Tomorrow, Americans will go to the polls to elect a new president. And while both candidates have included healthcare reform as a key part of their respective platforms, healthcare has become a secondary issue to most of the electorate as a consequence of the economic turmoil of the past few months.
Both candidates have promised real change if they are elected. But both of them seem to avoid addressing the fundamental shortcoming of our healthcare system: It offers economic incentives for all the wrong things.
The problems with healthcare in the U.S. are well-documented. We spend more per capita ($7,600 in 2007) than any other nation. Our healthcare spending is 4.3 times that of national defense spending. Yet despite that investment, the World Health Organization has ranked our healthcare as 37th in the world.
Our healthcare is fragmented, millions of our citizens lack health insurance, and our quality and safety are variable. Finally, the administration of our healthcare system has been described by economist Henry Aaron as an administrative monstrosity, a truly bizarre melange of thousands of payers with payment systems that differ for no socially beneficial reason, as well as staggeringly complex public systems with mind-boggling administered prices and other rules that can only be described as weird.
Sen. Barack Obama proposes that healthcare reform focus on the role of government in ensuring that every American has access to affordable, safe, quality healthcare and preventive services. His platform includes three key points: expanded coverage; cost and quality controls; and prevention and public health. He would expand coverage through an employer mandate (play or pay), a new public insurance program modeled on the federal employees program, mandatory coverage for children, subsidies for low-income families and elimination of denial of coverage for pre-existing conditions. This expansion would be funded by an increase in payroll taxes and by an income tax increase on those making more than $250,000 per year.
Sen. John McCains proposal also has three key components: expanded coverage through market forces, delivery system reform and personal responsibility. McCain has proposed a plan that the Dallas Morning News has called considerably more radical than Obamas. But McCains plan reflects his very different philosophy on the role of government. He would eliminate the tax deductibility of employer-based health insurance benefits and make the value of those benefits taxable to workers. He would then offset that new tax with a $2,500 tax credit for individuals and a $5,000 credit for families. His plan also calls for $1.3 trillion in Medicare and Medicaid cuts over the next 10 years to fund those tax credits.
Despite these very different approaches to attaining broader coverage, both candidates include a number of reform elements in common. Pay-for-performance, incentives for information technology adoption, bundled payments, lifestyle changes and transparency of cost and outcomes are mentioned by both. Obama also mentions disease management, medical homes, comparative effectiveness research, negotiated drug pricing, reducing administrative waste and eliminating subsidies for Medicare Advantage plans as elements of his approach to cost control and quality improvement. McCain references tort reform as part of his vision of delivery system reform.
Unfortunately, neither candidate seems willing to take on the real problem. Our healthcare system simply makes doing the wrong thing more profitable than keeping people healthy. Hospitals are paid more for patients who develop complications. Physicians make more money by increasing the volume and complexity of services they provide. All providers do better economically when people require hospital care, develop complications and receive intensive and invasive services. Keeping people well and out of the hospital actually reduces income for both physicians and hospitals. Until we come to grips with the fundamental misalignment between the goals of our healthcare system and the economic incentives in it, were simply tinkering around the edges of the problem.
Four basic principles should guide any efforts toward real change in healthcare:
First, it must be agreed that universal coverage is a basic human right.
Second, real payment-system reform must completely change the way we pay for care. We must reward physicians who are able to keep their patients healthy and quickly restore them to health when they become ill. Hospitals that quickly and efficiently return patients to health should be economically rewarded, and those that allow complications to develop or injuries to occur should be penalized. Volume of services per se should not be a pathway to profit.
Third, administrative waste must be reduced. We spend about 30 cents of every healthcare dollar on administration. Reducing that by only 30% would pay for the cost of insuring the 45 million who are currently uninsured.
Finally, financial incentives for insurers, physicians, hospitals and other providers must be aligned. If our citizens health is maximized, all of the systems components should share in the economic benefits. Conversely, if we fall short, we should all share the adverse economic consequences.
Real change in healthcare requires political courage and the willingness to consider a totally new way of organizing and paying for healthcare. Regardless of who moves into the White House next January, lets hope he has the will and the wisdom to lead that change.
William Jessee, M.D.PresidentChief executive officer Medical Group Management AssociationEnglewood, Colo.