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David Fisher, MD, MPH: Where President Obama is wrong about health care reform

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Friday, June 26, 2009

Where President Obama is wrong about health care reform

I don't have all the answers to health care reform. American medicine is a complicated web of economic, political, and social factors. I believe that everyone engaged in this debate wants the best health care for the most people; we just disagree about how to accomplish that goal. President Obama's recent statements about Medicare tipped me off that he is about to damage our health care system in ways that may not be reversible.

Medicare Advantage- standard or scapegoat?
His comments were about the program called Medicare Advantage. This is a program that works like an HMO. Patients who are Medicare-eligible enroll and reassign their Medicare benefits to an insurance company. The government then pays the insurance company a set amount per month to manage that patient's health care. Patients pay lower premiums (regular Medicare still requires patients to pay 20% of most of their own health costs), and patients must navigate their medical care through their primary care physician, who oversees everything and generates referrals for procedures or visits to specialists.

The insurance company contracts with doctors and hospitals to provide the care. If they do a poor job of efficiently managing a patients' medical care, they lose money. Let's say Medicare pays $700 per month for a patient. If that patient ends up having a $3000 hospitalization that month, the insurance company loses $2300 (and often passes that loss along to the doctors and hospitals in the form of reduced reimbursements). If, however, the doctors keep their patients healthy and out of the hospital, or help them avoid invasive (and therefore expensive) procedures, they have money left over at the end of the month. The doctors and hospitals who figure out how to manage their patients' care at the lowest cost have an incentive to do so. For example, if I meet certain clinical goals with my Medicare Advantage patients (things like improved blood sugar readings for my patients with diabetes, improved blood pressure readings, timely immunizations, etc), then I will qualify for a year-end bonus from my employer, Advocate Health Care. If I don't help my patients meet these goals, then no bonus for me.

For those who are concerned that this arrangement motivates doctors to withhold care, one of the largest factors we measure is patient satisfaction. Our scores go down if our patients' satisfaction goes down. Also, because there are many insurance companies, doctors and hospitals who accept Medicare Advantage, patients who are unhappy with their treatment can always switch providers. Another potential concern about this program would be that insurance companies will only accept healthy patients under this arrangement, but Medicare adjusts payments based on diagnoses and severity of illness, in order to encourage providers to take all patients, both healthy and sick.

The bottom line: Medicare Advantage sets a goal for health care costs, and then encourages doctors, hospitals, and insurance companies to work together to stay within that cost. Those who do it the best will keep more patients and will see financial benefits at year's end.

Obama's flawed philosophy

Here's where President Obama comes in. He wants to eliminate Medicare Advantage. His reasons reveal what I believe to be a flawed philosophy towards our health care system. According to Obama, Medicare Advantage "overpays insurance companies" and leads to "wasteful spending." Here's what irks me about that. Let's say that Medicare pays a capitated rate of $500/month per patient to the insurance/doctor team. (This is an oversimplification, but works for the sake of example). And then let's say that I work hard to keep my patient's healthcare costs to $400/month. I do this by spending more time with my patients emphasizing prevention, making extra phone calls to make sure their treatment is working so they don't end up in the ER, and arranging for family meetings to discuss advance care planning so patients avoid unwanted treatments and procedures. The resulting $100/month cost savings is my financial incentive to control my patient's costs. In many ways, it makes it possible for me to spend the extra time, since Medicare does not directly reimburse for phone calls or family meetings. What bothers me is that President Obama looks at the cost per month for this patient and thinks the $100 is "wasteful". He naively assumes that the patient's costs could have been managed within $400/month under regular Medicare, that pays according to what doctors/insurance companies bill (the "fee-for-service" model). He sees Medicare paying $500/month when they could have just paid $400. He fails to realize that my patient's lower cost per month was the result of my hard work, which was motivated, in part, by the opportunity to earn some extra money for being efficient and effective. When Obama labels this financial incentive as "wasteful" and "overpayment" he suggests that doctors, hospitals and insurance companies should be expected to control their patient's costs with no additional incentive for doing so. In today's world of declining reimbursements and increasing malpractice insurance rates, this is an unreasonable expectation.

By President Obama's own admission, any financial profit gained by health care providers who manage their patients well and keep costs down is considered "wasteful." His comments reveal a philosophy that resists, and may even resent, any financial gain by those who succeed at providing health care efficiently. This philosophy demonstrates a gross misunderstanding of human nature. It is a philosophy that could damage, and perhaps destroy, America's excellence in health care.

One factor more than any other has made American innovation in health care the envy of the world. That single factor is competition. Here in the USA, the business entity that does anything better than its competitor will achieve success. Competition drives creative solutions in all fields, including health care. The hospital that provides the best care at the lowest cost will end up with patients lining up outside its doors. The pharmaceutical company that invents a drug easier to take, and with better results, will take over the market. The medical school that develops innovative training techniques will get the best and brightest applicants. There is nothing obscene about success in a health care market; indeed, it is the potential for success that drives new innovators to enter the field and achieve personal goals, financial or otherwise, while improving health care for patients.

President Obama must understand human nature enough to understand this. Very few enter the health care field (or any field) on purely altrustic motives. There is always an underlying desire for personal success in the field that one loves. Yet, Obama naively labels financial incentives in health care as "wasteful" and "excessive." These statements frighten me, as Obama pushes for health care reform. Introducing more government into health care will skew the competitive market away from free enterprise, away from opportunities to develop innovative solutions, and towards more paperwork, beauracracy, and waste. The nursing home environment, where I spend the majority of my time, is one of the most heavily regulated sectors of health care. I am not against regulations; some rules are necessary to protect the vulnerable. However, the efforts required of doctors, nursing home staff, and administrators, in order to keep up with the documentation for state and federal regulations, drains nearly all of the patient-focus out of daily care. Nursing home employees are often more concerned about keeping their charts and documents within regulations than they are about caring for their patients. This is not a knock against nursing home staff; they are some of the most caring people I know. This is simply an example of what a large beauracracy does to any industry.

Stop cursing profits
Any health care reform must preserve the opportunity for people and organizations to compete on a level playing field in the health care market. The introduction of a wide-reaching "public option" for health insurance will, by its nature, limit these opportunities. Government subsidized health care will not be under the same pressure as private health care providers. Private companies must generate a profit in order to survive. This forces people to work hard, innovate, and contain costs. Governments that can simply print or borrow money do not need to generate profits. There is no pressure to perform well. This leads to laziness and lack of care, and costs tend to expand. President Obama should stop cursing insurance companies and innovators who earn money by introducing solutions into the health care market. He should not naively assume that injecting more government into health care will somehow bring equality and order. I believe it will have the opposite effect. I believe more government involvement in medicine will reduce health care quality for most Americans, will ultimately limit access to care for most Americans, and will discourage our best and brightest from entering the field of medicine. I hope and pray that the administration and Congress take a measured approach before increasing federal involvement in health care, because once government expansion occurs, it is very difficult to retract.


Anonymous said...

Hey Doc, I am also a geriatrician and FP doc. I have been really disappointed with Obama because he does not support a cap on non economic damages. He is no friend. I have been excited about most of his health care reform until he said that at the AMA meeting. Now I have lost faith in him, and he became an uncaring SOB. It was that crack that shattered my image of him. I personally think that he will not succeed. Historically the AMA has been able to shut down any large reform that is not in the best interests of American Medicine. I am not a member of the AMA because I can't afford it. The AMA has good intentions but has screwed up in the past in health care reform. In the 70s Nixon and Ted Kennedy both agreed that HMOs were a good thing -- and they were because at that time HMOs were "Staff Models" they employed physicians and hospitals. The AMA forced a provision for IPAs which allowed insurance companies to take premiums and divide up cap payments giving some to doctors and some to hospitals. When you do not have the whole structure of the staff model HMO, in effect you cause doctors to be at risk for patients debts, and this did put physicians out of business. I see no justification for unlimited damages when a we have a legal climate that lets a judge file a lawsuit againts a cleaning business for millions because they damaged his pants.

David Fisher, MD, MPH said...

Anonymous doc, I agree. Thanks for your comment.
There is no doubt that doctors are forced to drive up costs by practicing "defensive" medicine. We all do it, even subconsciously, because we hear the lawsuit horror stories and see the ads on TV by the predatory law practices.
Another policy that I think should be part of tort reform is the opportunity for doctors to countersue for damages when they face a frivolous lawsuit. As you know, even if we win the case and are completely absolved of negligence, the fact that we were sued at all will always remain on our record and will drive up our malpractice rates.

Anonymous said...

Hi Doctor Dave,

Thank you so much for taking this complex issue and breaking it down so that the average, non-medical person can understand what is at stake. I plan to refer many people to this article.


Joan Bishop

Tim Bovey said...

I thank you also for trying to explain this complex issue to the laymen. There is much that I still don't comprehend enough to be certain if I agree or disagree. I know how frustrating it is as an educator to have people who clearly haven't spent time recently in the classroom making educational policy or paperwork requirements that keep me from actually teaching.
However, at the risk of arrogance I still have many questions. Do you think that we have to choose between quality health care and universal access to health care? Although we may be the "envy of the world" as far as the quality of our doctors and ability to do advanced procedures, I think the actual health statistics of Americans fall well below many other industralized nations. A significant cause of this may be that many American do not have access to quality health care because of its skyrocketing cost. Are we destined to be a nation of health care "haves" and "have nots" as health insurance rates show no sign of halting in their staggering increases? Perhaps Obama is wrong in some of his tactics in creating health care reform. But are there means by which we may decrease significantly the estimated 47 million people who are uninsured? Or is it a necessary evil that many families be shut out of the health care system so that a competetive environment that encourages innovation will ensue? Is there a third stream of reform that will allow more people access but still retain a competetive, nonstifling environment? Is the situation either / or?

David Fisher, MD, MPH said...

I am not suggesting that we shut anyone out of health care. I simply balk at the idea that a centralized, government-run health care system will be able to solve the problem of people not having access to health care. There will always be limited resources. There will never be enough health care to go around. I reject the idea that offering "health insurance to all people" will somehow reduce the gap between "haves" and "have nots". If anything, the gap will increase. I expect the government option will have very limited access to any type of quality health care. I hope I am wrong, but I watch the way large beauracracies work and I doubt severely that Washington can swoop in and offer quality health care to however many million Americans when they have already bloated the costs of Medicare and Medicaid. What we will end up with, then, are those who can afford to pay for private health care, and those who have to settle for the government option. Having "health insurance" does not guarantee health care. I liken the public option to the low rate auto insurance companies that give drivers a policy just so they can stay within the law, but rarely pay out on any actual claims. It seems we are so caught up in this idea that everyone needs "coverage" that we are willing to do whatever it takes to slap a label on all the uninsured just so we can say they are now insured. In doing so, I fear we will draw more resources away from an already struggling industry and put those resources into more and more wasteful processes. I also fear centralizing the power of health care decisions into one overseeing group, as President Obama promised to do today. The potential for corruption is unavoidable, and health care decisions will not be made between doctor and patient, but rather by committees that are using "utilization" and "cost control" and their guiding lights in making those decisions. If that could be done in a pure manner, it would not be so bad, but a swarm of lobbyists will surround these committees offering favors for approval of a drug or treatment, because the stakes are now even higher since millions more people's health care decisions will be influenced by this small but very powerful oversight committee. Again, I believe that President Obama wants things to get better, I just fear that a centralized approach is nothing more than a way to bring more power to Washington, to be able to claim that we "insured" all America, while actually causing damage to the quality of health care that we all enjoy in this country to varying degrees.