Health Care - Again pt. 1

The Affordable Care Act (ACA) has now been effect for more than a month.  We are all aware of the mess that is the computer support piece of the ACA.  Although that is a ‘non-trivial’ issue, centralized, computerized support for healthcare being a key element of ACA, I’m going to ignore it for today.  Irrespective of the computer support for the healthcare, the central issue is whether the healthcare provided under the ACA will be an improvement or not.  So, let’s take a look at the issue of the healthcare that will be provided versus what needs to be done.

First, here are a couple of observations from a survey of healthcare workers – doctors and nurses - who were asked what effect the ACA will have on healthcare nationwide, this from an article in the Washington Examiner on 27 September: 

- More than nine in 10 believe that there could be major negative impacts such as a drop in quality care

- 53% believe that “Quality of health insurance policies will suffer.”

- 51% believe that “Quality of care will go down.”

- 42% believe that “Insurance exchanges will be poorly managed.”

- 19% believe that “Americans will die earlier.”

I would think the last line would give people pause: just a bit less than 1 in 5 doctors and nurses think that the ACA will result in Americans dieing earlier.  Isn’t healthcare about people living longer, healthier lives?  Yet 1 in 5 doctors think this new healthcare system will result in a decrease in life expectancy.   That alone should cause a great deal of concern. 

But, the proponents of increased government oversight and control of healthcare will respond that with the rising costs of healthcare over the past 4 decades something needed to be done for those who were without health insurance and were already dieing ‘early.’  So, let’s set aside for a moment the new concerns about dieing earlier and simply ask two questions: 1) What caused healthcare costs to rise above the rate of inflation over the past 45 years?  And 2) What might be done to control costs?  (Asked otherwise: How does the ACA address these issues?)

 

Healthcare costs have risen as a result of a number of different forces, each is relevant, but all are to blame, so the order below is not significant.

a)     Government funding; simply, when government starts pushing money into medicine (or any sector of the economy), prices rise; the greater the government ‘flow,’ the more the increase in prices.  (Government support of housing loans caused home prices to rise, for example.)

b)    Technology; as technology to diagnose and treat diseases has improved, treatments that weren’t available 5, 10, 15 or 20 years ago are now available, whether we talk about drugs (think of some of the pharmaceuticals developed in the last 20 years), treatment schemes (the advancement in cancer treatment) or hard technology (MRI, etc.)  These new technologies are incredibly capable, but they also expensive.

c)     Liability Law and Malpractice Insurance; various court decisions have had the effect of driving costs up across the board; malpractice insurance rates soared, and every element of the healthcare industry became possibly culpable in nearly any situation.  This has not only increased the amount of oversight – and hence cost – in medical care, it has also led to changes in medical practices, to include greater specialization as well as increases in the breadth of diagnostic testing – both of which drove up medical costs.

d)    Supply; the number of medical schools and nursing schools, and residency programs, in the US has remained essentially unchanged for most of the last 40 years.  This began as an effort – by the AMA and the federal government – to maintain standards.  But it is now unbalanced, and the US now produces less than half the number of doctors and nurses it needs.  Further complicating the issue, one of the effects of medical malpractice has been to drive physicians out of certain fields and into others, resulting in even greater shortages, for example among general practitioners and OB/GYNs.

 

In short, over the last 45 years ‘supply’ has more or less been kept constant, real costs (technology and the operating costs of hospitals and doctors’ offices) have increased, and the government has poured money into the ‘industry.’  Where does that leave us with the second question: What might be done to reduce costs? 

 The first issue is that there is no easy answer to the ‘supply’ problem.  There needs to be a concerted effort to open new medical schools and nursing schools and new residency programs around the country.  Doing so while maintaining standards will not be easy – or quick, but it must be done.  In the meantime, two steps should be taken: provide some sort of incentive to older doctors and nurses so that they put off retirement for several years, and pass a specific immigration bill to facilitate the immigration of doctors and nurses.

Steps must also be taken to cap or otherwise limit malpractice settlements.  The ‘deep pockets’ that the courts have dipped into in the past have been emptied at the expense of the entire nation.  Limits must be set on such settlements.  At the same time, the insurance conundrum is further complicated by limiting all concerned with insurance coverage within their own state – for doctors, nurses, and patients.  Now it appears that within the ACA there will be prohibitions to not only crossing state borders, but in some cases crossing county borders.  In short, one of the key issues with insurance costs that needed to be addressed has been made decidedly worse under the ACA.  That should be ended – it simply stifles competition and drives up prices.

Can anything be done to control the costs associated with new technology?  Probably less then we want.  The approval process (within the FDA) for new drugs and new treatments could be dramatically streamlined and that would be helpful.  But the truth is that many of these new drugs and new tools are expensive.  But with those new and expensive tools come cheaper ways to do business. Thus, operations that used to require a week in the hospital now often mean surgery and release on the same day.  Costs increase because of the technology involved, but the overall cost of treatment might be less.  In short, the real answer would be in letting the ‘marketplace’ develop the answer.  Certainly the technology has improved over the last 75 years in such a manner that medical care that was not available to kings, queens and presidents at the time is now available to everyone, and at reasonable costs.  Technology and the market place are like that – it takes time for technology and education and production and ‘SOPs’ (standard operating procedures) to all catch up and balance out – it cannot happen overnight, and government attempts to make it do so only result in severe imbalances, price spikes and mistakes.

Where does that leave the ACA?  Sadly, the only thing the ACA does is pour more money into the healthcare field.  Shortages are not addressed, nor are any of the other cost drivers – except eligibility for treatment.  In short, more money – which will mean higher prices, and managed access to supply, which is a polite way to say ‘rationing.’

There is another way to say that as well: Pay more, get less.

Tomorrow: some suggestions on what government might do – if it were inclined to actually improve the health of the citizenry.