What's Wrong With Health Care?

Statement

Q: Dr. Cassidy, what's wrong with health care?

A: In a word, cost. Take a look at this article I wrote for the Health Care Journal of Baton Rouge for a more thorough explanation.

The fundamental challenges facing our health care system are skyrocketing costs that limit access to quality care.

Neither blind hope, nor knee-jerk hostility can lower health care costs. We must address the specific causes of what drives them higher.

McKinsey & Co. explains that rising health care costs are caused by (1) the growing incidence of chronic disease, which consumes a rapidly growing portion of total health care spending; (2) systemic barriers to value-conscious decision-making, like the ban on transparency in medical pricing and other market distortions that undermine economically rational behavior; and (3) excessive administrative overhead, which, according to the American Academy of Family Physicians, consumes 40% of the average primary care physician's costs.

On all three scores, the House Democrats' health care bill fails.

At its core, the Democrats' proposal is a thinly-veiled attempt to nationalize health care. It expands Medicaid, which is bankrupting states, and Medicare, which is bankrupting the federal government, while creating a third entitlement program, which they call the "public option."

Layering a third bureaucracy on top of two bankrupt bureaucracies will not lower costs. It will raise overall health care costs, according to the Congressional Budget Office.

While caring for the uninsured in Louisiana's public hospital system, I learned an axiomatic truth about government and health care: government overpromises, underfunds, and patient care suffers. This is true of Louisiana's Charity Hospital System. This is true of Medicaid and Medicare. This will be true of the "public option."

Rather than creating a new bureaucracy and labeling it "reform," we should reform health care by combating what drive costs higher.

McKinsey & Co. also reports that the annual cost of chronic disease management is $100 billion and rising. Much of this can be attributed to behavior and lifestyle, such as smoking and obesity.

The grocery chain Safeway provides a model for what works to reduce the rising cost of chronic disease. By offering employees discounts on insurance premiums in exchange for becoming healthier, Safeway has held health care costs flat, while most other companies have witnessed costs increase by nearly 40%.

As McKinsey & Co. puts it, "health care consumers … find it extraordinarily difficult to discern or even define the benefits available at any given price and from any given provider and therefore cannot compare them. In no other industry are service attributes and prices so opaque."

Unless patients are empowered with control over health care dollars and health care decisions, along with the information they need to make educated choices, health care costs cannot be controlled -- unless they are rationed.

Health care reform should encourage greater use of Health Savings Accounts, which are 30% less expensive than traditional insurance premiums and incentivize value-conscious decisions by giving patients direct control over health care spending.

Health Savings Accounts are also a useful tool for reducing excessive administrative overhead. In most medical practices, money and energy that should be directed to treating patients is spent billing insurance companies, Medicare, and Medicaid for reimbursement. Health Savings Accounts significantly reduce administrative costs by cutting out the middleman and allowing patients to contract directly with doctors

In other words, the closer we get to patient-directed health care, the further health care costs will fall, and the more accessible quality care will become.

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