And now for something completely different
A message to President Bush from a co-architect of the Clinton health
plan
By PAUL ELLWOOD, MD
The American health system is crashing. We need to convince President
Bush and the new Congress to put in place institutions and rigorous policies
supporting health care that works for everyone. Confronting the system’s
failings is a challenge that only a powerful president in his second term
can take on. The system is huge, devilishly complex, emotionally charged
and filled with economic and professional snags.
First, the problem: Our domestic health expenditures are huge —
greater than the entire Chinese economy and growing at a comparable rate.
U.S. health spending is $1.6 trillion and is projected to reach $3.4 trillion
in 2013. Yet the quality of U.S. health care is poor. For example, according
to a 2003 study published in the New England Journal of Medicine (Beth
McGlynn et al), patients receive the proper diagnosis and treatment only
about 55 percent of the time.
The health system will continue to be out of control until we have an
institution responsible for guiding it. No existing institution has the
tools to manipulate the health system’s performance or the clout
to implement its goals. Indeed, most federal regulatory entities lack
the degree of independence, refinement and scope to deal with something
as complex and professionalized as health care. The lone exception is
our venerable central bank — the Federal Reserve System.
A prototype for health care?
The Federal Reserve System has shown that a federal agency can achieve
political independence and endurance while deploying tools affecting the
whole economy. The health system needs a similar steward. For purposes
of this discussion, the new health oversight agency will be the “HealthFed.”
Why is such an intrusive, top-down proposal coming from the leader of
the Jackson Hole Group, which arguably brought the United States its laissez-faire,
market forces-based, HMO/managed-care health policies and worked to include
them in the Clinton health plan? I learned much during 17 years of medical
practice and 35 years of health policy work. But I didn’t really
understand the health-care system until I depended on it as a patient.
I am now a typical Medicare patient with the prerequisite five big-ticket
chronic illnesses, plus a broken neck from a reckless ride on a young
horse. The system does not work.
Tough lessons for reformers
Until recently I was convinced that consumers given adequate information
about their choices could effectively influence both the cost of health
insurance and the quality of health care. I was wrong! Studies show that
despite the greater public access to sound health information, market
forces, patient choices and professionalism do not exert sufficient influence
over the quality of health services. But market forces can work to control
the cost of health care if quality can be guaranteed by some other means.
Quality and costs require different management strategies.
Another lesson: History teaches that restructuring the massive health
enterprise requires decades of continuous and pragmatic leadership. In
December 1970, President Nixon adopted the HMO approach as health policy,
expecting that 1,500 HMOs would form and be available to 90 percent of
the population within five years. The most predominant health plans were
expected to be prepaid group practices. But legislation encouraging this
market-based approach languished.
The promised impact of competition on health costs didn’t occur
until the Clinton administration — 23 years after the original Nixon
HMO policy proposal. Prepaid group practices never took off. And during
the ’90s, when price competition became most effective, the seeds
of managed care’s unraveling had already been planted. Providers
and their patients were charging that cost containment meant skimping
on needed care.
The HealthFed proposal
HealthFed needs effective tools for guiding the quality and value of
health services if medical costs are to be justified and the system to
be trusted. It will also need enough power to assure compliance with its
policies. Let the market determine prices of health insurance and the
structure of health-care organizations but have the HealthFed enforce
adherence to evidence-based medical quality guidelines.
The source of HealthFed’s power comes from another page of the
banking system playbook: federal insurance. The government extends guarantees
to depositors in banks meeting Federal Reserve and Federal Deposit Insurance
Corporation standards. The health system could benefit from similar insurance
or reinsurance on high-cost cases. To be eligible for optional federally
guaranteed reinsurance, patients, providers and insurers would have to
meet the data collection and evidence-based quality standards of the HealthFed.
The HealthFed assures Americans that they are getting health care that
is effective by requiring its users and providers to rely on evidence-based
guidelines. In return it gives access to federal health reinsurance thus
obviating risk selection by insurers.
The new health guidance institution must become so effective that politicians
and interest groups leave it alone. Currently, the medical industrial
complex ruthlessly wields tremendous power, using it in ways that can
harm the public. An example: In the early 1990s, the newly formed Agency
for Health Care Policy and Research (now the Agency for Healthcare Research
and Quality) issued a report on the most effective care for back pain.
This drew political fire from a small group of threatened orthopedists
and neurosurgeons who almost succeeded in killing the whole federal health
services research program.
Our health system is out of control because each presidential administration,
HHS secretary, Congress and Medicare/Medicaid administrator introduces
new strategies for dealing with health care. Since 1979 Medicare has had
22 chief (or acting chief) administrators. Each has had to learn on the
job how to run a $482 billion insurance company. Over this same period,
the Fed has had only two chairmen, assisted by seven Federal Reserve Governors
with 14-year terms, the presidents of 12 Federal Reserve Banks and large
professional staffs. They have two major responsibilities — keep
the economy moving forward at modest rates of inflation and assure the
integrity of the banking system.
No one has analogous responsibilities or capabilities in health care.
But someone should.
Paul Ellwood, MD, (SM’53), is president of The Jackson Hole
Group and Healtru, two health-care reform Organizations. Send him HealthFed
suggestions at pmellwood@earthlink.net.
Comments? Contact Stanford Medicine at
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