Comeback America Page 11

  The employers and government providers who have taken on the burden of many of these rising costs also are having trouble, especially in today’s tough economic times. You can see this happening in the numbers. In 2000, 69 percent of all employers offered health insurance, according to the Kaiser Family Foundation’s annual survey; by 2008, only 60 percent of employers were offering insurance—and only 45 percent of businesses with three to nine workers provided insurance. Given the current recession and other factors, the overall coverage rate is undoubtedly continuing to drop.

  In 2007—before the recession hit us—roughly 45 million Americans under the age of sixty-five lacked health insurance. Two years later, that number was approaching 50 million and is now probably beyond that. Some of these people had the opportunity to purchase health care insurance through their employers but decided not to. Some were young people who didn’t think they needed coverage, and others simply didn’t think they could afford the premiums.

  Still others had no choice: They lost their jobs. Under our current health care system, many unemployed Americans face a double whammy. Not only do they lose their employer-provided health insurance, but the state Medicaid programs designed to help the poor, facing financial pressures of their own, have cut back coverage. It’s true that many laid-off workers can opt to continue their health care coverage for a time under federal law. Without an employer subsidy, however, they must pay the full price of that coverage.

  Retirees too are losing coverage. Since health care costs are rising rapidly, employers have been either reducing or eliminating insurance for their former employees. In fact, less than 15 percent of American retirees now receive some form of employer-provided health care assistance.

  THE QUALITY GAP

  It is bad enough that our health care system costs too much and leaves too many people out. We also have to face the fact that the system itself is simply highly inefficient, and that directly affects the quality of the care we receive. Watchdogs have found plenty of evidence suggesting that we are not getting good value for our health care dollars. Studies show that quality is uneven across the nation, with many patients not receiving clinically proven, effective treatments. At the same time, many patients receive a range of unproven and ineffective treatments, because such treatments make the cash register ring and reduce litigation risk. And I’m talking about patients who are insured one way or another. People who aren’t insured typically get shoddier treatment.

  We Americans think of ourselves as world leaders—but not in the value, efficiency, and effectiveness of our overall health care system. Yes, we’re number one in some health care statistics—including unfortunate measures such as cost per person. As I said earlier, we now spend about 17 percent of our nation’s total annual economic production on health care, far more than other major industrialized countries spend. Yet all that money gets us below-average results in many areas. (See figure 7.)

  Figure 7 Health care outcomes among Organization for Economic Co-operation and Development (OECD) countries. We spend twice as much per person compared to other developed countries, and we have much worse outcomes. The system is badly broken.

  There are a number of sad examples. For instance, we are number one in obesity. America’s obesity rate has doubled in the past twenty years. More than three in ten Americans are now obese, by far the highest rate in the developed world. And obesity can be a leading indicator of diabetes, heart disease, and joint problems. Just ask my daughter-in-law Meghan, a nurse, how bad it can get. She needs the help of every other nurse on her hospital floor to get one five-hundred-pound patient out of bed several times a day.

  Our infant mortality rate (6.9 per 1,000 live births) ranks among the worst of the thirty nations measured by the Organization for Economic Co-operation and Development (OECD). Our life expectancy at birth (77.8 years) is also below par.

  When we do get sick or injured, our system has trouble making us feel better. The U.S. hospital infection rate is above average for an industrialized nation, a problem I have experienced firsthand. In 2007 I had to undergo a second surgery on my collarbone to address an infection from the first one.

  The Commonwealth Fund, a private foundation that tracks health care performance, estimates that as many as 101,000 fewer Americans would die prematurely each year from treatable problems if the U.S. health care system performed as well as those in other leading industrial countries. According to the Commonwealth Fund’s 2008 scorecard, the U.S. health care system is losing ground.

  FOUR PILLARS OF REFORM

  Reforming a health care system is especially difficult. After all, health care is about more than money. It is also about life and death. Health care reform is also vulnerable to manipulation by interest groups whose interest is in profit rather than effective health care. Without question, however, the United States’ system needs more than a few tweaks. The problems I have outlined require comprehensive reform. The nature and scope of our reform program, along with the timing and financing, are critical issues that will determine whether we can achieve sustainable success. We need to make changes; however, if we get the basics wrong, we can make a bad system even worse.

  Don’t expect President Obama or anybody else to fix everything overnight. Reform should come in installments, not all at once. The reform effort will take courage, patience, persistence, perseverance, pain, and a degree of nonpartisanship that is hard to imagine. It will also require a difficult conversation about how to set priorities in a world of limited resources. But we can do it, and we can show results sooner rather than later if we go about it the right way.

  Throughout this effort, we have to keep clear principles in mind. I see them as the four pillars of comprehensive health care reform.

  My first pillar of reform should be financial discipline. We must impose a budget on what the federal government can spend on health care each year. As I will outline below, we should ultimately achieve universal coverage for “basic and essential” health care. But without a budget that limits the total amount of taxpayer funds allocated to health care costs, we will inevitably find our costs ballooning.

  Financial discipline of this kind will be impossible as long as we have fee-for-service payment systems. There are several alternatives, among them, so-called capitation systems, in which providers take a flat fee to care for a patient or a group of patients each year. In general, we should also seek more of a team approach to providing patient care, integrating the services of hospitals, clinics, family doctors, therapists, specialists, pharmacists, and others. This includes taking steps to significantly reduce the rate of unnecessary hospital readmissions.

  Another component of reducing costs will be medical malpractice reform. Obviously doctors have to be held accountable when they make mistakes. But a system in which juries award settlements involving millions of dollars without adequate expertise is not an appropriate way to deal with cases. The way around this is to appoint special courts to handle medical malpractice claims as we have for bankruptcies.

  We can also encourage healthier lifestyles and generate additional revenues simultaneously. Why not adjust the health care premiums and coverage levels to discourage our fellow citizens who choose to smoke, for example? If you smoke, you might pay a higher premium and/or be subject to limitations on certain types of treatment.

  The second pillar of reform is to impose better standards of practice. Americans love to try new vitamins and supplements, innovative treatments and therapies—anything that smacks of a fresh cure, especially if they think they won’t have to pay for it. But our government cannot afford to pay for every pill that comes out of a box or every procedure known to man. As a matter of national policy, we must establish treatment standards based on sound clinical evidence of what works and what doesn’t work. These standards must guide the practice of medicine and the dispensing of prescription drugs financed by taxpayer dollars.

  Let me be very clear here. An American patient should have access to any
treatments, technologies, and pills available, provided they are legal and the patient wants to pay for them. The key question is, what should the taxpayers finance? In my view, taxpayer-funded programs should pay only for treatments and medications that have proven clinical results, are cost effective, and would meaningfully improve or extend life.

  We must employ more evidence-based practices to address the wide variance between geographic areas. These variances have been studied by researchers at Dartmouth and elsewhere, and they were the subject of a widely read article, “The Cost Conundrum,” in The New Yorker in June 2009. Auther Atul Gawande examined a system in which Medicare reimbursements in impoverished McAllen, Texas, far exceeded those in Rochester, Minnesota, home of the high-tech, high-quality Mayo Clinic. Even President Obama said that he read the article.

  Who should determine these evidence-based standards? The short answer is professionals, not politicians. We should set up a qualified and independent body of experts who have no current stake in the game—retired government health policy makers and former health industry executives, for example. This independent group could be our “health care Fed”—modeled after the Fed that supervises our money supply. The health care Fed would supervise our national health system, working to keep the standards vibrant and contemporary. A highly qualified panel of doctors, pharmacists, scientists, and specialists would advise the policy-making body.

  The health care Fed would ultimately determine which medications, devices, and treatments are effective enough to be covered and which are not. The standards it developed would elevate the quality and consistency of American health care, prevent a lot of costly litigation, and save taxpayers the billions and billions of dollars each year they now spend on overpriced and ineffective treatments. The health care Fed could address tough coverage, reimbursement, and other decisions that politicians either won’t or shouldn’t make.

  Let me add one other step we could take that would greatly raise our medical standards. The government should ban prescription drug advertising on television and possibly elsewhere. These ads create demand for expensive and often unnecessary products, and they should end.

  The Supreme Court doesn’t precisely agree with me. It has ruled that the pharmaceutical industry has a constitutional right to free speech and therefore to advertise. Nonetheless, Congress can impose a price for advertising pharmaceuticals. For example, it could make products that are advertised ineligible for certain federal drug programs, or it could make such advertising a nondeductible business expense on corporate income taxes.

  Restricting advertising is just one of the reforms our pharmaceutical industry needs. Our government has to give it incentives to conduct the type of basic research that will actually improve our health. And Washington has to let cheaper imported drugs come to our stores—on a very selective basis—and also allow cheaper generic drugs to come to market faster.

  My third pillar of health care reform is pretty basic. It’s all of us. We have to take more individual responsibility for our own well-being.

  This sounds like a no-brainer, but think of how a lot of us look at health care in our everyday lives. We go to the doctor when something is wrong. We go for the quick and easy route to good health—the crash diet or the magical pill. But that route is taking us in the wrong direction.

  We have to build a culture of healthy living. While this is ultimately something that will come down to each of us as individuals, the government and particularly the schools can certainly play a role, as they did in campaigns to get us to wear seat belts or to recycle. This will have to be based on science, and of course there will be interest groups whose livelihoods will depend on throwing sand in the gears. Once again it will be up to us to make sure that any such campaign is transparent and carefully scrutinized.

  Beyond that, we should practice the basics of well-being—eating nutritious food, taking vitamins, and getting adequate exercise—so consistently that these practices become a routine part of our lives. As my daughter-in-law Meghan says, just washing your hands frequently can make a big difference.

  Finally, we must focus our efforts on achieving universal coverage for “basic and essential” health care. I put those words in quotes because we have to talk seriously about exactly what American taxpayers should fund. Our national health care system has to serve the basic needs of our society as a whole, not the unlimited wants of every individual. This system might be financed through the federal government, but fulfilled through private-sector providers. It may also make sense to change Medicare from its current design, over a long transition period, to a program that provides this basic and essential coverage for all legal residents.

  Our “basic and essential” level of coverage should provide preventive and wellness care, for example, including annual physicals and tests such as mammograms. It should also address chronic conditions while insuring us against the potentially ruinous costs of catastrophic accidents and illnesses. After all, health care costs are the number one cause of personal bankruptcies.

  Beyond this national “basic and essential” program, individual Americans should be able to get further coverage as they think necessary, provided they are willing to pay for it. The poor and indigent still will have Medicaid. And everybody will have the right to buy supplemental insurance from a competitive pool of providers—through employers, unions, industry associations, professional and trade groups, and regional and nongovernmental cooperatives. Private plans should be able to be offered across state lines. They should provide for enhanced portability of benefits, not exclude preexisting conditions, and not contain unreasonable limits on coverage. The federal government might also provide an option, but the plan must be market-based and not receive extra taxpayer subsidies; otherwise, we will likely end up with another unaffordable and unsustainable federal program—only much bigger—than the ones we have today.

  Although other countries’ programs have been used mostly as a way to frighten people away from reform, we can in fact learn a lot from their experiences, as well as those of the states, many of which are miles ahead of the federal government in providing efficient care. For example, Washington State has a very successful cooperative plan. Oregon has prioritized what procedures it will pay for under Medicaid. Massachusetts has moved to provide its residents with universal coverage, though its legislature is struggling to contain costs and provide optimum service.

  We can supplement this culture of well-being with a national program that works to keep us healthy, helps pay for catastrophic costs, treats us according to evidence-based standards, offers supplemental insurance, and doesn’t break the bank or burden future generations. Over the next generation, these principles can reshape American health care, public and private—including Medicare and Medicaid.

  HOW TO REFORM MEDICARE

  Some people say we should focus on achieving comprehensive health care reform now and worry about Medicare and Medicaid later. But these programs are hemorrhaging money, if you’ll excuse the analogy, and need immediate treatment. There are three tough but necessary steps we could take right now to stanch the losses and bring in more revenue.

  Our government could start by negotiating more aggressively on behalf of benefit recipients and requiring more competitive bidding for Medicare and Medicaid and other federal health programs. If the Veterans Administration can negotiate for better prescription drug prices for veterans, we should be able to do so for drugs as well as other products and services in federal health care programs for nonveterans.

  Next, we could cut costs out of the Medicare Advantage program, also known as Part C. It was created to provide more alternatives and to encourage competition by providing more benefit choices and various options through competing private plans. It was supposed to save taxpayers money. But in actuality, it is costing taxpayers more money on a risk-adjusted basis. People who are covered under these plans tend to be healthier than the typical American senior.

  Finally, there’s a comm
onsense way to bring in more revenue. Medicare should charge more to those of us who can afford to pay more. We pay for Medicare Part A (hospitalization insurance) through payroll taxes during our working lives. But Medicare Part B (doctor payments) and Part D (prescription drug benefits) are voluntary. If we want them, we have to pay a premium to get them. A vast majority of eligible Americans do so because they get such a great deal. Why? Because under present law, on average, the taxpayers subsidize about 75 percent of the real cost of these programs.

  A government subsidy may be fine for a retiree who scrapes by just above the poverty level and is not eligible for Medicaid. But it makes no sense for middle-and upper-income recipients. It makes even less sense now that we are running large and growing deficits.

  In addition to taking these specific steps, we need Medicare and other federal health care programs to lead the reform effort by example. This leadership would include, for example, requiring that the results of any major federal investments in health information technology, evidence-based medicine, and other areas are incorporated into Medicare’s payment system. Health care providers would be required to use them—or face economic penalties if they did not.

  The failure of Washington to use taxpayer dollars wisely has led to unsustainable health care programs that benefit the rich as much as the poor. If these programs were redesigned and properly administered, they would better serve those who are less well-off, and they could meet the basic and essential needs of all Americans.