Gentle Reader:

Professor D’Amico and I wrote this recently and tried to make it an Op-Ed piece in a couple of our national newspapers; no success.  So I present it to you here.

The issues involved in the health care “debate”- such as it is – are precisely the issues for this campaign and for out country: What do we owe each other, as citizens of this country ? Health care, infrastructure, retirement, education…..all of these issues are – or can be – subsumed under the mantle of this question.

I look forward to your comments.

AJ Layon

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Political commentators have proclaimed we are at the start of a substantive and serious debate about health care reform due to Republican Presidential candidate Mitt Romney’s choice of Paul Ryan as Vice Presidential candidate. We seriously doubt this, not merely because of our experience with campaigns and campaign debates, but because of the nature of the issues. Thus we provide a guide and questions that do not depend on whose position you already lean toward. We think, for various reasons, that the two plans being discussed are each, in their own way, sub-optimal; the details of this analysis are for another discussion.

Before we begin, there are two assumptions we consider indisputable that must be explicitly stated: 1. There is no alternative to the system of third party payments for health care. As far into the future as we can see, we will have either a single-payer system, as in parts of Europe (Britain, France), or a system of private / private – public insurance, as is detailed in the Affordable Care Act and is present in other parts of Europe (Germany, the Netherlands). No cost-savings plan makes paying health care costs out-of-pocket possible for the average citizen. 2. No matter how hard we try, the market-model of a sick person being a “consumer” of health car services simply does not hold in aggregate. Consider a car crash. Will you plan to have this near a high quality trauma center ? Or near a trauma center at all ? Do you plan your car crashes ? The answer to each of these patently silly queries is, of course, no. As would be the same type of query for appendicitis, a myocardial infarction (heart attack), a cerebrovascular accident (stroke) and on, and on. There is no place for a market – consumer model when we talk about modern health care, at least in the context of the individual citizen who becomes ill.

We will divide this enormous topic into two pieces. First, there is the general question of how health care is to be covered in the United States. Second, there is the specific issue of Medicare and Medicaid.

The Affordable Health Care Reform Act, also called by some “Obamacare,” has taken the employer-based system of health insurance and expanded it by putting constraints on health insurance companies while offering these insurance companies a larger pool of lives to cover, without altering insurance coverage for those over 65 (Medicare coverage).

Before proceeding further, we point out that this is, in effect, the health care financing system presently in place. It depends upon private insurance – in most cases through employers – and works by way of group coverage to reduce costs.

The reform embodied in the Affordable Care Act requires that people either have health care insurance or pay a fine (or fee, or tax, choose the word you prefer). Will this feature produce the level of savings in health care that motivated its introduction ? Of course that depends on how insurance companies, hospitals, clinics, and physicians, for instance, behave as well as how the reform program is managed federally and by the states.   None-the-less, given where we are in the United States today with our health car system, this reform provides opportunities.

Is this reform plan good or bad for the average citizen ? Obviously, these changes provide the average citizen with more security. Does it limit the freedom of the citizen needing health services ? As we noted above, since one does not choose one’s genetic profile, nor does one freely choose the car accidents, ruptured appendix, or systemic infections that are among the contingencies of life, this assertion is unclear. Why – in fact, how – would dying or suffering from these contingencies express freedom ?

Now we turn to Medicare and Medicaid. We remind you that Medicare is health care coverage for everyone 65 or older, whereas Medicaid covers primarily indigent health care. Our reminder is required because there are people today in nursing homes who lived a middle class life, but who are now funded in the nursing home under Medicaid, because their resources have ben totally consumed. Many seem to be confused about this; Medicare AND Medicaid are programs that serve the elderly, the poor AND the non-elderly middle class. In our experience, the average citizen is confused about this.

Medicare faces two problems: first, the people it covers have both complex and expensive health problems; second, we have demographic bubble due to the post-World War II baby boom that explains the spill-over onto the Medicaid program. What should we do ?

There are only two answers: Either sustain Medicare and Medicaid through the baby boom generation by whatever reforms or additional funds are required, or end the two systems.

Given the information we have, the decision to sustain the programs is the cautious or even conservative – in the older sense of that label – choice. It holds that making a major decision based upon an unusual situation is unwise. None-the-less, given the fact that there is a demographic bubble, maintaining the systems will cost money.

The alternative, ending Medicare and Medicaid, is “bold” and of course radical, but neither we nor anyone else can assess this alternative. It is set off in the future and details are left unclear. However, we do have some idea how this “alternative” will end. All one must do – which of course Americans seem genetically incapable of – is look back to the health data in our country before President Johnson initiated these programs: our elders – our mothers, fathers, grandmothers and grandfathers – were driven into poverty by health care expenses; they often had to chose between eating and medications. Clinics, hospitals and physicians will not for long treat patients who cannot pay. And why would they ? If the message sent out by our national leadership is that the people of the United States owe nothing to one-another, why should a physician or a clinic behave any differently ? Further, even if these entities wanted to behave differently, how would they survive ? We would see, to be sure, some charity care, but overall the elimination of these programs would be an unmitigated disaster for our country.

On the other hand, there are innovations, mostly unspecified, that will help avoid such a collapse while saving money. For example, The Geisinger Health System (spoiler alert – AJ Layon works for GHS) has shown itself able to “bend the cost curve” by up to 7% by utilizing evidence based medicine and best practices and eliminating unwanted variation in care. This is not rationing, this is the provision of smart and appropriate care. Further, lifting the cap on the portion of salary that is subject to medicare tax would eliminate much, if not all, of the expected deficit in Medicare. Such innovations / choices ask whether various expectations are realistic and how we should rank our current preferences.

Here are several problems anyone (candidate, commentator, citizen) should at least ponder.

1.     Both plans assume health care markets work will to lower costs and increase efficiency. But when markets work they do so because consumers can exit any exchange, waiting until costs are lower or shifting preferences. Does this feature carry over into health care ? Can you wait to have your perforated bowel repaired ? We think that market forces have little to do with the delivery of quality health care.

2.     Both plans provide subsidies to buy health care – President Obama’s plan subsidies for the purchase of insurance, while the plan described by Mr. Ryan and apparently supported by Mr. Romney would provide a grant to, for example Medicare recipients, so that they could find and but their own insurance. Do these subsidies help or hurt the health of the nation ? Do they skew the “health care market” ?

3.     Health care is complicated because it requires projecting into the future. In general, younger people overestimate their health and underestimate costs and risks.   A 25 year-old thinks he is quite healthy until he has a car crash and, because he didn’t think it appropriate to wear his seat belt, suffers a severe head injury and ends up in the ICU. Will we let this young man die ? Will we care for him ? Who will pay for his care ? Do we want, in the end, the health care of our nation and its citizens to depend on the decisions of the least risk-averse ?

4.     Are people’s preferences open to manipulation, rational or not ? We believe they are and evidence of how robust the placebo effect is in health care highlights this problem. People can be convinced to avoid treatment they need or to take treatment they do not need. Is there, then, a danger that cost savings will be had by manipulation ?

5.     Is any of this really necessary ?   We at The Geisinger Health System have shown there are ways to provide high quality, patient and family centered care AND to decrease the waste that is documented and rampant in medicine.   In its essence, this disagreement is not about health care at all. Rather, it is about the following question: What does our society owe its citizens ? What do each of us owe one another ?

We end with a simple but we think unavoidable point. Cost saving in health care can be advanced with the provision of high quality, evidence-based care that entails minimal unwanted variation; we have shown with this kind of care that savings on the order of 5% to 7% are possible. In a health care budget that presently consumes approximately 17% of the GDP of the United States – GDP in 2011 was $ 15 trillion, 17% is $ 2.5 trillion – a 5% to 7% savings equates to between $ 128 and $ 178 billion, not an insignificant amount.

None-the-less, a discussion MUST be had on the limits of care. When is it appropriate to limit further care ? When the chances of survival are 5% ? 2% ? 1% ? 0.1% ? The answer is not ours to divine. This must be answered with a nationwide debate amongst the American people. We are not offering you answers, we simply want to hear some serious debate.

We are waiting…….

AJ Layon, MD

Robert D’Amico, PhD

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