Health Care Reform – Three different themes

Three reports this week about the costs of health care and health care reform caught my attention.  One said that health care reform will be a sure fire economic stimulus because it will replace jobs lost from the current recession.   Another suggests that a modest upfront investment will produce $530 billion in savings.  The third moans that without a commitment to hard choices, we are doomed to health care spending profligacy.

John Nichols in The Nation describes a report and follow-on campaign by the National Nurses Organizing Committee/California Nurses Association (NNOC/CAN) that attempts to bolster the argument for a Single Payer health care system by describing its impact on jobs and the economy.

A report in Reuters describes a report by DeLoitte that argues that a $220 billion investment in e-prescribing and electronic medical records will produce $530 billion over ten years.

Lastly, Robert Samuelson in the Washington Post reports on findings of a report by the McKinsey Global Institute that provides valuable insights into why US health care costs so much more than it does elsewhere in the world.  Unfortunately,  it was short on constructive “shovel ready” policies. 

So how does one react to such disparate perspectives.  Clearly, each study  support a specific ideological slant and approach to fixing our admittedly broken system.

The first study sponsored by the NNOC/CNA and completed by the Health and Social Economic Policy was disappointing.   It equates a single payer system with more jobs but, in fact, adds fuel to the opponents of single payer who argue that it will cost too much money. 

I generally support a single payer health care system.  But I support it for reasons that are opposite to those outline in this report, authored by Don De Moro.  A single payer health care system is the superior policy option because it can most effectively:

  • Eliminate waste in the system
  • Focus the system on patient care
  • Provide coverage to those on the edges of the current system

It is by providing this secure safety net that a single payer system can provide an effective economic stimulus.

  • It will make companies more competitive domestically and internationally by lowering health care costs and leveling the health care burden across all companies.
  • It will energize the smallest entrepreneurs by giving them the freedom to test new ideas in the marketplace instead of limiting themselves to jobs with health care benefits.
  • Free up capital resources for more productive economic investment.

The study by Deloitte is typical of the cure-all policy.  It focuses on one specific aspect of the current state and argues that if we can just fix this one thing everything else will fall into place.  It might be tax policy, integrated delivery systems,  the health of the population or a health insurance mandate. 

This study focuses on one of the more popular themes and one that many argue is championed by the Obama administration – the information technology infrastructure. As someone who has had some experience in this area, I am extremely skeptical.

Early on I learned a simple precept – automated stupidity is still stupidity.  IT integration has progressed light years since I was involved in an effort to promote a very limited community health information network (CHIN).  But the same integration issues that plague the smallest organizations will convert these visions of a super IT infrastructure into tormenting hallucinations – not to mention an economic boondoggle for IT firms.

Mr. Samuelson offers another strain on the thinking about the economic impact of health care reform.  The choice is either spending more money without any changes to the way we spend it.  Or make hard choices that primarily affect health care consumers – pay more for health care, pay more taxes and have fewer health care choices.

He dismisses the impact of administrative wastes by pointing to the study’s finding that administrative costs account for only 7% of health care costs.  That number seem preposterous to me.  Our plan purchases health care for 25,000 participants.  Seven per cent may be close to what our insurers charge our group – a very large group.  It does not account for the administrative costs of our office,  It does not account for the administrative costs of each of the doctor and hospitals .  And our group is certainly not representative of the larger insurance market.

This study offers some valuable insights in health care spending in the US relative to the rest of the world.  But the 7% number is not one of them.  And good conclusions can not flow from flawed facts.

The three articles reflect the three dominant approaches to health care reform – major overhaul, just fix this; and, it’s too complicated.


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