It’s so easy to get distracted, which is what most people are with regards to healthcare. Healthcare is a frequently discussed subject these days but few are discussing the issues that really matter. Too many are distracted by the website fiasco and not focusing on the most important healthcare challenges, which by the way, isn’t Obamacare.
Healthcare policy is shaped by politics and religion—two potentially divisive drivers. Politicians have used moral obligation, the roots of which lie in religion, to further healthcare initiatives, which stand to advance their political careers. The root of the reason for their biases can be debated, but the results are clear. Votes generally flow to the candidate who can deliver the most government subsidy.
One of the biggest problems with healthcare costs today is that few know the actual cost. Most have been conditioned to ask about their deductible, co-pay, or the portion of the cost that they’ll be required to pay. Only the insurance companies know the actual cost of healthcare. The various healthcare costs are so fragmented that few providers know the total cost of a particular procedure. Something as simple as a throat culture can result in charges from three separate healthcare providers.
Why don’t Americans know the cost of healthcare? Glad you asked. The notion of universal healthcare was first promoted in the 1930s by then President Roosevelt. Much like Hillarycare, it failed to gain traction. The Stabilization act of 1942 froze wages but allowed benefits, such as healthcare, to be increased. This introduced healthcare as an employer provided benefit. In 1954 legislation was passed allowing healthcare to be offered to employees free of payroll tax. And then by 1965, employer provided healthcare came to be expected. The cultural shift took twenty years.
What is the cost of healthcare? That’s a good question. It’s estimated that 50% of all personal bankruptcies are the result of a healthcare expense. Healthcare represents 18% of America’s GDP, our country’s total output of goods and services. By comparison, healthcare in China is 3% of their GDP. Healthcare averages 10% of GDP for most European countries. US Military expenditures represent 4% of the US’s GDP, and healthcare is the largest single cost component of the military budget.
The fact that payers don’t know the actual cost doesn’t change the impact of the disparate cost, which is to cause goods produced in American to be priced at a disadvantage on the world market. Everything else being equal, healthcare alone increases the cost of goods produced here by at least eight points.
There’s an abundance of talk about the cost of healthcare insurance, who should have it, who should pay for it, but not enough informed discussion about the cost healthcare. I’d like to suggest a few talking points that advance the conversation beyond Obamacare and the now infamous website.
Our healthcare system is faced with numerous challenges that will need to be vetted on the public square before a lasting solution will be defined and agreed upon by the majority of Americans. They’re both economic and cultural. The manpower requirement to produce goods is decreasing while the manpower required to provide services is stable or unchanging. Healthcare is primarily a service industry, the cost of which is escalating at a disproportionate rate when compared to goods. Additionally, payers or no longer sensitive to the actual cost, but only their portion of the cost, so negotiations are usually made with insurance companies or intermediaries rather than the healthcare provider, the originator of the cost. And there’s a sense of moral obligation on the part of society for the government to provide healthcare for those with an existing condition or economically disadvantaged or both.
Defensive medicine, driven by large malpractice awards unnecessarily drive up the cost of healthcare. Tort reform is needed but habits are hard to break. States like Texas that have passed legislation limiting malpractice awards have seen very little change in physician processes; they continue to practice defensive medicine out of habit and suspicion of the chance of a reversal by the Supreme Court.
Costs saving measures are occurring. Hospitals have already begun to acquire individual and group practices. This trend will provide the opportunity for significant cost savings through standardization of processes, elimination of conspicuous unnecessary costs (advertising) and industry standardized reporting. The capital expenditure for investment into software that drives cost saving digital devices can be spread out over several offices and thousands of patients, the ultimate payers. These systems and devices will reduce errors, allow for standardization of appropriate procedures, and provide needed metrics. Industry standardized metrics provide the necessary information for insurance companies and patients to determine the groups providing the best value in healthcare.
An example of a collaborative investment is telemedicine. A qualified technician, located at a remote hospital facility, would use telecommunications to assist Doctors, particularly specialists, in diagnosing injuries and illnesses from a central location. Rather than see a GP and then schedule an appointment with a specialist, see the GP, see the specialist via telecommunications on the same day.
Inexpensive solutions are being developed. In the book Creative Destruction of Medicine, Dr. Eric Topol describes numerous monitoring devices that utilize iPhones to transmit a patient’s condition directly to the Doctor’s office, eliminating follow up visits. A glucose meter Dr. Topol invented has resulted in significant decreases in diabetes among his patients.
Individuals need to take responsibility. Preventative practices must move from being discussed and joked about to active participation. The affordable healthcare act does provide for rate discrimination for users of tobacco and obesity. Smoking and obesity are major contributors to the spiraling cost of healthcare. Obesity is difficult to measure. Body mass index charts that better define appropriate weight relative to height will be developed and an individual’s shape will become a major factor in determining their healthcare insurance premium. Regular well checks and age appropriate disease screening will eventually influence one’s healthcare insurance premium.
Payers must learn to shop and compare healthcare using metrics provided by healthcare providers. These metrics should include: length of time from onset to Doctor’s appointment, waiting room time, accuracy of diagnosis, treatment, cure, cost, billing, and simplicity of the entire process. Bundled pricing for standard procedures such as MRI, endoscopy, colonoscopy, and routine joint surgery, including average recovery time, will eventually be posted on-line for easy, meaningful comparison.
Insurance or intermediary healthcare bundlers will negotiate with provider groups for set pricing on high cost, high complex procedures such as heart and spine surgery. Hospitals will no longer compete only with nearby hospitals but with every hospital in America for the high dollar patient. That alone will drive efficiencies and reduce costs.
Epigenetics, the identification of and suppression of genes linked to cancer, diabetes, Alzheimers and other hereditary conditions will grow in popularity once the issue of privacy and electronic records has been sufficiently addressed.
There’s a need for more emphasis on cure rather than treatment. This may come in many forms including something as simple people losing weight instead of being treated for diabetes or something as complex as pharmaceutical companies being rewarded for drugs that cure rather than treat. Reward for cure will require creative incentives since treatment provides a profit stream while cure does not.
The moral dilemma surrounding the discrimination of healthcare cost coverage based on genetic predisposition and lifestyle needs to be fleshed out. Those who truly can’t help themselves will always be the responsibility of the state or charitable organizations. But those who’s decaying health is heavily influenced by lifestyle choices, even if genetically predisposed needs to be exposed for what it is. People should be free to eat and drink what they choose, but not at another’s expense, which is what is happening today.
Every system is perfectly designed to achieve the result it gets. Our present healthcare system is designed to disguise the true cost of healthcare. So, the problem isn’t how to pay for healthcare, it’s how to control the cost of healthcare. It’s a national problem with an individual solution.