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July 10, 2007

Long Form Health Wonkery

We've talked a fair amount about universal health reform going through the states. Massachusetts is currently implementing a plan, California is floating one, and a variety of others, from Pennsylvania to Illinois to Connecticut, are hinting that they'll follow suit. Politically, I'm all for these initiatives. As a policy matter, however, they're doomed, for reasons I explain in the latest Washington Monthly. The trick is going to be converting the energy of the states into momentum for a national solution. Hand it over to the laboratories of democracy, however, and their solutions will collapse, and the push for reform will, I fear, be set back.

The idea of giving universal health care a little more time in the laboratories of democracy may sound tempting to certain cautious, bipartisanship-loving Beltway observers. But letting states continue to take the lead would be disastrous, for one very simple reason: providing health care for all citizens is one of those tasks, like national defense, that the states are simply unequipped to manage on their own. The history of state health reform initiatives (and there’s quite a history) is a tale of false hopes and great disappointments. The deck is stacked from the start, and the house—in this case the insurers, the providers, and other agents of the status quo—always wins. The new raft of reforms may prove different, but they probably won’t. Universal care advocates must be realistic about that, and think hard about how to convert the energy in the states into a national solution before the current crop of novel experiments fail—because fail they almost certainly will.

The current appetite for universal health care in state capitals may seem thrilling and unprecedented to some, but to those who follow the issue it carries an unsettling charge of déjà vu. Over the years, states have tried programs of many different ideological and economic persuasions. All of them failed, and not because the programs were insufficiently inventive, but because states are structurally incapable of sustaining them.

Read the whole thing.

July 10, 2007 in Health Care | Permalink

Comments

You’re right that state attempts to impose “universal health care” will probably implode, but you miss the significance of your own prediction. “Universal health care,” as a concept, contains the seeds of its own destruction. That’s why it always flops. But you can’t see beyond the tactical advantage this gives the “health care industrial complex.”

Why does the “reality-based” community spend so much time avoiding reality?

Posted by: Catron | Jul 10, 2007 3:03:59 PM

Because the insurers would rebel against this scheme to rip apart their business model and end their ability to price out the sick while attracting the well, the state demanded that all insurers who wanted access to Oregon’s market become certified through the state—that way, they couldn’t undercut the program.

You mean "Washington's," right?

Posted by: Sanpete | Jul 10, 2007 3:21:22 PM

Good piece. Hadn't really thought about all that. Catron is right that similar problems will arise on the federal level too, but the ability you point out of the feds to raise more money and run deficits will help. I think the pressures on federal legislators are also somewhat different, amyve because the costs and benfits are more broadly shared (I'm really bot sure why). Look at the Medicare drug benefit. Very costly, but no one is going to take the heat for cutting it.

Posted by: Sanpete | Jul 10, 2007 3:43:51 PM

I wonder if the past state experiments might have been more successful if Medicare were more willing to use its market power and its presumed moral authority to do the following: (1) make a serious attempt at performing a rigorous assessment to determine the comparative effectiveness of new drugs and devices before deciding whether or not to cover them, (2) try to bring about more convergence in practice patterns by developing mechanisms to reward cost-effectiveness and penalize overuse of the healthcare system and (3) drive a more sensible approach to end of life care such as developing an advance directive and living will registry and encouraging more use of palliative care. If these approaches were also applied to Medicaid patients, the states could more easily afford their share of the cost of that program which should, in turn, free up more resources to cover the uninsured.

Posted by: BC | Jul 10, 2007 4:08:49 PM

This works well for us, too. We get more bang for our lobbying dollars if we only have to deal with a single legislative body.

Posted by: Big Insurance | Jul 10, 2007 4:28:02 PM

If that "seeds of own destruction" had any merit on our national basis, there are a number of federal programs, such as irrigation, that would already have failed.

They haven't done so because the size of the nation and the plurality of interests means that a factor that weakens one local economy may benefit another, and secondly, some national policies sustain markets at viable sizes.

This should be especially true in healthcare, where keeping people healthy enables them to be productive, and especially considering we already have a considerable sunk cost in the person by the time they enter the workforce.

This is pretty well illustrated by the fact that the major resource of the cities is people, cities have a large capital base composed of both previous and ongoing expense, and cities remain the most productive sectors of the economy.

Or, you could do the short form- Where there's a will, there's a f--king way.

Posted by: serial catowner | Jul 10, 2007 4:53:27 PM

I think BC is onto something, but the answer, at least to (2) and (3) is that Medicare doesn't do those things, I think, because that's not what Medicare is charged to do. Changing the way Medicare approaches providing coverage - which many people who watch it closely point out is what it needs to do - is a massive task; and it involves no small amount of reeducating patients (and we are talking, remember, about the elderly, who have made it clear they don't want a lot of change in Medicare) about why changing approaches to treatment makes sense for their health.

I'm impressed, by the way, Ezra, with the way you've adapted your thinking over the years I've been watching you write on this issue. It strikes me that a year and a half or more ago, such state plans would have attracted more of your interest and enthusiasm, with less acknowledgment of the challenges involved. My own sense is that while we are dealing with employer-based health coverage - and we will be, for a good, long time - the interstate nature of major corporations (and their insurers) makes a state-by-state approach difficult if not impossible. However, Sanpete is right - even at the federal level, there are questions about how reforms will work, because the pressures on legislators are different, but also because the reforms needed differ from place to place (and from type of current coverage to type of coverage or lack thereof), as we examine availability of care, practice methods, and the like. I've long said that Universal Healthcare is very hard to see, at least to me, because I don't see a one-size solution to the various problems in healthcare, and I think any plan will be overwhelmed by practical questions of cost, logistics and transition. There's no argument, at least to me, that what we have in healthcare in America is badly broken. Undoing that, though, is not simple. And no, it's not something one state can solve alone.

Posted by: weboy | Jul 10, 2007 5:17:17 PM

So Ezra says a federal program is better because it can run up deficits with no questions asked.

thats hardly something we should be shooting for.

Posted by: joe blow | Jul 10, 2007 6:49:46 PM

Frankly, we already have "one-size" solutions to most of the problems of healthcare.

Doctors and nurses are licensed in such a way that they can practice and even be licensed reciprocally in all the states. Medical equipment that works in one state almost always works in another. Drugs, of course, are already regulated nationally. Most of the people who use healthcare the most, the elderly, belong to a national program. The codes by which buildings are built, patients housed, and even to a large extent new facilities authorized, are codes based on national standards.

The only place where this one-size-fits-all philosophy breaks down is in the financing, and there's no big mystery why- most of the big players profit from thwarting that kind of national standard.

Oh sure, the drug companies are happy to have national rules that keep out competition, but when it comes to selling their drugs, they like to keep the market as small and defenseless as possible. An elderly Jewish lady in Miami who isn't willing to go to the Walmart in the barrio is going to pay more for the same drug.

Hospitals routinely beat up state legislatures on terms of equality they could never reach with a national agency, and nursing home chains are so much more powerful than the state legislatures that there's just no contest.

From the patient's perspective, the one-size-fits-all Medicare program is a good deal (in fact, the de facto care standard for everybody already). Add the purchasing clout and discounted prices of a Humana-like drug insurance plan, and you have a significant improvement in the coverage of almost all Americans.

Posted by: serial catowner | Jul 10, 2007 6:56:47 PM

If that "seeds of own destruction" had any merit on our national basis, there are a number of federal programs, such as irrigation, that would already have failed.

To compare “irrigation” to something as large and complex as the health care delivery system is incredibly naïve. Indeed, it is precisely such thinking that renders the “reality-based community” so hard to take seriously.

Posted by: Catron | Jul 10, 2007 10:26:56 PM

Well, serial, I was thinking more along the lines that there's a glut of hospitals in urban areas, and a lack of general practitioners in poor and rural communities, things like that. You could also add in that there's a great deal of variety in practice between doctors, and not all best practices have been adopted. Because reimbursements can favor unnecessary procedures, there's incentive for fraud, waste and abuse. That's also a problem for Medicare. I am not a big fan of Medicare for all, mostly because it perpetuates hospital based approaches to care, with a complex reimbursement structure that fuels more beaurocracy, not less, and is not, despite the resistance of the elderly to see it changed, necessarily easiest for patients. Moving to such a plan would also face considerable resistance from young healthy professionals, who would likely see it as a reduction from their current coverage. I think the best change would be to separate insurance from employment, solving issues for the uninsured and easing things like portability between jobs, while leaving Medicare and the VA largely as is; with subsidized coverage the poor that would gradually replace Medicaid. I think the most owrkable solution here is a hybrid, not a push to put everyone in the same thing, which seems unrealistic and hard to accomplish. Smaller fixes are more doable and would speed changes into the system.

Posted by: weboy | Jul 10, 2007 11:22:01 PM

You miss probably the largest single obstacle to state based health care policy.

ERISA.

Anything "relating to" an employee benefit plan, including health insurance plans, are preempted by federal law. There is some complicated legal stuff around a "savings" clause and a "deeming" clause, which _might_ allow a state to escape ERISA preemption, but it's not easy. The Maryland Walmart law, for instance, was recently struck down as preempted by ERISA.

Posted by: Dan | Jul 11, 2007 1:03:26 AM

You guys have some funny views on corporate vs state compared to corporate vs national power struggles.

Other have hinted that its vastly easier for corporations to fight state legislatures than it is for them to fight against Congress, but thats a load of bullshit.

What happens is simply a scaling approach to lobbying. You dont see individual health insurance commpanies fighting Congressional reform, you see them band together in supergroups to do the same work that individual companies do at the state level.

So its an absolute myth that corporate power is "watered down" at the federal level. If anything, their consolidation of power into these "supergroups" makes the relative power advantage GREATER at the federal level.

We're never going to have a Michael Moore healthcare system precisely because of the insurance lobby supergroups. They would go out of business OVERNIGHT with such a plan, and they will spend their entire fortune to prevent that from happening.

even Hillary has recognized this, she is no longer advocating for single payer. Just like the rest of the democrats (besides the lone wolf Kucinich) she is now favoring a "half ass" system that keeps the insurance racket in play. She knows she cant beat them so she's trying to buy them off instead.

Posted by: joe blow | Jul 11, 2007 5:31:23 AM

To think that putting "irrigation" in quotation marks somehow makes it a trivial subject is one reason I find it so hard to take the rightwing seriously.

By "irrigation", of course, I mean the 70+ year effort that built the TVA, the Grand Coulee, the Hoover and other dams, the system that spans the nation, provides water for our cities and agriculture, and attempts to prevent flooding. And, incidentally, is the kind of Big Government rightwingers claim to be against, but will defend to the last breath when the choice is between saving a salmon run or providing subsidized water and barge transport to wheat farmers.

If it's that damn simple, Catron, howcum the rightwing can't get their story straight?

Posted by: serial catowner | Jul 11, 2007 8:44:16 AM

To take some of weboy's comments one at a time-

There is an urban glut of hospitals because hospitals can effectively ignore the regional planning commissions. One of the reasons they can do this is that private insurers don't make any effort to enforce the governmental regulations of the planning commissions. A government insurance plan could simply refuse to play this game, first, by refusing to pay the extra charges the empty beds levy on the occupied beds, and second by directing patients away from non-compliant hospitals.

The dearth of rural practitioners is partly due to a simple policy- "Payment must be made at the time of your visit". The cure for this is Medicare for all, which would allow the clinic to see more patients, IOW, expanding the market, lowering the unit cost, and providing more predictable revenue stream.

In practice, Medicare-Medicaid is actually very simple- almost everything the patient really needs is reimbursed at roughly 2/3 the market rate. The doctor, for example, is paid about $30 for an office visit, but we know that in actual practice doctors usually make up their mind about the patient in less than a minute, so it's not really unfair to reimburse modestly here.

The thing to remember is that although it seems to you that your problem is very complex, to people who work with those problems every day it usually seems very familiar. The whole basis of our medical system, after all, is that what works for one person is very likely to work for another, because it is based on science instead of religious belief or 'the stars'.

We've spent a lot of time discussing two major gaps in our coverage- the lack of insurance, or, secondly, employer-provided insurance that doesn't work well.

However, the big change over the past 30 years has been to move treatment out of the hospital by prescribing drugs and wellness routines the patient can use at home- exactly what Medicare doesn't provide, or provides poorly, and exactly what we could buy at bargain prices if we formed a nationwide buyers group to negotiate Costco quantity purchasing prices.

To imagine that this would expand the bureaucracy, when in fact it would render unnecessary literally hundreds of smaller bureaucracies, each of which has a different set of rules, really mises the point.

For example, every time you go to a new clinic, they make you fill out a form. All of these forms ask the same questions, but they are all a little different in format. The next time you have to do this, try taking a sheet you typed up that has all these answers- and see how far that gets you.

Under a rational national system all of these forms would be the same, just like the drugs are all the same and the interpretation of an x-ray is always the same. There are reasons Medicare spends about 5% on overhead while private insurers spend about 15% on overhead.

'Nuff said.

Posted by: serial catowner | Jul 11, 2007 9:25:12 AM

The dearth of rural practitioners is partly due to a simple policy- "Payment must be made at the time of your visit". The cure for this is Medicare for all, which would allow the clinic to see more patients, IOW, expanding the market, lowering the unit cost, and providing more predictable revenue stream.

This is far from a critical point in this discussion, but just wanted to pointed out that this is not correct. Physicians that work in urban settings, particularly the most populous cities, typically have lower compensation compared to their peers in suburbs or rural areas (with notable exceptions, e.g. specialized surgeons). This is due to the fact that there is an oversupply of physicians in cities, and an undersupply in other areas. While serialcatowner mentions ideas that could further increase the incentives for physicians to work outside of cities, the incentives do already exist.

The challenge is the following: physicians can make a good living working in/near major cities. Do they really want to spend 20-30 years of their lives in rural areas so they can make $300K rather than $150K a year? Quality of life, for most, is more important than the additional cash.

Posted by: wisewon | Jul 11, 2007 10:24:07 AM

Oh sure, the drug companies are happy to have national rules that keep out competition, but when it comes to selling their drugs, they like to keep the market as small and defenseless as possible. An elderly Jewish lady in Miami who isn't willing to go to the Walmart in the barrio is going to pay more for the same drug.

Same caveat as above-- not a crucial point, but a wrong one.

The difference between Walmart in the barrio and the rich areas has very little to do with pharma companies, but instead relates to profit margins of drug distributors and retail pharmacies. Drug companies will receive the same amount for given prescription regardless of where it is filled.

Posted by: wisewon | Jul 11, 2007 10:28:56 AM

Ezra,

But letting states continue to take the lead would be disastrous, for one very simple reason: providing health care for all citizens is one of those tasks, like national defense, that the states are simply unequipped to manage on their own.

Interesting that you didn't focus on comparative health systems. A number of the countries in Europe that have UHC and/or single-payer systems have populations smaller than many states in the US. Why then, would your assertion above be the case?

Posted by: wisewon | Jul 11, 2007 10:34:27 AM

Ezra,

One other thought, which echoes comments of others above. There is a common thread among the state examples-- costs grew more than projected, the states are unable to do deficit spending, benefits are then cut and the programs were then unattractive to constituents.

The only part of the story that would seem to differ for single-payer is that the federal government could use deficit spending and absorb the unexpected cost growth. Given the current levels of health care spend, is that really such a great thing?

Posted by: wisewon | Jul 11, 2007 11:03:32 AM

I don't know where wisewon gets his idea on those rich rural docs, cause it ain't true. I'm sitting in a hotel right now at a rural health meeting. Rural docs make less than the average urban and suburban doc. There's a lot of reasons, the basic one being that rural folks are poorer than urban folks. Rural folks are less likely to have insurance as well. If I was sitting in my office it would be a lot easier to document all that, but if you want I'll get back to anyone who's interested.

Meanwhile, Canada also has trouble getting docs to practice in rural areas, despite universal coverage, for many of the same reasons the US does beyond the money angle. Most med students grew up in urban areas, they study in urban areas, they do residency in urban areas, and med schools encourage students to specialize which pretty much requires docs to practice in areas with major med centers. And the cultural aspects of living in small towns vs. the burbs also pushes docs to stay in urban areas. Universal coverage would help, but it won't solve maldistribution of health care personnel.

Posted by: SteveH | Jul 11, 2007 11:23:41 AM

SteveH,

We probably have a GP/specialist split-- my experience and bias is admittedly the latter. For example, in procedurally-oriented specialties, the migration of surgeries from hospitals to ambulatory surgery centers (ASCs) have allowed rural docs to have greater incomes than their non-rural counterparts. While lower insurance coverage rates and lower incomes are both true, the degree of undersupply of docs is even greater-- hence the ability to have more high-intensity, revenue-generating patient encounters than urban/suburban docs. I could see how the same would not be true for general practitioners, but would think that the growth of family medicine docs in rural areas that do basic procedures would make this increasingly true in GP specialties as well.

Posted by: wisewon | Jul 11, 2007 11:51:10 AM

"We probably have a GP/specialist split-- my experience and bias is admittedly the latter. For example, in procedurally-oriented specialties, the migration of surgeries from hospitals to ambulatory surgery centers (ASCs) have allowed rural docs to have greater incomes than their non-rural counterparts."

We definitely are using different terms, including what you consider rural probably. I'm reminded of when I was sitting in on a meeting between a gov't official on HIPAA and CEOs of small rural hospitals. She assured them she understood their problems, after all she had worked with hospitals with as few as 100 beds. The temperature in the room dropped suddenly. None of the CEOs worked in a hospital that had even 50 beds.

The kind of ASCs you're talking about don't exist in the kinds of rural places I work with. Rural areas are lucky to get a GP, specialists don't find the population density necessary to generate enough cases to justify their presence. GPs are over-represented in rural areas, specialists tend to stay in higher population areas. And with med schools churning out specialists, that doesn't bode well for rural areas having docs on hand in the future.

Posted by: SteveH | Jul 11, 2007 12:51:17 PM

SteveH,

Not to nitpick, because I think we're in alignment, but I'd suggest your use of "rural" would be better termed "extreme rural" or something to that nature, given your characterization on ASCs, hospital bed size, etc.

On the main point- we agree- physicians don't work in rural areas because they don't want to, and universal coverage doesn't change that.

On the income point, I did do a quick google search for some quick data, and I think my initial point to you holds (see table 1):

http://www.medicuspartners.com/pdfs/Rural_vs_City_2-5_Article.pdf

On the specialist numbers-- I'd caution that you need an apples-to-apples comparison, i.e. pull out the data for the specialists clearly not in rural areas transplant surgeons, some CV surgeons, neurosurgeons, etc. and you'll see numbers similar to the GPs-- rural docs do make more than their urban counterparts. I'd suspect that may not hold for your "extreme rural" docs, but does for the broader term.

Posted by: wisewon | Jul 11, 2007 1:49:07 PM

Hold on. If a small country with a lower per capita GDP than Alabama can have universal health care, why can't any American state?

Posted by: Adam Herman | Jul 11, 2007 3:48:53 PM

Okay, I see that the main issues are:

1) States have to have balanced budgets. That's a feature, not a bug. Although there's nothing wrong with running small deficits in times of recession, our federal government, even without universal coverage, runs high deficits as a matter of normal practice in good times or bad. Universal health care would make that problem worse.
2) States are more responsive to voters and thus voters can kill the programs by refusing to allow tax increases. Again, a feature, not a bug. Ezra evidently prefers a system by which voters are powerless to resist massive tax increases.

Posted by: Adam Herman | Jul 11, 2007 4:05:30 PM

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