Tuesday, August 26, 2008

Fifteen days of blogging for health care reform: Paying the piper

Guest post by Skylanda.

Today, you’re going to hear something new and different. Today you are going to hear this bleeding heart, tree-hugging, west-coast, San Francisco-born, ivory-tower progressive make a neo-conservative argument. Free market, pay-your-own way, private enterprising, classical neo-liberalism. Hold on to your wallets, we’re going for a ride.

This argument concerns the question that underlies everyone’s hesitation with heath care, no matter what your political orientation: how are we going to pay for it. Covering every child, woman, and man in America is an expensive proposition, and paying for it is the key stumbling block between dreamy idealism and real movement forward toward universal health coverage.

Anyone who wants to answer this question - from the most laissez-faire neo-liberal to the farthest left socialist - needs to understand one thing, and one thing alone: we already are paying for it. No health care economist disputes this one common understanding: Americans pay more - per capita and as a percentage of our gross national product - for health care services than any other industrialized nation. And for that sacrifice, we cover less of our people, we live with the gripping national fear of health care insecurity, we measure out at some piss-poor rankings on standard outcomes measures like infant mortality and childhood nutrition. We pay more money for the great privilege of getting less health.

In other words, Americans are getting the rawest health deal on the block.

That is the bad news. But that bad news is also the seedling that sprouts the sapling of good news on the horizon. The good news is that if dozens of nations with similar wealth profiles to ours are able to squeeze better outcomes out of lesser health investments, that means that there is slack in the system, that we have already dedicated the resources and the means to the accomplish the task, and that providing America with a first-class health care system is merely a means of rearranging that system to fit the circumstance at hand. Simple, yes?

God, however, is in the details, as they say. So here are some of the nuance it behooves us to understand in tackling the dizzying problem of paying for universal health care.

Rationing. If you’re my age, the word might bring to mind propaganda shots of little old Russian ladies standing in line to buy bread just before the fall of the Iron Curtain, with a Reaganesque voiceover decrying the evils of Communism. A little older and you might remember the oil crisis and the self-rationing feat of standing in line for hours to pay for gas. If you’re my parents age, you might remember stamps that gave you the right to buy tires and butter and other household products that were scarce during the war.

Rationing is the hobgoblin under the bed, the Commie in the closet, that is yanked out to be puppetted around every time the prospect of a national health care plan arises. Do you know how long it takes to get an MRI scan in Canada?! - it threatens (and actually, I have no idea at all how long it takes to get an MRI in Canada; I suspect it depends on the same variables that drive wait times here: distance from nearest tertiary care center, relative wealth of the region, staffing issues, and the like). Because in America we use rationing as a strawman to promote the glories of capitalism over the evils of…well, just about everything else, we tend to be blind to the fact that there are actually two forms of rationing - one of which terrifies us to our very core (Commie plot that it is, of course), and one of which we live with so commonly that we fail to notice its sinister existence, the way we forget to notice the sky is blue after too many sunny days.

The first form of rationing - the one that invokes such terror - is rationing by wait time. These are the communist breadlines of old Russia, the gas lines of the 1970s, the apocryphal wait times to get that MRI scan in Canada (it also explains the way you have to put your name on the list now if you want to get a private permit to run the Grand Canyon by river raft some ten to fifteen years into the future - even in the good ol’ USofA, rationing by time has its well-worn time and place). If you stand there long enough, you’ll get your goods. The goods aren’t even necessarily any more expensive for your troubles; you just have to wait for them.

The other means of rationing is by cost - that is, you just raise the price until the right number of buyers drops out, and there you have your trade. This is the absolute fundament of free-market capitalism; a certain quantity of goods is out there, a certain demand is placed on that supply, and the winners are those whose cash and values come into best alignment with the available quantity of desired stuff. This is also what you see modeled in simple Cartesian form in every freshman econ class, with the supply on one axis, the demand on the other axis, and economic efficiency at that magical price where the two meet in the middle (I never saw rationing by time modeled on a two-axis graph - I suppose it‘s possible, but not so much the subject of talk in countries where the free market is the order of the day). This functions well for goods like luxury cars, designer jeans, concert tickets hawked on the day of the show, and artwork; it falters clumsily in the face of health care products which are not optional, and have great social consequence if they are not distributed with some efficiency of manner.

In America, we ration by cost so frequently and so thoroughly that we do not consider it rationing and we get very huffy when anyone implies that it might not be the best means out there to distribute goods like health care. And if we do complain - about, say, the cost of health care - it is not looked on as a reaction to rationing; it is looked on as the free market in action (which it is; it is also a formalized and highly regulated form of distributing limited supplies of goods…that is, rationing). Conversely, we recoil at the very thought of rationing by time, even though rationing by time may actually get services sooner for a large number of people than rationing by cost, because so many people can simply never mount the resources pay for something like an MRI.

The question of rationing by time versus cost is heavily reliant on regional values, and it speaks to the soul of America whether we would rather to continue rationing by cost - which allows quick access for the ever-shrinking numbers of those who can pony up cash (or bill their insurer) - or whether we might start to thinking about rationing by wait time, which equalizes the playing field across a wider socio-economic spectrum. The fact that those making policy usually have insurance (and the quick access it entitles) throws a wrench in any attempt to change this status quo (though insured individuals should remember that this is not a permanent status, rather an ephemeral notion of security that could evaporate tomorrow). Rationing by time does not necessarily mean that every cancer patient is going to wait eight months to see a specialist; a good health care rationing system uses effective triage to work in emergent cases first, then urgent, then routine, with preventive services tracked along a different route. These sorts of systems take planning and rational forethought (as well as continuous adjustment to feedback) to work effectively, but consider the alternative that we have now: a haphazard system where your entry into specialty care is wholly predicated on where you live, what emergency room your ambulance screamed into the night you first got sick, what providers happen to accept what insurance, who your primary doctor happens to know that she or he can pull strings with when time gets alarmingly short, and the like. Rationing by time provides a means to more efficiently utilize services that are today placed without overall regional planning for needs, often with a waste of investment inherent in that sort of decentralized system.

Which brings me to the second point that is vital to understand in the financing of health care:

The inevitability of decreasing returns on investment. Health care is like chocolate cake. The first bite of that cake is good, even fabulous. It satisfies that place in the belly that only chocolate cake can satisfy, it fires off a few dopamine receptors, and for a moment, life ain‘t so bad. The second bite? Also very good, but not quite as fulfilling as the first. By the fourth or fifth bite you’re getting kind of bored, and by the end of the plate, you wish you had stopped a few bites back.

Such is the investment in things like health care (and other public goods like education). If you had been uninsured and get, say, a sudden windfall of $2,000, the first thing you might do is spend a chunk of that money catching up on the pressing health issues that have been bothering you. A hundred fifty bucks to go to the dentist to take care of an aching tooth - money well spent, like that first bite of cake. After that you focus a little more on that gnawing feeling you get in your stomach after you eat, so you go to the doctor, who tells you it’s just severe heartburn and gives you a prescription. You feel better - not quite as much better as when you knocked that first burning priority off your list, but still, better. Next you’re wondering if that ugly twisted toenail could be fixed; it doesn’t really bother you, it’s just unsightly, and it turns out that it costs lots of time and money to fix something like that. You decide to forgo it, because you’ve already blown about five hundred bucks, and you want to spend the rest on a vacation you’ve been putting off, a contribution to your retirement account, and a new bike to replace the one that is breaking down in your garage. The toenail is the middle of that cake, the part you’re still enjoying but not really getting too much out of anymore. On the other hand, you might take that money and hit up a cosmetic dermatologist, who gives you an expensive cream to remedy that embarrassing adult acne and talks you into lasering the hair off your legs (or chest, or back…let’s not discriminate against the boys here) for $350 a shot. It sounds like a good idea at the time, but once the bill comes, you realize that not only is your entire $2000 gone, you now owe another $200 on top of that, and that‘s the end of your vacation and your retirement contribution and your new bike. This is that last bite of cake, the one you kind of wish you’d never eaten.

This model can be extrapolated to nation-wide health expenditure. There are pressing matters that can give great relief if funded: vaccines for children, primary care access, care for life-threatening illnesses, those kinds of things. Then there are secondary matters that are best addressed once those primary matters are covered - advanced care for professional sports injuries, cosmetic issues like acne and braces, etc. The primary issues tend to be (though are not always) mass, cheap interventions; after that, things usually become more costly and individualized. But if you go far enough on down the line, you can continue paying more and more money for incrementally smaller outcomes (let’s call those outcomes “health”) until you are paying so much cash for so little gain in health that it is questionable whether that is still something you want to spend your hard-earned dough on - or, more accurately, what we as a nation want to spend our hard-earned dough on. Not because health isn’t important, but because there are other important things too - roads, schools, social security, clean air and water, national defense - and the national budget (or GDP, or whatever your source of cash) is always going to be a limited resource.

For that reason, it is not necessary nor desirable to purchase an unlimited amount of health, nor does it make sense to spend unlimited funds on health care. It behooves us to plan what portion of our collective wealth we want to spend on this thing called “health” - or what sort of health we want to achieve given the limits of our wealth - and then to determine the most efficient way to reaching that end. Setting open-ended financial boundaries, on the other hand, does not make for sound planning and is not a sustainable means of establishing universal health care.

The year that I moved to Oregon, citizens of the state voted on a ballot measure to provide universal health care for every person within the state borders. It was a lovely thought - it would have paid for everything, for everybody. It set no limits on what would be covered, when, or for whom. It included things like aromatherapy as a covered medical service, despite the dubious benefit of that particular modality for any other purpose than making your nose happy. It was voted down by a resounding margin, something like 70-30 on the nay side. This was a wise move on the part of the voters. The measure included no cost estimates, but pundits and analysts on both sides noted that this kind of coverage for that number of people would exceed the entire state budget every year; no new funding source had been built into the proposed program. Had it passed, it would have failed with the thud of a thousand lead bricks hitting the ground, and it would have been hailed by opponents nationwide as a failure of universal coverage - a nail in the coffin of single-payer health care. For that reason, I can look back and say that I am very glad that, in this case, single-payer coverage did not pass muster.

Which brings me to the third point that I advocate everyone understand about health care financing:

Understanding that good business sense and the profit-making motive are two different things. That there is a very big difference between divorcing the profit motive from the health care industry, and removing good financial sense from the health care industry. Under no circumstances can I advocate the breezy, never-can-care idea that medicine should not be about money. Medicine is about money. Everything is about money. The last time that medical providers acted like they could work without a thought to the financial consequences of their actions, we ended up with a system of capitated HMOs...please, please let us not do that again.

On the other hand, prying our health care system back from profit-making ventures is not going to be an easy maneuver. The health insurance industry is a large and powerful lobbying force, one that gets its digs in every time a state or region starts tinkering around with the idea of single-payer coverage. And whereas pharmaceutical outfits have at least some mutual role in which profit motive operates toward the benefit of people who eventually receive their drugs, I am not sure I can come up with a solid social good provided by for-profit insurers that could not be equally provided by a well-funded single-payer system (aside from providing employment for a literal legion of administrators and bureaucrats along the way).

This is not to say that the free market has no place in health care - on the contrary, single-payer coverage may actually open up choice for consumers by unshackling the lock-down on preferred providers, formularies bargained for convenience instead of efficacy or cost-effectiveness, and regional limits that insurers tend to have over their patients. Moreover, ancillary services (such as imaging centers, laboratories, even clinics themselves) can still operate in the free market under single-payer coverage by providing competitive advantages over each other to attract business in the same manner they do currently. This is one of the main reasons I support single-payer sourcing but not an entire system of government-employed providers: by hybridizing socialism and capitalism, you can squeeze the best out of both without losing the aspects that makes each of them attractive.

So in the context of these three principles (rationing, decreasing returns per increased investment, and good financial planning with or without the profit motive), where is the American health care system now? One, we ration by cost, not by time, for almost every service…though some regions are so strapped for specialty care that we ration by both cost and time - a particularly potent recipe for disaster. Two, we are hugely overspending on health care and yet not even getting that first delicious, satisfying bite of cake out to the entire population. And three, we consistently emphasize profit over any kind of good business sense at all.

Pulling these three forces into alignment is - in this one opinion - key to founding a sustainable, affordable version of universal coverage that Americans can live with and thrive on. And here is the sinking realization that should haunt every American when it comes to health care: we already pay too much for too little. We are getting the rawest end of the deal in the developed world. We now have a choice: we can continue to bury our heads in a very expensive sort of sand and believe that a fractured system with ever-increasing premiums is working to our advantage, or we can start to wonder what would happen if we took all that cash - that enormous chunk of the GDP now wrapped up in health care - set it all into one collective system, redistributed without the skimming of profit or the redundancy of hundreds of parallel systems, and set about planning a rational health system for the next fifty years. Could we do it? It would be one of the toughest, most contentious enterprises America could take on…just a hair less tough and contentious than our current health care system, I would wager.

But, you say, would I have to pay higher taxes?

Well, that’s a good question. I submit that if you are paying insurance premiums in America today, you are subjecting yourself to one of the most ludicrously progressive tax schemes on the planet. You may consider yourself middle class (or otherwise), but the public good known as the nation’s health is resting on your shoulders - not only are you contributing directly to the private pooled premium fund, you are also paying federal taxes to support others on the Medicare-Medicaid axis and a variety of other programs. And if you are not paying health insurance premiums, it’s time to buck up and do your share - in the proportion to which you are able, so that you may draw resources that you require. There is only one way to accomplish this: taxes.

If you worry that only the wealthy, the documented, or the honest will pay their fair share? Well then heck, make it a sales tax - no one walks the American soil without buying something. If you want to ensure that every person stepping foot on American earth deserves their fair share of the health care pie because they contributed their piece, sales tax is probably the most thorough (though probably not the most equitable) way to do it.

And if we paid for single-payer health care out of an increased tax, what would that buy you to make it worth your trouble? You could do away with your health care premiums. Stop wondering if Blue Cross is going to double your deductible this year just for the heck of it, or triple your premium because you just found out that persistent nagging cough is severe asthma, or deny your coverage because you had that condition before your employer switched plans last month. You would buy portability, security, and predictability - ratcheting the stochastic impact of health care costs out of your emergency budget. And if you get what you expect out of a single-payer system, you actually have a voting say in who stays in office to guide the system - unlike your coverage today, where you only have a voice in Blue Cross’ policies if you are a major stockholder. And remember, head for head, every other developed nation in the world - by controlling the profit motive and the redundancy issue - has managed to pull off some form of access that covers more of the population for less cost than we have. We are already paying the piper; now is the time we demand that the piper hand over the goods.

And how do we go about demanding those goods, forcing a system wracked by inertia to start a free-wheeled move in the direction of universal coverage? First there is the regional approach - county by county, city by city, state by state. State-wide universal coverage has been tried to varying degrees of success in a number of territories; New Mexico is among those currently wrestling (thus far unsuccessfully) with how to cover its total (albeit rather small) population within the bounds of a notoriously cash-strapped budget. On a smaller scale, cities like San Francisco and Albuquerque have made grand efforts to carve out havens of access within their boundaries. The pitfall of this approach is obvious: it creates a system more finely fractured than Yugoslavia after the fall of the Iron Curtain. You move ten miles down the road and lose your insurance.

A second tactic is to attempt grand sweeping reform at the national level. This might result in the best outcomes should it succeed, but please remember this was recently tried at the highest levels of power - during the Clinton years - and the plan was killed by political manhandling before it even got a chance to stretch its wings.

Another strategy - this one sneakier and designed to make an end-run around such organized resistance - is to simply pick the most successful federal program and quietly fund and expand its scope until it covers a larger and larger portion of the population. What the free-marketeers fail to mention so often is that we are have an enormous sector of America already on federally funded health insurance. Start adding up the numbers from these programs, and go from there: Medicare. Medicaid (alongside its state-by-state contribution). The VA system. The Indian Health Service. S-CHIP. (If you add every county and local coverage scheme across the nation, you might start to guess that we already have a heavily socialized, but very poorly planned, medical system - but that‘s a digression for another time.) Medicaid is fractured by state, the IHS is limited to tribal members only, and S-CHIP is for childhood coverage. But then there’s Medicare - a nationwide, full-spectrum insurer that (so long as its budget stays on an even keel) doesn’t do such a bad job of funding care for a large number of Americans, albeit usually of a particular age group. If one could slowly expand its population coverage (maybe even combine it with the contribution of the VA’s remarkable system of health care informatics), it is possible to build a system of universal coverage without ever having to do national battle on the gladiatorial field of the congressional floor. The infrastructure is already in place, the bureaucracy already pushing those papers; all we need is the will and the cash.

And now to bring it all back around to the place where I started, the neoliberal argument for universal health care. So far, this probably sounds pretty far to the opposite side - all kinds of people-taking-care-of-people, feel-good socialist talk. And it is. But flip it over for a second and take a look at what the burden of the providing insurance does to the free market in America:

Providing private health care benefits to employees saddles businesses - especially small businesses - with a burden so unpredictable, expensive, and bureaucratically top-heavy that it severely impinges the ability of the free market to operate in America today. The current health coverage system does its part to kill the entrepreneurial spirit as people feel locked into secure jobs purely for the health benefits. It imposes a legitimate but ultimately defeat-ist fear of going out and taking the risks needed to start a business, become self-employed, go out on one’s own - all those things that go along with free-style invention and innovation. It restricts the market for labor as people become geographically bounded by their need to maintain a particular insurance policy due to a pre-existing condition, or because one state has more sympathetic laws regarding repossession of personal property in medical bankruptcies (ironically, Texas - a bastion of neo-liberalism - has been repeated cited as a state with laws friendly toward individuals in crisis from the hit of medical bills on their finances…go figure), or because they are afraid to temporarily lose Medicaid coverage for a serious illness in the interim. I defy you to find another force in America that so deeply impinges in the entrepreneurial spirit for so little gain in social good.

It is a strange sort of backwardness in America that we are defiantly against government-sponsored socialism (at least on the surface: I‘d like a show of hands of how many neo-cons are on the Medicare or VA rolls), but we are quite happy to saddle commerce - especially small businesses - with what largely amounts to a social good obligation. I believe the reverse should be true. I believe that the free market should be unburdened of the heavy load of providing health benefits, and that once so unburdened, we may see a re-flowering of what Adam Smith envisioned when we first spoke of the capitalism and the invisible hand a couple centuries ago: a multitude of players, easy entry and exit from the market (a key component of “perfect competition”), a society of self-motivated self-sustaining players who can equally sell their labor to others or work it for themselves, as they so choose. That is capitalism, old-style, old-school, the way the game was meant to be played.

Single payer health care. Socialized medicine. It’s the new capitalism.

Moreover, health care security on the individual level is about that most American value of all: personal freedom. It is about the ability to choose a job that fits your interests and your skills, not your medical needs. It is about being able to quit that job and not worry that you‘re also quitting your best shot at health. It’s about being able to work hard and get that raise without worrying that it will be the straw that breaks the Medicaid threshold without offering any new benefits in return. It is about being able to divorce your spouse and not worry that you are also divorcing your right to be seen by a doctor for your health problems. It is about being able to cross state lines for a better job without leaving your benefits behind. It is about sleeping well at night knowing that a mis-step in front of a bus or a few cancer cells growing in your bones will not mean the capping out of your meager private benefits, repossession of your house, or the long road to permanent poverty.

Universal coverage is about security. It’s about freedom. It’s about time.

Cross-posted at my blog, Loose Chicks Sink Ships. Please note that all references to patients have been altered and/or fictionalized to protect the identity of those individuals.