Signature Update: Just What Are We Reforming?

August 11, 2009, 2009 Edition, Volume III

Inside Signature Update

Just What are We Reforming?

Just What Are We Reforming?

Part One of Two

One can’t pick up a newspaper or turn on the television without getting a glimpse of the ongoing debate regarding healthcare reform. The American healthcare system is enormous and represents some $2.5 trillion in annual GDP. It is expensive, seems to favor the upper and middle class, and oft times provides a less than certain outcome. It is also the finest in the world; contrary to some media reports. The critically ill across the globe turn to American medical centers and physicians trained at domestic universities and hospitals, and depend on medical procedures and pharmaceutical products stemming from American-led research. It’s not that other countries don’t produce important medical talent and technology, but the standard of care and cutting edge developments being used by doctors and hospitals across the United States are second to none. And therein lies one of several problems we face in distributing healthcare; along with the rapidly increasing benefits the healthcare industry is able to deliver today has come rapidly increasing cost.

The problems faced in healthcare today are not as many of our elected leaders would have us believe. Certainly there is the issue of providing coverage for an increasing number of uninsured and underinsured, but there are other fundamental issues that are not being adequately addressed. Among them are American’s expectations of the healthcare industry, our lack of willingness to accept our personal responsibility, the increase in the provision of unnecessary procedures in an attempt to avoid potential liability, the interest of some of our elected representatives to reduce compensation to healthcare providers and researchers, and the need to deal with the looming insolvency of Medicare.

What appeared incurable only ten or twenty years ago is now often managed by a simple pill. Surgeries that may have taken weeks from which to recover and required lengthy hospital stays are now sometimes done on an outpatient basis with the patient often being able to return to their normal lifestyle patterns within days. Rather than undergo ‘exploratory surgery’ as may have been done only twenty to thirty years ago, an ailing patient is now able to lay still as a machine creates three-dimensional, full-color images of virtually every portion of the body in minutes. This is not only performed in a major hospital, but can be found in shopping malls and mobile medical units, as well as most hospitals and clinics in the country. The unimaginable has become fantastic and attainable, miraculously real, and it has come at a cost. For those longing for healthcare costs to decrease to the levels experienced in the 1950’s to 1970’s, I only suggest they also consider accepting the level of care attainable at that time.

Miraculous medical procedures and drugs have become so real, so expected in our society that too often our physicians lead us towards treatments that may be cutting edge, but for which the outcome may be less certain than many expect, and for which the expense is considerable. The range of motivations for physicians to consider such treatments may range from a sincere attempt to provide outstanding care to a desire to push revenues. It is often the consumer who seeks advanced treatment, expecting modern miracles to be their benefit. In the end, many patients are not better off than they may have otherwise been and the cost of treatment may have gone from expensive to excessive.

My children are now at the age that they are having their own families. It amuses me when I find that they have named their children months in advance of the infants’ birth. But when one stops to consider that they know the sex of the child, have seen full-color images detailing fingers, toes and facial features, and have listened to their baby’s heartbeat on numerous occasions, then it seems normal to have named their baby. When my wife and I were having our children we could only guess at whether we would have a boy or girl. With our first, whom I call ‘Junior’ to this day, my wife’s doctor was sure we were having a boy, so much so that he convinced us we should paint the nursery blue and decorate for a child who would be my namesake. No one was more surprised than he when Jessica was born rather than Richard. Richard came years later, but by then we had stopped even venturing a guess, well enough assigning a name or decorating preference. Along with Rebecca, Lauren and my grandchildren, they are the delights of my life.

We think these kinds of advancements commonplace today, but they aren’t. They have come at extraordinary expense, and by bringing together the finest and most advanced talent and technology in the world. Just as any consumer wants the best of what they see, people want, and have come to expect, the highest, most advanced level of healthcare attainable, regardless of the price. Healthcare appears to be the only consumer good with no consideration of budget; after all, what is the value of good health, being free of pain, or of a human life? Virtually impossible to assign without risking being seen as cold and calculating. The cost of providing care increases faster than most other costs around us, and unless we are willing to accept less than extraordinary care, we must be prepared to deal with extraordinary costs. The rising cost of healthcare in this regard is less of a problem than it is the natural byproduct of innovation and advancement and there is little to reform.

It’s understandable that our expectations have increased and that we all want the best care. As such, we simply need to accept the higher price, or be prepared to make budget-oriented decisions such as when we are purchasing an automobile or choosing where we might have dinner on a night out. Unfortunately, some don’t understand this concept and their defenders now seek a solution to a problem they are unwilling to fully appreciate. In many cases, the same individual who complains about having to pay $500 to $800 a month for full-featured healthcare coverage, or is unwilling or unable to pay what can be hundreds more for adequate life insurance coverage, will defend their ‘right’ to expect an insurance company to pay millions of dollars in medical expenses in an attempt to save their life or that of a family member. Where do we draw the line between having economically reasonable expectations versus natural, understandable emotion? Moreover, is it responsible to expect taxpayers and other insureds to pay the bill? Difficult to say and subject to personal values and judgments: where is the biblical King Solomon when we need him?

We live in an age of disparity, a time during which many have chosen to take extraordinary care of themselves while others abuse their bodies in every conceivable manner. Communities abound with fitness centers and fast food outlets alike, and never before have either been more frequented. We’ve accommodated better health awareness through various campaigns against the evils of smoking and drugs, while at the same time making it easier than ever to consume a 1200 calorie lunch and continue to glamorize the consumption of harmful amounts of alcohol and drugs. These elements, and many others, have direct bearing on the cost of our healthcare and medical insurance premiums. The less responsible among us tend to overeat, abuse their bodies chemically and disregard physical conditioning, and then complain loudly at the higher cost of care and coverage. Much of the legislation currently proposed would further reduce our personal responsibility by limiting the differences in premium costs between various groups of consumers (based on their personal health or familial predisposition) or by attempting to assign a dollar amount the medical community may charge to care for an individual’s health. Reducing our personal responsibility will only serve to increase the need for more costly care and in no way solves the problem. Consider the Canadian healthcare system in which citizens may be prepared to go to the local doctor or hospital for even the slightest ailment, but in which those who can afford to travel to the United States for important procedures routinely do so. This is not the sort of system we ought to encourage.

Another problem, only somewhat separate from that which we’ve explored, is the pressure now placed on medical professionals to run every possible test to rule out potential problems when the real difficulty may be reasonably discernible, though with less absolute certainty. Many expect that any procedure, test or treatment possible should be applied in an attempt to deal with the situation with absolute certainty, but is this reasonable? This comes down to expectation and a standard of care issue once again. But it also speaks to a substantial cost in healthcare. The tests and procedures are not inexpensive and often only serve to burden the system. In addition, malpractice or liability coverage and the high cost of dealing with the outcome of being wrong or having missed something when providing medical care is often 25% or more of the cost of care through a local physician.

Settlements of millions of dollars are commonplace when something has gone awry in a patient’s treatment; those measured in hundreds of thousands are now considered inexpensive. This is due to the difficulty in assigning a value to good health, pain and suffering, or life and the fact that healthcare is a high-stakes game. When one is an auto mechanic or accountant and a mistake is made, the outcome may be annoying, but is easily remedied at a readily identifiable cost. When a physician errs, the byproduct may require a lifetime of care, or worse. Some would suggest that the solution lies in expecting medical professionals to be willing to reduce their personal incomes to accommodate the cost of liability coverage; personally, I prefer my physician to be deserving of a high level of compensation. Others suggest a curtailment in the amount of awards or settlements in medical liability cases.

A reasonable few would suggest a return to personal accountability in these cases and advocate a more standardized level of reasonable care. Were a patient to receive a lower standard of care, the door to liability should be open and rewards and settlements should be appropriate to do what is possible to correct the problem and assign a value for the difficulties caused. Conversely, if a patient expects a higher standard of care, then they should also bear the cost directly or through an insurance policy designed to do so. For those who advocate that high quality healthcare is our right, this may seem heretical. But we must remember that quality healthcare is our opportunity, our privilege, perhaps even our blessing; it is not our right.

In the current debate, little appears to have been said about the level of compensation for healthcare professionals, but barely beneath the surface of the debate is an ongoing resentment of those with higher incomes. While the media rarely presents comments from legislators and others regarding the cost of salaries among healthcare professionals, including those involved in research and support, it is inconsistent to expect that under a ‘reformed’ system the opportunity for high compensation will remain. This becomes one of the most problematic portions of some of the current proposals. Not only would the incomes of healthcare professionals be subject to decrease, but those who may still be able to garner six figure incomes are under attack as being those targeted to pay the price of the legislation through increased tax rates.

I referenced that I prefer my physician to be deserving of high compensation. It’s not that I like paying high fees, it is more that I want to know that the compensation available in healthcare is high enough to attract the best and the brightest. These are they who have brought about the innovation which now affords us the best healthcare in the world. Without them we would be subject to less competent providers with less ability to advance the science. If physicians and others are less able to create high incomes, then they would also be less able to justify the high cost of quality medical education and those universities that now provide the training would become less able to offer a cutting edge educational opportunity. This all becomes a downward spiral that ends in a healthcare system not unlike that seen in certain European and Asian nations and Canada.

Those leading the charge of healthcare reform discount this affect. They may be uninformed, perhaps naïve, or are more likely attempting to sidestep the issue in an effort to forward their own agendas. The current president and legislative leaders from his party have been candid at times regarding the desire to create a single-payer system. This means a healthcare system where the federal government is the single payer, the insuring company if you will. We have a system that eschews such monopolistic powers for a good reason; whenever any one body has too much power, abuse and corruption often occurs, and inefficiency and bureaucracy ensues. Some argue that Medicare is a single-payer system and that it is preferred by its users and provides for excellent care. We must also add that it is subject to an otherwise competitive healthcare industry of care providers, scientists, and insurers. Absent these influences, we can rightly expect it would be more like the retiree healthcare provided many in Europe and Asia and Canada – less than adequate and replete with inefficiency and limitations.

We are all aware that the Medicare system is headed for a tremendous and potentially devastating problem. The Congressional Office of Management and Budget has long warned that Medicare will be insolvent by 2017 without drastic intervention. Absent from the healthcare debate, is what the passage of current legislation, which either creates or opens the door for a single payer system, would do to Medicare. Consider an insurer with only one group of insureds where that group is growing in both size and cost, but are unwilling to continue to face increases in their rates. What must the insurer do to side step the problem? Open their doors to other classes of insureds without the same problems, but with a large enough group across which can be spread the cost increases of the existing group. The federal government actually has two groups for which it is effectively the single payer: retirees covered by Medicare and the uninsured who may be covered by Medicaid or a state or local equivalent, yet funded by federal dollars. Both groups are growing and both represent inordinately increasing costs. It is possible that their salvation may be a federal single payer system that includes all groups and insurance classes, and it may be inevitable unless we are prepared to dramatically decrease costs, increase taxes or decrease benefits.

Taxes are already on the rise, even for the middle class, and we’ve already pointed out how a decrease in benefits is unlikely given the expectations of our society. We may be able to decrease costs, but not through the planned actions of any of the existing legislative proposals. Only through reasonable moderating of expectations, an increase in personal responsibility, and a decrease in unnecessary costs can we ‘reform’ healthcare.

Our system of healthcare likely needs little reform. Rather, our expectations of what that system should offer us at a given cost may need to be altered. Likewise, we may need to address the fiscal state of Medicare in a forthright manner, rather than as a side issue or fortunate bystander of existing legislation, and in so doing we are likely to address the state of Social Security, the third rail of American politics. Perhaps this time the courageous who do so will succeed rather than be electrocuted by the energy of their own ambition.

Part Two of Just What Are We Reforming? will address sensible changes in healthcare delivery and outline economically viable steps that may be taken to address the problems of our healthcare system while providing incentive for quality care with reasonable and responsive consumer access.