The Financial Crisis and Health Care

The financial markets are gyrating. The world economy is teetering. The U.S. government is making a $700 billion or more bailout to avert a worldwide disaster. No surprise, health care has become a side show. Or has it? Not only does this upheaval actually make health-care reform more pressing, it makes comprehensive reform--change in the way health care is paid for and how care is organized and delivered-- more realistic and feasible.

"Socialism" has come to Wall Street. For more than 60 years, Republicans have criticized as "socialized medicine" any reform proposal that gave government a central role in funding health services or in regulating providers.

The charge has always been false. True socialism requires governmental ownership of the means of production. No health-care reform proposal, even the most ardent single-payer plans, ever suggested the government should employ doctors, or own hospitals, pharmacies, home health-care agencies or drug companies. Moreover, in the current system, the government already pays for more than 40 percent of the health-care bill. With a Republican administration leading the takeover of Freddie Mac, Fannie Mae, American International Group Inc., and the purchase of housing securities, it hardly seems credible to criticize health-reform plans as socialized anything.

The phenomenal failure of Wall Street dramatically changes the appetite of the country for regulation and for shoring up the safety net. With trillions of dollars evaporating in this crisis, millions of middle-class Americans face the prospect of losing their homes and jobs, and witnessing a dramatic contraction of their retirement savings. In response, the public will desperately want financial security, and health care is a critical element of that.

This financial crisis also means Americans may be more willing to forgo gold-plated comprehensive insurance that covers everything with few restrictions. Under the threat of losing everything, Americans may feel content with the guarantee of a decent plan that covers cost-effective treatments with some restrictions on choice and services to save money. This should enhance the chances for a bipartisan deal on health care.

With politicians and regulators committing $700 billion in a single week, spending a few hundred billion to make the health-care system cover everyone more efficiently and at higher quality begins to look like chump change. This upfront spending can create the infrastructure--such as systematic measurement of quality and patient outcomes--for serious health-care cost savings. After the last several weeks, health-care investment appears more reliable--and politically palatable--than bailing out bankers and other gamblers.

The huge increase in the federal debt that these bailouts will entail intensifies the pressure to rein in health-care costs. This favors comprehensive rather than incremental reform.

Before the financial crisis, the most likely options for controlling government health-care costs involved tinkering around the edges--striking a new deal between Medicare and physicians on their pay, initiating more demonstration projects in paying for performance and efficiency, and assessing comparative effectiveness of new tests and treatments.

While absolutely valuable, these policies are far from certain to control health-care costs--and it will be five or 10 years before they are likely to generate savings. Paradoxically, only more radical changes in the health-care system are likely to actually save money and improve care--and more quickly. For instance, the Wyden-Bennett health-care bill--which proposes more extensive changes than either Barack Obama's or John McCain's proposals--is the only health-care legislation scored as budget neutral by the Congressional Budget Office. The CBO said that in the first year of full implementation, the expenditures would equal revenues, and in subsequent years the Wyden-Bennett bill would generate a surplus because it would save the health-care system money. The Lewin Group, a health-care policy research and management consulting firm, estimated that within a decade this plan could save as much as $1.4 trillion. No other health-care legislation comes close.

Some will find this comprehensive reform unpalatable because it removes employers from health care altogether. As the economy stagnates, this may be absolutely necessary to keep employers afloat. Facing a rising deficit, more comprehensive reform that can really control costs begins to look more realistic than a few untested adjustments here or there.

The dean of health-care economists, Victor Fuchs of Stanford, has long maintained that we will get health-care reform only when there is a war, a depression or some other major civil unrest. It's beginning to look like we might just have all three.

While the financial crisis has appeared to knock health care off the national agenda, in the strange chemistry that is American politics, it may in fact make comprehensive health-care reform more politically feasible, indeed maybe even absolutely necessary for fiscal stability.

Ezekiel Emanuel is an oncologist and chair of the Department of Bioethics at the National Institutes of Health. He is the author of Healthcare, Guaranteed: A Simple Secure Solution for America.

This post originally appeared in the Chicago Tribune.

Comments

[NABNYC]

We do need radical change in health care. The biggest problem is that most of the money goes to people who contribute little: insurance companies, claims adjusters, hospital administrators, and too many doctors who do little but charge lots. I know the insurance industry is a disgrace, spending most of their efforts to deny coverage while getting premiums collected and into the pockets of the CEOs, with a nice kick-back to the politicians for their protection. But too little is mentioned about the role of doctors in destroying our medical system.

When I was a child, doctors made more than their neighbors did -- but not that much more. They might have a nicer house, but they were in the same neighborhoods as the teachers. No more. I just got my mammogram bill of $220. 10 minute appointment with a technician. I figured with 6 hours/day of patients, this doctor is grossing almost $2.0 million/year with total expenses of $300,000 max, or making well over $1.5 million/year for about two hours work per day. Every doctor, every dentist in my community is earning well over 1/2 million per year. It is no surprise that millions of Americans cannot afford healthcare when the medical professionals are so greedy and see their true calling as being stealing from sick people instead of helping them.

[Bluebayou101]

In Japan, the way they keep their costs down is that the government sits down with Doctor groups, insurance groups, etc. and they negotiate a fixed price for the coming two years for all medical procedures and drugs. It's illegal for any doctor to charge more than the fixed price. Of course there are plusses (low costs) and minuses (no differentiation for quality because pricing is uniform) to such an approach. However those who offer better quality get more patients because there is no gatekeeping and people are free to choose their doctors.

There is a high satisfaction rate with the Japanese health care system among consumers . Unlike here (as you point out in your post), the problem with the Japanese system is that doctors (perhaps) are paid too little for the amount of work that they do and there are hospitals there that have financial problems for a similar reason.

More can be read in this NPR link (All Things Considered): http://www.npr.org/templates/story/story.php?storyId=89626309

[bannorhill]

This shows how little you know. At the end of your 10 minutes did they give you the results? I doubt it. You need to add the time for an expert to examine the results, then the doctor to review and read the results again.

You also had to pay for the office expenses (I assume this was not done in a tent). The test equipment.­.. $250,000.0­0. Add at least $100,000.0­0 a year for liability insurance (the lawyers need their cut). Then add the $150,000 college loans the doctor has to pay off.

Were you able to get in when you wanted? That means the schedule was not full so they are not seeing the 60 patients a day you figured.

If the doctor saw a dot on the results then off to another test. He may know that 99.998% of the time it is nothing but he is scared of being sued if he is wrong. Better safe (and expensive) than sorry.

When you were a child, women did not have mammograms. Even if they did and something was found there was no real treatment. These treatments also cost hundreds of thousands of dollars... but they can save your life.

Medicine costs more than it did before but now we can treat everything from ED to Polyps that 30 years ago you lived (and sometimes died) with.

[schatsie]

I understand that the German doctors have 100,000 in loans, but you don't here them whining about it.. And at least 50% of the malpractice claims that are paid go to paying for the medical care from the malpractic­e....I have worked with wonderful doctors, none of whom were perfect...­.Fact is the English Primary Care doctors are better compensated than their American counterparts due to incentives to promote and effectuate health improvements in their patients..­.

[NABNYC]

I actually factored in all of the above. Do the math. Even assuming 6 hours of patients per day, it's still $2.0 million gross per year. Minus one technician ($50,000), two receptioni­st/billing and one rental office ($120,000), malpractice insurance (which is usually per patient but let's use your number of $100,000), piece of equipment amortized for 5 years would be $50,000/year; total expenses roughly $270,000 out of $2.0 million still leaves $1.7 million for the doctor. As far as school loans go, since when were workers' school loans paid off by the public? But even assuming what you say, the doctor could pay off all the loans in one year and still put over $1.0 million in his pocket that same year.

The point is that doctors grossly overcharge. There is no reason doctors should be paid so much more than other professionals. Engineers make about $60,000, maybe a little more. CPAs make $80-120,000. There's simply no reason doctors earn so much more except that (1) they've got great PR, the whole "God" deal, (2) the AMA restricts access to keep the fees high, (3) the society won't support working class kids who might be good doctors but don't have the money to get in, and (4) women and minorities continue to be denied equal representation in the medical schools and in the practice.