With the passage of the Affordable Care Act (ACA) behind us,  substantive change in our health care system has become a reality, against all possible political odds.  With all of its weaknesses, ACA represents a monumental political achievement. .  But, whatever good may have come out of ACA with respect to addressing the inequities of our health insurance system, ACA did little to address the fundamental problems with it that have resulted in a dangerous expansion in the health care costs over the past 40 years. ACA, revolutionary as it may be, is but a tiny step forward in health care finance reform.  It addresses chiefly the problem of inadequate access to health care, and it does so imperfectly. But  it does little to address the causes of rising health care costs. Unless the fundamental flaws in the health care financing system are corrected, we will continue to see massive and unsustainable growth in health care expenditures. This growth not only will increase individual costs, but it threatens Medicare and Medicaid and, indeed portends disaster for the entire health care system.

While it is easy enough to attribute the growth in health care expenditures to improvements in medical care, through more advanced surgical techniques, more and better drugs, and more sophisticated treatments, the reality is that cost increases due to technology are but a small part of the explanation for the growth in costs.  The growth in costs are  due primarily to health care economics  in the United States, rather than to medical advances.  According to an article in the New England Journal of Medicine (Volume 310, Number 18, November 2013)  “the overwhelming share of increased health expenditures can be traced to the higher prices that hospitals, medical professionals and drug companies charge to treat a wide swath of illnesses” (Quoted in Huffington Post). Factors intrinsic to the practice of medicine, including defensive medicine, technology, and other incidental expenses including the high cost of pharmaceuticals and medical devices certainly play a role, but  economic factors are greater because they not only tolerate but encourage inflation of costs (Goldhill, David, Catastrophic Care, How American Health Care Killed My Father — and How We Can Fix It). Our medical technology is simply not growing that fast.  The problem with the economics of health care is that we have neither a centrally regulated system nor a free market.  Instead we have a mish-mash of dysfunctional economic subsystems, including Medicare, Medicaid, private systems, and the V.A.

At the heart of the economic problem lies the delusion that we can have a workable system where there is no personal economic accountability either for consumers or practitioners of health care.  By allowing all decisions about health care costs to occur in the dark, without any input from those who make the services available and those who use them, we have set up a system that lacks checks and balances, does little to encourage quality and efficiency, and that encourages  ever-increasing cost outlays  (Goldhill). With neither consumer nor practitioner having a direct connection to the costs of care, the third parties are the only ones who have a direct interest in and regulatory power over health care costs.  Yet they themselves are politically limited because of the immense blowback that inevitably results from a nation of consumers and practitioners suffering cost increases or payment cutbacks.

Consumers and their health care practitioners have stood  quietly by as employers, insurance companies, pharmaceutical companies and medical device makers took control of the health care system, not merely from the perspective of costs, but even availability.  How has this happened?  How have we allowed ourselves, in the pursuit of health, to be enslaved to health insurance companies, pharmaceutical companies and medical device companies?

First of all, we for the most part allow our employers to select our health care plans for us, instead of choosing individually.  This is not so much an individual choice as a consequence of the dysfunctional system we have inherited, and which had its origins just prior to World-War II  and during the severe economic circumstances of World War II  (Buchmueller T. and Monheit, A., Employer-Sponsored Health Insurance and the Future of Health Insurance Reform, 2009 http://www.nber.org/papers/w14839.pdf?new_window=1). We all know (or at least suspect) that “benefits” are actually nothing of the sort, since the employer deducts the cost of the health insurance from our salaries, but we persist in the delusion that such false protection amounts to a “benefit”.  In some sense, this is correct, because (until ACA) for the most part we all have obtained a discounted price, however poor the product may be,  by purchasing through our employer rather than as an individual or family.  However, in reaping this benefit, we have given over purchasing power to our employers, who, for purely economic interests, are likely to purchase less desirable and cheaper plans than we might select for ourselves.

Second, the cost of medical services, allied professional services, laboratory and imaging studies, pharmaceuticals, inpatient care, emergency care, ambulances is all kept in the dark from us, except for the rare occasion where we have a rude awakening when we find out the actual charges of a service or product because it is not covered by our insurance plan.  In many cases,  it is shocking to find out how much things actually cost , and, except for the wealthiest among us (to whom this is less likely to happen, since they have the best policies), we are unable to pay such high prices  (http://www.nytimes.com/2013/12/03/health/as-hospital-costs-soar-single-stitch-tops-500.html?_r=0). Many bankruptcies result from “normal” medical expenses (http://www.cnbc.com/id/100840148).

Third, instead of learning about the costs of the services we purchase, most of us are shielded from this awareness by having deductibles, to discourage us from seeking care in the first place, or flat co-pays, that do not vary whether we are charged $100, $1000, or 10,000.  In this way, we are anaesthetized to the costs of our health care.  When the next rate hike comes from the insurance company, or our insurance policy is dropped in favor of a cheaper but worse policy, we start to belatedly feel the pain.  In addition, since what doctors are making is not known to patients, doctors are free to charge very high rates for their services and are not held personally responsible for these charges.  This is perhaps the third rail of medical costs — overbilling, which is encouraged by the system, since those doing it are almost completely protected from being held responsible.   Instead, the insurance company gets blamed for refusing to pay the very high prices being charged, or requiring pre-authorizations that serve to slow down the payment process and the delivery of services.

Fourth,  government funded sources, like Medicare and Medicaid shield individuals from the cost of care, but have no internal cost-containment features.  When reimbursement declines,  practitioner billing tends to increase to maintain constancy in receipts.  Thus we see, contraction of services or threats of reduction of payments to providers.  We have been walking on the edge of a cliff with threatened deep Medicare cut-backs for years, with congress providing eleventh hour reprieves again and again. “Medicare for all” means having a cheap but unregulated and fraud-ridden system that lacks the capacity to constrain costs, except by making deep and politically untenable cuts to reimbursement patterns.   And many Medicare and Medicaid subscribers have difficulty finding doctors who accept their insurance.  So access to care is not what it ought to be under our public systems.  Even the V.A. has fallen down on the job in treating our most recent veterans, from “Gulf War Syndrome”  to PTSD to Traumatic Brain Injury ( http://journaltimes.com/lifestyles/faith-and-values/va-to-expand-benefits-for-traumatic-brain-injury/article_0f9940b6-6c2d-11e3-8be1-001a4bcf887a.html).

Fifth, our health care system is founded on people becoming sick, rather than on people staying well.  There are strong economic (and other kinds of) disincentives for people to see doctors, take their medicines and take care of their health. People are often confused by the variety of health recommendation they hear about in the media and in different books.  There is rarely enough time in the average primary care visit for a doctor or nurse to lay out the essential facets of a good preventive care plan.  Most conventionally trained health care practitioners do not have enough training in preventive medicine to actually create such  a plan. So most of medical care is devoted to mopping up health messes that could have been prevented had adequate attention to illness prevention been paid.

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To address these problems, some changes almost certainly will have to take place.

1.The employer based health insurance system must be slowly dismantled and then removed. People need to own their health insurance policies, understand these policies and take responsibility for the choices they make and have a variety of coverage options to choose from.  ACA attempts to do this, though with mixed results. It’s been a long standing tradition with most other types of insurance, such as life, homeowner’s or auto insurance. How the employer-based health care system can be replaced by one more comparable to other insurance systems will be a subject of a further paper.

2. The prices of goods and services must be readily available for the consumer to inspect.  It is impossible to have any form of marketplace when  the costs of health-related goods and services are kept invisible (until after they have been purchased).  This idea has been referred to by some (Makary, Marty (Unaccountable: What Hospitals Won’t Tell You And How Transparancy Can Revolutionize the Health Care System Bloomsbury, 2013) as “transparancy” and refers to the need to understand not just costs but performance information about health care practitioners or institutions.

3. Eliminate or reduce deductibles. They do nothing but discourage people from getting care, since they are essentially ways of having people pay 100% of the costs up front, which is impossible for far too many people and a strong disincentive to obtain care even when possible.  Research has demonstrated that high deductibles reduce the frequency with which people obtain preventive care. The idea of preventive medicine is not to prevent people from getting treatment, but to facilitate their getting preventive health services to obviate the need for more extensive and more expensive treatment down the road.  The last thing we need is to reinforce the unaffordability of health care.

4. Instead of fixed copays, we need variable copays at predetermined rates: the more the copayment, the less the monthly fees paid to the health insurance company.  ACA is on the right track here with the bronze, silver, gold and platinum plans. Although high deductibles are anti-health,  the lower co-pays for more expensive plans is the right idea. Copays should also  be lower for primary care physicians, or those practicing preventive medicine, to encourage access to  preventive medical care.

5. There needs to be separate systems for inpatient, outpatient and emergency care, because these situations involve different types of decision-making processes.  Dr. Arnold Relman, former editor of the New England Journal of Medicine has argued  (Relman, Arnold, A Second Opinion)that we can’t have a free market in medical care because people are in no position to negotiate prices when they are having a heart attack, stroke, or being treated for head injuries sustained in a motor vehicle accident.  True enough, but the vast majority of patient encounters in the medical system are scheduled appointments, or ER visits where the patient is awake and aware of what is going on.  Only a small percentage of individuals in the system fall into the category Dr. Relman describes, where they do not have the ability to negotiate their health care.  For the rest of the world, a system must be worked out where people can check into costs ahead of time.  And even for emergencies, at the time one purchases a policy, one should be able to research which ER’s and hospitals have the best treatment outcomes, best rates, or best overall services.  These preferences can be communicated to a loved one, or kept on a bracelet, as with diabetics, to notify rescue services of where care is to be preferentially obtained.

6. Quality and cost of care must be assessed, and made readily available to the public. People must know how much it will cost them to see a certain professional, what the ratings of those professional are, in terms of patient satisfaction, and utilization of health care resources (this data is already being tracked by some health insurance companies).  While some efforts in this direction have been made through a system known as PFP (Pay for Performance), I believe this approach would be a mistake, because different doctors see different patients and checklists lead to a kind of cookbook approach to medicine.  I believe a system similar to current on-line product evaluation systems. such as Amazon.com where medical encounters are rated on a scale of 1-5 stars, with space available for more descriptive commentary is better than a check-list approach.  Mandating that such simple evaluations be done after treatment is completed would assure that information would be available to all.

7.  Health insurance companies, pharmaceutical companies and medical device companies need to be more regulated by the government.  These companies enjoy regular profits because they have a semi-monopoly, and they have far too much political clout.   Our health is too expensive to allow insurance companies to feed any longer at the trough of the health care system, which is already bloated enough.  Whining about the stifling effect of regulation on the pharmaceutical and medical device industries is a common strategy these industries use, but when they produce unaffordable products, where’s the loss? The pharmaceutical industry charges Americans more than in any other country and has higher profit margin than any other U.S. industry (http://healthcareforamericanow.org/2013/04/08/pharma-711-billion-profits-price-gouging-seniors/.

8. There needs to be a public health system available for those unable to afford health insurance, including the poor, the disabled, and those too sick to participate in the health care system (While many view lack of health care as a product of economic forces, any health care practitioner whose been around the block a few times can affirm the simple observation that some people drain the system of resources but do not profit measurably as a result.  This is not just patients with Munchausen’s Disorder, but people who over-use resources for a variety of different personal reasons, most of which are not treatable).  This system would be run by medical students, residents, fellows and public health workers, and be carefully circumscribed in what it could do (more limited diagnostics, mostly generic drugs, waiting lists for elective surgery, for example), but it would be open to anyone.  It would be a national health plan, but participation in it would not be mandatory, and people could purchase supplemental private insurance, as in Great Britain and Germany. Physicians, including M.D.’s and D.O’s would be mandated to spend time after residency in the system, part or full-time in exchange for having medical school costs paid for by the government.  Most of them would be required to do some amount of primary care, even if that was not their eventual specialty of choice.

9. States should also offer more broad health insurance coverage at  discounted rates to compete with regular health insurance.  It would be simpler, more straightforward and in more  understandable terms, and call for  far less administrative costs.  Paying higher premiums would qualify one for lower co-payments and fewer restrictions on care (i.e., less restrictions on elective surgery, non-generic medications, and imaging studies).  The aim here is to compete with the insurance companies and drive down premiums.  The insurance companies will oppose this with all the political force they can afford, and they can afford a lot.  They’ve had it good for a long time, but too long.  It’s time to break up their stranglehold on healthcare and cut costs so that we don’t kill ourselves in our quest for better health by purchasing more health insurance than we can afford.

10.  More effort needs to make at a state level to promote preventive health.  Preventive health needs to be encouraged through the state system by reducing insurance premiums for those who attend health prevention centers, or can demonstrate substantial improvements in their health through preventive medical interventions.  There are many treatments that our current medical system does a poor job of availing patients of,  in spite of a tremendous interest in them. These preventive treatments tend to promote health, and reduce medical expenditures.  We all know of the dismal record of our medical system in helping patients to lose weight, increase exercise, reduce or eliminate cigarette smoking and other substance abuse.  In addition to these obvious changes, we also need people to be utilizing more health systems which have a proven track record of promoting health, including nutrition, herbal medicine, acupuncture homeopathy, yoga, tai ch’i and other alternative medicines.  Many of these are  disparaged by the medical community without empirical basis as part of a power struggle with the alternative medical community.  Practitioners of many (though not all) alternative treatments, who are familiar with the research are aware of the overwhelming data base of research that verifies the health benefits of most of these treatments.

11.  The problem of increasing costs of care and end of life care in the elderly and others struck with catastrophic illness must be addressed by increasing the numbers of people with advanced directives and reducing problems of over-medication and over-treatment.  Special geriatric health centers need to be created to reduce hospitalizations, address over-medication, and improve end-of-life planning.  We all know that most of our national health care dollar is spent in the final ours of our lives ( http://www.nytimes.com/2013/01/11/opinion/costs-of-medical-care-at-the-end-of-life.html).  While a certain amount of this money will inevitably be lost through medical heroics, many people would prefer not to be the recipients of their would-be-heroes efforts and, increasingly, through advanced directives are making sure that they are not the victims of unwanted and frequently useless heroics.

12.  These changes will not be popular with anyone.  Physicians will need to earn less money.  They’ll have to put time in to public service as well. On the other hand, they will graduate with less debt, so they’ll need to earn less money in their careers.  But the system will tend to discourage young people from going into medicine in order to become wealthy and encourage those who are more idealistic about helping others.  Insurance companies will be threatened with going out of business because of competition from government systems that will operate at far lower costs.  You can bet they’ll do everything they can to get local government to stop such a system.  Patients won’t like it because they’ll have to think about costs more instead of having health care served on a silver platter (even though the silver is usually more than they can afford).  On the plus side, their costs will become lower.  The price of lower costs is more responsibility.  Some patients will lose some of the freedom to get the “best” care when best means “most”.  But as hard lessons have taught us (see Overtreated: Why Too Much Medicine is Making us Sicker and Poorer, by Shannon Brownlee and Epidemic of Care : A Call for Safer, Better and More Accountable Health Care, by George Halvorson and George Isham) more is not only not better, but it is sometimes worse then less care.  It only seems better when you don’t have access to it.  Without these kinds of changes the folly of ignoring prevention, allowing profiteering to continue, and avoiding taking responsibility for our health will continue with the same predictable economic and social consequences.