Marcie Angell on how to fix health care simply:
“Recommendation #1: Drop the Medicare eligibility age from 65 to 55. This should be an expansion of traditional Medicare, not a new program. Gradually, over several years, drop the age decade by decade, until everyone is covered by Medicare. Costs: Obviously, this would increase Medicare costs, but it would help decrease costs to the health system as a whole, because Medicare is so much more efficient (overhead of about 3% vs. 20% for private insurance). And it’s a better program, because it ensures that everyone has access to a uniform package of benefits.
Recommendation #2: Increase Medicare fees for primary care doctors and reduce them for procedure-oriented specialists. Specialists such as cardiologists and gastroenterologists are now excessively rewarded for doing tests and procedures, many of which, in the opinion of experts, are not medically indicated. Not surprisingly, we have too many specialists, and they perform too many tests and procedures. Costs: This would greatly reduce costs to Medicare, and the reform would almost certainly be adopted throughout the wider health system.
Recommendation #3: Medicare should monitor doctors’ practice patterns for evidence of excess, and gradually reduce fees of doctors who habitually order significantly more tests and procedures than the average for the specialty. Costs: Again, this would greatly reduce costs, and probably be widely adopted.
Recommendation #4: Provide generous subsidies to medical students entering primary care, with higher subsidies for those who practice in underserved areas of the country for at least two years. Costs: This initial, rather modest investment in ending our shortage of primary care doctors would have long-term benefits, in terms of both costs and quality of care.
Recommendation #5: Repeal the provision of the Medicare drug benefit that prohibits Medicare from negotiating with drug companies for lower prices. (The House bill calls for this.) That prohibition has been a bonanza for the pharmaceutical industry. For negotiations to be meaningful, there must be a list (formulary) of drugs deemed cost-effective. This is how the Veterans Affairs System obtains some of the lowest drug prices of any insurer in the country.
Costs: If Medicare paid the same prices as the Veterans Affairs System, its expenditures on brand-name drugs would be a small fraction of what they are now.”
My Comment
Point one. Some libertarians take the purist position that the simple solution would be to get the government entirely out of health. But I wonder if that isn’t utopian at this point.
Point two. Since the financial crisis has obviously resulted in a huge and criminal wealth transfer, it’s morally untenable to use a libertarian argument, when it wasn’t used to stop the bail-outs of the banks. In other words, now that we’re in the wealth redistribution business, we can’t suddenly become principled when the population demanding the transfer isn’t the financial industry.
Point three. An incremental improvement of the dislocations caused by years of market intervention is the least likely to cause more problems. Angell’s ideas seem like one good place to start.
That said. I still think paying in cash as you go, with small private insurance pools, is the only libertarian solution.
I loved her book, The Truth About the Drug Companies, and Marcia Angell truly has a gift for seeing much that has been and continues to be wrong with medical care in this country. But the weakness of her book–and it continues with these “solutions” she proposes here–is that her proposals will add many problems of their own.
Rather than spend a lot of time with each recommendation, let’s just consider one or two to get a flavor. Her recmmendation #2 sounds good on the surface. Increase fees for primary care physicians and reduce for specialists (who tend to order too many costly and medically unnecessary tests/procedures). Yeah, great. At first it may seem like it will save costs. But will it do anything to improve the expertise of the primary care physicians? In a word, NO. The reason primary care physicians refer patients to specialists is because they know they’re out of their depth. So it will just encourage and subsidize less than ideal care on an extended basis. By the time the patient finally gets referred to the specialist, the case will be a lot more complicated, and–guess what?–a lot more expensive to fix.
If the problem is that specialists order medically unnecessary procedures, why not address that issue head on? Not that any government agency or even private insurer will ever really be able to do that. The best way to fix that problem is with an educated consumer who has access to an industry and players in a freer market with competition and good information regarding prices (along with expected benefits and risks).
And then recommendation number three: reduce compensation for physicians who order more tests than average for the specialty. Does she realize how complicated it will be to monitor that on any fair basis? One will have to take into account the fact that some specialists will attract a much sicker distribution of patients (who, on average, REQUIRE more extensive tests). It may very well be the case that the BEST specialists who heroically save the most patients in the most dire health circumstances have much greater costs than their lesser peers. BUT IN SUCH CASES, THE HIGHER COSTS ARE JUSTIFIED.
She just doesn’t get it. The worst thing that ever happened to medical care in this country was the notion of 3rd party payments. Any time somebody else is paying the bill for the customer, normal market signals will be distorted. The only hope of ever restoring any semblance of sanity to medical care prices is by getting the customer back in touch with his medical bills. But in order for that to work, the customer will have to have access to providers who compete for his business and provide enough information to allow him to make informed decisions.
Naturally, with medical care being as screwed up as it is now, it would be disastrous for consumers to have to bear the full brunt of their medical care costs suddenly. And respnsibility for the costs without access to competitive (and open) pricing from providers would also be disastrous. But if this is ever going to be fixed, that’s the direction it will have to go. A sufficiently long phase-in could help. But right now, nobody is even thinking in the right direction, virtually guaranteeing that the situation will stay screwed up. And Marcia Angell’s recommendations are unehlpful.