Health care costs are growing rapidly, now approaching 15 percent of GDP. Meanwhile, the numbers of uninsured are rising even faster. About 44 million Americans are uninsured. Increasingly, these are people who aren’t financially indigent but lack access to insurance through their employer and for reasons of choice or prior medical illness aren’t willing or able to purchase insurance. Hospitals are operating on razor-thin margins, if, in fact, they are fortunate enough to be profitable, and doctors are working faster and faster just to stay in place as reimbursements for professional services decline.
I would like to outline three big issues on my top-10 list of health care challenges and propose three simple, “little” ideas that might ultimately have a big impact.
Big issue #1: Rapidly rising numbers of uninsured. Between large corporations like General Motors shedding or rapidly reducing coverage, and small employers not able to provide insurance, there are now over 44 million Americans without health insurance.
Little idea #1: Require that everyone have health insurance, like we require everyone who drives a car to purchase automobile insurance. Automobile insurance is no longer a luxury in our society. Why should health insurance be any different? The state of Massachusetts must have secretly obtained an advance copy of the draft of this article, because it recently passed a landmark bill that will require every citizen in the state to be covered by health insurance. For those below a certain income level, tax subsidies will be provided. By putting everyone in a large risk pool, denial of coverage by individual risk profiling will be eliminated, so everyone can access affordable coverage.
Big issue #2: Doctors are working faster and faster just to stay in place with declining pro-fee reimbursement, while health care costs continue to escalate.
Little idea #2: Uncap physician reimbursement to lower health care costs. Yes, you heard me. If doctors were paid more, health care costs wouldn’t escalate as fast, and, in fact, might actually go down. Why is that, you ask? Well, paying primary care doctors to spend more time with patients will allow them to better counsel patients on optimal therapies and also allow the primary care doctors to treat simple conditions for which they now refer to specialists because they can’t get reimbursed.
For the specialists, higher reimbursements lead to lower utilization because of the perverse incentives created by the notion of “targeted incomes.” This is best described by a discussion I had with a classmate from medical school who is a plastic surgeon. In this field, most procedures aren’t covered by insurance, so doctors set their own fees. After my friend had opened up his practice, I saw him nine months later and asked, “Jim, how is your practice going?” He replied, “Bill, business is so good, I reduced my fees.” Yes, targeted income is a well-documented concept—if one spends nine years in a neurosurgical residency, one expects to make a certain target income level. If that doesn’t occur, and lacking the ability to raise fees due to fixed fee schedules, surgeons, for example, will endeavor to generate more demand for their services (with a resultant rise in income). Eliminating standard fees would allow the market to work positively in this unusual variant of supply-side economics.
Big issue #3: Quality of medical services is highly variable. Health care variability may be the number-one disease in America—resulting in patients who are suboptimally treated, many injuries and deaths from medical errors, and utilization that is higher than necessary. All of these factors lead to higher costs as well as poorer outcomes.
Little idea #3: Require all providers to compile and publish statistics on quality, safety and outcomes. This may be another unfunded mandate, but in this case, I think promoting safety and transparency of the health care system is in the patients’ best interest and ultimately will help slow the rise in costs.
These three little ideas could bring a major transformation in our health care system. The question is whether we have the political will even to discuss the big issues, let alone try new solutions.
