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What to do about Health Care?   (Michael Goodfellow, May 29, 2007)

Charles asked me to write something about the health care system in the U.S., but before I do that, I should add a few words about my own situation. The opinions below could be read as a rant by some overpaid techie who has never been sick a day in his life. Sadly, that is not the case. I sustained a spinal chord injury at age 7, and have spent the rest of my life in a wheelchair. Long-term paralysis leads to other complications, and so I now have multiple serious conditions. I have seen more than my share of the health care system.

Working in the computer industry, I always had health insurance, first as an employee (even of a 4-person startup company), then as an independent contractor. In the 10 years I did contract work, I saw my insurance payments go from $200 a month to $800 a month. Two months ago, I was hit with an increase to $1000 a month. Due to further declines in my health, I decided to go on Social Security Disability. Medicare starts only after a two year wait, which ends in July. So I’m about to experience the joys of government health care, like it or not.

So what would I do if I were king? I don’t know. First, I’d try to get some perspective on the whole problem.

We don’t know in any absolute sense whether our health care system is good or bad. We just compare it to other systems. Even that is difficult. For example, we know that U.S. life expectancies are lower than some countries in Europe, and many people blame this on the health care system. However, it’s been pointed out that you can’t blame the system in cases where it’s not involved.

For example, if someone becomes obese and gets diabetes, then dies young of complications, you can’t blame the system for this. The health care system did not make him obese! Yet his early death will drop overall life expectancy. If someone dies of a heart attack from high chlorestoral before an ambulance is even called, you can’t blame the system for his death – doctors never had a chance to treat him.

In general, you have to separate treatment from environmental and genetic factors. People who look at procedures (how well does the U.S. treat cancer, for example) say that care in the U.S. is excellent, frequently the best in the world. People who look at outcomes (life expectancy, frequency of various illnesses) think the system does a terrible job.

So the first thing we’d have to recognize is that there’s more to health than just trying to treat disease. The health care system can’t do it all. It can’t make up for lifestyle problems, and (currently) can’t do much about genetic factors.

It goes beyond that. Health care actually has a fairly small effect on our health and life expectancy! This sounds silly to a lot of people. They know that life expectancy has increased dramatically in the last 100 years, and is better in the rich world than in poorer countries. They figure modern health care is responsible for this, and that without it, you would die young. This is not the case.

One way to separate out various factors is to look at history. According to this source, white male life expectancy at birth in 1900 was about 48 years. It’s now about 76 years (28 year increase). For white women, it went from 51 years to 81 years (30 year increase). But remember that there was very little of what we’d call effective medicine in the early part of the century. According to Wikipedia, penicillin was not used to treat disease until 1942. What they had were public health measures, such as malaria and hookworm eradication, improved sanitation, improved water supplies and food supplies. Most people didn’t have access to a doctor, and there wasn’t much the doctor could do for you anyway. (read The Youngest Science, by Lewis Thomas).

Despite that, by 1940, life expectancy was at 63 years for men, 67 years for women. So 15 of the 28 years for men and 16 of the 30 years for women was due to public health measures, not any kind of advanced medicine. Even today, this is the main difference between rich and poor countries.

After 1940, antibiotics and vaccines become available, and going to a doctor becomes worthwhile. Primary care is the next tier of the medical system. It includes some prenatal care, giving birth in a (clean) hospital, treatment of infections, etc. Let’s say that era goes to 1970. By then, male life expectancy is 68 and female is 75 years. So we’ve gotten another 5 years for men and 8 years for women from primary care (the extra gains for women are probably a result of reducing the risk of childbirth.)

That leaves 8 years improvement for men and 6 years for women since 1970, which covers the era of intense high-tech care in the U.S. All the expensive stuff, from MRI’s to cancer treatments to organ transplants, is in this category (Wikipedia says that transplants routinely failed until the discovery of cyclosporine in 1970.) So of all the improvements we’ve had in life expectancy, public health and primary care (the cheap stuff) have been responsible for most of it.

This sounds surprising, but it should agree with your intuition. Most people are healthy most of their lives. Their mothers get a little prenatal care, they get some vaccinations, maybe some mild childhood ailments (infections, etc.), perhaps a broken bone. Then nothing much until old age. Sometime after age 60, they die of one of the big three – heart disease, cancer or stroke. None of these is particularly treatable even now. Half of all cancer patients survive less than 5 years, as do half of heart attack victims.

So what are the implications for the U.S. health care system?

First, it would be great if people would recognize the limits to health care, even high-tech health care. Diet and exercise matter more to your quality of life than treatment does. For example, you could stop treating cancer completely and only drop the overall life expectancy by a couple of years. If this seems ridiculous to you, do the math. If half of cancer patients die in less than 5 years, and half more, set the expected value of cancer treatment at five years of life. If a third of the population die of cancer, the additional life expectancy from treating it is 5/3 years – 1.6 years. So even big variations in treatment of cancer don’t affect life expectancy much. If Canada managed only 3 years of expected life saved, the overall life expectancy would only be 2/3 of a year less.

Second, stop treating people all the same. There are several different categories of customer for health care:

The healthy non-elderly. There’s no reason to insure yourself against the ordinary expenses. We do that now, and just end up paying for it in premiums instead of retail, but with the extra costs of insurance paperwork. By paying for most care with insurance, we also get waits for appointments, and services/drugs denied by the insurance company or government program. There’s no retail competition by providers, since the customer is the insurance company, not you. You see the result as soon as you walk into a doctors office. Long waits, rude behavior (the doctor can’t even remember who you are, and waits until he’s seeing you to read your chart) and lack of innovation. As far as I can tell, nothing has changed in doctors offices or hospital procedures in 30 years, despite how much everyone hates it. And then there’s the expense! Even when I was paying $250 a month, that would have paid for a couple of doctor’s visits every month! At $1000 a month (my current payment), my premium would buy me a new wheelchair every month.

My model of what it should be like is the eye care industry. It offers a huge variety of products and prices. At the cheap end, you can pick glasses off a rack in the drug store, until you find one that corrects your vision adequately, without being tested at all. Next up is something like LensCrafters, where you can have glasses made on demand. They’ve gotten very automated and use a machine to test your vision, as well as make the lenses. For better fashion and fancier lenses, with an exam by a optometrist, any number of eyewear stores are available. Or you can buy contact lenses, in several varieties. Finally, you can have corrective surgery done. Across the range of treatments, you can get a variety of prices, quality, comfort and fashion. This is a competitive industry, and it’s night and day compared with the rest of the medical system.

It’s encouraging that pharmacies and chains like WalMart are interested in providing cheap, routine medical care. We might see some of the same innovations in primary care as we’ve seen in eyecare or hearing aids or dentistry. As the regulated system becomes more dysfunctional, this part of the private system will become more and more attractive. Of course, if the government promises care from the first dollar of expense, that will probably kill off private systems. It will be hard to get consumers to pay for services they’ve already paid for via taxes or mandatory insurance.

The elderly. A recent NYTimes article wrote about geriatric care, and how much it could improve the life of the elderly. This wasn’t about high-tech medical intervention, but about simple things like exercise, diet, social life and watching for signs of serious problems. The doctor they interviewed mentioned little things like “always check the feet”, as a indication of how well an elderly person was taking care of themselves.

Given the projected increase in the number of elderly, it would be nice if the system were capable of regularly monitoring them. Unfortunately, as the article quoted one doctor, “It’s impossible. We’re out of time.” Not enough new specialists will be trained before the onslaught of retirees. Still, in an ideal world, this kind of long-term monitoring by doctors who know what to look for would be what you’d want. I don’t know how you pay for it. I’m a big believer in market solutions, but I’m not sure the elderly would shop around for doctors, especially if they are just getting this kind of basic lifestyle advice.

Even without available specialists, I have some hope that the internet will rise to the challenge. There’s no reason comprehensive websites, even equipped with expert system software, can’t interview people and advise them in much the same way as a specialist. There’s certainly demand for this kind of service, and it would be much cheaper to provide on the net.

The chronically ill. People like me with chronic conditions are very expensive. We’re all a bit different, and really need specialists to monitor us. Unfortunately, even the current system isn’t very good in this respect. Doctors are already overworked and don’t want complicated patients. My current primary care doctor seems determined not to spend more than 10 minutes with me every six months, and has never done a physical exam. My insurance company just rejected a request to see a specialist. I expect this to get worse, not better, as the system runs out of money and tries to handle increased demand from the boomers. If we see large increases in the number of diabetics due to obesity, that would just compound the problem. In an ideal system, anyone with complicated health problems would be regularly monitored by a specialist in their illness. I don’t know who would pay for it.

Again, perhaps the internet will help a bit. We’ve already seen it become a resource for diseases of all kind, especially rare ones. Several of my health conditions have discussion groups dedicated to them, where affected patients and families can share information. If the medical industry comes under enough pressure, doctors could respond by monitoring patients via email, video mail, or with web site questionnaires connected to diagnostic software. This isn’t a substitute for seeing a doctor who remembers who you are, but that’s becoming a fantasy anyway.

Accident victims. One area where a market solution probably won’t work is true emergency care – car accidents, heart attacks and other trauma. Market systems require the ability to choose your provider, and you don’t have that when the ambulance pulls you out of a wreck!

Currently emergency rooms are flooded with routine charity care. From what I can tell, they’ve responded by handing critical cases first, and letting everyone else just wait for hours, insured or not. I think a significant number of people just give up and leave. The unpaid care is padded onto the bills of the insured. Paying cash becomes more and more ridiculous, since you get the insured rate, which is at least double the true cost. Some urban areas have so few paying customers that the emergency rooms are under severe financial stress. This affects even the affluent areas. I’ve read that in Los Angeles, there are times when most of the city emergency rooms are closed to new cases, due to overloaded conditions. Don’t have a car accident, or an unscheduled birth.

The uninsured. The usual number is 40 million or more of Americans are uninsured. Many of those are uninsured in brief periods between jobs, and others are eligible for Medicaid, but don’t sign up. Some are the ones advocates are worried about – the working poor who just can’t afford insurance. However, their health care needs probably aren’t that significant either (they are working.) Cheaper walk-up clinics would serve most of their needs, if the system would encourage that kind of retail medicine. The costs of health insurance are so high now that it only really makes sense in cases where you have some extreme health problem, and bills start in the tens of thousands of dollars. For routine care, it makes no sense. And in any case, treatment of uninsured is given now in emergency rooms, probably the most expensive care you can get.

The homeless. A special category of the uninsured, the homeless use some disproportionate share of emergency room care. One blog I read (March of the Platypus), is written by an ER worker, and had an entry describing a recent patient:

EMS delivered one favored customer for his 95th visit of the year. He went out front and hasn't come back. I think he did that two days ago when I picked his chart up too. I showed the advocate how to pull up his previous visits and she was amazed. This month he's been here on the 1st, 3rd, 9th, 10th, 13th, 15, 19th and this morning. April saw him here on the 1st, 6th, 7th, 9th, 10th, 11th, 12th, 14th, 15th, 17th, 22nd, 25th and 29th. February was a short month so he only came in on the 3rd, 7th, again on the 7th (I guess that's the leap day), the 9th, 12th, 17th, 22nd and 25th. Like I said, it was a short month but I'm sure he was blessing other ERs with his presence when he wasn't with us.
Obviously, a truly astonishing amount of money is being spent on patients like this, all of it added onto the bills of insured patients. I’d really categorize the homeless with the chronically ill, requiring monitoring, not just treatment on demand. There may be nothing you can do about their long-term problems, but regular checkups would be much cheaper than constant visits to the emergency room.

The system I’d like to see

Overall, I’d like to see no insurance or government programs for most routine care. I think a retail medical system would end up looking like eye care does now, with lots of variety and innovation. It would also be more convenient and cheaper. This type of primary care would probably be just as effective as what we have now. If people with borderline medical conditions visited the doctor more often (because it was cheap and convenient), care might even be more effective than it is now.

For the truly significant medical events (accidents, chronic conditions), I don’t know that a market solution will work well. This is, by definition, the kind of care you hardly ever use. With most people just paying and hoping to never need care, I don’t see how a market can really operate. On the other hand, when you are in need of this kind of care, it would really help if you controlled the money, so that you could easily change providers when you are unhappy (hard to do under insurance or government plans.) I don’t see how you get people to pay for care they rarely use and still exercise judgment when they do need it. I don’t see how people would be expected to shop in emergency situations. And I’m not sure how you give people control and ration care at the same time.

Demand is increasing with the aging of the boomers, and the increase in available treatments. The supply of money for care has some limit, at least as percentage of the economy. If your standard for care is “pay for anything that could benefit the patient” (the standard doctors would like) the system will go broke. Practically every old person will be taking medicine for high blood pressure and chlorestoral. A chronically ill person could literally go through millions of dollars of medical care in a lifetime if you did everything that could conceivably help. No private insurance system is going to handle unpredictably large bills, and no government system is going to permit it. So at some point, we have to ration care.

When you have to ration, you can do it two ways. In a market system, simple care will be cheap, and complex care will be expensive, and therefore unaffordable to some people. Still, there are enough rich people (or insured people, or people willing to mortgage the house to pay medical bills), that there is a market for advanced care. More procedures will be developed, and like the latest computers, they are more expensive. As time goes on, the development bill is paid and the procedure gets cheaper, and available to more people. In the long run, unfair as it seems to price people out of the latest care, this provides the best care for the population as a whole.

In a government run system, rationing will take place behind the scenes. It will be called “fairness”, but the result will be long waits even for simple procedures, and life-threatening waits for more complex ones. New procedures will be denied, or never developed, since there’s no market for them without government approval. This is exactly what’s happened in England (try to get a NHS dentist), Canada (long waits for “elective” surgery like hip replacements) or Australia (don’t try to give birth at some public hospitals!) Most of the world’s new drug development happens in the U.S., where companies can get paid for new drugs. In Europe, there’s no point in even trying, unless you are absolutely sure the government is going to pay for the drug once it’s developed. And every public system seems to hire bureaucrats rather than doctors and nurses. They are trying to fix waits with more management, and insure “accountability”, but they end up just increasing waits, since they are not adding any medical resources.

What will happen

Unfortunately, I think government run care is in our future. The market arguments above are falling on deaf ears. People seem to think it must be better in other countries than here, because they are just as healthy and pay less. But as I mentioned above, this is because health care can’t actually do much about life expectancy or overall health.

There’s a lot of inertia behind the current system, so I don’t expect the political process to completely overhaul it. Instead, we’ll get steady expansions of Medicare/Medicaid and programs like the new Massachusetts system which require everyone to have health insurance. In this way, the government can claim to be “doing something” about the problem without immediately rocking the boat. Over time, it can try to wring more savings out of the system by regulating it. We’ve already seen this with Medicare, which is setting the prices for a large portion of the medical system. As insurance becomes required, and more regulated, we’ll see more of the same there. In small steps, we’re moving away from a market-oriented system and towards a government provided one.

It will also be a significantly less innovative system. I think the U.S. market is paying for medical research everywhere in the world today. As private money dries up in the U.S., so will medical research. The only research left will be government agencies, which will run at their own pace and have their own incentives. Providing cheap, effective, convenient care probably isn’t going to be their top priority. It doesn’t seem to be the priority of any other medical system in the world.

People say we have a “two-tiered” system now – the insured and those millions of uninsured, who get only emergency room care. Under a more regulated system, we will also have two tiers – the majority who wait and wait for government care, and the rich minority who hire doctors and hospitals directly. If you think health care is unequal now, you haven’t seen anything yet.

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