Health Care: A Dark Fairy Tale

Lost in the Woods

Okay. I am breaking from my usual blog topics to talk about health care.

"But you're a writer. A poet. Sometimes a potter," you say. "What do you know about health care?"

Actually? Quite a lot.

Once upon a time (in 1984) I earned my undergraduate degree from the University of Rochester in health policy/planning/history. I created my own concentration (my degree was specifically in Ethical Issue in Health Care) because at the time, there wasn't an established major in public health. Now there is.

I went on to graduate school at Columbia University in NYC and earned a masters degree in Physical Therapy in 1986. Immediately after that, I started working in the field and practiced as a physical therapist (PT) for almost 25 years before I left the field.

So I know a thing or two about health care in the US, from an historical perspective, from a policy perspective, and from working in the trenches during the years of run-away health care costs and our first institutional efforts to reign those in. I was there at the start of HMOs (Health Maintenance Organizations) which were touted as the answer and the future.

They were one answer, but given how complex our health care system is, it wasn't a surprise to any of us working in it that it didn't solve the problem.

But I'm getting ahead of myself. Let's go back a bit, shall we?

At the turn of the 20th century, medicine as we recognize it today didn't really exist. There was no standardization of medical education, research, or care. Most medical care was provided at the individual physician level, in a private office or in a patient's home.  Individuals had to pay for the care they received and in many cases, that care was paid for on the barter system, if the physician accepted it.

• Insurance didn't exist as we know it now, though there were some mutual protection plans sponsored by Unions to help pay for lost work time due to injury or illness.
• Hospitals were primitive places that essentially warehoused the mentally ill and the chronically sick.
• Most people were born and died at home, and rarely under medical guidance
• Physicians' training was scattershot and they often learned on the job.
• The widespread use of surgical anesthesia (ether) was less than 50 years old!

Then along came a man named Abraham Flexner who was tasked with investigating and reporting on the state of medical education in the US and Canada. His report, published in 1910, was the blueprint for the standardization of medical school and a shift to the scientific method in medical research and treatment.

And we are still feeling the reverberations of his recommendations, over 100 years later.

While a lot of good (and our conception of modern medical care) emerged from the Flexner Report, so, too, did a lot of unintended consequences. In addition to the ones noted in the linked Yale report, were others that directly and indirectly contributed to the explosion of health care expenses that continue to rise today.

Some intended and unintended consequences of the Flexner Report.

First and foremost, it standardized medical school curriculum across the nation and based medical training on the scientific method. Thanks to Flexner, if you saw a doctor in NYC and one in Des Moines, IA, you could be sure they both had a similar skill set and knowledge base. There was a huge consolidation in medical education which included (unfortunately) the closure of many medical schools that trained African American physicians and women. However, it also ensured that quack schools were shut down.

Then came the Great Depression. Hospitals shut down. People couldn't afford to pay the doctor. There was a recognition that a community without medical care would quickly become a failed community and the first insurance companies that we would recognize as health insurance were formed. (A group of teachers in the Dallas area agreed to pay premiums in advance to the hospital in exchange for the promise of future care. This was the rise of Blue Cross.) [From this brief history of employer based medical insurance. A good read. It quotes one of my undergrad professors, Theodore M. Brown.]

So employer based health care insurance kept the industry afloat until after the depression.

Along with this new way to pay hospitals and doctors, came change in the structure and nature of hospitals in some dramatic ways. As the US population expanded and new cities arose, there was a need for new hospitals. Their construction was financed by the government, with many caveats, traceable to the recommendations in the Flexner Report. It included the dismantling of the old ward system, where patients were taken care of in multi-bed wards that could be supervised by a minimal amount of nursing staff.

When hospitals shifted to semi-private and private rooms, the costs of providing patient care skyrocketed as the number of employees needed to adequately supervise those patients increased.

And there are still more consequences of the Flexner Report: Along with the scientific method, came the rise of medical specialties, which also, unfortunately, brought with it a devaluation of general practice and primary care; problems we are still seeing today.

Along with the personnel costs, the technological and pharmaceutical advances brought about by WWII and continuing to the present day brought huge capital expenses to medical care.  Those costs were passed along to patients who increasingly couldn't afford to pay them. Especially if they were retired or indigent.

Our patchwork health insurance system

Still with me?

So we have employer-based insurance that covers some hospitalization and some physician's visits. And because of tax laws, those plans were advantageous to employers to provide.  But what if you weren't or couldn't be employed?

That's when Medicare and Medicaid came into being as hospitals and doctors could not longer absorb the costs of providing free care and we realized that having some public safety net to assure medical care was a public health need.

But there were still significant holes and while universal insurance has been floated by lawmakers periodically since the early 1900's, for one reason or another - primarily political will - it has never come to be.

And over the years, to the present day, health care costs continued to rise. For a while, employers absorbed the costs, until that became unsustainable. Researchers were looking at health care as a system and came to the conclusion that the fee for service method, where health care personnel and hospitals are paid for each service they provide, encouraged high usage of health care. Greed being what it is, and with the perception of the costs being paid elsewhere, many health care providers and hospitals simply fed off the system, knowing they would get paid for whatever they provided. Individuals didn't see the cost increases because their insurance was paying the bills. Insurance companies increased premiums to ensure their profits.

In the 1970s, different models were promoted, based on capitation: that is, doctors would be paid a small amount of money per patient they had on their lists, and had to manage their costs for that pool of patients. If a patient remained healthy, the doctor kept that money. If too many patients needed medical care, the doctor's pockets would be thin. The theory was that this would give the doctor incentive to provide only the most needed care and 'trim the fat.'

Capitation was one of the basic principles that became the first HMOs (Health Maintenance Organizations.) It was believed that this kind of financial shift would rein in medical costs.

But it didn't.

Primarily because we still had (and still have) a patchwork system of for-profit insurance, not-for-profit insurance, employer provided or sponsored insurance, and government insurance (medicare and medicaid) with no standardization among all the plans in terms of basic coverage and payment to the medical providers.

The plot thickens. . . 

And it gets more complicated, still, because of the pace of technological change, the way early adoption of tech is expensive, the expectations of individuals, the lack of a cohesive public health strategy, and the malpractice mess.

The more we tried to treat health like a business, the more byzantine the system got. Because here's the heart of the matter:

Health is not a commodity. 

It's not a widget that is produced, then bought and sold. Sure, there are pieces of the industry that are like manufacturing: medical equipment, pharmaceuticals, for example. But basic supply and demand and price pressures don't really work well in medicine.

Say you have a burst appendix. Trust me, you won't be shopping for the best price for your appendectomy. You will be writhing on the floor and if you're lucky, a friend or family member will be able to take you to the nearest ER for care. You will not be comparison shopping for surgeons: whoever is on call whenever you show up will be who you are operated on by. You will not be able to negotiate for what pain meds you are given, nor how long you will stay in the hospital.

When you are ill, you need care. When you are ill, there is only demand, not supply. Business models simply don't and won't work, EVEN IF YOU COULD GET PRICING INFORMATION. Which you really can't because it's not really available. 

Standard of care also makes the market forces issue moot. Here's another example. In the old days, if you sustained a knee injury, you would have an arthrogram - an xray with dye to see where the injury was. It was uncomfortable, exposed you to the risk of allergic reaction to the dye, and involved radiation. Then along came MRI technology. No radiation. No dye for the knee examination. But it was SIGNIFICANTLY more expensive.

There was a time when both were being done and which you received depended on your insurance, your doctor, and if the hospital had the MRI machine. Then standard of care shifted in favor of the MRI even though arthrograms were cheaper and were effective in diagnosing knee ligament tears. So the more expensive practice became the standard practice.

This happens in almost every sphere of medicine.

Then there's the whole system of malpractice. The issue isn't with malpractice suits, per se, it's with the equating of bad outcome with malpractice. Medical negligence SHOULD be punished. Bad outcome in the absence of negligence shouldn't be.

But it is. It's cheaper for insurance companies to pay out malpractice claims instead of going to court, even if they know the physician is not culpable. That increases the rates of malpractice insurance which increases the cost of providing care.

So, yeah, it's complicated

There was a push for universal health insurance during the Clinton presidency and we all know what happened to that.

Then a conservative think tank floated another idea. That idea turned into Romneycare in MA which turned into the ACA (AKA Obamacare) nationwide. It was the idea that we could somehow tie together the patchwork of all our myriad insurances by creating regional health care exchanges. Every citizen would be required to buy health insurance if they didn't already have it through employers, and insurance companies would be able to afford to provide care more widely because they'd have the larger risk pool. (Healthy folks' premiums would offset the cost to provide care for less healthy folks.)

Because most people have been shielded from the true cost of medical care and of health insurance, the sticker shock was huge. But the government, committed to keeping the patchwork system in place instead of committing to a single payor system, hoped to sweeten the pot by offering subsidies for individuals to pay for the premiums.

It worked in some states better than others: states willing to increase and expand medicaid were states where the ACA worked best and had the most success. In other states, where the mostly Republican administrations refused to expand Medicaid, the cost of insuring the sickest fell to private insurers who didn't want to offset their traditional profits by actually paying for care. So they cried poverty and pulled out of those exchanges. Leaving it harder and harder for individuals to obtain and pay for insurance in those places.

The vendetta against the ACA

The ACA is far from perfect. But in the absence of the will to move to a single payor system, it's the best we've got now.

(And if you're going to argue against a single payor system by making claims of Medicare fraud and the need to keep government out of your health care, you'd better come armed with facts because regardless of what some legislators would have you believe, Medicare works. It provides reliable care to a huge number of people with an exceptionally small amount of fraud and a lower percentage increase in costs as compared with the rest of our disorganized system.)

It's ironic in the extreme how the ACA had become the target of the conservatives since it was a conservative plan in the first place, INCLUDING the individual mandate.

And here's where I must leave our tale: Where we are now may not be the happily every after of health care, but if the ACA gets gutted without a viable replacement (of which there is none, because this stuff is hard and everyone knew that), far too many of us will end up wandering in the dark and terrifying forest with no way out.

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