Saturday, November 10, 2007

Why Incentives Will Not Control Health Care Costs

On November 1 and November 8 the New England Journal of Medicine published two important articles on rising health care costs by Peter Orszag, director of the Congressional Budget Office. (The November 8 article is available to non-subscribers.)

Orszag and Phillip Ellis (his coauthor) don’t beat around the bush about the importance of controlling health care costs: “The long-term fiscal balance of the United States will be determined primarily by the future rate of growth of health care costs.”

Their analysis and proposals are sound. They argue that we don’t have enough information on comparative effectiveness and that our payment systems provide no incentives to patients or providers to choose treatments that offer the best quality at the lowest cost. They endorse a value-based approach to insurance design.

But these excellent ideas aren’t new. Proposing them will accomplish nothing without public understanding and public support. And we will not get understanding and support without a form of educative political leadership that -- with the exception of former Oregon governor John Kitzhaber -- has been almost altogether lacking. (Also see the speech I proposed for the Vermont governor in my October 27 post.)

I’m not a politician. I can’t claim to know how a political leader could pursue this kind of educative strategy and win votes. The political challenge, however, is like a clinical challenge that nurses and doctors deal with every day. Hectoring patients about losing weight or cutting down on tobacco or alcohol doesn’t work. But motivational interviewing, which involves meeting patients where they are in their understanding and readiness for change, and helping them take the next step, however small, often does. Skillful clinicians do this well with individual patients. Skillful political leaders can do the same with populations.

The fact that the two New England Journal articles come from the non-partisan Congressional Budget Office is important. Orszag and Ellis lay out the extent of the problem posed by health care costs in a careful, hard-to-challenge manner. They suggest many of the steps we will have to take. What they don’t do is make any mention of the need for political leaders to take the analysis and run with it. Let’s hope that some the Representatives and Senators they advise take the baton from them.


Anonymous said...

What a hot button issue this could become, for whomever it is that chooses to ‘pick up this baton.’ While movement in this direction is getting underway on a legislative level (MA Health Care Quality and Cost Council, to name one instance), I think that the inclusion of this issue into the platform of any politician has the potential to quickly overrun the rest of their seated term or campaign, whichever the case may be. That said, I agree that there is a need for such reform on a national level.
I think several immediate challenges would present themselves: First, opponents will cry “Socialized medicine!” before the ink dries on early drafts of such a proposal. The fine line between public and private health care will need to be negotiated delicately here, when you consider how easily the spin doctors on both sides of this issue can play to their respective bases. I believe many Americans would find it unsettling for the Federal Government to dictate what care may or may not be provided to them. Conversely, it would be equally unsettling were these decisions to be placed solely in the hands of those in the private sector, for the same reasons. Skepticism will closely follow any decisions of such a council, whether private or public. Anyone promoting this idea will need to defend the system’s workings and ethics before it exists, and will most likely need to defend decisions not yet made. With opponents on both sides of the issue with plenty of ammunition, that could be a slippery slope.
Another issue will be that of marketing the meat and potatoes of this plan to the general public, outside of the public/private debate. The first order of business will be to illustrate to the middle class that this will save them money. This will be difficult to do, because many Americans do not grasp that health care costs are going to continue to rise meteorically without acting on such an initiative as this. Hence, when the only “savings” that you are able to present to your audience is a maintenance of current costs at best, to a tapered level of increase at worst, it will make it all the more difficult to promote the means that justify that end.
Once past that major hurdle, the task getting Americans to understand the workings of such a policy awaits. Herein lies a major problem: Americans love simplicity. Presenting to them a health plan that tiers medical coverage, or has different cost sharing responsibilities for different scenarios, or requires more involvement with prior authorizations or appeals processes could illicit a major disconnect or backlash. This is why the idea of the HMO was so alluring to so many people: it simplified their health care. The HMO eventually ran into trouble in an area that this proposal will need to navigate: the perception of too few controlling the health care of too many.
With all this being said, here’s how I would move forward in presenting such a plan:
First, before any mention was made of cost control, or efficiency, I would introduce the ideal of a national health care system to be proud of. An abridged sample speech:

“There's an old method to determining your true calling in life that goes something like this: "What would you do every day for the rest of your life if money were not an issue?"
Well, "How would health care in this country be managed and delivered most effectively if money were not an issue?"
This seems less and less to be the starting point in the health care reform discussion, and more and more to be an afterthought. Obviously, money dramatically affects anything, especially a system that has the potential to generate so much of it. If money were not an issue, though, would anyone really be debating the merits of SCHIP? Would taking money out of the equation make it easier to access primary care, or 'level the playing field', so to speak? Would there be a need for the sweeping reforms and overhauls we are now faced with, reforms and overhauls whose success and/or failure is inextricably linked to the same financial issues that prompted them in the first place? The answer to these questions is, most likely, no.
I know that this is the utmost in idealism, and I do not advocate a single-payer system, mostly for the reason that the free market competition inherent to our economy would pit private insurers, manufacturers and providers directly against the Federal Government - with the patient in the middle. This could prove inevitable in America, and would ultimately get us nowhere. I do support the formation of a national Best Practices Institute and overall national health care reform. Progress seems to be underway in aligning private insurers with state and federal governments, as evidenced by Massachusetts Health Care Reform, similar proposals in California, and Hillary Clinton’s acknowledgement that the need for such a partnership exists. But where is the idealism on the part of our leaders, and from within the collected health care industries?
I know that 16% of the GDP, which is how much this currently costs us, is nothing to shake a stick at, but I think that in order to keep this train from going off the tracks, we need to determine where it is heading.”

After setting the table with the ideal that the driving factor behind any reform is to improve care as well as control cost, it should be much easier to get people on board. The next step will be to sell the plan itself. Having touched upon the quality issue above, here is where I would begin to promote cost efficiency. The first step would be to advocate a regulatory mandate requiring all health care providers, practitioners and insurers, public and private, to adopt and maintain measures of full and publicly available cost transparency. This, in and of itself is a daunting task, but one that I believe will be both crucial to further momentum towards the greater goals set forth, and easier to present and promote to the public. By presenting the issue under the premise that transparency will reduce costs, countering opponents will be aided by the public perception that “those against transparency are in favor of higher costs.” This, of course, is not necessarily true, but it is how the case could most easily be made. Opponents and detractors of regulation will also point out that regulation tends to foster a cost-plus environment; but when the measures being regulated are those that enforce full transparency, that argument disappears.
The major obstacle will lay in ensuring compliance from those within the collected industries, specifically the insurance and manufacturer communities. The ability to turn a profit, however, will not disappear (this will not be an issue, of course, with not for profit insurers, but the premise will remain in terms of competition), but will shift almost fully to risk assessment. This will have the corollary benefit of encouraging insurers to promote wellness initiatives within their customer base. As for the manufacturers, by enforcing transparency, their hand will be forced to search for profit almost solely by providing the best possible products.
Like the speech above, much of this is highly idealistic, and maybe not even that realistic. I think, however, that promoting these principles will help to set the stage for a public engagement on the issue of value-based health care.

Jim Sabin said...

Hi Ian --

I am sorry it took me so long to thank you for this wonderfully thoughtful and detailed comment. You may have another career coming as a health advisor for political leaders! I think you are on target in suggesting that politicians start from health ideals in framing their positions. Health care cost containment is crucial for the future of the U.S. (and planet), but it isn't a theme that will stir the masses. I agree that it should come into political discussion as a means, not an end.

I would tweak your position in one way -- in "After setting the table with the ideal that the driving factor behind any reform is to improve care as well as control cost" I would substitute "health" for "care." The more of our personal and national treasure health care gobbles up the less we can invest in areas of life -- personal and communal -- that will promote better health. I think a smart political leader could make this point with pithy sound bites.

Please keep these thoughtful comments coming!



Anonymous said...

Hi Jim,
Thank you for the feedback. I agree with your suggestion to focus on 'health', as opposed to 'care' - especially in political terms. Transparency has been in the news the past few days, with several insurance leaders (James Roosevelt and Charles Baker among them) proposing increased public access to data illustrating exactly what it is that drives up costs. I am 100% in favor of these measures, as I cannot see a reason not to support them. I only hope the measures are not restricted to the hospital and insurance industries, but expand to include pharmacies, manufacturers, and other private health care practitioners. I firmly believe that thorough transparency will cause those in the collected health industries to gain their competitive advantages through superior product, service and delivery. Unwarranted cost increases could realistically be eradicated if uniform adherence to these guidelines was properly implemented and maintained. These are the kind of large scale, sweeping reforms that are going to be needed in order to get costs under control, while at the same time working to improve the health of the populations that our industries serve (i.e. everyone).