Category Archives: Prevention
Part 2: The Emergence of Consumer Value
Despite its deep flaws, the new health reform law, ACA, has three aspects that make me optimistic about medical entrepreneurs being able to surmount the law’s barriers to create a consumer-dominated, market-based medical care system that will deliver high-quality, affordable medical care to everyone:
1. The creation of consumer value
2. The rise of high-value local health plans
3. Effective disease prevention
This second of five installments discusses consumer value.
Medical Consumer Value
The word “value” appears more than 200 times in ACA. The law’s architects clearly liked it and felt that the bill should strive to achieve it. Too bad they never bothered to clearly define it. If they had, they could have created a much more direct approach to fixing our dysfunctional medical care system, and without all the counter-functional, top-down bureaucracies that will actually impede it and force medical costs higher than they need to be.
Part 1: Even a Blind Pig Finds an Occasional Truffle
I’ve made no secret of my disdain for the Patient Protection and Affordable Care Act (ACA), the new health reform law. It is a bad bill that focuses the wrong “solutions” on the wrong problems and promises to visit unnecessary economic distress and destruction on America’s providers, consumers, taxpayers, and insurers. Even the IRS is protesting.
Yet, rather than continue to bash it, I’ve taken my summer hiatus from writing this blog to focus on a more constructive approach. The law is a fact we have to deal with, and despite a lot of talk about a subsequent Congress overturning it, I’ve concluded such an action to be both unlikely and unwise. The opposition has nothing better on the table and the ACA situation is actually far from hopeless. The focus needs to be on repairing, not revoking it.
We know that more than half of all medical cost is wasted, adding no value to the patient. We also know that the total costs of medical provider billing, collection, and payment consume as much as 30% of every health care dollar—about ten times the transaction costs in every other industry. If medical care were as efficient as, say, our economy’s food sector, it would provide higher quality for a third of today’s $2.6 trillion cost and free up $1.7 trillion every year for higher wages, lower federal deficits, and a major boost in job-creating private-sector investment.
Moreover, 75% of all medical spending now goes to treat preventable chronic diseases. If we could figure out how to get people to stop eating, drinking, and smoking themselves to death, and cut out the wasteful spending, our total medical bill would plummet to only 10-20% of today’s level.
As we approach Thursday’s bipartisan health summit, no one has yet successfully challenged the comprehensive health reform proposal I describe in my book, speeches, media interviews, and this blog. It has withstood all technical, actuarial, financial, behavioral, and economic challenges to date. This would be gratifying if it weren’t for one annoying loose end—the political issue.
Almost everybody tells me that my approach’s lack of sound-bite simplicity renders it DOA as a workable legislative agenda. They have a point. As bad as our health care system is, it’s not yet bad enough to engender the kind of political will necessary to put American consumers fully in charge of buying their own health insurance and medical care. Until we get there, let me offer a simpler, interim proposal that will immediately offer relief from out-of-control medical costs: we should make everyone financially responsible for his own preventable illnesses.
I buy collision and comprehensive insurance on my car, but after talking to my State Farm agent, it might as well be called collision and incomprehensible. With seven layers of coverage, most of it is as clear to me as the details of health insurance are to many others. But it has two aspects I do understand. First, it doesn’t cover gasoline, oil changes, or worn-out tires. Those are predictable, normally affordable consumer purchases. Even if I could buy such coverage, I wouldn’t. It’s not worth the added insurer overhead and profit—not to mention the cost inflation on gas and tires once sellers discover their customers no longer care about price. I’m better off shopping around for reliable service, low price, and credit card convenience.
The other part I understand is the deductible. If my car gets accident damage, I pay the first $2,000 to fix it. Insurance pays the rest. I could get a $100-deductible option, but that costs an extra $183 per year. I’d rather save the money and drive more carefully—even if the two gents who’ve run into me during the past 40 years didn’t. I’m still way ahead.
The Dietary Nanny Patrol is at it again, this time with an article in the current New England Journal of Medicine claiming that a penny-per-ounce tax on sugary soft drinks would help to reduce the nation’s bulging waistline while raising $150 billion “that governments can use for health programs” over the next decade. And cows nationwide will breathe a sigh of relief over the plunging demand for belt leather. This is another in a long line of similar ideas to paste a bull’s-eye on isolated food groups as a way to refill depleted tax coffers under the guise of public health advocacy. It always seems odd to me that the estimates of enhanced tax revenues and increased public health are so often trumpeted together, even though the achievement of one always comes as a tradeoff against the other. Such “solutions” send mixed messages and are inefficient as hell.
President Obama went all-in on health reform tonight (September 9, 2009) with his win-one-for-the-late-senator pitch to the assembled houses of Congress. Beyond his always-inspiring rhetoric, his actual proposals offered virtually nothing we haven’t heard before. His essential message: when it comes to health reform, I’m asking the American public to accept hope over experience, faith over fact.
Have Faith that the government will provide a public insurance option that is more competitive, efficient, fair, and effective than anything you can get from a private insurer. Subtext: Ignore the man behind the curtain who has already given you the unmatched fairness and effectiveness of FEMA, Fannie, Freddie, Medicare ($74 Trillion in the hole), Social Security ($17.5 Trillion under water), the national debt ($11.7 Trillion and counting), the sex-offender registry, and the SEC’s crack enforcement of Bernie Madoff’s Ponzi scheme.
“There’s no reason that we shouldn’t be catching diseases like…prostate cancer on the front end.” President Barack Obama’s op-ed on health care reform in the New York Times.
Once again, Mr. President, wrong end. It reminds me of a banker friend who years ago told me about his first annual adult physical: “The doctor told me he was going to give me a digital prostate exam. I said it was simply amazing what they can do with computers these days.”
“(W)e will require insurance companies to cover…colonoscopies. There’s no reason that we shouldn’t be catching diseases…on the front end.” President Barack Obama’s op-ed in the New York Times, 8/16/9.
Uh, I don’t think it’s that end, Mr. President.
The average obese American consumes a beefy 42% more in medical costs than his normally-weighted neighbor. So says an article published today in the journal Health Affairs. Last year, such avoidable avoirdupois boosted health care spending by a corpulent $147 billion. That’s enough to buy comprehensive health insurance for more than a million uninsured families.
America’s infatuation with “weight loss” (I got 107 million Google hits on the term.) is exceeded only by its obsession with successfully avoiding it. In the mere eight years between 1998 and 2006, the obesity rate distended from 18.3 percent of the population to 25.1 percent. This progression of portly proportionality gives every indication of continuing until we all resemble the ponderous passengers on the movie spaceship in Wall-E—but without the anodyne of zero-g.
What can be done? Taxes on Twinkies? Measuring the obesity rate in “porcint”? Mandating spandex halter tops and sweatpants for Wal-Mart shoppers? No? Then how about a market-based solution?