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RATIONING OR REFORM?
Rep. Jim Cooper speaks at David Lipscomb University on the topic“The Perils of Health Care Today & Tomorrow”June 22, 2009
I CHOOSE REFORM!
Surprise, surprise
I support the HealthyAmericans Act
Rationing is a dirty word
• Street definition– Some jerk saying “no” to my sick wife
• Standard definition– Withholding needed medical care– Doesn’t matter who the bad guy is: insurance
company or government• U.S. definition?
– No other nation spends so much, gets so little– Slowing growth of health sector to 17+% GDP
Possible to reconcile these views?
1. Only if people understand that 2/3 of America’s financial problems are due to overspending on medical care
2. Only if government understands that people have a right to all the medical care they can afford, and enough care so that everyone can live up to their potential
What we have is a failure to communicate
How can we spend so much, and people still feel short-changed?
Demand for medical care is unlimited, whether is helps us or not
“More is better”
“…unalienable Rights… Life, Liberty and the pursuit of Happiness”
Declaration of Independence, 1776
We don’t need to ration health care!
• We are wasting $700 billion annually– We can slow spending without denying needed care
• Proof– McKinsey Global Institute – top private consultants– Dartmouth Atlas of Health Care– Peter Orszag at OMB and CBO– Shannon Brownlee’s book “Overtreated”– Even industry admits to $200 billion waste a year
• June 2009 White House Summit of industry leaders promises $2 trillion savings over ten years
Private Health Spending
http://www.worldmapper.org/images/largepng/214.png
Remember: Don’t use static analysis
• No one is thinking of reducing current $2.4 trillion to $1.7 trillion in annual spending
• We are talking of slowing the rate of growth of medical spending to the rate of inflation– No more “inflation plus 2.5%”
• Slowing growth by even 1% avoids 2/3 of our entitlement solvency problems– While allowing growth that other industries envy
• Every basis point (1/100th of 1%) matters
2.32
2.46
2.64
2.8
2.97
3.15
3.35
3.55
3.76
3.98
2.33
2.5
2.7
2.89
3.09
3.3
3.54
3.79
4.04
4.32
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Year
Trill
ion
of D
olla
rs
Does this look like rationing to you?
Lewin Group, Cost and Coverage Estimates for the “Healthy Americans Act,” Dec. 12, 2006
Wyden-BennettHealthy
Americans Act
CurrentTrends
HAA Ten-Year Savings = $1.48 Trillion (4.5%)
“What is federal government?A giant insurance company that is $56 trillion in the hole, with a side business
in defense.”
“And we are an insurance company that uses cash accounting. What is an insurance company that
does that? It’s not an insurance company. It’s an accident waiting to happen.”
- Peter Fisher, former Asst. Sec. of Treasury, now at Blackrock
Regular government issacrificed to entitlements
Your choice: double taxesor cut benefits by 1/2
The first Baby Boom retiree
?
?
?Out-of-controlmedical costsof little value
The Baby Boom problem
$56T Real National Debt
And this does not count Medicaid!
Wrap your mind around it:
• One million seconds = 12 days• One billion seconds = 32 years• One trillion seconds = 32,000 years
• We almost need new words to describe these completely different quantities
Are we fiddling while Rome burns?
BACK TOMEDICALCARE
How to get healthy?
• 40% behavior• 30% genetics• 15% social conditions• 10% remedial health care• 5% environment
Steven A. Schroeder, M.D., We Can Do Better – Improving the Health of the American People, New England Journal of Medicine, 357:12, p. 1221, Sept. 20, 2007.
We don’t need to ration health care!
• May need to ration health hazards• Reducing smoking, alcohol, sloth, and
gluttony could save 900,000 deaths annually, or 40% of annual U.S. mortality• Jeffrey Liebman and Richard Zechhauser, “Simple Humans, Complex Insurance, and Subtle
Subsidies,” NBER Working Paper 14330, Sept. 2008, p. 15.
• Health insurance for all could save 20,000 lives a year
Still, many will oppose reform
by claiming it is rationing.They will say anything to keep
the profitable status quo,even if it sinks America
Some patients will oppose reform;Blame Game v. Responsibility
Easier to blame someone else than to lose weight, exercise, make more money, and get a positive attitude
Medical industry will oppose reform$2.4 Trillion = $2.4 Trillion
Health spending = Vested interestsNo one will admit they are wasting a
single penny
What Is the Right Amount?
EconomistScarce resources
PhysicianPatient comes first
PatientRight to health care
Optimum: Marginal Cost = Marginal Benefit
Hippocratic Oath:Do No Harm
Survival Instinct:Get Well Soon
$1 care = $1 benefit $1 care = $0 benefitJoseph P. Newhouse, Pricing the Priceless, MIT Press 2002, p. 79..
$1 care = $0.10, or out-of-pocket expense
$0.99 of benefit not worth it
-$0.01 of harm not worth it
$0.09 of benefit not worth it
Don’t waste money Don’t waste patient Don’t charge full price
What is the right amount of care?
Don’t waste money
Don’t pay full priceDon’t lose patientGreatest fear:
$0.99 of care is not worth it
$0.09 of care isnot worth it
-$0.01 of harm is not worth it
Ideal statednegatively:
$1 of care =$1 of benefit
$1 of care =$0.10 of benefit(patient’s co-pay)
$1 of care = $0 benefit
Ideal ineconomic terms:
Optimal: Marginalcost = benefit;Scarce resources
Survival Instinct:Get well soon;Right to health care
Hippocratic Oath:Do no harm;Patient comes first
Professional Ideals:Everyday goal:
BusinessPatientPhysician
This is why we disagree:
TAKE ACLOSER
LOOK
We don’t have a health care system. We have a sickness care non-
system.
Dr. Jonathan Perlin, Chief Medical Officer, HCA
We do need medical reform:
But status quo is still popular
96% of voters have health insuranceDon’t want to give up anything
Afraid of changeNot aware of own responsibility for health, or nation’s fiscal nightmare
Existing rationing we don’t notice1. Rationing by income level by insurance companies
– Rich can get experimental procedures, assisted living– Bigger tax breaks to buy health insurance
2. Rationing by poverty status by doctors– 2/3 physicians refuse to see most Medicaid patients
3. Rationing of prevention/wellness care by insurance4. Rationing of U.S.-born physicians by medical schools5. Rationing of primary care physicians by med schools6. Rationing by racial and ethnic group by doctors7. Rationing by region by Medicare
– Miami = 3x Minneapolis; McAllen = 2x El Paso
We supported rationing in WWII,but not formedical caretoday
Don’t ignore price of care
• Has grown much faster than wages or inflation– But our out-of-pocket spending is lower % of total
• Growing feeling that no family should have to spend more than 5% of income for care– Equivalent housing number is 30%– Is health so much less important than housing?
• How can U.S. spend 16+% of GDP on health while families will only spend 5%?
Paying full price for care is unfair?
• 80% of people turn down traditional COBRA coverage – the only time you see full price
• Half of personal bankruptcies are due to health costs?– Yes, but discharged medical expense was $3,600– Yes, but entire episode of illness was only $11,500– So people declare bankruptcy for less than the
cost of a used car
Existing “reverse rationing”
• “Reverse rationing” ignores income levels– Mayo Clinic, VA have best quality, lowest prices
• More people would go there if they could see quality and price more clearly – “Less is More”
– Middle-class has less risk of adverse drug event• Less likely to be over-medicated
– Some Medicaid patients get better benefits• Higher actuarial value than Blue Cross
– Meth burn patients get millions at Vanderbilt
What new rationing do you fear?• Limits on doctor or hospital services?
– Doctors and hospitals slow work without more $$$?– Hospitals eliminate more emergency rooms?– “Comparative effectiveness” testing will reduce
choice of meds or technology? But FDA doesn’t do this work
– New insurance networks may not want your doctor or hospital if they don’t measure up? Do you want a bad doctor?
• Limits on insurance options?– Choices should increase if you can shop like a federal
employee does
What ethical guidelines do you use?
• Your family’s needs?• Your faith’s doctrines?
– Christianity opposes artificially-prolonged life?• Devil says “How much better for us if all humans died in
costly nursing homes amid doctors who lie and nurses who lie, promising life to the dying.” C.S. Lewis, The Screwtape Letters
– Catholic Church dislikes for-profit care?– Jehovah’s Witnesses oppose many forms of care?
• Your country’s needs?
Right to health care v. Rationing
• “If criminals have the right to a lawyer, I think working Americans should have the right to a doctor… I am Harris Wofford and I believe there is nothing more fundamental than the right to see a doctor when you are sick.” 1990 Senate campaign ad
• Talk like this stops rationing• But could obscure U.S. solvency problems
until they are too big to fix?
Short history of U.S. medical care1912 – safe to go to doctor
1932 - invention of health insurance
1942 – employer-based insurance
1953 - no more “natural” deaths
1965 - Medicare and Medicaid
1983 - DRGs
1996 – SCHIP
2009 – reformed American health care?
Conclusion:
• Rationing is unnecessary– $700 billion in annual waste; often hurts health
• Reform is necessary– Must reduce this annual waste; won’t hurt anyone
• Reform will still be attacked as rationing– Disagreement over which spending is wasteful
• Can’t duck need to solve fiscal problems– U.S. health spending is unsustainable
Guide to Health Care Reform
Insurance ReformPublicOption
The Kennedy Bill
- $1+ trillion price tag- Subsidizes up to
500% of poverty- Income of $110,000
for family of four- New disability
entitlement program
The Senate Finance Bill: $1.6 Trillion
Senate omits Medicaid reform?
• 2nd Class medical care?– Low reimbursement– 2/3 doctors shun
patients– States vary widely– Dominates most state
budgets
• Long-term care, end-of life issues ignored
Healthy Americans Act
• Covers everyone• Bipartisan• No new taxes• Scored by CBO• Fits Obama’s 8
principlesThe perfect breed?
Other bills to come…?
Obama’s choice will matter most
Big issue is the tail: public option
• Tail must fit dog• Must not wag dog
Some tails look ridiculous
Public option: no bullies allowed
Need a level playing field
Schumer Option
Fair competition between dogs
Conrad’s Co-op Option
.
Isn’t this radical?
Key relationships in health care
TriageConvenience Reimbursement
Self-referral
Managed care Utilization review Capitation paymentsHMOs
Rationing?
Medicare Medicaid Tax subsidies Tax exemption
Anti-trust exemption
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