Why are Americans so worked up about health care reform? Statements such as “don’t touch my Medicare” or “everyone should have access to state of the art health care irrespective of cost” are, in my opinion, uninformed and visceral responses that indicate a poor understanding of our health care system’s history, it’s current and future resources and the funding challenges that America faces in the future. While we all wonder how the health care system has reached what some refer to as a crisis stage. Let’s take some of the emotion out of the debate by briefly examining how health care in this country emerged and how that has formed our thinking and culture about health care. With that as a foundation, let’s look at the pros and cons of the Obama administration health care reform proposals, and let’s look at the concepts put forth by the Republicans?
We can all agree that access to state-of-the-art health care services would be a good thing for this country. Experiencing a serious illness is one of life’s major challenges and to face it without the means to pay for it isn’t very comforting. But as we shall see, once we know the facts, we will find that achieving this goal will not be easy without our individual contribution.
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These are the themes I will touch on to try to make some sense out of what is happening to American health care and the steps we can personally take to make things better. A recent history of American health care – what has driven the costs so high? Key elements of the Obama health care plan The Republican view of health care – free market competition Universal access to state of the art health care – a worthy goal but not easy to achieve. What can we do? First, let’s get a little historical perspective on American health care. This is not intended to be an exhausted look into that history, but it will give us an appreciation of how the health care system and its expectations developed. What drove costs higher and higher?
To begin, let’s turn to the American civil war. In that war, dated tactics and the carnage inflicted by modern weapons of the era combined to cause ghastly results. Not generally known is that most of the deaths on both sides of that war were not the result of actual combat but what happened after a battlefield wound was inflicted. To begin with, the evacuation of the wounded moved at a snail’s pace, which caused severe delays in treating the wounded. Secondly, many wounds were subjected to wound care, related surgeries, and/or amputations of the affected limbs, which often resulted in the onset of massive infection. So you might survive a battle wound only to die at the hands of medical care providers who, although well-intentioned, interventions were often quite lethal. High death tolls can also be ascribed to everyday sicknesses and diseases when no antibiotics existed. In total, something like 600,000 deaths occurred from all causes, over 2% of the U.S. population at the time!
Let’s skip to the first half of the 20th century for some additional perspective and bring us to more modern times. After the civil war, there were steady improvements in American medicine in understanding and treating certain diseases, new surgical techniques, and physician education and training. But for the most part, the best that doctors could offer their patients was a “wait and see” approach. Medicine could handle bone fractures and increasingly attempt risky surgeries (now largely performed in sterile surgical environments), but medicines were not yet available to handle serious illnesses. The majority of deaths resulted from untreatable conditions such as tuberculosis, pneumonia, scarlet fever, measles, and/or related complications. Doctors were increasingly aware of heart and vascular conditions and cancer, but they had almost nothing to treat these conditions.
This fundamental review of American medical history helps us understand that until quite recently (around the 1950s), we had virtually no technologies to treat serious or even minor ailments. Here is a critical point we need to understand; “nothing to treat you with means that visit the doctor if at all were relegated to emergencies so in such a scenario costs are curtailed. The simple fact is that there was little for doctors to offer and, therefore, virtually nothing to drive health care spending. A second factor holding down costs was that medical treatments that were provided were paid for out-of-pocket, meaning by way of an individual’s personal resources. There was no such thing as health insurance and certainly not health insurance paid by an employer. Except for the very destitute who were lucky to find their way into a charity hospital, health care costs were the individual’s responsibility.
What does health care insurance have to do with health care costs? Its impact on health care costs has been and remains to this day, absolutely enormous. When health insurance for individuals and families emerged as a means for corporations to escape wage freezes and attract and retain employees after World War II, almost overnight, a great pool of money became available to pay for health care. As a result of the availability of billions of dollars from health insurance pools, money encouraged an innovative America to increase medical research efforts. More Americans became insured through private, employer-sponsored health insurance and increased government funding that created Medicare and Medicaid (1965). In addition, funding became available for expanded veterans’ health care benefits. Finding a cure for almost anything has consequently become very lucrative. This is also the primary reason for the vast array of treatments we have available today.
I do not wish to convey that medical innovations are a bad thing. Think of the tens of millions of lives that have been saved, extended, enhanced, and made more productive as a result. But with a funding source grown to its current magnitude (hundreds of billions of dollars annually), upward pressure on health care costs is inevitable. Doctor’s offers and most of us demand and get access to the latest available health care technology in the form of pharmaceuticals, medical devices, diagnostic tools, and surgical procedures. So the result is that there is more health care to spend our money on, and until very recently, most of us were insured, and the costs were largely covered by a third party (government, employers). Add an insatiable and unrealistic public demand for access and treatment, and we have the “perfect storm” for higher and higher health care costs. And by and large, the storm is only intensifying.
At this point, let’s turn to the key questions that will lead us into a review and hopefully a better understanding of the health care reform proposals in the news today. Is the current trajectory of U.S. health care spending sustainable? Can America maintain its world competitiveness when 16%, heading for 20% of our gross national product, is being spent on health care? What are the other industrialized countries spending on health care, and is it even close to these numbers? When we add politics and an election year to the debate, information to help us answer these questions becomes critical. We need to spend some effort in understanding health care and sorting out how we think about it. Properly armed, we can more intelligently determine whether certain health care proposals might solve or worsen some of these problems. What can be done about the challenges? How can we as individuals contribute to the solutions?
The Obama health care plan is complex for sure – I have never seen a health care plan that isn’t. But through a variety of programs, his plan attempts to deal with a) increasing the number of Americans covered by adequate insurance (almost 50 million are not) and b) managing costs in such a manner that quality and our access to health care is not adversely affected. Republicans seek to achieve these same basic and broad goals, but their approach is proposed as being more market-driven than government-driven. Let’s look at what the Obama plan does to accomplish the two objectives above. By the way, his plan was passed by Congress and began to kick in starting in 2014 seriously. So this is the direction we are currently taking as we attempt to reform health care.
Through insurance exchanges and an expansion of Medicaid, constitution the Obama plan dramatically expands the number of Americans that will be covered by health insurance. To cover the cost of this expansion, the plan requires everyone to have health insurance with a penalty to be paid if we don’t comply. It will purportedly send money to the states to cover those individuals added to state-based Medicaid programs. There were several new taxes introduced to cover the added costs, one being a 2.5% tax on new medical technologies and another increases taxes on interest and dividend income for wealthier Americans.
The Obama plan also uses evidence-based medicine, accountable care organizations, comparative effectiveness research, and reduced reimbursement to health care providers (doctors and hospitals) to control costs. The insurance mandate covered by points 1 and 2 above is a worthy goal. Most industrialized countries outside of the U.S. provide “free” (paid for by rather a high individual and corporate taxes) health care to most, if not all, of their citizens. However, it is important to note that there are several restrictions for which many Americans would be culturally unprepared. Here is the primary controversial aspect of the Obama plan, the insurance mandate. The U.S. Supreme Court recently decided to hear arguments as to the constitutionality of the health insurance mandate resulting from a petition by 26 states attorney’s general that Congress exceeded its authority under the commerce clause Constitution by passing this element of the plan. The problem is that if the Supreme Court should rule against the mandate, it is generally believed that the Obama plan as we know it is doomed. This is because its major goal of providing health insurance to all would be severely limited if not terminated altogether by such a decision.
As you would guess, the taxes covered by point 3 above are rather unpopular with those entities and individuals that have to pay them. Medical device companies, pharmaceutical companies, hospitals, doctors, and insurance companies all had to “give up” something that would either create new revenue or reduce costs within their spheres of control. For example, Stryker Corporation, a large medical device company, recently announced at least a 1,000 employee reduction to cover these new fees. This is being experienced by other medical device companies and pharmaceutical companies as well. The reduction in good-paying jobs in these sectors and the hospital sector may rise as former cost structures will have to be dealt with to accommodate the reduced reimbursement rate to hospitals. Over the next ten years, some estimates put the cost reductions to hospitals and physicians at half a trillion dollars. This will flow directly to and affect the companies that supply hospitals and doctors with the latest medical technologies. None of this is to say that these changes will not realize efficiencies or that other jobs will, in turn, be created, but this will represent the painful change for a while. It helps us to understand that health care reform does have an effect both positive and negative.
Finally, the Obama plan seeks to change the way medical decisions are made. While clinical and basic research underpins almost everything done in medicine today, doctors are creatures of habit like the rest of us, and their training and day-to-day experiences dictate to a great extent how they go about diagnosing and treating our conditions. Enter the concept of evidence-based medicine and comparative effectiveness research. Both of these seek to develop and utilize databases from electronic health records and other sources to give better and more timely information and feedback to physicians regarding the outcomes and costs of the treatments they are providing. There is great waste in health care today, estimated at perhaps a third of an over 2 trillion dollar health care spending annually. Imagine the possible savings from a reduction in unnecessary tests and procedures that do not compare favorably with health care interventions that are better documented as effective. The Republicans and others don’t generally like these ideas as they tend to characterize them as “big government control” of your and my health care. But to be fair, regardless of their political persuasions, most people who understand health care at all know that better data for the purposes described above will be crucial to getting health care efficiencies, patient safety, and costs headed in the right direction.