Medicare for All Requires Healthcare Delivery Reform

2020.06.01 terry-medium

I am happy to re-blog this post entitled, Medicare for All Requires Healthcare Delivery Reform, below. This post was offered by fellow blogger Ken Terry, who has been a respected health economics journalist for decades. I add comments about points of agreement, some other valid insights, alternative points of emphasis, and questions, posed somewhat rhetorically.

Points of Agreement

I highlight key points of agreement between us:

  • Medicare for All would fix the universal access problem but not the cost escalation problem, unless additional actions are taken.
  • The former is a healthcare financing problem, but the latter is a healthcare delivery problem, whose root causes are embedded in the structurally dysfunctional system.
  • Both corrective projects should be undertaken. Terry asserts that the duty to provide access as axiomatically self-evident. The motivation to fix the cost problem is a matter of free-market faith – that perverse constraints on the market should be removed to maximize benefit and seek Adam Smith’s ideal price point. Well and good. (I invoke other philosophical arguments to arrive at the same conclusions.)
  • Physicians have a unique ability to maximize value of healthcare services, ferret out waste, and lead reform, both at the level of individual patient care decisions as well as at the systems level. (I tout cost-benefit analysis as a key tool, whereas Terry touts an approach that reorders economic incentives, placing key treatment and systems decisions in the hands of primary care physicians.)
  • Terry champions a public health and population health perspective, that is, rejects the strictly “corporatist” viewpoint that seeks primarily to maximize revenue and profit (or “margin,” in the non-profit world). He embraces the Hippocratic ideal of optimizing individual patient health and its corollary of leaving no one in society behind. He implicitly entrusts this health-promotion duty into the hands of those who took the Oath.

Valid Insights

Terry’s physician-led approach to healthcare reform provides several valid insights, here listed along with my sympathetic critiques:

  • Physicians drive utilization. Physicians have a unique eye for waste. “Unless we can get doctors to change how they practice, Medicare for All will struggle with the same cost pressures that have made our system the most expensive in the world.” Put another way, changing the old fee-for-service or bonus-for-volume incentives are necessary (but to my way of thinking, not sufficient).
  • Primary care physicians have a potentially key role in this regard because “they’re upstream of the major cost drivers, and they’re the only doctors who treat the whole patient, rather than just a particular physical system or disease.” That is, primary care physicians are free of the perverse incentives that currently lurk throughout the system. By the same token, in today’s complex and highly technical healthcare realm, even well-informed primary care physicians may be out of their depths when considering highly specialized and sophisticated treatments. Primary care physicians are well-suited to sit on panels considering cost-benefits because they can ask the “whole patient” questions; however, they alone may not have the final answers.
  • Physicians in general, and primary physicians in particular, are well-suited to identify over-utilization. Terry has the insight that over-utilization can be driven by both structural factors and patient-level decisions. Structural factors include incentives such as fee-for-service that reward over-utilization. Patient-level decisions include redundant testing. Physicians can recognize both types.

Critiques and Alternative Emphases

Overall Fixing U.S. Healthcare agrees with Mr. Terry on:

  • Facts: Denial of access to many, poor public-health performance and exorbitant costs.
  • Values: Optimal cost-benefit, societal duty for equitable access to care, “whole person” approach
  • Goals: Efficiency and cost control, equitable access, public health, decisions guided by Hippocratic ethics and responsive to patient goals
  • Methods, namely physician-led reform: This approach is is sound. Indeed, the Oregon Health Plan of 1994 touted by this blog was led by a physician, John Kitzhaber MD. Further, this blog specifically endorses cost-benefit analysis.  This is a methodology used by physicians to evaluate the costworthiness of treatments for specific diseases. Cost-benefit analysis served as the linchpin of the Oregon Health Plan. Twin Cities’ Buyers Health Care Action Group (cited by Terry) had significant physician participation in design, governance, and operation.

However, Fixing U.S. Healthcare views an exclusively physician-led method of healthcare reform as incomplete. Here are some critiques and alternative emphases:

  • Actuarial flaw: Allowing large primary care physician groups to assume and manage risk. contains a technical actuarial flaw. Namely, any risk-bearing entity that is not sufficiently large is destined for a “death spiral.”   Even a very large multi-specialty physician group practice would not be large enough to withstand the financial loss of covering even one catastrophically expensive case. Think of CAR-T therapy (immunologically engineered T-cell infusions) for acute lymphoblastic leukemia at $2.5 million a pop.  Terry’s solution is to engage “infrastructure vendors.” This would “corporatize” the the physician group, namely pitting the organization’s financial health against the interests of individual patients. Others have offered the solutions of separating out high-risk pools, or of letting risk-bearing physician groups “re-insure” against catastrophic risks. But I argue that the ethical trade-off between these kinds of catastrophic costs and life-saving benefits belongs at the highest societal level, not at the doctor-patient level or group practice level.
  • Need for political leadership: Oregon health reformer Dr. Kitzhaber became a politician, first a state senator, then governor. It is inconceivable that the nation’s health sector, comprising one-sixth of its economy and 31 percent of the annual federal budget, can be reformed without engaging the public via politics. Healthcare is too important to be left only to doctors and hospitals.
  • Fix America, not just healthcare: Steven Brill, an attorney turned investigative reporter, has made the case in his 2018 book, Tailspin, that all sectors of American life have been broken, as discussed in a previous post. And healthcare is no exception. Historically, a meritocratic elite emerged after World War II.  At first, Brill argues, America thrived under innovative leadership by the professions, corporations, law, politics, and in fact all facets of our economy and society. But over the ensuing 50 years, these elites created structural moats that ensconced themselves in privilege and barricaded out the rest of us. Brill’s optimistic clarion call is for a new, equally gifted cadre of innovators to once again rise up.  He calls on this new elite to retain the advances of the last half-century, but this time to breach the moats of privilege and instead to promote equitable opportunity and the common good. This will need the engagement of leaders and thinkers across our society, not just physicians.

Questions and Rhetorical Questions

I anxiously await the publication of Mr. Terry’s book by the same name as his blog, Physician-Led Healthcare Reform.  Here are my questions that I hope will be further elaborated in the book:

  • Granted that physicians are uniquely qualified to maximize efficiency – maximum benefit for optimal cost – and, in the process, root out low-value care and uncoordinated delivery. And granted that implementing a single-payer financing system should minimize currently exorbitant administrative costs. How does he see the other 3 sources of “waste” being addressed by physician-led reform? These were identified by Donald Berwick MD and co-authors, and featured in my previous blog post – pricing failure, fraud, and overtreatment. Put another way, granted that physician-led reforms are necessary, are they sufficient?
  • How does Mr. Terry account for the fact that at-least-partial solutions have been identified for each of the six categories of waste, but have not been widely adopted? Fixing U.S. Healthcare blog has concluded, with Steven Brill, that a vast web of political and economic vested interests have been woven into the system over the past 50 years, now commanding control over one-sixth of the economy. Does Mr. Terry agree, accordingly, that only the full faith and clout of the federal government can overcome those vested interests, as an expression of the public will and the public’s demand for accountability and transparency? Does he acknowledge that a political solution will need to undergird any technical solution?
  • Does Mr. Terry acknowledge that physicians have their own blind spots and biases, and that the public should retain the prerogative to override their “expert judgments,” as Oregonians demanded in 1994? Does Mr. Terry also acknowledge that physicians, no less than any other group given political power, could fall subject to abuses unless check-and-balances are built into governance systems to constrain them?

I also wonder if Mr. Terry truly thinks that healthcare reform would be best designed by something that looks like a Working Group convened under the American Academy of Family Physicians (Full Disclosure:  I am a member).  Or, instead, does he think that such a physician-led working group would be only one among many others in a broader multi-stakeholder assembly looking more like the one convened in 1992 by Hillary Clinton? Does he think that physician-led system restructuring is the single “silver bullet” that would fix cost escalation? Or does he see that as but one element, among an extensive array of multi-pronged interventions, needed to break down the vested interests and install in their place a checked-and-balanced system?

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Physician-Led Healthcare Reform

Inan op-edinThe Guardian, Sen. Bernie Sanders (D-VT) and Rep. Pramila Jayapal (D-WA) make a powerful argument that the COVID-19 pandemic has shown the need for the U.S. to adopt Medicare for All as soon as possible. If the Democrats take back the White House and the Senate in November, a public option that might lead to Medicare for All is more likely to become law than Sanders’ or Jayapal’s current single-payer bills. But more than two-thirds of Americansnow supportof Medicare for All, and it’s possible that rising public pressure could force Congress to pass Medicare for All legislation in the near term.

The United Statesshouldguarantee tax-financed, high-quality, comprehensive healthcare to every resident, as Sanders and Jayapal propose. The problem is that grafting Medicare for All onto our dysfunctional healthcare delivery system will not control the growth in U.S. healthcare spending, which is…

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Fixing U.S. Healthcare – Annual Review & Summary

Fixing U.S. Healthcare blog’s two-year anniversary is a good time to take stock of what has changed in our approach to fixing U.S. healthcare.  And a good time to review highlights of the last year. Elevator Pitch for Fixing U.S. Healthcare Let’s start with an “elevator pitch” summary: The U.S. healthcare system has outgrown itself, … Continue reading Fixing U.S. Healthcare – Annual Review & Summary

AMA Journal Blames Greed and Politics for Rising Healthcare Costs

A new study in the Journal of the AMA (JAMA) finds that 25% of the current $3.5 trillion spent by Americans on healthcare is wasted – dollars spent that don’t help achieve health or relieve disease.

Fellow blogger Henry Kotula has summarized the findings, as re-posted below.

Commentators on the JAMA article echo Fixing U.S. Healthcare blog’s messages:
Exorbitant healthcare spending diverts resources from “the nation’s schools, small businesses, road builders, bridge builders, scientists, individuals with low income, middle-class people, would-be entrepreneurs, and communities as a whole [which] could make much, much better use of that money.”
• The largest cost drivers are administrative fragmentation ($265 billion) and bloated prices ($240 billion). Note: The JAMA study also identified low-value care as a driver, but only looks at three categories: over-aggressive terminal care, misuse of testing, and over-use of brand-name drugs. Fixing U.S. Healthcare blog has claimed that low-benefit-high-cost care is a more pervasive and significant cost-driver.
• The JAMA article shows that up to $282 billion could be saved simply by implementing at scale measures that have already been proven
• However, interventions so far have been piecemeal and haphazard
Monopolies in healthcare are a key driver of cost
• Many interventions save money at first pass, but then result in cost-shifting (“squeezing balloons”)
• While healthcare costs are an increasingly obvious issue in the United States, they are also emerging as an issue in other advanced countries

Greed & Politics Are the Root Cause
Beyond these findings, the most incisive accompanying editorial by Don Berwick MD, MPP, who was featured in our previous post, points out that what these researchers call “waste” others in the healthcare sector call “income.” He further observes that

When big money in the status quo makes the rules, removing waste translates into losing elections. The hesitation is bipartisan. For officeholders and office seekers in any party, it is simply not worth the political risk to try to dislodge even a substantial percentage of the $1 trillion of opportunity for reinvestment that lies captive in the health care of today.

So, he concludes,

the challenge of removing waste from US health care and reinvesting that harvest where it could do much more good is not a technical one. It is a political one. In short, removing waste from US health care will require both awakening a sleepy status quo and shifting power to wrest it from the grip of greed.

None of the researchers or editorialists came right out and said it. But we do know where waste lies. And we know how to root it out. And that will happen only when Americans awaken and when they collectively, through the only institution powerful enough to overcome that greed and politics – the U.S. government – demand fixing U.S. healthcare. And only when all agree to be part of that fix.

Enjoy the summary, below.

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HENRY KOTULA

https://www.beckershospitalreview.com/finance/25-of-us-healthcare-spending-is-waste-study-finds.html?oly_enc_id=2893H2397267F7G

Image result for Journal of the American Medical Association (JAMA) Publishes Humana Study on Health Care Spending

About 25 percent of U.S. healthcare spending can be classified as waste, according to a new study published in JAMA Oct. 7. 

For the study, researchers from Humana and the University of Pittsburgh School of Medicine analyzed 54 peer-reviewed studies, government reports and other medical literature to estimate the levels of waste in the U.S. healthcare system.

Researchers divided waste into six previously developed categories including: failure of care delivery; failure of care coordination; overtreatment or low-value care; pricing failure; fraud and waste; and administrative complexity. 

Administrative complexity accounted for the most waste with $265.6 billion annually, followed by pricing failure or inefficiencies, which accounted for up to $240.6 billion in waste per year.

Approximately $300 billion in waste accrued from failure of care delivery, failure of care coordination and overtreatment. The study estimated that about half of this waste could be avoided.

Overall, the researchers found that the…

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Walmart’s Care Bundling – Will It Fix U.S. Healthcare?

This month Harvard Business Review (HBR) published the dramatic results of Walmart’s innovative centers-of-excellence (COE) care-bundling initiative. Walmart’s third-party administrator, Health Designs Plus (HDP), claims that this approach saved Walmart $86 million on spine surgery alone over 3 years, and could “address the cost-and-quality dilemma and drive change nationally.” But will it? FixingUSHealthcare blog agrees that … Continue reading Walmart’s Care Bundling – Will It Fix U.S. Healthcare?

It’s Not Just About Costly Drugs – It’s Testing, Too

On the stump, many of the candidates are railing against skyrocketing drug costs. They promise at campaign rallies at the top of their lungs to “Bring down the cost of drugs.” This blog, however, claims that it’s not only about costly drugs. It’s the whole system that is rigged and has high costs baked into … Continue reading It’s Not Just About Costly Drugs – It’s Testing, Too