Presidential Debates and the Core of Health Policy

Tonight marks Round 1 in the three-part series of presidential debates.  Why Round 1 is interesting, aside from the political points and positioning each side craves (in his favor) is that this round is supposedly focused on domestic issues. Deficits, tax policy, education and yes, health policy will no doubt work through each candidate’s comments.  As debates aren’t really a debate, moreover a synopsis of highlighted ideas and a reference guide to potential political ideology, its important for viewers at the very least, to understand the gravitas of current health policy issues facing each candidate.  Neither will delve into detail tonight but both will crack the door and offer a peek into their “politically” framed policy agenda.  Some of this will be a re-hash of what we already know and some, a nuance yet divulged.

What strikes me as a tad odd is that little true substance exists for either candidate when it comes to health policy and the major issues facing the economy and the country going forward.  Perhaps the Obama camp believes it has laid out its cards via the ACA. Perhaps the Romney camp believes that its cautious embrace of the Ryan plan is sufficient to paint a contrast and thus, a different direction.   Substance from both camps is sorely lacking.  With the issues today, the “devil is truly in the details”.

The plain facts remain unchanged and unaddressed by either party and thus, by either candidate.  The entitlements in this country, especially Medicare and Medicaid are unsustainable, underfunded and consuming the entirety of the income tax revenue flowing into the government’s coffers.  The net result is that this country prints debt obligations and relies on the power of a central banking system and a moribund world economy to keep debt costs low (via interest rates) and thus, repayments viable – for now.  Repetitively, we print new debt to fund the payments on existing debt plus our new debt.  We have become so used to looking forward with unreasonable projections of a recovery period and phantom GDP growth that somehow, we believe the political pundits and the rhetoric that the hemmorhagic problems within our entitlements can be solved with band-aid solutions.  We willingly deny the world realities confronting us in Greece, Ireland, Spain, France, and Italy instead, buying a failed story of omnipotence and a belief that the European issues are somehow “different”.  Wrong.

The frank reality of today is that the health care system in the U.S. has become a governmental entity unto itself and thus, a whole new economy.  Unfortunately, the incentives are poorly and incorrectly aligned and the revenues uncorrelated to actual population needs for health and services required.  Neither candidate has come close to addressing this reality.  The Obama plan does nothing to “reform” health care spending or to change the relationship between spending and care delivered.  If anything, it creates a new entitlement so ill-conceived in funding that it requires the country to print even more debt to fund.  While it does attempt to solve an issue of assuring some form of health insurance for everyone it does so at a cost that isn’t covered by any credible source of revenue, sans debt.  At the core, the system remains as flawed as it always was with new layers of red tape and bureaucracy that only increase the gap between care services, cost and ability to pay.

The Romney approach is as flawed.  It too places “ear-rings on the pig”, focusing on expenditure controls as a solution.  Like the Obama approach, it falls short of addressing what is truly wrong with the system and relies solely on a less government is better approach.  Kudos to Romney for at least recognizing that some path of privatization provides more hope for a sensible outcome than interventionist government.  Negative points however, for not recognizing that some interventionism is required to realign the incentives and to change the policy framework.  Without some direct intervention, merely shifting the problems horizontally won’t solve anything.

What we need and should hear is painful and yet simple.  The painful part is that revenues must go up and that means tax collection.  It also means that we must address the growing percentage of people in this country whose “intake” from the government is greater than their “input”.  This gap creates apathy and disengagement and it is demonic at its core.  As we have seen in Europe, a diet rich in entitlements leads to bloat and too much bloat creates stagnation and ultimately, civil and economic discord.  Apply austerity isn’t the answer but it is the only thing governments can do.  Common sense is the answer but to get there, we need to be clear where the issues lie and how the fixes will create winners and losers.

In the U.S., the path toward entitlement reform starts with identifying who truly needs ‘what” and then, developing a system for distribution of the “what” and proper, simple payment systems that fairly compensate those that provide the “what”.  Gone must be all current definitions born out of times in history that no longer are relevant.  Eligibility ideology must be the first thing to change and quickly.  Next, we need to get “real” about the “what” and who pays.  Bioethicists such as Daniel Callahan and Arthur Caplan and economists and researchers such as Uwe Reinhardt and the folks at Dartmouth Atlas have done significant work in this arena.  We need to embrace quickly, their work and that of others who have researched how health care is used and by whom.  Moreover, we need to look closely at the relationships between utilization and incentives or payments.  Dr. Gawande’s piece published in the Atlantic points this out famously.

Being in and around health care now for thirty years and an economist by training, it is apparent that so much can be done quickly and efficiently, albeit not without some pain and definitive leadership from Washington.  We must be willing to identify the elephant in the room and to start to clean-up after it.  Our delivery and our focus is not only wrong but it is wrong-headed.  Simple economics tell us that “what gets paid for or rewarded gets done” and thus, we spend disproportionate sums on acute, episodic care at the expense of where the real issues lie.  We are an aging society and one fraught with chronic disease.  Our systems and our payments fail to address these key realities.  While our population ages, our supply of physicians trained to treat elderly patients is stagnant and in real numbers, dwindling.  Primary care is needed in huge amounts yet no incentives exist for the system at present to train sufficient numbers and to pay adequately.  The process of medical education and payment is horrendously skewed.  I have heard from all too many physicians in training that the debt to earn ratio is too prohibitive to enter primary care and certainly, geriatric care.

We need to begin to pay well and directly, for prevention and treatment of chronic conditions and proportionately and over-time, less well for acute episodic care that on its face, against the lower cost of prevention, is a negative return.  I am not suggesting eliminating but reducing the incentive to accurate and tested correlations of necessity and payment.  I doubt that one or perhaps even a dozen less heart centers in major metropolitan areas would change the level of care and in fact, may improve it as the efficiency created by focused and known volumes at centers of excellence will produce better returns and likely better outcomes.  Certainly, the opportunity cost of prevention applied and early treatment produces a far greater return (for less resources) than care that is delivered in “earnest” and in “crisis”.  This stuff we know.

My top ten, not that either party is listening, quick initiatives that make simple policy and economic sense are hewn through observation and in the trenches work.  For what they are worth and happy debate watching!

  1. Make the purchase and annual premium payments for the purchase of Long-Term Care insurance fully deductible – not subject to itemization.
  2. Until we can reform Medicare, up the eligibility age for fee-for-service Medicare to 68 and require anyone younger, non-disabled, to enroll in a Medicare Advantage Plan. Pay the plans at 92% of the fee for service rate and allow them to keep any excess profit – stop quibbling here.
  3. Subsidize physician education through grants for any primary care physician at the rate of 50% of the cost of their medical education.  For geriatricians, the subsidy should run to 75%.
  4. Re-balance physician payments to more adequately pay for Medicare patients at real rates and get rid of the insane “meaningful measures” garbage.  Fix the sustainable growth formula by abandoning the whole thing and going to a cost plus formula that is simple and correlated to real practice data.
  5. Reform at a national level, the medical liability system in the U.S.  Create hard caps and a sole administrative system (like mediation or arbitration) for adjudication.
  6. Reinvigorate and complete the core goal of HIPAA – a single, standard claim form.  No other form for any private or governmental claim can be used in the U.S.
  7. Change Medicaid funding and eligibility to a per person funding status with a simple, core benefit structure.  Allow states flexibility to expand coverage but only if the state funds the expansion.  The core funding status should be 50/50.  Allow high-risk Medicaid patients to enter a national health risk pool that requires third-party management of their care and directs their care to high quality, low-cost centers.
  8. Publicly post cost and quality data that is meaningful and consumer oriented.
  9. Target with national education and information, the top five chronic diseases.  Employ private, third-party agents skilled in managing chronic illness to target this issue with outcome targeted payments – some up-front, some from savings.
  10. Re-base all provider payments with an up to date, modernized payment system that is outcome driven.  Reform regulatory oversight for providers to a completely privatized accreditation system that is focused entirely on patient care outcomes versus insane regulatory standards.  If providers can measure-up and reduce costs but still provide meaningful, standard outcomes, all the better.  The hospital systems, the SNF system, the home care system, the hospice system under Medicare is so convoluted and disconnected from patient outcomes and care requirements that it produces fraud, incents poor behavior and disproportionately rewards unnecessary care.


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