08/30/2009 05:12 am ET Updated May 25, 2011

The Impossible Dream: Can We Get Better Health Care for Less?

Mr. President, your plan to reform our health care system is in trouble.

Reading the latest New York Times/CBS poll ( on health care is about as easy as reading tea leaves through a cracked-lens telescope aimed at Mars. While 75 percent of the 1,050 adults responding said they feared the cost of health care would eventually rise unless the government can guarantee health care for all Americans, a slightly higher percentage (77) think that doing that would itself raise the cost of health care. And there's more. While 55 percent liked your ideas on health care better than the Republican alternatives (which mostly involve doing nothing), 69 percent said that they feared the quality of their own health care would drop if the government created a plan covering everyone. (Subtext: it's hard enough right now to see my doctor. What happens when she has to handle twice as many patients?) And by the way, Mr. President, your job approval rating has dropped ten points since its April. It's now down to 58 percent.

Much of this can be blamed on -- or credited to -- right-wing Republicans, who cherish nothing so much as the prospect of seeing your health care agenda go up in flames. But I have to say, Mr. President, that part of the blame lies with you, or more precisely your political strategy. Determined not to repeat the mistakes made by Hillary Clinton, who conceived in secret a health care proposal born dead as soon as it reached Congress, you threw out a couple of bones and asked Congress to flesh them out. You asked Congress to 1) make health insurance available for all, and 2) make it affordable.

But can those two bones fit within a single body? So far, the answer seems to be no. And not just from Republicans itching to abort your new baby.

Remember July 16? Appearing that day before the Senate Budget Committee , Douglas Elmendorf, chairman of the nonpartisan Congressional Budget Office, testified that the health care reform bills so far drafted by House leaders and the Senate health committee will substantially raise the federal share of health care spending. According to the CBO, the House plan to cover the presently uninsured would raise the federal tab by more than half a trillion dollars.

Can we pay that tab with new taxes? Good luck. Though Treasury could probably raise something like 300 billion dollars by taxing employer-provided health care benefits, such a tax will never pass the House because it is strongly opposed by both parties. Instead of taxing benefits, therefore, House Democrats plan to make the rich pay the bill -- by charging a surtax on high income. Starting at 1% on family incomes over $350,000 and rising to 5.4 on income over a million bucks, this surtax could conceivably raise $544 billion over the next decade -- more than enough to pay that half trillion tab. But the surtax has no support from Republicans and worries Senate Democrats like Ben Nelson of Nebraska, who reminds us that "tax is a four-letter word" with voters.

On top of all this evidence that health care reform will mean more taxes and higher costs, the Republican right is leading more and more people to think that you're aiming to take over the health care system.

You can deny that till you're blue in the face. From here to eternity you can assure us that if we like the health care plan we've got, we can keep it. But to win this battle, you've got to do much more. You've got to radically change the debate. You've got to persuade everyone that your NUMBER ONE objective is to cut the cost of health care for everyone even while making it better.

So how do we do that? By a frontal attack on everything that drives up costs without improving anyone's health, and that sometimes makes it worse.

Right now, 13 health care programs in this country are leading the way on two fronts: patient-centered medicine and team medicine ( At the Mayo clinic in Rochester, Minnesota, for instance, the only thing driving decisions is the needs of each patient. Since all doctors there work on salary, none of them earns more by ordering an extra test or procedure, or earns less by referring a patient to someone else. They all work together with one end in view: improving the health of each patient. They don't care what the treatment costs or even whether it's covered by insurance. They don't practice medicine by wrangling with bean-counters on the other end of a phone or an email exchange. A few years ago, a Mayo cardiologist treating a patient needing a pacemaker had to choose between 1) a Medicare-approved model requiring surgery and several days of hospitalization and 2) a new, non-Medicare-approved model requiring just one day of hospitalization. The doctor chose #2 because it was "best for the patient." This is just one of the reasons why, in the year 2006, the Mayo clinic cost the Medicare system just $6,688 per enrollee -- about half the per patient cost in cities such as McAllen, Texas ( With the best doctors and all the latest technology, the Mayo's Medicare spending is in the lowest fifteen percent of the country.

OK, you say, good for the Mayo. But how on earth can we legislate that kind of care for the country as a whole? How can we make doctors, nurses, and health care administrators measure success by the quality and cost-effectiveness of the care they deliver, rather than by the quantity and expense of the services they provide?

One answer to this question is provided by a bill now making its way through the House and the Senate. Called the Medicare Payment Improvement Act (, it tries to establish a mechanism by which health care programs around the country would be rated for quality and rewarded for doing well. But even though the president of the Mayo Clinic and 12 other heads of similar health care systems have called this proposal "simple" in a letter ( recommending the bill to Members of Congress, the bill is indigestible and its provisions so unwieldy as to be unenforceable.

Nevertheless, one thing about this bill should make everyone sit up and take notice: in the Senate, it is sponsored not only by Amy Klochubar, Democrat of Minnesota, but also by a fiscal arch-conservative from my own state of New Hampshire: Judd Gregg. So far as I know, this is the only significant piece of bi-partisan health-care legislation now in the pipeline. And while I hold no brief for this particular bill, its capacity to win Republican support tells me that if Democrats can forge a bill that truly cuts the cost of health care, they might just win this one for you, Mr. President.

What would such a bill look like? Let me have a go at drafting it -- in much less than the one thousand pages reportedly consumed by at least one of the bills now circulating in Congress.

1. Individuals. Anyone who likes his or her health care plan in its present form and at its present (but ever-increasing) cost can keep it.
2. Health Care Group Providers. Any health-care system that wants to go on charging for care on a fee-for-service basis will have to go on accepting rock-bottom reimbursement rates for Medicare patients and wrangling with insurance providers over what services are covered and what percentages of their costs are reimbursed.
3. Health Care Insurance Companies. Any company that likes paying a fee for every service and wrangling over coverage and reimbursement rates can go on doing business as usual. But it will lose the present subsidy of 12-13 percent that it now gets for Medicare recipients.
4. Putting Patients First and Team Medicine (PPFT). Any health-care system that puts patients first and practices team medicine will be rewarded for doing so provided it does the following:
a. Puts all its doctors on salary.
b. Makes each patient's records electronic and readily available to anyone treating that patient.
c. Makes sure its doctors have no financial interest in performing or ordering any procedure.
d. Strives to deliver the best possible health care at the lowest possible cost.
e. Charges not for individual services but for the entire process of treating a particular injury or
illness and healing the patient.
5. REWARDING PPFT SYSTEMS. Every PPFT system will have the following advantages:
a. None of its decisions on health care will need approval by anyone outside the team.
b. Every one of its bills for total treatment of a patient's illness or injury (not for individual
services) will be promptly paid in full by the patient's health care insurance provider, whether public or private.
c. It will be paid a bonus for lowering per-patient costs, as explained below.
d. None of its doctors or nurses can be sued for malpractice because only the team as
a whole is liable for its actions, and only the team can be sued.
6. Grading the Quality of PPFT Systems. Every year, each PPFT health care system will be evaluated by the National Health Care Commission (NHHC), staffed by representatives from each of the thirteen PPFT health-care systems now in operation. Depending on how well the system has served the health of a randomly selected group of its patients, it will be graded on a scale of 1 to 10. The NHHC will also do everything possible to educate health care groups on PPFT care.
7. Bonus for Cutting Costs. Each year that a PPFT system lowers its cost per patient, it will get a percentage of the savings as a bonus. That percentage will depend on the quality of its service as graded by the NHHC, with 2 percentage points for each quality grade up to 10. A top quality system, in other words, will get a bonus equal to 20 percent of what it saved over the previous year.
8. Distributing the Savings. Whenever the per patient costs at a PPFT system drop from one year to the next, the insurance provider will keep half of the savings. But it must pay up to 20 percent of them as a bonus to the PPFT system and use the remainder (at least 30 percent) to lower the insurance premiums paid by its subscribers.

Is it fantasy to think we can ever lower the cost of health care while improving it? No, because thirteen health care groups are doing both right now. All we have to do is create incentives -- not forge regulations -- so that others will follow their lead. Last year, Medicare spent 468 billion dollars, 3.2 percent of GDP ( This year it's expected to spend 512 billion, and if we do nothing to change the present system, it will spend nearly one trillion by 2018. Instead of nearly doubling its costs by then, what if we could cut them in half, and do the same with all of our health care costs while improving the quality of care itself?

And while we're at it, let's do the following on prescription drugs:
1. Ban all Direct-to-Consumer (DTC) advertising of them. Last year drug companies spent about 4.3 billion dollars in advertising big-name drugs that cost much more than generic drugs but in many cases work no better, and sometimes do more harm than good. If a prescription drug can be bought only when a doctor decides that it is safe and beneficial for a patient with a particular condition, there is absolutely no medical justification for marketing prescription drugs to the consumer. (Besides New Zealand, we're the only country in the world that does so.)
2. Allow drug companies to give doctors no more than information about their products. Ban all goods and services from companies to doctors. Do everything possible to ensure that doctors prescribe what is most cost-effective as well as safest and most beneficial.
3. Make the Food and Drug Administration (FDA) establish and maintain a website that independently evaluates the safety and effectiveness of all drugs.
4. Make the cost of all prescription drugs subject to negotiation between the drug companies and Medicare.

Finally, we should all try to follow the president's example. He starts each day with at least an hour of exercise, and that's the best and cheapest kind of health insurance anyone can find.