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Political Jousting

Posted Oct 25 2008 4:40pm

The election sure is increasing the spotlight on various health reform options -- unfortunately I am less confident that the spotlight is illuminating the fundamental drivers or choices.   The last Presidential debate sure wasn't helpful in educating or informing the viewers.

Zeke Emanuel -- a very smart and informed physician/researcher has been blogging over at the NY Times.   Given his slant towards increased government involvement in health delivery -- (and the fact there are more readers at ) -- I decided to post my comments to his latest post there.


The policy debates like to blast "for profit" companies and the insurance companies in particular.   Since most of the people writing the debates are not business people - they either forget or ignore the fact - -that even NON-PROFIT companies (including government run enterprises) have to balance 'sources of revenue' with 'expenses'.    I heard this most eloquently from the CEO of a Catholic hospital in Melbourne Australia -- "no margin, no mission".    The only real economic difference between a 'for profit' hospital and a 'non-profit' one -- is that one pays taxes and the other doesn't.    They both have to live with the laws of economics -- which means that prices of inputs matter (wages, supplies, real estate, capital etc), productivity matters, economies of scale matter - and revenues matter.   Getting rid of 'private' companies changes non of the economic drivers.  See a note just posted by Instapundit about British Health Service and economic drivers affecting care decisions.


The other missing element in the debate is the role of the individual in impacting their own total cost of healthcare.    Let me say up front -- I acknowledge that genes matter and that some, if not many, can't control the fact they get cancer or have a heart attack and that I believe said folks should have the option to buy insurance that spreads the risk of these health outcomes around to all.  But reality is also -- that individuals CAN and DO dramatically impact their healthcare burden on society -- they don't eat right, don't exercise, don't get preventive screenings for early detection of problems, don't comply with prescribed therapy, don't stay compliant with drug regimen and so on.    Do we simply ignore this fact?     Or do we build a 'reform' plan around this fact as a central element?    A simple analogy to me is  what happens regarding home insurance against hurricanes.   Should the rest of the country 'pay' for folks building their homes in regions with a high probability of hurricane damage (no individual accountability) -- or should those folks pay higher insurance premiums for the benefits they receive?    Frankly, I don't believe I should have to subsidize folks who take high risks by building in less safe areas....just like I should not have to subsidize folks who take real risks (this they could do better) with their health.


This is where I see insurance companies playing a major role....if they could be motivated to innovate.   The insurance companies can design benefits that educate and motivate consumers to be smarter consumers of health care services.    There is a chance - that insurer and consumer could have aligned interests (if done properly over a long time frame -- say a decade, certainly not annual renewals).   This kind of innovation could happen -- if reform separates health insurance from employment.


To 'reform' health -- we need lots of areas -- in discovery of diagnostics and therapies, in the delivery of health services, in the understanding of how consumers interact with the health delivery system and much more.    When we have debates about reform -- we have to acknowledge that CMS (our largest government program) doesn't really stimulate innovation.   We need a 'system' that does -- and this should be a central focus of any reform debate.   Most of the other countries that have large government funded systems -- have already learned this lesson -- seems like we don't need to repeat this mistake.

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