03/25/2013 11:55 am ET Updated May 25, 2013

The Democratization of Health Care:The Seniors Question

There is much talk these days about seniors. There are just so doggone many of them, proliferating and living long lives in Medicare. It is estimated that by 2030, one-third of our population (80 million) will be on Medicare, with a life expectancy of 20 years in the program. The concern is that, by their numbers and longevity, seniors will bankrupt Medicare and damage our economy as we struggle to save the program.

How can Medicare afford to cover our seniors? One answer to that question is Medicare's recent effort to move away from paying fees for services and toward paying for value. Value is a pleasant-sounding word. Who could be against getting value for a dollar? But this shift raises questions of its own: How can value save Medicare from bankruptcy? What do the proponents of a value-based health care system mean by the term value?

As it turns out, the shift toward value-based Medicare means transfer of the program's financial risks to physicians through a mixture of capitation, bundled, and performance payments. It means reduction in reimbursements to product manufacturers. It means diversion of consumers to lower-cost, older therapies. Aside from these dubious effects, there is nothing transformative about this value-based system. Its purpose is to balance the books by denying access to quality care. Masquerading as a system to provide quality medical care, it hides rationing behind the word value. It holds out no vision of a 21st-century health care system capable of meeting the challenges of providing optimal care to seniors. It does not regard seniors as its customers, nor does it recognize that meeting their demands is the sine qua non of Medicare.

Even though our health care system is currently a disorderly enterprise, lacking a clear consensus on priorities and goals, we are making real progress in disease control. Remember stomach ulcers, where the prescription was once to lower stress levels, drink milk, and eat baby food? Too distant a memory? Let us fast-forward to HIV/AIDS. A decade ago it was a fatal illness. Now it is a chronic disease, and we have begun to speak of a functional cure. There will be therapies on the market in a few years that literally cure hepatitis C, which has real financial consequences for Medicare if beneficiaries are not treated in time. Diabetes is a raging epidemic in Medicare, but who is so pessimistic as to discourage serious national investment to tame this disorder? We live in a mature, highly developed social system that has the capacity to alter disease progression by rapidly learning and transmitting to the bedside effective medical information -- that is, all of the research, products, services and personnel involved in the preservation and restoration of health that we generally refer to as the health care delivery system. As a human society, we are an amazing computational organism with the native ability to learn how to heal ourselves.

The proponents of today's value-based shift fear an expanding Medicare program driven by an aging population that has outlived its productive capacity. They argue, with varying degrees of frankness, that the financial health of the nation would be better served if Medicare were redesigned so that seniors who do not have private means to purchase life-saving health care would face the terminal consequence of illness and aging without draining the national treasury. Advances in medicine that Medicare has helped to finance have increased life expectancy for seniors, posing a question that some find troubling: What to do with long-living seniors and the Medicare program that spawns them? Even those who resist placing a firm limit on Medicare's financial commitment to seniors may contemplate schemes to frustrate seniors' demand for medical services, accepting as axiomatic the notion that medicine is an expensive, scarce resource that must be rationed. We need to resist this inclination toward preemptive surrender.

There is no natural law that makes medical information -- the means to maintain and restore health -- a rare commodity. Medical information is made scarce by the systems that we have established to create and distribute it. In fact, medical information is an important part of our daily commerce. The creation, processing, and distribution of medical information is the largest sector in our economy, employing more people than manufacturing or the military-industrial complex. The medical information sector is driven by consumer demand for products and services that can extend and improve life. If we unleash our capacity, we can create great wealth while meeting that demand.

Yet policy makers accept the scarcity axiom. It justifies a bewildering tangle of laws and policies that limit the flow of medical information and drive down consumer demand for health care. In this context, seniors are a management problem: How to cap the demand and cost of health care in an aging nation?

We need fresh eyes to reconsider what is widely accepted as axiomatic in health care policy. We must demand the liberation of medical information. By trying to dictate what information consumers may access, when they may access it, how much they may have, how it may be distributed, and who may distribute it, insurers (public and private) are creating artificial scarcity. They are driving up health care costs by frustrating innovation. Ours is not a command economy. Free markets are fundamental to our way of life, and artificial scarcities should not cause us to reserve medical information for the financial elite.

If our future is to improve on the present, we must treat medical information as a commodity, available at commodity prices. Obviously, we are a long way from that point, but the inherent value of a free market is that our children and their children will have today's innovations at commodity prices. Our experience teaches us what seems complicated and expensive today will be low-tech and inexpensive tomorrow.

Preserving and expanding access to the full range of medical information need not imply the creation of a laissez-faire system in which bad information is allowed to propagate, driving out the good. Well-regulated, transparent information sharing can enable us to move toward a consumer-oriented health care system, where government's premium support permits universal access to care and payers do not dictate the fine details of every commercial transaction. Every component of the system -- service providers (including clinicians), product manufacturers, and payers -- must compete. We need greater transparency; consumers must know the costs and safety profiles of therapies. Consumers already have skin in the game, because every penny in the health care market comes from them, but they must feel fully vested to act as informed consumers. Consumerism, competition, and transparency will improve outcomes while driving down costs.