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Toward a Better Health System, Part III

By January 5, 2017Commentary

Okay, regardless of what I or anyone else things might be a better way to maintain the health, and manage the health care, of Americans, the current system is so complex it is difficult to contemplate a comprehensive overhaul that occurs quickly.  So here are a few ideas on shorter-term solutions which may help address the problems, many of which have been mentioned before in this blog.  It is true that the primary issue in regard to health that we face as a country is the amount of spending associated with it and the growth of that spending.  This is partly a government finances problem as half of health spending now comes from governments, but also a personal one, as most workers and those with individual coverage are incurring larger premium contributions and greater cost-sharing.  The personal cost does become an access issue; it is a barrier to people receiving care that they need.  So it is logical to try to attack the cost and spending issues first.

Research suggests that our primary cost problem is unit prices–hospitals charge more, doctors earn more, drugs cost more, etc., than in other developed countries.  And concentration across the provider world has greatly increased, lessening competition and leading to faster price increases.  It is hard to reduce what physicians earn, and they do an important and difficult job.  But we can provide lower cost clinical alternatives and settings.  The regulatory limits on what nurses, nurse practitioners, physician assistants, pharmacists and other clinicians can do without physician oversight should be eliminated and scope of practice broadened to the extent consistent with training.  The absurd patchwork of state licensure requirements should be eliminated as well, there should either be national licensure or automatic national reciprocity for any state licensure.  These changes would allow much greater use of lower unit-cost professionals and of telemedicine, which also has a lower cost, as well as allowing for a more rational national use of capacity.

Hospital systems should be broken up and forced to divest ownership of physician practices, skilled nursing facilities, etc.  There is literally no evidence that the wave of consolidation over the last two decades has either lowered prices or improved quality.  And, one of my pet peeves, non-profit hospital systems and other providers, and health plans, should be forced to limit executive salaries.  This is no small item; reducing these to more rational level consistent with the idea of a non-profit would save billions and billions of dollars.  Drug prices are high solely because of patent protections.  Any drug developed with any governmental assistance should be subject to restrictive pricing.  For other drugs, the length of patent protection should be tied to drug pricing, and drug price increases.  Pricing a certain level above cost or price increases above general inflation would lead to a reduced patent term.

Inappropriate utilization is also somewhat of a problem, but I think a number of initiatives have made significant progress in addressing this aspect of the problem.  The amount of inappropriate service use is overstated in my judgment.  But it is important to remove regulatory barriers to care management activities of both government payers and commercial health plans.  And, as I noted in the first post in this series, the more we connect personal financial responsibility with payment for care, the more likelihood that people will be wise consumers.  It is also the case that poor health behaviors lead to a lot of health spending.  Particularly for government programs, people who don’t change these health behaviors after being given a couple of chances to do so, should simply have to pay the full cost of their health care.  It is completely, disgracefully unfair to make responsible citizens pay for the poor behavior of others.  Private payers should similarly be permitted to raise the cost-sharing of members who won’t change poor health behaviors.  Doing that is the only way to encourage better health behaviors.  And if people don’t want to change, that is their prerogative as long as they bear the cost.  So we are pretty much back where we started.  Hope this sparks all of you to think about how you might improve the system.  And I know the ideas tossed out here require a lot more fleshing out if they are ever to be put in place.

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