Getting health care 180 degrees wrong

I guess it doesn’t really surprise me anymore how completely, amazingly wrong-headed the Trump administration can be on policy matters, but still…

If there’s one thing I like to get through to my students on health care policy (okay, maybe 10 things) , it’s how the perverse incentives of fee-for-service medicine drive up our medical costs.  Among the less well-known, but important aspects of ACA is programs that try and move away from this.  Of course, Trump and his minions are trying to undo that so doctors can get richer and we can all waste more money.  NYT:

or several decades, a consensus has grown that reining in the United States’ $3.2 trillion annual medical bill begins with changing the way doctors are paid: Instead of compensating them for every appointment, service and procedure, they should be paid based on the quality of their care.

The Obama administration used the authority of the Affordable Care Act to aggressively advance this idea, but many doctors chafed at the scope and speed of its experiments to change the way Medicare pays for everything from primary care to cancer treatment. Now, the Trump administration is siding with doctors — making a series of regulatory changes that slow or shrink some of these initiatives and let many doctors delay adopting the new system…

The efforts to chip away at mandatory payment programs have attracted far less attention than attempts by President Trump and congressional Republicans to dismantle the Affordable Care Act, but they have the potential to affect far more people, because private insurers tend to follow what Medicare does. That in turn affects the country’s ability to deal with soaring health care costs that have pushed up insurance premiums and deductibles.

The administration has proposed canceling or shrinking Medicare initiatives that required doctors to accept lump sums for cardiac care and joint replacements, two of Medicare’s biggest cost drivers.

Ugh.  And all the storm and bluster aside, this is about doctors (and hospitals) getting rich (er).

This news came out the same week as the death of noted health care economist, Uwe Reinhardt.  Sarah Kliff’s excellent appreciation features this pertinent explanation of health care costs:

I wanted to take today’s VoxCare to tell you about a Reinhardt paper I think anyone interested in health policy ought to read. It fundamentally shaped how I think about the biggest problems in American health care — and the right solutions to fix them.

The paper is called “It’s the prices, stupid!” It is co-authored with Gerald Anderson, Peter Hussey, and Varduhi Petrosyan.

The thrust of the argument is this: America does not have an overuse problem when it comes to medicine. We do not go to the doctor more than people in other countries — we actually go to the doctor a little bit less.

The reason that American health care is so expensive is that, each time Americans do go to the doctor, we pay outlandishly high prices. We’re not consuming lots and lots of health care. We’re just paying higher price tags.

This is a fundamental fact about American health care that often gets lost in our debate. We have a lot of discussions about “waste” in American health care or “overuse” in our fee-for-service system…

What Uwe Reinhardt taught me about American health care is exactly the title of his paper: It’s the prices, stupid. And that has shaped what I decide to report on. It is why I tackle projects that try to bring more transparency to American health care pricing, and the reason I think it’s important to tell the stories of the medical bills my readers send me.

These aren’t one-off, sad stories. These are, as Reinhardt rightfully spent his career arguing, small windows into the systematic way the American health system charges sky-high prices

There’s so much wrong with our health care system, but we actually know what the right steps to take are.  The ACA was a few baby steps in the right direction.  Alas, Trump’s minions (I’m 100% sure Trump himself is beyond clueless on the policy details) want to lead us in precisely the wrong direction.

About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

2 Responses to Getting health care 180 degrees wrong

  1. SF says:

    No, no, no. Blaming doctor costs is incorrect. While some doctors may be getting rich, others struggle to pay off the hefty bills for their medical training. We are actually facing an acute doctor shortage in this country, and this is one area where we are “importing” people fill the gap.

    The #1 factor driving health care costs (and rising prices) in this country is the switch from non-profit hospitals to for-profit hospitals. This added an entire layer of stockholders who now have to be paid out of (higher) profits, which was not the case 30 – 40 years ago.

    The #2 factor is duplicate facilities with very costly medical machinery. It is not efficient to have multiple hospitals and dozens of emergency care facilities all outfitted with very expensive equipment and staffing, yet empty hospital beds.

    Other huge changes driving costs (and higher prices) of health care include issues people don’t like to talk about, such as:

    The enormous diabetes epidemic in the US, leading to costly cardiovascular problems, amputations, and eye problems. This epidemic is largely driven by the obesity epidemic, but is also due to the change in U.S. demographics, because African Americans, Asians (and their Native American cousins) and Hispanics are genetically predisposed to diabetes.

    Gun shot wounds from gun violence, which are very costly to treat and often require long term therapy for permanent disabilities. Closely related to this problem are the injured veterans of the Middle Eastern wars.

    Pre-mature births, which are increasing in number, very costly to treat, and very often involve long-term treatment for life long disabilities. The so called “million dollar babies” cost a lot more than that in many cases.

    The next looming health care cost is the aging population, but many in that group are healthier than the same age group in previous generations.

    Until we address the real causes of rising health care costs, we aren’t likely to solve them.

    • Steve Greene says:

      The factors you identify are all part of the story. But we also may our specialists, *way* too much. On average, twice as much as other advanced countries. Hospitals are probably the biggest part of the problem, but Tom Price got rich as a specialist and he clearly believes we need to be over-paying specialists on a fee-for-service model. We don’t.

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