Some observers have begun to suggest that it really doesn’t matter who pays for health care. What matters is how we pay, and what we pay for.
Dr. Atul Gawande made this point in the brilliant piece that the NewYorker published at the beginning of this month. “Activists and policymakers spend an inordinate amount of time arguing about whether the solution to high medical costs is to have government or private insurance companies write the checks . . . ” Gawande observes. “These arguments miss the main issue. When it comes to making care better and cheaper, changing who pays the doctor makes no difference.” In other words, he is saying, it just isn’t important whether we have a public-sector insurance plan competing with private sector insurers.
Over at the Huffington Post, Jim Jaffe makes a similar argument. He begins by saying that health care spending has become unsustainable. Trying to pay less for health care services isn’t the whole answer: “Ultimately we have to provide fewer services.”
“Too many are now invested in a series of side debates irrelevant to this central issue,” Jaffe continues. “The existence of a public plan won't cut consumption unless it includes limits on services . . . A public plan isn't a prerequisite for imposing such limits.”
I have to disagree. I believe a public sector plan, overseen by a Federal Heath Board comparised of physicians, medical reserachers and medical ethicists, is the only plan that can impose limits, weeding out unnecessary, ineffective, and potentially harmful tests, products and procedures.
“Limiting Services”= “Managing Care”
Let's be honest. We are, in effect, talking about “managing care”–what “health maintenance organizations” (HMOs) were supposed to do. As originally conceived, they were called “health maintenance organizations,” because they were charged with keeping us well by providing generous and vigilant preventive care. They were supposed to “manage” chronic diseases, making sure that the right person received the right care at the right time. And they were supposed to use medical evidence to make certain that patients were receiving the care that provided the greatest benefit—and the least risk—for that particular patient.
When Dr. Paul Ellwood coined the phrase “health maintenance organization” he envisioned non-profit organizations subjected to strict quality reviews (with these reviews based on medical research). In Ellwood’s mind, plans would compete with each other on the quality of care they provided, not the price. The cost-consciousness of managed care would be balanced with an emphasis on outcomes.
At the time, there were few for-profit insurance companies peddling health care. For-profits sold other types of insurance—but not medical insurance. When the HMO Act of 1973 was passed, the law did not bar for-profit HMOs, but neither did it encourage them. By contrast, it did offer federal loans and grants to non-profit HMOs. The Nixon administration believed that non-profit HMOs could curb health care inflation by moving away from fee-for-service payments while simultaneously offering better care. The HMOs that Ellwood described in the early 1970s, sound very much like the “accountable care organizations” that Gawande and others talk about today.
But in 1980, with the election of President Ronald Reagan, priorities changed. Non-profits were no longer in favor. The for-profit corporation became the model for the nation. In the early 1980s, Washington eliminated the federal grants and loans for non-profit insurers.
By this time, the nation’s health care bill had begun to spiral. For-profit insurance companies saw just how much money was on the table; and they realized that now that the non-profits no longer had a stream of federal funding, for-profit insurers could probably move in and take over the market. And this is just what they did. Since they had deep pockets, these publicly -traded insurers were able to create price wars--and win them. Meanwhile, non-profits looking for capital turned to Wall Street—and turned themselves into for-profits. In 1981, 88% of HMOs were non-profits; by 1986, the share of nonprofits had fallen to just 41 percent. And by the 1990s, the vast majority of managed care companies were profit-driven.