Tikkun Magazine, September/October 2009

By George Vradenburg

Do you understand what Congress is planning to do with the health care system?

The lawmakers' goals seem clear: Extend basic health care insurance to all Americans-a worthy goal. Improve the quality of health care by "personalizing" treatments, focusing on prevention and wellness, and reducing the number of deaths-by-error. Also worthy. And reduce the cost burden of health care on families and on the federal entitlement system of Medicare and Medicaid, 16 percent of the American economy and rising. Again, worthy.

The problem? These goals are inconsistent. Increasing the number of Americans with health care insurance will, presumably, increase the demand for health care, driving up its cost. Increasing health care quality by requiring all hospitals and physicians to shift to information technology and personalized and preventive medicine will cost. Subsidizing the cost of health care premiums for middle class families will cost-a lot. Total cost: $1 trillion over ten years.

From public reports, one can deduce several congressional approaches to "paying" for these costs.

First, cost-shifting: reduce the costs in some parts of the system to pay for increased costs elsewhere. How? By mandating that people who do not need or want health care insurance pay for it anyway so that the profits derived from the younger and healthier will compensate for the losses in treating the older and sicker. Also, by lowering insurance cost reimbursements to hospitals and drug companies, thereby offsetting their revenue from the increased volume of insured (paying) health care customers.

Second, changing incentives: move reimbursements from a "fee-for-service" model (i.e., the more tests you take, the more the physician or hospital is paid) to payments for "outcomes" (i.e., prevention and wellness, and whether the patient got better or lived longer). This involves incentivizing hospitals, physicians, and other health care service providers to adopt new information technology to assure that the right information is in the right hands at the right moment at lower cost.

Third, eliminating expensive tests and treatments: deny insurance reimbursements for diagnoses or treatments that are not proven to be "comparatively effective" (i.e., more expensive but unnecessary).

How to protect against increased prices or reduced benefits from private insurance? Create a government-managed-and-subsidized insurance company (the "public option") to compete with private plans.

(Surprisingly, the proposals for health care reform do not include increased investments in research to prevent the diseases that are driving up Medicare and Medicaid costs, like Alzheimer's and diabetes.)

What's the objection to this approach? Putting aside questions of fairness (is it fair to force those who do not want health care insurance to buy it, shifting the burden to the younger, healthy generation from the older, sicker generation?), will the systems for paying for the increased costs to the health care system work? Will all of the patient, provider, and payer behavioral changes assumed in this massive reworking of the health care system actually produce the goals desired? That's the $64,000 question.

No wonder the American people-who, by large majorities, appear to like their own insurance yet are willing to support universal coverage if it doesn't adversely affect their own situation-are getting nervous about the 1,000 pages of congressional legislation and their highly likely unintended consequences.

Other, seemingly simpler approaches to reform have been rejected.

The Republicans propose moving more slowly, "on a glide path," using expanded health care savings accounts and other consumer-oriented mechanisms to extend coverage incrementally and pay the costs for doing so by taxing employer-provided health care benefits (McCain's proposal), something Democrats have opposed.

Liberal Democrats favor a single-payer system ("Medicare for all"), arguing that comparable or better health outcomes at a lower overall cost to the economy would result, citing the experience of other countries. Moderate and conservative Democrats, as well as Republicans, oppose that route, reflecting the strong belief in America that government owned-and-operated systems are more expensive, perform badly, and are subject to political considerations (see, K-12 education systems, FEMA in New Orleans, and the Defense Department's post-invasion efforts in Iraq).

The case-moral and economic-for health care reform is strong. Millions of Americans are suffering as a result of inadequate access to quality care. One has to accept that there is no perfect solution. But the perfect should not be the enemy of the good, and progress in the face of uncertainty is vital. Congress is likely to legislate a first attempt at health care reform by the end of the year, but one that will require significant mid-course correction in the coming years. Given the agony of this year's effort, one can only hope that Congress will have the will to embrace a process of continuing improvements in the years ahead.

George Vradenburg is the publisher of Tikkun, and he often disagrees with our editorial opinions.