For four decades now, progressive and conservative policymakers have offered up different reform plans for health care. All have failed in some way, to the degree that each has played a role in perpetuating a system dogged by constant crisis, resulting in the awful state of affairs in which we find ourselves today. With the recent collapse of one Republican plan, the Affordable Care Act (ACA) remains in place—a ticking time bomb that both political parties know will eventually explode.
I am a physician, which may be useful here, because doctors are skeptics by nature and distrustful of ideologies. When it comes to working with one person or a system composed of people, whether it is a small system like the doctor-patient relationship or a large system like health care, a doctor knows that theories must give way to practicalities, an acceptance of imperfections and impurities, and the natural give-and-take between people. Today, serious health care reform demands this sensible outlook as much as the doctor-patient relationship does. It demands skepticism, not ideology.
“Something needs to be done about health care,” people cried in 2010, when the ACA was passed. And, in truth, something did need to be done. Progressives argued then and still that the ACA was the right solution. Facts suggest otherwise.
The most relevant facts preceding the passage of the ACA involved rising health care costs and the number of uninsured. In 2009, health care costs continued to rise much faster than the rate of inflation. Insurance premiums reflected that rise. From 2006 to 2009, the cost of the average family health insurance plan rose 31 percent. From 2001 to 2006, it rose 63 percent. 1
In 2009, 45 million Americans were uninsured. Progressives cried “poverty,” yet upon closer examination, many people were uninsured for reasons other than a lack of money.2 In fact, the poor then (as now) had Medicaid, while the Children’s Health Insurance Program (CHIP), passed in 1997, insured poor families with children just above the Medicaid eligibility level. Instead, many young working people made a calculated decision not to buy insurance because they thought it not worth their while. Several million uninsured were eligible for Medicaid or CHIP, but for some reason refused to sign up. Ten million uninsured were non-citizens, which constituted more of a sociological problem than an insurance problem. Curiously, another ten million uninsured lived in households with annual incomes greater than $75,000 and thus were able to buy insurance but for some reason did not.
The real number of chronically uninsured was therefore closer to 12 million, not 45 million. Many of these 12 million people worked in small businesses. At the time, the small group insurance market was very unstable, with exploding premiums, in part because small businesses lacked sufficient numbers of employees to pool risk. Other uninsured people had preexisting diseases and could not get insurance. In retrospect, one wonders why the Federal government just didn’t buy these 12 million people private insurance plans. Given the average cost of insurance in 2008, the price would have been about $72 billion, or $720 billion over ten years. When President Obama signed the ACA, he predicted it would cost $940 billion over ten years.3 Just giving the uninsured private insurance plans might have saved a lot of money and headache. Indeed, in 2016, the Department of Health and Human Services announced that 20 million people had gained insurance under the ACA. But that left 25 million of the original 45 million still uninsured. Too little was gained for too high a price.
But that was then, and we live in the here and now. So the question we must ask is: Where do we go next in health care? The answer begins with admitting how little has changed not just in the past seven years, but in the past forty. True, some problems have been ameliorated by the ACA—for example, the number of uninsured has decreased, people can no longer be turned down for health insurance because of preexisting conditions, and young people can remain on their parents’ insurance plans until age 26. All that is to the good. But what hasn’t changed is at least equally significant.
When examining the standard pie graph of U.S. health care spending, one notices that the pie slices have hardly changed since the 1980s.4 In 2015, physician and clinical services comprised 20 percent of the pie; in 1990, they were 19 percent. In 2015, hospital costs were 32 percent of the pie; in 1990, they were 38 percent. In 2015, prescription drugs counted for 10 percent of the pie; in 1990, they were lumped in with dental costs and home health costs, for a total of 23 percent—yet if one assumes that little change in dental costs (4 percent) and home health costs (8 percent) since 1990, prescription drugs accounted for roughly 11 percent of the pie in 1990, roughly the same as today. Even out-of-pocket costs, the nemesis of so many low- and middle-income Americans, have barely changed. In 2015, they comprised 11 percent of the health-spending pie; in 1990, they comprised 20 percent of the pie (even more than today), although the pie then failed to include such categories as “investment,” “public health activities,” and “other programs” as part of total health spending. Upon injecting those programs into the 1990s pie, the 20 percent figure would likely drift down toward today’s number.
So much time and energy spent on new theories of health care delivery, so many papers published on the vital role of quality indicators and preventive medicine, so many conferences held on accountable care organizations, the Cleveland Clinic model, health savings accounts, and other delivery methods, and yet the borders within the pie have barely moved! Both progressive and conservative theories designed to revolutionize health care have proved ineffectual. All that has happened over the past four decades is that the pie itself has steadily grown bigger, in part from population growth, but also from the introduction of more services, drugs, and technologies, and the increase in prices—the same old story.
The most relevant change introduced by the ACA, at least for the average person, lies below the level of ideology: The ACA simply shifted the financial burden of health care from one group of working people to another. People who suffered in the past—for example, those with incomes just above the old Medicaid eligibility level—can now go on Medicaid. Some people working in small businesses are now eligible for government subsidies. Yet other working people have actually been hurt by the ACA. Young low-income families who in the past refused health insurance must now buy it, even though it comes with a $6,000 deductible, making it useless for most such people. But it’s either that or pay a fine.
Moreover, people with slightly above-average incomes in the individual insurance market must now pay more to subsidize the more favorable position of those just below them. Many working people saw their hours cut, or their labor outsourced to contractors, so that employers would not have to pay for their health care. Some low-income working families became eligible for enormous subsidies on the ACA exchanges while similarly positioned families working in a different environment (for example, in fast food restaurants) were eligible for much smaller subsidies that were manifestly insufficient to cover their insurance costs. So it’s no wonder that people in this category positively hate the ACA.
Curiously (or not), the people who did well under the ACA are the people who always do well. These include the rich, because the rich can take any hit. The one hit the rich took, a new tax on dividends, hardly elicited a yawn from them. People working full-time for large businesses also continue to do well. Their Cadillac plans remain tax-deductible, with the implementation of a tax on part of their premiums continually postponed. In addition, large businesses retain their advantage in pooling risk. And the very poor continue to do well—they have Medicaid. The overall state of affairs today is thus not appreciably different from the 1980s or 1990s.
All that said, there is a change in the health care data that suggests a new direction for reform. In 1990, the private sector was responsible for 58 percent of health care expenditures; public budgets accounted for 42 percent. Today, private health insurance and out of pocket expenses are responsible for 44 percent of the nation’s health care spending, while state and Federal spending account for 55 percent. Private health insurance alone comprises only 33 percent of expenditures. Basically, the public and private sectors have swapped positions.
Since government today is already responsible for more than half the health care spending in the United States, and private health insurance only one-third, even economic conservatives must now ask themselves: Why fuss over that last third? Why not simply inject government into it and be done? Is it because private health insurance is a symbol of free-market capitalism? Why fuss over a symbol? Besides, for many low- and middle-income people, it’s a very expensive symbol.
The sheer existence of the private health insurance market allows for the practice known as “cost-shifting,” whereby people with private insurance pay more for their services to compensate for the low rate of reimbursement from Medicare and Medicaid. This hurts low- and middle-income people during their working years. Even more irksome, the co-existence of public and private insurance lets policymakers play games with low- and middle-income workers, with scattershot tax credits and subsidies hurting some workers to benefit others, depending on where they work and what businesses they work for, while the very rich and the very poor stand happily on the sidelines. Although the ACA exemplifies this, Congressman Paul Ryan’s recent plan did some of the same. Middle-income workers would have suffered less financial pain than they do now under the ACA, but the plan’s refundable tax credits would have been insufficient to cover the insurance costs of low-income workers earning too much to qualify for Medicaid.5 Either way, some working people always end up being sacrificed for the benefit of others. Such games have gone on now for almost four decades.
We should insist on no more games. A main benefit of a national health insurance system is that it would rely on direct progressive taxation for funding. A person making $30,000 a year pays less toward his or her health insurance than a person making $50,000 a year, independent of where he or she works, how many hours he or she works, or how generous his or her employer is. Such a system is easy to understand, transparent, and fair. The United States needs to move away from its current work-based insurance premium system, with its Byzantine maze of credits and subsidies (whether ACA subsidies or free-market-oriented “premium support”), and simply tax people’s incomes or investment streams directly to pay for their insurance, with the rich paying more than the poor.
How that tax system is set up can be a subject for debate. Perhaps the poorest Medicaid recipients should pay nothing in taxes toward their insurance, or only, say, $5 a month. Perhaps a person making $40,000 annually should pay $100 a month, or $125. Perhaps a family making $500,000 a year should $28,000 annually, or $29,000 (which is more than they’re paying now for insurance). All this can be decided in due course. More important is to make paying for health insurance a straightforward progressive scheme through direct taxation, giving low and middle-income people relief from the economic shenanigans to which they have been so long exposed.
Now, implementing a national health insurance tax plan need not necessarily come with actual national health insurance: These are two very different things. Good reasons exist to preserve the private insurance system, including efficiency and greater responsiveness to consumer demands. If conservatives have won any argument over the past century it is that the private sector is usually more efficient and consumer-friendly than government is. I believe the private health insurance system should remain for these reasons. Instead of receiving their monies from a mixture of employers, employees, individuals, non-profits, and indirect government subsidies, private insurance companies can get them directly from the government, through taxes.
Precedent exists for this. The full-time Federal workforce hasn’t actually increased all that much over the past two decades. What has increased is the enormous number of subcontractors who perform government tasks. Private health insurance companies will simply become one more (albeit giant) contractor for the Federal government.
Nor does government’s role as check-cutter for the insurance companies necessarily risk inefficiency. Again, a century’s worth of experience has shown that government programs involving nothing more than cutting checks to stable populations (for example, Social Security sending money to seniors) work reasonably well. It is when government involves itself in the delivery of services, or in social engineering, that trouble arises. The insurance companies represent a kind of stable population.
To preserve the private insurance system’s stability, government needs to take one more action. It is well known that about 20 percent of the people account for 80 percent of the costs in health care. As a physician, I see this phenomenon play out all the time. For example, the same morbidly obese people come in for their diabetes checks, then a few years later come in for their cardiology checks (because their obesity and diabetes affect their cardiovascular systems), then the following year come in for their pulmonary checks (because their obesity causes sleep apnea), then the next year come in for their joint replacements (because their obesity stresses their joints), then a year later come in for their vascular bypass surgeries (because now their diabetes has clogged their blood vessels), then a year after that come in for their hysterectomies or breast biopsies, if they are female (because their obesity has led to abnormal estrogen levels, causing severe uterine bleeding or breast cancer), and so on. Other patients use health care constantly because they have particular diseases that give rise to systemic problems that need constant management—for example, patients with connective tissue disorders. Still others have exceedingly rare diseases that require expensive therapies—for example, people with hereditary diseases such as Wilson’s disease or hereditary angioedema.
Under the ACA, the younger and healthier subsidize these people by paying more for insurance than they otherwise would. This is unfair. They have their own lives to lead. Why should they be so burdened during the most hopeful period of life? Instead, the Federal government should take over direct payment of those health conditions that generate most of the costs, similar to what it did in the 1970s when Medicare took over payment of hemodialysis for patients with end-stage renal disease. This would involve essentially bifurcating the health insurance pool into an 80 percent chunk that can pay for itself quite well, and a 20 percent chunk that is hopeless in that respect and that combined with the 80 percent chunk makes everything hopeless. Monies for patients with such conditions (the conditions themselves can be debated) will come through direct progressive taxation, as they will for health insurance in general. Not only is this fair, it would also preserve the solvency of the private insurance system.
The ACA is failing because it expects the healthy to subsidize the unhealthy. The healthy exit the system by paying a fine, leaving insurance companies with the most expensive patients. Removing those patients from the private insurance system can stabilize the system. In a way, it is analogous to government removing subprime mortgages and other bad loans from a bank’s books to keep the bank afloat.
Health care reform invariably starts with economics. It always has, which is understandable. Money is a powerfully compelling reality. Health care is accessed via insurance, which is all about money. The problem with this approach shows up when policymakers must decide which economic issue to tackle first: the insurance problem or the health care cost problem? The choice on both sides of the political spectrum has typically been to solve the insurance problem first (meaning, decrease the number of uninsured) and then to control costs afterward. This is not surprising, since expanding insurance makes voters happy, while controlling costs through restrictions makes voters unhappy. We saw this during the 1990s, when managed care brought down the rate of increase in health care costs, but only temporarily, as patients (meaning voters) started to complain.
It is easy to understand politically why the Obama Administration approached the problem this way. But it is still the wrong approach. Health care costs should be brought under control first, or at least simultaneously, making the method by which we insure people—national health insurance versus private insurance—less important, since without cost control rationing is inevitable either way. And while controlling costs has an obvious economic component, it also has an equally important non-economic component. A serious personnel problem exists in medicine, begging for resolution. Once resolved, the potential cost savings are enormous. Then again, it must be resolved correctly, because otherwise patient lives will be endangered.
The problem begins with the doctors. Doctors no longer know what it means to be a doctor anymore, nor does anyone else in medicine. This confusion radiates outward, affecting every sector in health care. Is a doctor a technician? If so, should nurses and other para-professionals who are sometimes better than doctors at performing procedures be considered on par with doctors? How much authority should a doctor wield? In the new environment of patient-centered care, are doctors and patients equals? Is doctoring a profession or just a job? If just a job, does that mean doctors should work for a company?
This is just a slice of the confusion that now exists in medicine, as doctors fight with nurses over turf, fight with patients over who calls the shots, fight with employers who treat them like “line workers” in their companies, and fight with regulators who presume to govern their activities at a distance. Not only does this confusion demoralize physicians, it also arouses resentment among the various actors in medicine who feel themselves treated unjustly, or who bristle at what they believe to be an unfair usurpation of their rights. It is also dangerous for patients, because it spawns conflicts (and politics) in everyday medical care that risks trapping them in bad situations.
Disarray always arises when a system loses its core. No one knows who is in control, and so different people move in to take it. This poses new problems. The trend toward employed physicians that has continued under the ACA exemplifies this, with more than half of today’s doctors now working as dependent employees for large companies. As dependent employees, doctors must please both their customers (which is how today’s patient-centered care movement views patients) and their bosses, or risk being fired. As a consequence, doctors increasingly factor in numerous side considerations—often political—when making medical decisions, and some of these endanger patients. Policymakers who salivate over the potential cost savings from putting doctors on salary overlook this ominous trend.
The role of doctor needs to be redefined for the 21st century. I have described this new role as one of a “leader,” but whatever its title, the change means that doctors in the future (more in primary care than in the surgical specialties) must take on more supervisory duties, while ceding many of their traditional technical, diagnostic, and therapeutic activities to nurses, para-professionals, and computers.6 This should excite doctors, who risk becoming superfluous in a world where machines and other professionals can do much of their routine work as well as they can. Besides, doctors themselves are increasingly bored and frustrated with their work—for example, much of their time is devoted to entering data for the sake of electronic recordkeeping, turning them into information technologists. The new plan should excite nurses and other health care professionals, who will expand their scope of responsibilities beyond their current limited menu. And it should excite policymakers, for the potential cost savings are enormous.
For example, we now have a shortage of doctors. New medical schools are being built. Doctors and medical schools are expensive. But the shortage exists only if doctors retain their current role as the primary performers of procedures and the primary dispensers of drugs. If they do not, then the shortage evaporates, and so does the financial pressure.
Once the doctor’s role is established, much else falls into place—for example, what nurses do, what administrators do, what technicians do, how hospitals are organized, how many doctors we need and what kind, the difference between who practices in hospitals and who practices in outpatient centers, and so on. But—and this is most important—doctors and nurses, along with their governing boards, must sort these issues out themselves, working together, rather than have the answers imposed on them by impersonal policymakers and regulatory bodies. This points to another important cost-saving reform we must make.
Doctors and nurses often discuss among themselves the cost savings they could generate in everyday medical care, if only they were consulted. But they are rarely consulted. Medicare, other Federal agencies, and hospital accreditation bodies impose rules on them that often make no sense. Who are these rulemakers, doctors and nurses often ask themselves? Where and how do they come up with their rules? In my own specialty of anesthesiology, for example, we wonder why patients having cataract surgery under a few minutes of sedation must have the same physician coverage as patients getting brain surgery. We wonder why distinctions aren’t made between patients’ medical histories, allowing sicker patients in surgery to get a little more staffing support than healthy patients during their operations, without violating some rule. We wonder why agencies straitjacket doctors and nurses with rules mandating certain medicines always be given preoperatively, or that post-operative pain always be reduced to a particular level, thereby eliminating the flexibility doctors and nurses need in some situations.
The ACA is an example of such policymaker thinking on a grand scale, conceived at an unhealthy distance from everyday medical practice. It commanded, it ordered, and it mandated; it rarely consulted. To the degree that it made a cost-containment effort (and it wasn’t much) it was misguided and unnecessarily impolitic—for example, the future Medicare panels composed of unknown appointees who will decide how health care will be rationed. Again, these were orders coming from on high, from people with no real feel for patient care. Conservative health policy ideas often originate from analogous quarters, such as free-market economics departments or conservative public policy organizations. Health savings accounts (HSAs) exemplify this. They are a reasonable idea. With HSAs, patients decide whether to see a doctor or pocket the money as savings. But conservative activists, too, ignore the everyday human element in medicine. Do all patients have sufficient knowledge to make these decisions? No. What about children, who lack decision-making power, and their parents, who will be put in the untenable position of having to choose for them?
Health policy that originates in closed-off environments reminiscent of bank boardrooms is inherently unwise. Doctors and nurses know the ins and outs of medical practice better than anyone else. They know where the money is wasted in health care and where costs can be cut—safely. With their practical natures and vast clinical experience, they and not economists or ideologically driven public policy activists need to lead on reform. They need to review the regulations imposed on health care that are generating unnecessary costs. But no one lets them.
Skilled politicians are sensible. They know what goes on inside their constituents’ minds and are eager to take advantage of it. This makes the reforms described above doable. Both political parties know that people are angry with them, while also anxious about their health security. People are angry with the Democrats for creating the ACA. They are angry with the Republicans for failing to fix it. Both parties have a huge vested interest in solving this problem.
For Democrats, progressive tax plans work like catnip. Once the plan described above becomes the main funding stream for health insurance, they will probably work with Republicans on the second-order issues, despite their hostility toward President Trump. Republicans, in turn, will be able to finally deal with the health care problem that they have always looked upon nervously as “not their issue.”
The greater hurdle in reform is not the politicians but the credentialed policymakers—the vast army of health economists, health policy analysts, public health experts, and health management consultants—who control the debate over health care reform. For four decades, these people have shrouded themselves in mystery so as to preclude democratic interference. They have argued that health care is too intricate a matter to be entrusted to the ignorant masses. How could people without Ph.D.s be relied on to make judicious judgments about something so complex as health care, they ask? Indeed, “complex” is one of their favorite words. While health care is complex, their constant invocation of that word is designed to seal the process of health care reform off from common sense scrutiny and, above all, from the medical professionals who actually know what this is really all about.
The ideologues and policy technicians have failed. Four decades of repeated crises and mishaps prove this beyond all doubt. Fortunately, in the end, the politicians control the technicians, and they can include medical professionals in efforts toward real reform. The era of the health policy analyst is over. Let the era of the doctor and the nurse begin.