Health Care Reform: The Reality


You can see my most current evaluation of health care reform here.

Health care is a central part of Mr. Obama’s proposal to revamp the American economic system. To that end, Mr. Obama held a health summit in Washington in February in the hopes to stimulate discussion of how the plan should come about.  He has a stated goal of a nationalized health care system, which may or may not be centrally run.  In his current budget, he has proposed raising almost $700 Billion to begin to fund such an endeavour.

First, let me start by saying I am for universal health care. I think it is very difficult for physicians in the environment that we practice in to not see the inherent problems with the current system.  The current system is broken. Part of the reason is over regulation, while the system is too based on individual idiosyncrasies than based on sound science.

However, couple caveats.  It must be a bipartisan approach to health care.  Any use of parliamentary maneuvers to avoid Republicans should be considered ‘the nuclear option‘, and would end the thought of bipartisanship during the rest of the Obama Administration.  Ideologues must be kept out of the discussion, on both sides, because there are many practical matters involved, and frankly, most of these politicians are not well informed enough on the issues to be dictating terms.  Also, I think there are certain goals we must achieve if a national health care policy is worthwhile:

1.  Universal coverage – We must find a way to fund health care for all individuals.

2.  Universal applications of best practices – This is not to only to ensure high quality health care with uniform standards, but also to implement the most cost effective strategies.

3.  Improve health care IT, including better, more efficient methods of billing – This will reduce mistakes, reduce fraud, and in the long run hopefully reduce costs, though up front capital costs will be significant.

4.  Transparency – We must make costs and effective practices known and easily accessible to the public.

5.  Tort and Malpractice Reform – It is essential to remove defensive medicine as part of the culture.  Therefore, legal tort reform is essential, while still balancing the legal rights of patients.

Also, a couple of huge misconceptions in the public, and for that matter, in the Obama Health Care proposal:

  • Electronic Medical Records save money? – I have NEVER seen any evidence to prove this.  Hillary Clinton, followed by the President, made this assertion during the campaign last year without any evidence to support the claim.  Mr. Obama now claims that $80 billion could be saved using EMR.  This is absurd. The basis for the claim was a RAND Corporation report (partially funded by Hewlett Packard and Xerox, who may benefit from EMR implementation) that suggested that EMR could save money.  Of course, that was in 2005; since then, there have been numerous studies that have showed the opposite.   For example, A 2008 study published in Circulation, a premier cardiology journal, assessed the influence of electronic medical records on the quality of care of more than 15,000 patients with heart failure. It concluded that “current use of electronic health records results in little improvement in the quality of heart failure care compared with paper-based systems.”  Now, don’t get me wrong; as a physician I love the EMR.  It likely will improve patient care and decrease in-hospital mistakes.  But the cost savings are highly suspect.  It likely will cost more to impelement EMR, even though I support it’s use.
  • That we have high quality health care? – This is highly questionable.  We certainly spend more on health care per capital than any other country:  The Business Roundtable report says Americans in 2006 spent $1,928 per capita on health care, while the G5 nations (Canada, Japan, UK, France, and Germany) spend only around $1,100.  But does that translate to quality?  We certainly have the best specialists in the world, the best techonologies and drugs.  But quality is a difficult measurement.  For those that are truly sick, I would still argue that we are the best; that is why so many foreigners come here for treatment.  But most of us are not sick (yet).  Preventative care is the one factor in which the U.S. is serious lagging other nations.  And that is the one area where we can significantly reduce long term expenditures by changing our approach today.


These are the most general outlines of the beginnings of a plan.  But at the heart of the problem is that there are basic funding problems that must be answered.  There are central problems that we have now that must be addressed if we want any type of successful universal plan.

1.  Costs Will Increase Overall

There is no way around thisSimple numbers will tell you that. And the only hope of stopping increased costs, which no one wants to admit:  rationing.

Total health care costs passed $2 Trillion in 2006, and up to $2.4 Trillion in 2008.  That was 3 times greater than the $700 billion it cost in 1990.  And that means that health care now accounts for almost 1 of every 6 dollars in the economy.  In 2006, U.S. health care spending was about $7,026 per resident and accounted for 16% of the nation’s Gross Domestic Product (GDP). Total health care expenditures grew at an annual rate of 6.7 percent in 2006, a slower rate than recent years, yet still outpacing inflation and the growth in national income.

O.k., fine, that is the baseline.  So what?

Well, we have approximately 45 million people in this country that are uninsured.  There is approximately another 45 million who are underinsured.  Now, some will argue we are already paying for these people.  That is true and false.  Yes, we are paying for emergency care, which includes funding disease that could have been avoided with preventative care.  But we are still only spendin a fraction of what it would cost to provide these people full care.

The reality is that to fund full insurance for these 90 million Americans, it is estimated that it will cost an additional $400 billion a year.  A a recent CBO report (“Key Issues in Analyzing Major Health Insurance Proposals, ” December 2008) clearly states that any universal plan will cost more money than we are currently spending.  Preventative care, disease management and electronic medical records are also constantly cited as big cost-savers.   It’s a great hypothesis, but research does not indicate it amounts to much. “In many cases,” as CBO director Douglas W. Elmendorf testified regarding such initiatives, “those studies do not support claims of reductions in health spending or budgetary reductions.”

Additionally, the rate of increase for spending is  unsustainable, at around 7%.  That money has to come from somewhere.  And there is no real plan to limit the rate  of growth in most health care proposals.  And with Republicans and Blue Dog Democrats demanding that any provision be paid as we go, that inherently means more taxes.  There is no other way.

Let me make one point very, very clearIt is a complete and utter falsehood to tell the American people that any universal health care plan will cost less than we spend now.  Period.

Let us use a simple, present example:  Massachusetts.  Former Gov. Mitt Romney and Sen. Ted Kennedy developed the first universal health care plan in the country three years ago.  Since, the state has been hailed as a landmark in health care reform.  So what are the results?  Well, it has been an absolute success in getting most people insured, with greater than 96% of the population insured at last count.  However, the problem?  There is no control on costs.  Officials now admit that without huge restructuring, the plan will not stay afloat for more than 5-10 more years.  Additionally, Massachusetts spends 33% more per person than the rest of the United States!  This only goes to prove my point: universal health care is possible, but only with increased costs.  And to prove my point even further, what solution are they strongly considering as the only hope to balance the budget deficit?  Strict price controls, a.k.a. rationing.

So what does all this mean?  Well, unless you take the most optimistic view (or pessimistic view, depending on you point of view) that approximately 20% of current health care expenditures are wasted, either by fraud or misuse, then there will be a shortfall of funds that must be made up with increased tax collars.   The only way I can see to get universal care is to ration it to some extent.  I accept this as a reality.  You will have to restrict certain services to the general public.  Certain surgeries and diagnostic procedures very likely would have to get some sort of preauthorization before going forward.

This is the reality.  This is the reality for countries with socialized medicine as well, such as Canada, Britain, and Germany.  And even with the rationing, those countries are having funding problems.  Politicians must be honest about this.  Rationing is a scary word, but it is a reality we must face if we want to be able to pay for universal care.

2. Culture.

A lot of the problems we have is culturally based.  Americans are an instant gratification society.  We want answers to our questions now, not later.  And in medicine, that has promoted the idea of diagnostic tests for everything.  As a radiologist, I see the overuse of these studies all the time.

We have to  have a cultural shift in this country.  If national health care is to be a reality, people will have to realize there will be REAL SACRIFICE, not the artificial sacrifice our politicians spout all the time.  You won’t be able to get an instant MRI because you bumped your knee.  You won’t be able to get immediate access to every specialist you want to.  That is the reality, because otherwise, there is no way to decrease cost.

A second cultural aspect is how our litigious society has created a culture of defensive medicine.  Doctors know exactly what I am talking about.  Many physicians order tests and additional consultations for patients not because they believe anything is wrong, but becaue they are worried about the slim possibility of some rare or unexpected disease that they can’t predict.  We can’t afford that kind of medicine.  Patients will have to accept that doctors are not perfect, and that sometimes time is the only way to get answers.  Additionally, the only way to truly get doctors to change their culture is to provide real tort reform, so they don’t fear the constant threat of lawsuits.  We shall see if the ABA and bar lobby will allow this to even be considered.

The third and final component in the culture that must change is the acceptance of death as part of life.  We have become such a sterile society, most people have never seen a person die.  They fear death.  And because of that, we spend 1/3 of all medical dollars on the last 3 months of life.  Most of this money is completely wasted on people that cannot be saved, cannot be cured, and often the treatment is more psychological for the family than practical for the patient.  This will have to change.  We must be able to accept death as a natural process that we must confront, and that the medical community cannot protect us from.  This will be an exttremely difficult thing to accomplish.  I actually have little or no idea how to accomplish this.

3.  Balance of Government and Private Sector

Ultimately, this is where the battle will be won or lost.  How much government control will we need, and will we be able to tolerate?  Republicans want none; Democrats want total control.  The answer will have to be somewhere in the middle.

The number of unintended consequences from any plan is astounding.  For example, if you cut doctor’s incomes too much, you are very likely to immediately increse the loss of physicians from the market through retirement or just leaving the profession.  This has already been a trickle in recent years, as physician pay has stagnated while workload has dramatically increased.  Additionally, if government doesn’t help defray medical schools costs, why would any intelligent person with many different job opportunities choose a profession where their income is limited and they are ensured to have loans number in the hundreds of thousands of dollars?  Some have suggested the government pick up the tab.  That isn’t much a solution either, considering paying for the approximately 20,000 medical student a year would likely be cost prohibitive.

Additionally, one thing we know for sure is that a government only program would have immense waste.  People point to medicare as a well run program, because of its low 2% overhead.  That is true.  But that is because Medicare inherently RATIONS.

For example, CMS (Centers of Medicare and Medicaid Services) sets up the fee structure for almost all procedures and costs in the health care system.  Those charges are then used by insurance companies to set their base.  This past year, CMS had agreed to pay for virtual colonoscopy (VC), a new procedure that allows people to examine colons without a colonoscopy, as a screening tool to detect colon cancer.  The research on the VC has been mixed, but the science panel finally o.k.’d the procedure.  Well, several weeks ago CMS decided it would not pay for VC.  Why?  Nobody is sure; but the guess is that they realized that VC would be costly, and decided to ration it.  Debate on the decision is on going.

So who will ultimately make the decision in these cases?  Right now, it is the government; most people don’t realize that.  Some insurers pay for VC, others don’t.  But if CMS paid, it is very likely all insurers would follow suit.  We already have a pseudorationing system going on.

4.  What are we doing well?

There is much debate about what we as a country are failing at in health care.  But to state that everything is bad is just a falsehood.  For example, we are among the best in the world in proactive treatment of cancer and heart disease, though on both we spend more money than anywhere else in the world.  We lead the world in cutting edge diagnostics and treatments.  Again, in the future that will have to be balanced with costs.

Below, if you are interested, is a video from the Heritage Foundation, stating some of the common misunderstood myths of health care in this country.

I will have more to say as time goes on, especially as ‘Obamacare’ come to full fruition.  But, I felt this was a fair way to start.

3 thoughts on “Health Care Reform: The Reality

  • Pingback: Health Care Reform: The Reality Video

  • April 22, 2009 at 8:52 pm

    Good review of the state of Health Care in U.S. You have also highlighted the challenges in providing affordable health care to everyone, when the annual income of half the American families is less $50,000.

    Let’s hope that the Government does not come up with a plan that attempts the higher income group to pay for the low income group. This will only result in making the productive people in the country less productive, but will not provide us with a better health care system for all of us.

  • April 23, 2009 at 4:51 am

    Thank you (from the most impartial critic around, I may add… 🙂 )

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