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Kimberly Krautter Headshot

Part 3: Un-Spinning Healthcare Reform - The Economics

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How ironic. I caught the flu right in the middle of blogging about health care reform. After two days of misery, I awoke this morning to see Tina Brown on CNN talking about how, as a Brit, she has been able to go to the doctor whenever necessary without question or worry. She said that for everyone born in the U.K. or Europe this is just a normal expectation of, "living in an evolved society." And she said everyone has always had the option to "go private" for enhanced care. Can you imagine the peace of mind that must offer?

The big question is how do they pay for it? That is what Congress is wrestling with now. It seems to me they are making it way more complicated than it needs to be.

A British writer and friend named Mark has lived in Paris for the last decade. Now a permanent resident of France, he has the unique perspective of both health care systems. He wrote to me saying, "In the U.K. basic health care is covered by National Insurance Contributions, which pays for the National Health Service, as well as retirement. In other words, if you're hospitalised in an emergency, nobody asks you if you're insured or, conversely, to write a cheque. The food may be lousy, but the chances are you'll live. NI contributions are taken right out of everyone's salary on a scaled basis and you barely notice them."

According to my American friend Elizabeth who now lives in the U.K. (see her story in Part 1), a noticeable difference between the level of care in the U.S. and British systems is the hospital ward. Here in the U.S. we're used to having "semi-private" rooms wherein two strangers are housed in adjacent beds in the same hospital room with curtains for privacy. In England, multiple patients are housed in an open ward with curtains for privacy. In a culture where our sense of community has completely broken down and we no longer know our neighbors, this would definitely require a psychological adjustment. However, unless our healthcare reform is going to include the cost of demolishing and rebuilding every standing hospital in the U.S., that's just not going to happen. Thus, ostensibly, we'll have the comparative luxury of semi-private rooms while gaining the peace of mind of no longer having to fight insurance companies and worry about losing our homes while we fight the cancer that put us in the hospital to begin with.

In France, things work a little differently. Free medical care for all, including the jobless and homeless, is the guiding principle, however implementation is a little more complicated. The French national health care system, L'Assurance Maladie, provides for standard medical care at 100% support. If you have a trauma, you are wheeled into the hospital, you receive the same standard of care we expect here in the U.S., and you pay for nothing. You are healed, given ample opportunity for recovery, and no one from billing contacts you. Also, the doctors don't have to get permission from an insurance company to determine what procedures to provide. They just get the job done.

When it comes to routine preventive care, in France, fees for doctor appointments and dental care are reimbursed at 80%. According to Mark, you present the receptionist with the French equivalent of a Social Security Card and pay 20-50 euros. You also give the card to the pharmacist when you pick up prescription drugs. He said, "If you're lucky enough to have an employer with a 'mutuelle', or private healthcare scheme, a small amount is taken out of your wages. You send a form to your mutuelle saying how much you paid for your check-up or dental appointment, and it's reimbursed. The result: you pay nothing."

Under debate by Congress now is a tax-based system that appears to be similar to the one used in England where roughly 10-11 cents of every dollar you earn is put in a giant fund to pay for every U.S. citizen to get the health care they need. I don't know about you, but one thin dime for every buck you make seems like a very easy trade for being able to see the doctor any time you need to. It is certainly a very easy trade-in on all of the stress of fighting the insurance company bastions over routine denials.

But what will all of this change mean for the doctors who care for us? I consulted with another friend, Steven R. Hindes, MD, MPH of Colorado. Dr. Steve and I went to high school together. I remembered him as one of those delightful people who always had the best interests of everyone in mind, so it was no surprise for me to learn that he graduated from the University Of North Carolina School Of Medicine with both his medical degree and a Masters in Public Health. He is a board certified family physician, and he operates a private practice outside of Denver. He is also a professor of medical health economics at the University of Denver. This week, I went to school with Dr. Steve on the economics of healthcare reform.

The big sticking point for most Americans, including Congressional Blue Dogs and RINOs, is how to fulfill President Obama's pledge that reform will be "deficit neutral." First, we need to understand why the deficit exploded in the first place. Presidents Clinton, Bush and Obama (sorry Dems, there's ample blame to go around on this one) abandoned the Pay-Go law that prevented Congress from approving any new expenditure until a tax was increased or a different expenditure was eliminated in order to make the new spending budget neutral. Add together the long list of unfunded mandates including Medicare Part D, the Iraq War and the Wall Street and Auto Industry bailouts, and we have the fix we're in today. One of the few programs in decades mandated to be deficit neutral is health care.

As a physician, Dr. Steve says that a public health care option that is "administered as efficiently as Medicare" is favorable. While the argument that a government option will drain consumers off the insurance company rosters has been used as a negative, Dr. Steve says this will be a positive effect. The reason: private insurance is currently way over-priced. Proof is how quickly premiums have outpaced cost-of-living and wages in the last decade. While he accedes that supply and demand per se doesn't work in health care, the fact is that supply drives demand and leads to excessive and redundant treatment with no benefit outcomes.

This is what the President speaks about often. "When these expensive sources are controlled and only used as truly needed, then the total billing goes way down," wrote Dr. Steve. "If someone wants to get the test or procedure even when it has been deemed not medically necessary, then they can pay for it themselves with their own money but the taxpayers will NOT pay for it." (His emphasis.) Critics spin this as "rationing." Truthfully, it is an end to CYA medicine a.k.a. "defensive medicine" that is done simply to avoid malpractice claims. Tort reform is essential.

As a family doctor, Hindes says that increasing the financial incentives to go to primary care and to get preventive services will reduce the high cost of specialist services that can be just as well handled by primary care physicians. This echoes what I learned a few years ago when I provided P.R. consultation to the Georgia Academy of Family Physicians. Our national addiction to specialists has made it economically infeasible for our front line physicians to practice in most rural areas and low income zip codes.

Another thing Dr. Steve believes will truly impact the cost of health care in reform is the elimination of direct-to-consumer advertising for medications which he says drives inappropriate demand and inappropriate use.

"When the uninsured have insurance, they will be seen early and fixed early," Dr. Steve wrote to me. "Now they wait until they are very ill, go to the ER, need advanced care and don't pay, so the hospital shifts the cost onto the next patient who walks in the door with good insurance and jacks up the bill...This is cost shifting, and it makes care seem extraordinarily expensive for those who are insured." Dr. Steve says that when everyone is insured, then preventive care is incentivized. That way when someone does need advanced care, the cost for those high-end services is spread across everyone, not just across those who happen to get sick.

Now that sounds like healthy economics.