We have been entangled in a running debate in our society about health care, the related skyrocketing costs, and how we are going to pay for them. In spite of the political backlash initially endured by the White House Administration, the Affordable Care Act, where the rubber meets the road and where the pocket book meets the health care delivery system, is alive and well. The campaign trail brought even more scrutiny and threats of repeal for the legislation. I would submit, however, that there is something more to the conversation, a piece to the debate that has long been left out of the national dialogue.
Our current public vitriol is mostly reserved for the issue of how we pay for health care, and we have almost entirely skipped over the part where we talk about how we deliver health care. There are several reasons why this debate has gone astray, and understanding the reason that we are so far off the mark will go a long way toward steering us back in the right direction.
One of the problems with addressing this issue is that we are, as a culture, suffering under the delusion that the debate is over private health care vs. public health care. The reason that we are delusional in this regard is that there is a misconception about the nature of “private” health care in our current system. According to a testimony before the House Committee on the Budget on February 28, 2012, by Richard S. Foster, FSA, MAAA, Chief Actuary for the Centers for Medicare & Medicaid Services:
“Medicare and Medicaid have been growing as a share of total [health care]expenditures. Over this period, Medicare increased from 13 percent of all U.S. health spending to 20 percent currently, and Medicaid grew from 10 percent to 15 percent. Payments by private health insurance have also increased as a share of the total, reaching 33 percent in 2010, although this level is a little lower than the maximum of 35 percent experienced in 2003 through 2005. Out-of-pocket costs for health care services have declined substantially, from 27 percent of total expenditures in 1976 to 12 percent in 2010, reflecting private health insurance and Medicaid coverage expansions during this period.”
So, in 2010, 35% of National Health Expenditures were from a public source, paid to a private hospital for services rendered. More than a third of our “private” revenues were indeed paid for by the public. This is certainly not a sustainable solution, as any time the public fund is used to prop up the bottom line of private industry the public is asking to be ripped off. There is no incentive for the private health care industry to curb expenses, provide excellent customer care, or invest in new and innovative practices to streamline processes. Public money is not an effective means of revenue for private health care delivery systems, and the percentage of our National Health Expenditure on Medicare and Medicaid looks as though it is only set to rise in the future.
So, private pay for private service is the answer, right? Well, not exactly. The problem with health care relying solely on the market as a motivator is that the very nature of that system creates a situation where the provider is not invested in the health of the patient, but in the treatment of whatever condition is present. Healthy patients don’t bring in revenues, so the profit motive to keep people healthy is inadequate. Treating subsequent problems is a much better business plan than creating a whole health program for the individual that keeps them out of the office or exam room. What is the motivation to encourage flu shots? Smoking cessation? Regular primary care visits?
In our current social climate, the odds of a provider or even an entire health care institution having a long term relationship with a patient are declining. The average patient today stays with the same provider for only 4-6 years, affecting the investment that the provider makes in the patient’s long term health and well being. There is little return on an institution’s investment in a seemingly healthy patient who doesn’t want any intervention and leaves your health care network before any of his or her health complications provide a source of revenue for you. The lack of lifelong patient interaction with the system combined with the need to make a profit make the current health care delivery system unsustainable.
There are many alternatives out there, and there are some models that we can use to look at what an overhaul of the delivery system might look like. One interesting suggestion from Phillip Hoffman in his book “Best Care Anywhere: Why VA Health Care Is Better than Yours” is to offer a national delivery system that would integrate the “St. Elsewhere” facilities that are under-funded and over-crowded into a national delivery service that would track the patients via a nationally integrated database, so that if you went to a hospital in New York, then entered another similar hospital in L.A., your records would be available and you would receive consistent care. Hoffman’s is not a perfect plan, as he readily admits in the book, and any systematic change is going to be hard and is going to require some sacrifice; but seeking to only address the payment delivery methods is never going to get the job done.
I don’t have definite solutions for the fate of the American Health Care System, but I know that we are not addressing the core problems that face it. As the old axiom goes, “If you are digging hole and you realize you are digging in the wrong place, digging deeper won’t help.” We are digging in the wrong place, and it is high time that we take a step back and evaluate our options on a larger scale.