Thursday, March 30, 2017

Why I'm Glad RyanCare (AHCA) Failed in Congress

Even though I voted Trump in the 2016 elections and I generally lean Republican, I was not a fan of the healthcare bill Paul Ryan devised to replace Obamacare.

Ryan was opposed to the individual mandate and to the government regulation of care (e.g. setting a baseline for things that must be covered by all insurers participating in the Marketplace). The Republican proposal was to eliminate the Marketplace and regulation thereof, drop the mandate, and instead offer tax credits toward the purchase of coverage in the private market.

The problem with this plan --and I'm surprised that Ryan didn't recognize it before it blew up-- is that is doesn't solve the problem that triggered the ACA in the first place. The only was "repeal and replace" could have worked is if the replace more or less solved the basic problem of lack of access and affordability, albeit in a conservative, free market fashion. Now even though I lean conservative, I am not a free market hawk. I certainly don't believe that free markets are ALWAYS correct and the answer to all societal ills. Nevertheless, if the "replace" effectively addressed the national health care problem I would probably have supported it since I recognize some serious faults with the current, ACA, health care law.

Why does Ryancare not address the problem? It all has to do with the individual mandate. Since Ryan insists that individuals should be free NOT to purchase any health care coverage if they so wish, it poses a problem for insurers as only those who are already sick or prone to become sick would seek coverage and the premiums would therefore skyrocket (unless insurers could deny an application due to preexisting conditions). Ryan's bill, therefore, allows insurers to charge significantly more to older age groups (though not to individuals within the group who are sicker than normal). Also, since, the government offers only tax credits, not a financial contribution of its own money for those who could not afford premiums, someone who earns too little money, does not owe enough in taxes to get enough in its "credit" offset to pay for the high premiums in old age. Result: poor old people cannot afford coverage (while young healthy and wealthy people pay nothing and are easily "covered"). This is hardly a desirable outcome toward which to strive in any federal program. Inequality is already prevalent in our society; we don't need government to make it any worse, or even to administer a neutral program that keeps private money where it is and doesn't solve the problem it was meant to.

The Real Problem

Obamacare recognized this in passing and I give it credit for it. It seems to me in the current "repeal and replace" debate, however, that this matter was virtually never mentioned: the problem of cost.

You see, a hundred years ago, nobody had health insurance, even though we lived in a much poorer society overall, with less medical technology, less expert physicians and less knowledge of how to live well and stay safe. In other words, Americans a hundred years ago seem to have risked a lot more by choosing not to be covered by a health care insurance plan. And yet there was no outcry back then.

The key to this puzzle's solution, cost, is critical and should be at the center of our current healthcare crisis. For various reasons the cost of care was much much lower back then than it is now. I will briefly touch on the three main reasons:

1. No malpractice lawsuits.

It used to be unthinkable to sue a doctor. Someone who made a sincere and good-faith effort to save your life or cure you from an illness couldn't and wasn't sued in court for damages when things went wrong. These lawsuits now account for a very large chunk of the cost of health care. For example, one act of a failed surgery (whether by error, bungling or misfortune) could elicit a one million dollar compensation award by settlement our of court of by court ruling. This is 4 times the surgeon earns in a year. If such an incident (or a combination of smaller ones that add up to such an amount) occurs on average once in a decade, it results in a 40% increase in the cost of health care. In other words, because of those those exorbitant compensatory awards, as rare as they are, EVERYONE, including the poor who could lease afford to, pay 40% extra every time they visit the doctor.

2. No defensive medicine.

But there is an additional hidden cost to the litigative epidemic, that is perhaps even greater and more pernicious than the financial one: defensive medicine. Out of fear of being sued if they don't cover every single base, doctors are trained to run every possible test before making a diagnosis and prescribing a course of treatment. Intuition is seen as the enemy; it may lead a doctor to make an "unscientific" and thus "negligent" diagnosis for which he would then be found liable to the tune of millions. "It's not worth it", declaims the professor at medical school. "Run the tests. Back up every single pronouncement of yours with tests and data. If you are not 100% sure about a diagnosis based on the tests, then don't even mention it. why scare the customer needlessly? Train yourself to say 'I'm sorry sir but we don'y yet have the results of the CT scan, so I won't be able to tell you that right now'."

Back in the good old days, when someone had flu symptoms and went to see the doctor (or the doctor came, kit in hand, to visit the patient, as was very common in the past), there was no appointment necessary, there was no nurse preceding the doctor's visit, there were no weight measurements, temperature taking, heartbeat and pulse gauging, and almost no medial equipment. The doctor quickly saw you, asked you two or three questions, examined your mouth, listened to your cough, rolled his eyes this way and twitched his nose that way and then exclaimed confidently "You've got the flu, young man (not "sir"). Don't go out in the cold. Drink lots of fluids, preferably warm ones and you'll be fine in a week." No tests. No nurses. No appointments. No medical records. No medical devices. No malpractice insurance. Cost of the visit? $1.

3. No government regulation.

People underestimate how costly industry standards and government regulations are. For example, the HIPAA law makes it very cumbersome for medical records to be efficiently shared between doctor and patient. The result is, even to this day, that patients don't have access and knowledge of their own medical history, nor does the physician who sees them for the first time. consent and acknowledgement forms must be filled out and processed before the doctor can start treatment and clerks must be hired to perform the work.

Another, much costlier example of expensive regulation is the FDA's authoritative grip on the pharmaceutical industry. The FDA demands extensive, lengthy, and very expensive testing of all new drugs concocted by Big Pharma. This federally mandated testing is in fact so expensive that it far eclipses the cost of the drug's manufacture.
Now I'm not necessarily saying that Great Depression-era practice was superior overall to ours (though this could certainly be argued) and that there is no merit at all in the changes we have implemented in the three domains enumerated above. What I am saying is that we have overdone it. We have gone too far in holding doctors accountable for their negligent care. We have crushed intuition and elevated tests and data too much. And the regulation and standardization of the industry is much tighter than the optimum.

Note that on all of three domains I enumerated, we are doing too much, not too little. Naturally, therefore, we are expending greater effort and cost in the process, and the result is a higher price tag for the medical consumer.
Legislating a solution to the cost overrun in medical care is not at all easy, not in a society where both the right and left cherish liberty and despise government-imposed regimentation of our lives. If the government were to require doctors to revert to old-days simpler and more intuitive approaches to care, it would be as revolting (or more) as the government "protecting" us by establishing strict standards of care. The federal government can and should do certain things to ameliorate conditions in the abovementioned three domains, but the ultimate solution will evolve gradually as people change their attitudes and expectation of what ideal medical care looks like. Here are some of the things that I would like to see happening:

1. Abolish employer-provided coverage.

Health care coverage has nothing to do with employment. Why then was it standard prior to Obamacare enactment for people to obtain coverage through their jobs? It happened by dint of historical accident at a time when we didn't think much of it. During WWII when employers wanted to raise their workers' salaries despite the caps that were in place then, they resorted to the circumventional "salary by benefit" tactic. If an employee could get health insurance as a benefit, it was tantamount to a monetary raise by virtue of the dictum "a penny saved is a penny earned". What's more, BOTH employers and employees could write it off as a non-taxable expense to be deducted from their totals before calculating income tax liability. The significance of this tax benefit and the potential it had in store for distorting and degrading health care was not appreciated at the time. The big problem with this scheme is that by introducing an additional middleman into the chain of flow of care from provider to consumer, it made providers less efficient and less accountable to their clients (as would happen in any market where the consumer is far removed from the creator of the product or service). Whereas a doctor would be highly motivated to accommodate a patient who pays them per service out of pocket --maybe even one who pays the doctor indirectly through the patient's insurer-- there is much less motivation to do so when the doctor knows that the patient did not choose the doctor, the patient's employer did.

An incidental, equity problem with employer-insured health care is that it creates unlevel grounds for consumers who choose not to go that route. One who chooses to take matter in their own hands and buy their own coverage, are forced to pay income taxes BEFORE they pay their premiums. Also, by rejecting this "bargain" benefit that their employer is eager to give them, they are indirectly impelling their employer to pay them more in "full-price" compensation (either monetarily or through some other non-discounted benefit), thus rendering their employer less competitive with other enterprises in that industry that shell out less for equally satisfied employees. Both the business and the worker in such an enterprise are thus penalized if everyone else but them do choose to avail themselves of the tax benefit.

2. Medical Malpractice Tort Reform.

I am leery of legislating the precise contours of liability. What I envision, ultimately, is that juries will start seeing malpractice case in a different light. That they will be less reflexively sympathetic to the apparent victim. That they will be conscious of the price-raising effect of their awards and that such higher prices then hurt the very socio-economic class of people whom the juries are trying to champion.

But judges play a very critical role here. Baby boomer judges are just as much complicit in this problem are their contemporary baby-boomer jurors. This whole generation must go and a new generation not intoxicated with the doctrine of social justice by "making them pay" must come to the fore. I don't know if my Generation X fits this bill, but it certainly is a better candidate for it than my predecessor.

Lastly, laws could and should be rewritten to protect physicians from liability for undesirable outcomes of their professional acts done in good faith.

3. Open Government Clinics (on the state level).

As the constitution stands now, there is no basis for the federal government to administer such a program. Neither am I convinced that economies of scale and the resultant efficiency could be realized by operating such a program federally as opposed to regionally. This program does NOT suppose a government takeover of the entire industry. It would work something like this:

The government would use tax dollars to gradually purchase or erect clinics throughout the state. any resident of the state (by showing their ID card) could then walk in to the clinic and receive care for free (or for a nominal, heavily discounted fee). Such care would range from diagnostic tests, to prescriptions AND their fillment, to surgery.

The government clinics would "lag behind" private hospitals and clinics and follow their lead in adopting new technologies, treatments and drug prescriptions. There is a two-fold benefit in this: significant cost-reduction (generic drugs could be much cheaper than name brands, as are traditional treatments over modern ones such as taking aspirin for clogged arteries instead of having bypass surgery), and the curbing of runaway unproven (but costly) medical technologies. On this second point, even if the newfangled treatment were be cheaper than the old one (which is never the case!), there is still merit in questioning it on the mere basis of it being more intrusive and liable to engender side effects compared with a less intrusive legacy treatment.

In effect, the government clinics would be employing its medical resources conservatively and judiciously, and this may well be perceived as rationing (which it is!) but it would have the effect of reining in spending by the private market. As it stands now, the profligate method of health care delivery has no competition. What we need is for government clinics to offer an alternative "competitive" approach to medical care that may or may not catch on but it would incontrovertibly offer more choice and force private market practitioners to justify their higher-cost method on solid grounds.

Many people, especially those in the middle class and up and those who worship at the altar of science, progress and technology, would still choose to be served by the private market (however that may be organized), and that's perfectly fine. In fact, that would alleviate the burden on the government clinics thus saving taxpayers' resources even while accomplishing the core mission of such clinics, namely to insure that no citizen ever faces a situation where they cannot afford to pay for an essential medical treatment.

To return to the issue of Ryancare and to elaborate further on its shortcoming, it's that it was neither fish nor fowl. Freedom Caucus members were right that the bill was still too liberal in its government involvement. Moderate Republicans were right in their criticism that even thought they believe in private market solutions to societal problems whenever possible, we can still not have a situation wherein millions of people do not have affordable access to an essential life-sustaining service. The new bill was more an Obamacare protest, seemingly driven by a tribalist oppositional mentality, than a thought-out, smart, and ideal solution based on conservative principles. No wonder it failed.

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