Inkwell: Authors and Artists

    

Joining us today is futurist Joe Flower. Joe has written about healthcare
for 25 years. He regularly speaks at industry gatherings in North America
and Europe on the deep forces bringing unprecedented change to healthcare,
from new technologies to payment systems. He is a columnist for publications
of the American Hospital Association and the American College of Physician
Executives.

His speaking and consulting clients have included the World Health
Organization, the U.S. Department of Defense, and the U.K. National Health
Service. He is an independent voice with no ongoing financial ties to any
company or industry entity. His professional website is ImagineWhatIf.com.

Leading the conversation with Joe is native New Yorker Andrea McKillop.
Andrea is an artist, a writer and a mother who likes keeping her brain
limber. Her graduate studies were in health care planning and policy, with
research interests including accessibility, care for the underserved and
mass casualty planning.

Her career has taken her from land use planning to family planning, and she
is currently editing her handbook for families facing a catastrophic or
terminal illness. She has been a reproductive health educator, and she is
the creator of a model for cooperative, interorganizational systems for
health care.


Welcome to Inkwell.vue, Joe and Andrea!
  

    
Should the U.S. switch to a single-payer healthcare system?

That is the subject of this conversation.

How to manage and pay for healthcare in the 21st century in the richest 
economy in the world is a complex question. So let me start this off by 
posting a short article I wrote recently for the American Hospital 
Association's online journal, laying out nine conservative, 
business-oriented reasons why we should nuke our current healthcare 
financing system.
  

    
Nuke the Healthcare Financing System

By Joe Flower

A single-payer arrangement is a key to survival for U.S. hospitals.

Besides liberal outrage and justice for the oppressed masses, there are 
at least eight solid, conservative, good-for-business reasons why the 
United States should knuckle down and just pay for health care for 
everybody like all the reasonable countries in the world. Every one of 
these reasons is an argument for the survival of the American hospital.

1. Transaction costs: Health care is one-sixth of the U.S. economy, the 
largest business sector in the history of the human species, and we 
throw away some 25 to 30 percent of the money by paying armies of 
keyboarders to parse out who exactly is eligible for what, exactly for 
how much, and when. If we just pay for everybody, most of that goes away 
overnight. American hospitals are being bled to the bone by insurers who 
not only demand unsustainably steep discounts, but randomly and 
routinely deny payments for legitimate covered services -- at the same 
time that U.S. employers are bled white by those huge transaction costs.

The Canadian provincial systems have many problems, but think about 
Trillium, the largest health care system in Canada. Do you know how many 
people are in Trilliums accounts receivable department? Three. Sometimes 
four, when the workload gets heavy.

2. Employer funding: Why should employers pay for health care, anyway? 
How did we decide that health care is connected to a job? General Motors 
regularly complains about the vast sums it pays for health care. Why 
isn't it agitating for health care costs to be spread equitably 
throughout the population through a single-payer system -- a system that 
could more rationally allocate the funds necessary to build and run the 
hospitals we all need? Sure, taxes would rise -- but health care costs 
would fall to something closer to the 10 percent of GDP that other 
developed nations pay, instead of the 14 to 15 percent that we pay.

3. The idea of insurance: Spread risk among the broadest base. If you 
own and operate a car, you need to have car insurance, no exceptions. 
That benefits all drivers. Since you own and operate a human body, you 
should have a way to pay for its upkeep so that others dont have to bear 
that burden -- meaning usually hospitals, which have become without plan 
or compensation the providers of free health care to millions who cannot 
afford it. Helping hospitals survive benefits all owners and operators 
of human bodies -- and the businesses who employ those owners.

4. Value: Studies by Elliott Fisher, John Wennberg, Beth McGlynn and 
others have consistently shown that health care repeatedly and vividly 
violates this country's most strongly held and widespread belief, that 
you get what you pay for. Costs and charges vary widely and 
nonsensically, with no demonstrable connection to mortality rates or 
other outcome measures. A single-payer system would at least be a 
system, and might be able to get a handle on the wastelands of 
profligacy hidden in those statistical variations.

5. Risk cost of receivables: With a single payer, we could throttle the 
bankruptcy and collection industries in their beds. Half of all the 
bankruptcies in the United States, and the majority of liens on homes, 
are due to medical bills. You don't really enjoy putting widows and 
orphans out on the street, do you? It's distasteful. It's bad karma. It 
puts a kink in your golf stroke that you've been trying to get rid of. 
Trying to recover the unrecoverable through liens and bankruptcy, 
instead of funding for peoples' needs ahead of time, is not just cruel. 
It places a tax of inefficiency on the whole system. It's more sand in 
the gears. Cover everyone, and that sand disappears.

6. Service quality: Single payer is not the opposite of private, market 
driven or consumer choice. Think vouchers. Think Health Savings 
Accounts. Think tax credits. People are afraid that a government payer 
means a Soviet-style system in which anonymous bureaucrats force us to 
conform to thousands of obscure and arbitrary rules. Bingo! We already 
have a Soviet system -- outsourced, privatized, for-profit and divided 
into multiple variant sets of opaque, unnavigable rules.

Do you want real competition, leading to lower prices, better products, 
the reliability of FedEx, the defect rate of American Express, the 
customer friendliness of Nordstrom or Home Depot? Give everyone a pot of 
money with which to buy health care, and let them buy.

7. Efficiency: People using emergency rooms for colds and ant bites is 
stupid. 

8. Patriotism: It's really hard to love a country that forces millions 
of people to choose between such luxuries as food, rent, fuel oil to keep 
from freezing, and cancer treatment to keep themselves alive. If we want 
hospitals to survive -- and U.S. employers do need hospitals -- we need 
to find a way that everyone who needs hospital services can afford them.

Here's a ninth reason, and it is the most important: In this 
system-that-is-no-system, no one is looking out for hospitals. The only 
people who really worry about the survival of hospitals are the people 
who run them. Every big payer, every big customer, just tries to strike 
the best deal and lets someone else worry about whether the 
institutions, the industry, can survive to serve the public.

As long as we don't think of our system as a system, no one really cares 
about us but us. It's time for that to end.
  

    
Thanks for that introduction, Cynthia, and many thanks to Joe for
joining us for this conversation.

Joe, may I begin by asking what led you to the conclusion that a
single payer system is the key to saving hospitals?

I'm sure that you didn't start out in the field with that opinion, so
I'd be interested to hear about the journey that got you there.
  

    <scribbled by dfowlkes Tue 3 Jul 12 10:14>
  

    
>what led you to the conclusion that a
 single payer system is the key to saving hospitals?

You're right, I used to be more agnostic on the question. But I have 
been writing about the hospital sector for 25 years. And they are 
getting squeezed. Half of their business (roughly) is government-paid, 
and that compensation is far less than their costs. Most of the rest of 
the business comes from health plans. Most markets are dominated by one 
or two major plans that are typically nationwide, which compete against 
each other almost solely by holding costs down. The hospitals have 
almost no bargaining power, and must provide huge discounts to the 
plans. Even at that, the plans randomly deny payment on many charges 
which they have a contractual obligation to pay. So here we have a 
sector we dearly need - hospitals - on the ropes and deeply constrained 
in what they can provide the people they serve, at the mercy of another 
sector - health plans - that frankly we could do without, that actually 
adds no value at all.

And by the way, the above column singles out hospitals because it was 
written for the American Hospital Association journal. I could make 
almost the same arguments for doctors and other providers, for patients 
and families, for taxpayers, and certainly for employers. 

Our system is insane.
  

    
Haha.  Since you actually know this sphere in great detail, whereas I
am merely an occupant of Blowhardistan on this subject, it's funny that
you have come around to the view I've held for 20 years, which is
basically "first, we kill all the health plans."
  

    

Granted our system is insane.

And I think your points about single payer is not single choice are apt:
> Single payer is not the opposite of private, market 
> driven or consumer choice. Think vouchers. Think Health Savings 
> Accounts. Think tax credits.

But given what's happening with medicare funding, I'm very nervous about
such a system. How can we be sure that Halliburton and its 'cousins' don't
buy enough congresspeople and senators to game the system? I can't help
but believe that corruption won't screw up even a perfect system.
  

    
Joe, you make an impressive case, both in the reasoned clarity of your
intelligence, and also in the empathetic, caring, and creative way you
conceputalize to make vivid. (Such as use of your phrase "owners and
operators of human bodies.")  Before the discussion gets really meaty, I'd
like to add, for nonWell-subscribers just tuning it, that you are a masterly
moderator of the Well's "Writers" discussion group -- without which I'd be a
lesser person myself.

Now, here are a couple initial, unrelated questions.

You mention the Soviets (I remember!).  Do you think the bogey of socialism
and communism is still a major obstacle here -- rather than, say, looking at
this as a system of allocation of resources between the private and public
sectors?

I, for one, am concerned that, if my understanding is correct, by not paying
benefits, but paying low wages, WalMart is outsourcing their employee health
plan to the taxpayers' pocketbooks (E.G., mine).

Two, isn't another colossal obstacle the insurance industry?  Wouldn't
single-payer mean buying out the insurance industry?  (Are there any must-
read books about the insurance industry? Or recent feature articles?)

Three, what lessons do you derive from the current administrative fiasco
arising from recent MediCare legislation?
  

    

(Note: Offsite readers with comments or questions can send them to
<inkwell@well.com> to have them added to the conversation)
  

    
> will corruption screw it up?

This is possible, and as in any system, the devil is in the details. But 
we have to view that possibiity against the current system that is 
inherently corrupt.

>the bogey of socialism

Yes, that is a problem, both in the sense that it is still easy to scare 
Americans away from anything by labeling it "socialist" or 
"nationalizing," and in the sense that it is not in the American 
political culture to do things in a coherent, rational way across whole 
sectors. For instance, in many countries, what we call the 
"military-industrial complex" is all part of the military. Here it is 
mostly private, and we even outsource many purely militaryn functions.
  

    
> WalMart is outsourcing their employee health
 plan to the taxpayers' pocketbooks

Exactly. We should either expect all employers to pay for their workers' 
healthcare, or take the burden from them completely. Why sould we 
incentivise employers not to provide insurance. In Hawaii, if you are an 
employer, you must provide healthcare insurance. If you are a small or 
new employer, you get help in the form of tax credits.

My company employs two people, and we provide healthcare insurance.
  

    
>isn't another colossal obstacle the insurance industry?

The insurance industry is an enormous obstacle, probably a show-stopper 
to any serious attempt at reform. For one thing, it has enormous 
political power. Equally important, it is about 4% of the entire US 
economy ($500 billion of a $12 trillion economy). If I were made Czar of 
All Things American, I would not eliminate the healthcare insurance 
industry overnight, because to do that would cause an overnight 
depression, and cause untold misery. Whether it is possible to downwind 
the industry and turn it into one that adds rather than subtracts value, 
is a difficult question indeed.
  

    
> What lessons do you derive from the current administrative 
fiasco arising from recent MediCare legislation?

That people and organizations do what they are paid to do. Look at the 
legislation: No one would profit from doing it right. In fact, doing it 
right would cost them much more money than screwing it up.

I am not a conspiracy theorist. I do not imagine executives sitting 
around plotting how to screw it up. But on margin, organizations follow 
their incentives, and there was no incentive in this plan to do it 
right.
  

    
Am w/ you, so far, Joe.  And <13> might bring up a whole separate sidebar,
about how U.S. government entitites aren't run with the same accountability
as counterpart private companies, and so veer towards thick inefficiencies.
  

    
can you say more about how no one would profit from doing
the current medicare plan d right? i has assumed this
was true, without any specifics aside from the
general healthcare disaster in the u.s. --- can you
say more?
  

    
> can you say more about how no one would profit from doing
 the current medicare plan d right?

The plan is enormously complicated, but the driving business plan is 
not: insurance companies get a flat premium per patient per month, and 
in return they shoulder some of the cost of the drugs. Some people can 
shop around for a plan (though without much good comparative 
information); many people (especially the "dual eligibles" who are on 
Medicare and Medicaid, and are more often poor, frail, and in nursing 
homes - and for whom Part D is mandatory) just get dumped into an 
insurance plan - there is no real competition. And due to the nature of the 
market, I would assume that though the health plans are getting volume 
discounts on the drugs, they are not actually making much on the arbitrage 
- the whole idea of the thing is supposed to be keeping drug costs down.

Obviously, the ideal patient would be one who pays the premium and never 
uses any drugs on the plan. The plan is confusing, there are many 
details, exceptions, and loopholes. An insurer could be a good citizen 
and spend a lot of money on education and help lines - with the result that 
more of its members successfully use the plan to obtain drugs. A rival 
insurer could just let its members stay confused, and see maybe 5% fewer 
of its members successfully get drugs on the plan. The premiums of that 
5% is pure profit, and the costs to educate them? None. The incentive is 
to do it poorly.
  

    
I've been kinda following the Medicaid waiver plan that Idaho is
trying to do. What are other states doing and how is it working out?
  

    
yeah, i sort of instinctively got that, and did wonder
what was in it for the insurance companies. just as,
i have wondered, since they all (theoretically), have the
same kinds of populations to deal with and the same
costs of doing biusiness --- why do the premiums and
offerings very so wildly?
  

    
An historical question for our futurist:  how did we get in this fix
in the first place?  How did health care came to be funded by private
insurance companies accessed through employers?   Did it used to be so
elsewhere?  And if so, how did those places make the transition?   
  

    
A good question.

My medical group was a response to an industrialist's need to provide
health care to employees at relatively remote spots (the Grand Coulee
Dam and the California desert).  It (Kaiser) expanded with WWII and
Kaiser's shipbuilding enterprises.  I still have some of my father's
old pay slips from the Richmond Kaiser shipyard.  They took, I think,
50 cents out of each paycheck for healthcare.

That was then.  In the early 1950s Kaiser turned his health plan over
to an independent corporation.  Today, Kaiser is a tri-partite entity:
a non-profit insurance plan, a non-profit hospital corporation, and a
for-profit medical group that staffs everything.  And Kaiser, which is
doing better than many plans, is getting squeezed.  Every time I go to
a meeting that discusses how we should position our
"product"(individual directed health care is the latest fad)I come away
feeling like I've just heard another series of good arguments for
single payer.

I do, however, get annoyed when I hear people lumping Kaiser with some
of those insurance company health plans--companies that actually
provide no direct medical care, but only act as financial institutions
and gatekeepers.

Per capita medical expenses in the USA are the highest in the world. 
Switzerland, which spends a little more than half per capita than we
do, manages to do this with private insurers.  I can talk a little bit
more about this later, but I think really long posts make the eyes
glaze over.
  

    
There are some great questions being raised here, and we'll get to
them, I'm certain, as we move along here. 

If we can return to the single payer issue for a moment, though: one
question that I hear often is simply, what's in it for doctors and
other care providers? In what ways does it serve them, or create new
opportunities? And what's the downside for providers? 

The strident opposition of the AMA to the single payer concept has
continued, has it not? Why are they so opposed? 
  

    
I wouldn't call it "strident" any more.  They're opposed because (1)
they fear loss of income and (2) they fear some sort of loss of control
with Big Brother looking over their shoulders.  It's the
insurance companies who are really opposed! 

For high dollar specialists, I'm sure single-payer would reduce their
incomes.  For us primary care types, I doubt there'd be much change.
  
There'd be a lot to gain in managing a practice.  Consider that some
practices are returning more than half of their gross receipts to
administrative expense. Dealing with a zillion different insurance
plans is a huge pain in the ass.  It's started folks in a lot of
traditional fee-for-service practices thinking about alternatives.

I have a weakness for spending time on tropical islands.  I sometimes
run into physicians from countries with single payer systems
vacationing on those same tropical islands.  So I guess they're making
enough money to take nice vacations.
  

    
Two different docs have told my wife in the last year that they are
ready for single payer.
  

    
I know some doctors here, too, who are not averse. They recognize that
the current reimbursement system is not working very well for them, to
put it mildly. I understand the concerns about systemic interference
in the doctor-patient relationship, and the ongoing struggle to
maintain independence in medical judgment in the face of increasingly
complex reimbursement requirements. 

I'm interested in hearing from Joe about the larger political issues
attached to AMA opposition, though, and how the issues they're raising
can be addressed and perhaps mitigated at the macro level. 
  

    
Whoah! A lot questions piled up quickly. Let me take a shot at them:

What's in Medicare Part D for insurance companies and why do the 
offerings vary so widely? I suspect thqat the companies themselves are 
not sure whether they want to be in this market, adn are doing it 
largely out of fear of being left out of what could be an opening wedge 
for competitors in a rapidly growing population segment. And since the 
details of the plans are left up to the insurers, they come up with all 
sorts of different offerings and prices in an attempt to figure out what 
will be profitable for them. But the law is very complex, and it's a new 
slice of the market, so they don't really know.