...If the answer to the first question is "no," the plan will not control costs. If the answer to the second question is "no," the plan will not improve quality. If the answer to the third question is "no," the plan will not increase access to care. If the answer to the full set is "no, no and no" (and I believe in almost all cases it is "no, no and no"), the plan is hardly worth talking about.
Two hundred years from now, anthropologists will look back on our era and wonder why there was so much sound and fury over plans that from the get-go could not possibly succeed. To help them out, I plan to entomb this Alert in a cornerstone somewhere.
Health care is a complex system. It may be the most complex of any social system. Complex systems cannot be managed, planned, controlled, etc., from above. If they are functional, it is only because the people down below face good incentives and feedback loops. If 300 million potential patients make just 10 health care decisions every year, that's 3 billion decisions on the demand side of the market alone. No one can manage, plan, control, etc., 3 billion decisions, to say nothing of the supply side of the market. The problem with all of the plans you have been thinking about is that they all violate this principle.
How do we know if the participants in a complex system face good incentives and good feedback loops? We can begin by asking whether they have the power to make things better. Although the three questions above are very good questions, here are three that are even more fundamental:
4. Does the plan allow doctors and patients to freely recontract, so that a better, higher-quality bundle of care can be provided for the same or less money?
5. Does the plan allow providers to freely contract with each other to reduce costs or raise quality?
6. Does the plan allow the insured and the insurers to freely recontract in order to change the boundaries between self-insurance and third-party insurance and arrive at more desirable allocations of risk?
The really disconcerting thing is not that the answer is "no, no and no" for all of the plans. I'm sure you already anticipated that. The really troublesome thing is that the answer is "no, no and no" for the current system.
In our fee-for-service payment system, doctors are slaves to the way they are paid. It doesn't matter whether the payor is public or private. It also doesn't matter whether we are in the United States or in Canada. Doctors have no freedom to repackage and reprice their services. More precisely, regardless of how they repackage, they cannot reprice. So almost any innovation that raises quality or lowers the patient's costs means less - not more - net income for the physician.
Fortunately, there are exceptions to this generalization. There are isolated markets here and there that are bustling and teeming with entrepreneurial activity. These islands of health care innovation are easy to spot. They are the places where the third-party payers are not.
TelaDoc is headed toward its one millionth customer. If that doesn't immediately knock your socks off, stop and consider: Almost one million people have stepped outside the traditional health insurance system and paid with their own money for a few simple services that our institutionalized, bureaucratic, archaic, third-party payment system cannot deliver. In addition to telephone consultations, TelaDoc patients have portable electronic medical records. Also, their prescriptions can be ordered electronically, taking advantage of software that reduces medical errors.
Another entrepreneurial venture — walk-in clinics in pharmacies, supermarkets and shopping malls — has recently discovered for medicine something nonmedical professionals have known about for several decades: the computer. Nurse practitioners not only enter patient data electronically, they follow computerized protocols in making decisions, and they can order prescriptions electronically as well. A MinuteClinic survey of 58,000 sore throat cases found that the nurses conformed to evidence-based treatment guidelines 99.15 percent of the time. By contrast, the RAND Corporation found that system wide, doctors deliver appropriate care only 55 percent of the time.
Big market changes are not driven by entrepreneurial buyers. They are driven by entrepreneurial producers and sellers.
The posts are impressive for their clarity and emphasis on really important insights.