taking pre-existing conditions into account when setting premiums or scheduling benefits. Obamacare’s supporters insist the two features go hand in glove. Because the law forces health insurers to accept any applicants without taking pre-existing conditions into consideration and charge everyone (except tobacco users) the same age the same premium, it must be coupled with an individual mandate.
If not coupled with a penalty (or fine or tax) for not having health insurance, people would simply wait until they get sick or injured and then buy health insurance. This leads to a so-called death spiral as health insurers increase their premiums in response to individuals’ behavior. It is an impeccable theory, but it does not hold up in a system run by politicians.
The ACO model never fooled the CBO, which estimated that in 2010 they would only save $4.9 billion through 2019 – just 11 percent of the total cuts to Medicare incorporated within Obamacare. ACOs are complicated contracts whereby the government and provider organizations agree to share the gains the provider organization wrings out of Medicare costs.
Although we only have two years of Medicare ACO experience, their supporters are already starting to panic that ACOs are “at risk,” according to the title of a recent paper by scholars from Dartmouth College, Dartmouth-Hitchcock Health, and the Campaign to Fix The Debt. Total savings for Medicare ACOs last year were $417 million, less than one percent of Medicare spending.
At the risk of over simplifying: Benchmarks (from which savings are determined) are based on three-year trends in national spending. This means that the least efficient and most expensive provider organizations have the most opportunity to profit from an ACO contract. However, once the first three-year period is finished, each ACO’s benchmark will ratchet up, so that it ends up “chasing its own tail,” as the Dartmouth scholars put it. The low-hanging fruit will be gone in a year or two. No wonder over two-thirds of executives of ACOs have indicated they will not sign up for the next three-year round of ACOs.
Locating the food source for this second group of squirrels is pretty easy. All they have to do is show up and collect their sustenance, like fat squirrels would by taking the path of least resistance for nuts put out for them by a well-meaning homeowner.
And just who is responsible for this obesity epidemic among squirrels? For starters, we can thank a systemically perverse tax code. Since the 1940’s, tax laws favor employer-sponsored benefits while suppressing and punishing the individual/small business market into submission; and recently straight into the waiting arms of either the ACA or MCO’s of Medicaid.
It took 50+ years of crony deals between special interests and state & federal legislators to hitch and load the cars of this health-care gravy train. It won’t uncouple easily.
Relocating the squirrels or giving them more nut-gathering rules will not fix this. This cartel of fat squirrels will only disband by removing the food source provided by this government sanctioned and partially financed oligopoly.
But back to the first group of combative squirrels, i.e. the mouth pieces of the status quo. Why do they continue to lobby for more of the same – even to their own detriment as patients and citizens?
They beat the drum for more regulations, legislative relief, price controls and mandates (that includes the ACA) in various forms, such as Value Based protocols, Single payer (i.e. streamlined,efficient rationing), higher taxes and various other re-distributive schemes.
Sure, when viewed in isolation any of the models listed above can be found to have some laudable benefits in and of themselves. But just as pushing on one end of a balloon causes it to bulge on the other, it is the unforeseen moral hazard and downstream unintended consequences that doom many of these Utopian ideas.
None of which are necessary, by the way, if we focused on the root causes of our current dilemma: Costs! Rather than how to “cover” people within the current dysfunctional system, which amounts to just applying pressure to one end of the balloon and expecting nothing to happen on the other.
There are common-sense market-based incentives that would reset the current system and solve the majority of the cost challenges we face. It will burst the balloon which will scare the squirrels, though.
Here is an abbreviated list of reasons why I believe these ineffectual models are often championed by well-intentioned individuals and groups, even when they have no direct financial stake.
Read entire article via Too Many Squirrels, Not Enough Attention to Their Food Source | Robert Nelson, MD | LinkedIn.
“Major cancer centers, including Dana-Farber in Boston and the Moffitt Center in Florida, are pooling data collected by oncologists, and using computers to develop precise biomarker-based prescription protocols using existing FDA-approved drugs. Commercial vendors are also offering precision oncology services recommending treatment based on patients’ unique molecular profiles—regardless of what the drug’s FDA-approved label says.”
As reported previously, none of this fits into the vision of the Obamacare creators. Obamacare architect, Zeke Emanuel, for example has called personalized medicine a “myth” and even if it works, he says, we can’t afford it. Obamacare cheerleader Atul Gawande thinks that medicine should be more like engineering — with all doctors following the same script, rather than exercising their individual judgments. Karen Davis, another cheerleader, envisions a world in which doctors who follow the script get more pay, while those who deviate will be docked.
Command and Control
Coding was one of the earliest manifestations of the cancer consuming the medical profession, but the disease is much more broad-based and systemic. The root of the problem is that patients are not payers. Through myriad tax and regulatory policies adopted on the federal and state level, the system rarely sees a direct interaction between a consumer and a provider of a health care good or service. Instead, a third party—either a private insurance company or a government payer, such as Medicare or Medicaid—covers almost all the costs. According to the National Center for Policy Analysis, on average, the consumer pays only 12 percent of the total health care bill directly out of pocket. There is no incentive, through a market system with transparent prices, for either the provider or the consumer to be cost-effective.
As the third party payment system led health care costs to escalate, the people footing the bill have attempted to rein in costs with yet more command-and-control solutions. In the 1990s, private insurance carriers did this through a form of health plan called a health maintenance organization, or HMO. Strict oversight, rationing, and practice protocols were imposed on both physicians and patients. Both groups protested loudly. Eventually, most of these top-down regulations were set aside, and many HMOs were watered down into little more than expensive prepaid health plans.