Empathy, Taxes, Personal Responsibility, and Healthcare Reform

Two years ago I wrote a four-part blog post presenting answers the questions: Who is worthy of having adequate health insurance and high-value (safe, cost-effective) care; and what makes them deserving? And who, on the other hand, is unworthy; and what makes them undeserving? It includes debates with others about issues including free market forces, as well as government and individual responsibility, universal healthcare, taxation, smart economic growth, and problems with healthcare insurance. Here's the link http://curinghealthcare.blogspot.com/2007/09/worthiness-socialized-medicine-and.html

In January '08, we presented an in-depth analysis of the presidential candidates' healthcare proposals. The analysis included a discussion that compared (a) a publically funded universal healthcare program that included a private insurance to (b) a single-payer program (no private insurance) at http://www.nhds.com/candidate_analysis/healthcare.htm#EN3. Then we discussed whether it's necessary to increase taxes in order to fund a publically-funded universal healthcare system at http://www.nhds.com/candidate_analysis/healthcare.htm#EN4. The bottom line is that the Republicans' main focus appeared to be on minimizing taxes and making only minor changes to our current healthcare system, while the Democrats appeared more focused on providing some form of universal coverage (be it single payer or a hybrid system). The debate today seems to be along the same lines.

From a psychological perspective, here's how I see it:

Many fortunate people with plenty of money or a secure job with an excellent health plan do not want to pay more taxes nor to risk changing the coverage they believe benefits them; even if such changes may benefit many others who are suffering.

Some of those fortunate folks likely experience cognitive dissonance (i.e., are conflicted) when considering the plight of the millions of Americans who cannot afford adequate insurance and top quality care. Some may reduce this emotional discord/distress by believing that those less fortunate are somehow less deserving and should even be punished for having health problems. They may, for example, believe in the "moral hazard" myth, which states that providing adequate health insurance for all encourages risky and wasteful behavior by the insured persons since the cost of healthcare consumption is paid by someone else. So, they conclude that there ought to be considerable "skin in the game" (i.e., out of pocket expense to reduce consumption), which can have a devastating impact on the working poor and other struggling to make a living; see http://curinghealthcare.blogspot.com/2006/11/moral-hazard-idea-myth.html.

Interestingly, one key thing absent from all this is EMPATHY (i.e., the ability to put oneself in the shoes of another). That is, it's much easier for many who are better off financially and health-wise to blame those who struggle and suffer for their own woes, than it is for them to feel others' pain and willingly pay increased taxes to help them. This is not surprising since:

• Judge Sonia Sotomayor Supreme Court confirmation hearings in which empathy—the quality President Obama has proposed as a criterion for his judges—was considered a dirty word.
• Many of the bankers, brokers, and others responsible for our economic collapse didn't feel empathy for those losing (or destined to lose) their homes while they profited.
• Empathy is often absent in the health insurance industry as evidenced by insurance exec turned whistleblower Wendell Potter, who spoke out against health insurance industry at http://www.democracynow.org/2009/7/16/former_insurance_exec_wendell_porter.

Based on all this, I'm not at all surprised with the current opposition to universal healthcare—I'm saddened by it—but not surprised. After all, the "me generation" and their children are in power in the USA … and focusing on "me and mine" to the exclusion of others does not promote empathy (or compassion). This bodes very poorly for the future of our civilization, btw!

I'm not without hope, however. President Obama appears to be pushing strongly for change in a direction that will help level the playing field and improve the lives of those who suffer. Increased taxes from the more fortunate to help the less fortunate cannot be avoided, imo. So, we can expect pushback from those lacking empathy.

In my next post, I have a contentious debate with people working in the health insurance industry.
Related links:

• Low-Cost, High-Quality Care In America: A Reply
• How to Reform Healthcare Sensibly: Focus on Two Clear Goals
• Healthcare Reform’s Most Important Issue: How to Make it a High-Value System
• Empathy, Taxes, Personal Responsibility, and Healthcare Reform
• Empathy, Taxes, Personal Responsibility, and Healthcare Reform – A Timely Debate (part 1)
• Empathy, Taxes, Personal Responsibility, and Healthcare Reform – A Timely Debate (part 2)
• Healthcare Reform: Where to Focus?

U.S. Healthcare’s Perverse Commercial Incentives

An interesting article recently published by Robert Kuttner in the New England Journal of Medicine explains how our relentlessly increasing healthcare costs are due to more than these usual culprits: Our aging population, expensive new technologies, poor diet and lack of exercise, the tendency for the supply of supply providers, medical devices, and new treatments to generate its own demand, excessive litigation and defensive medicine, and tax-favored insurance coverage.
The other culprit, he explains, is America's "pervasive commercialization," which is dominated by:

... for-profit insurance and pharmaceutical companies, a new wave of investor-owned specialty hospitals, and profit-maximizing behavior even by nonprofit players raise costs and distort resource allocation ... [as] private bureaucracies siphon off $400 billion to $500 billion of the $2.1 trillion spent [due to] perverse incentives produced by commercial dominance of the system.

Mr. Kuttner isn't the only one blaming our economic system for many of healthcare's problems. His explanation of pervasive commercialization driven by perverse incentives is consistent with John Bogle's description of the "pathological mutation of capitalism" that is destroying the American economy. Mr. Bogle is an authority who has been named by FORTUNE magazine as one of the four giants of the 20th century in the investment industry, and by TIME magazine as one of the world's 100 most powerful and influential people. As I wrote at this link, the pathologically mutated form of capitalism he describes has infiltrated and broken our healthcare system by pressuring healthcare providers to treat more patients in same amount of time to maintain their profits, which mean greater likelihood of errors and omissions due to overload. Furthermore, providers who keep their patients healthy longer through prevention, and who treat ill patients in the most cost-effective manner, are at serious risk of financial ruin. Not to mention the lack of good evidence-based guidelines defining what cost-effective care actually is. The end result is that the consumer receives less value, i.e., higher costs and lower quality.

So, our healthcare system is based on a pathologically mutated model of capitalism that encourages a form of commercialization in which perverse incentives maximize profits for some by delivering low value to the consumer … What a mess!

Mr. Kuttner gives examples of the kinds of problems these perverse commercial incentives are causing in the healthcare industry. He begins by explaining how many private insurance companies control costs by:

...practicing risk selection, limiting the services covered, constraining payments to providers, and shifting costs to patients…[thus] resources are increasingly allocated in response to profit opportunities rather than medical need, many attainable efficiencies are not achieved, unnecessary medical care is provided for profit, administrative expenses are high, and enormous sums are squandered in efforts to game the system. The result is a blend of overtreatment and undertreatment — and escalating costs. Researchers calculate that between one fifth and one third of medical outlays do nothing to improve health.

He then claims that:

Great health improvements can be achieved through basic public health measures and a population-based approach to wellness and medical care. But entrepreneurs do not prosper by providing these services, and those who need them most are the least likely to have insurance… Comprehensive, government-organized, universal health insurance systems are far better equipped to realize these efficiencies because everyone is covered and there are no incentives to pursue the most profitable treatments rather than those dictated by medical need… Commercial incentives are not fixing what's broken.

He also explains how primary care physicians are suffering the brunt of our broken healthcare system due to perverse cost-containment strategies, such as income targeting, which cause their caseloads increase and net earnings stagnate or decline:

The idea is that physicians have a mental picture of expected earnings — an income target. If the insurance plan squeezes their income by reducing payments per visit, doctors compensate by increasing their caseload and spending less time with each patient … [which] has multiple self-defeating effects. A doctor's most precious commodity is time — adequate time to review a chart, take a history, truly listen to a patient. You can't do all that in 10 minutes. Harried primary care doctors are more likely to miss cues, make mistakes, and — ironically enough — order more tests to compensate for lack of hands-on assessment. They are also more likely to make more referrals to specialists for procedures they could perform more cost-effectively themselves, given adequate time and compensation. And the gap between generalist and specialist pay is widening.

Another cost-containment tactic is to increase deductibles and copayments in order to:

…dissuade people from going to the doctor. But sometimes seeing the doctor is medically indicated, and waiting until conditions are dire costs the system far more money than it saves. Moreover, at some point during each year, more than 80 million Americans go without coverage, which makes them even less likely to seek preventive care.

Furthermore, a strategy used by hospitals to maximize their revenue involves fierce defense of their profit centers, investing heavily in facilities for lucrative procedures that will attract physicians and patients (such as cardiology). It would be better for our healthcare system as a whole, however:

…to shift resources from subspecialists to primary care [where many things can be done for much lower cost]. But in an uncoordinated, commercialized system, specialists might take their business elsewhere, so they have the leverage to maintain their incomes and privileges — and thereby distort cost-effective resource allocation.

And physician entrepreneurs are increasingly moving toward "boutique medicine:"

...in which well-to-do patients pay a premium, physicians maintain good incomes, and both get leisurely consultation time. It's a convenient solution, but only for the very affluent and their doctors, and it increases overall medical outlays. Other doctors opt out by becoming proprietors of specialty hospitals, usually day surgeries. In principle, it is cost-effective to shift many procedures to outpatient settings that are less expensive but still offer high-quality care. In a government-organized universal system, the cost savings can be usefully redirected elsewhere. But in our system, the savings go into the surgeons' pockets, and their day hospitals often have a parasitic relationship with community hospitals, which retain the hardest cases and give up the remunerative procedures needed to subsidize those which lose money.

I propose a healthcare system that focuses on bringing value to the consumer by fostering high quality care delivered efficiently (i.e., cost-effective care) through better use of clinical research, evidence-based guidelines, and health information technology. It would also have incentives for:

• Delivering high value care to consumers
• Making quality and cost transparent to enable consumers to make better healthcare decisions
• Offering consumers wellness tools, counseling and guidance to enable them to take better care of themselves. 

How to determine the best healthcare reform plan

There’s great debate about which candidate is presenting the best healthcare reform plan. A key issue is whether insurance companies (the private sector) or our government would do a better job managing universal healthcare. Both have been criticized for serious problems of inefficiency, bureaucracy and waste (as well as questionable practices and fraud).

 

It seems to me that the only way to determine who presents the best strategy is to compare the different plans head-to-head. The comparisons must consider costs to the public and patients in terms of taxes, premiums, deductible, co-pays, and coverage for people in different locales, who are in different economic and age groups, and who have different types of health problems and risk factors. This is a very complex issue, which cannot be understood with generalities and sound-bites. So, access to a detailed comparison grid that enables in-depth analysis is critical.

 

But even such an analysis, I contend, would fail to deal with the most important factor: The need for radical reduction of inefficiency, waste and fraud; errors and omissions; over-testing, under-testing, over-treatment, under-treatment; inappropriate care, problems with safety, quality and accessibility; inadequate wellness/preventive services; poor coordination of care; etc.

 

In other words, I assert that if all patients received cost-effective (high value) sick-care and well-care services—delivered safely, efficiently and competently—people would stay healthy longer, recover more quickly from illness, utilize fewer expensive services, medications and medical devices, and have a better quality of life. In addition, the system should give competitive advantage and financial reward to healthcare providers who get the best results for the best price. The resulting quality improvements and cost savings would be astronomical.

 

I would vote for plans—be they single-payer/government-controlled or private-sector insurer based—that return the greatest savings to the consumer through lower out-of-pocket expense (including taxes and shared responsibility payments), while providing the broadest coverage and supporting policies/plans/procedures that promote continuous improvements in quality and efficiency.

Universal Healthcare, Free Markets, Taxation, Smart Economic Growth, Government, and Insurance Problems

This post is a continuation of my last post, in which I debate with someone the issues of universal healthcare, worthiness, free markets, taxation, smart economic growth, problems with healthcare insurance today, and more. As always, I welcome your feedback.

In this round of the debate, he began by referencing the following statement I made in a previous post: “The best kind of Capitalism fosters 'smart economic growth' through the right combination of small company entrepreneurial (technological) innovation and big- firm market capabilities, without restrictions on free trade, brings about a higher standard of living for just about everyone in that country.”

He then said: This is essentially what I have been espousing, with the state keeping the corporations from manipulating a free market, and leaving the rest alone. Incentives for productive entrepreneurship being profit, and the disincentive for unproductive entrepreneurship being hunger, no further incentive is required.

Next, he pointed to a reference I made in my previous post to France Lappe’s book, “Democracy’s Edge,” and he said ...

I would flatly disagree with Ms. Lappe, arguing that free markets are NOT the product of democratic gov’t, but that only a democratic gov’t will ALLOW free markets. The apparent battle between the free market and the gov’t issuing from the gov’t failing to keep the welfare of the people their priority by interfering with the free market, and allowing the corporation to interfere.

‘If our government begins to spend money wisely and without corruption; if it implements policies to control waste, inefficiency, fraud, greed etc’ will be a point we disagree on, as I have no confidence this or any other gov’t is capable of doing so. None has so far. Gov’t is inherently evil, as it attracts those who desire power over others, however altruistc, or not, their motive.

Those who find themselves in a poor economic situation, through no fault of their own, should be taken care of through charity. That’s the problem with entitlements, the recipient is “entitled” to the benefit, automatically deserving, while with charity, if the recipient is of no inclination to improve their lot, is ungrateful, or is deemed unworthy for some other antisocial reason, the charity may stop. The advantage to the donor of charity is that it promotes an individual’s humanity, and their sense of community. Something the IRS does not. We are a charitable people, and the gov’t has taken advantage of it. We need a drastic REDUCTION in taxes. The gov’t has stolen our humanity and used it to buy votes.

I am convinced that most of the blame for our current health care problem lies with industry providers. Their inefficiency, incompetency, and exaggerated opinion of the value of their service, has put their pricing well above what the market will bear. Add to this funds spent on research (much of them by the gov’t) to develop methods/ equipment/etc. that we as a people can’t afford. In a free market, prices automatically level at what the market will bear. The health care industry has exceeded that level. There will be a correction, one way or another. If the gov’t gets involved, they will dictate fees and services, and we will get $1 of service for $2 in taxes, that will cost $3 to deliver. In other words, much like what we have now, only instead of not being able to afford health insurance, we will be taxed for it, whether we can afford it or not.

And then I replied ...

Where we agree on the following:

1. The benefits of smart economic growth
2. The state keeping the corporations from manipulating the market
3. Our Gov’t having an inherently negative side because it attracts those who desire power over others with less than altruistic motives.
4. The need for a drastic reduction in taxes (and I’d add: on the middle class especially)
5. The Alexander Tyler quote
6. Stopping those who can afford to pay at least a portion of their healthcare, but who manipulate the system to receive free care through taxpayer handouts.

Where we disagree:

1. Since we agree that government is needed to keep corporations from manipulating the market, and since we agree that our gov’t fails to do (and actually encourages corporate manipulation), then we don’t have a free market; instead, we have a corporate controlled market that has emerged due, in part, to lack of good gov’t policies and the existence of bad ones.

2. I do not blame any group—not the healthcare providers, patient, insurers, employers, big pharma, labs, medical device makers, nor researchers—for the current healthcare crisis. Yes, we do agree that there is plenty of greed, incompetence, inefficiency, ineffectiveness, ignorance, inertia, corruption, etc., but these human shortcomings are manifested by virtue of our badly broken healthcare system. But I see it as a system’s problem that actually rewards poor performance (e.g., fix it and fix it again when it breaks), despicable processes (e.g., insurance practices exposed in the movie SICKO), as well as excessive pricing and other ways to “play the system.” I contend that we need gov’t controls to fix the system because no one else will do it, but I don’t trust our current gov’t to do it either!

My hope is that we will develop a healthcare strategy that will change this by making gov’t responsible to the people. I don’t see the need for tax increase to accomplish this, but I don’t have the numbers to support this claim.

He responded ...

Our first disagreement isn’t one. We appear to agree that our current criminal electorate, acting outside the boundaries of the Constitution, and failing to act inside those boundaries, has created the problem by interfering in the operation of a free market.

Our second disagreement remains, as I see no possibility of one of the agencies largely responsible for the problem, successfully solving it. I suspect that soon (2-4 years) we will have some form of UHC [Universal Health Care]. I doubt it will be fiscally sound (Medicare, social security), or will provide care of any quality (Veteran’s Administration).

I have no confidence in a man who “believes” the Cuban gov’t, or ours for that matter. Mr. Moore does not believe any of what he “exposes”. He has merely found a lucrative market for his fictitiously manipulated “research” among those of liberal/socialist persuasion.

The only way we can SUCCESSFULLY solve the problem is to find a way to force the gov’t to act responsibly, and within the boundary of the Constitution, by “promoting the general welfare” not financing it. A tall order indeed

To that, I responded ...

OK, you don't trust Michael Moore. So here are problems with the current healthcare economic models, as related to insurance, which create a chaotic system and encourage destructive practices (with references from this page of our Wellness Wiki):

• Cost-shifting — Charging higher prices (above cost) to one group of patients in order to offset lower prices (below cost) to another group of patients based on their insurance coverage.
• Price discrimination — Charging different patients different prices for identical healthcare goods or services irrespective of cost.
• Cherry-picking — Choosing to provide insurance coverage to the young and healthy, and treatment to the most profitable patients, while not providing the same level of coverage and care to others.
• Retroactive coverage cancellation — Payers cancel coverage retroactively for people who need expensive care in order to escape its obligations to members who become seriously sick.

A more sane payment system would encourage continuous quality improvement, while controlling costs and insuring everyone through shared risk. It would recognize the responsibility of all stakeholders in creating a sustainable healthcare system that brings greater wellness to all in an effective and affordable way.

Methods having been proposed include pricing transparency, informing consumers of the value of care providers render in terms of performance and cost, and pay-for-performance. There are serious issues with each of these proposals, but they may contribute to the development of a better payment system. In addition, it may be useful to give consumers incentives for maintaining healthy lifestyles and complying with sound medical advice.

Anyway, I happen to agree in part with your final point: The only way we can solve the problem SUCCESSFULLY is to find a way to force the gov’t to act responsibly, and within the boundary of the Constitution, by “promoting the general welfare” not financing it. A tall order indeed.

The disagreement, or should I say confusion, with that strategy is that, even if our gov't is forced to act responsibly, it has to spend considerable sums to promote general welfare through writing and policing the implementation of radical new policies that foster the delivery of high-value care, as well as supplementing coverage for those who simply cannot afford it. In other words, I just don't know how anything can be accomplished without the wise expenditure of tax monies. Do you?

He responded ...

No, nor do I expect the wise expenditure of tax revenue, it is seldom done.

A few things not adequately addressed that would require relatively little revenue:

• The monopoly of healthcare by the AMA through the FDA.
• The ineptitude of the FDA. That is, the FDA should not approve alternative health care practices not endorsed by the AMA. That which is not approved, or endorsed, will not be insured, and, in fact, may be criminally prosecuted.
• Policing/regulation of the insurance companies (corporations).
• Policing/regulation of the provider companies (corporations).
• Eliminate gov't sponsored research, except in the most dire national situation.
• More gov't control of medical licensing. (doctors mostly police themselves).
• Criminal charges and sentences for fraud/theft equitable to any other common robbery. The only difference between “white collar” and “blue collar” crime is how it is dealt with. Theft of your life savings through fraud is just as violent as a mugging.
• Elimination of regulation defining what groups are eligible to negotiate with insurance and/or care providers. Most states currently have strict regulation, which is obviously a protection of the insurance/provider companies.
• Here is an idea that just popped into my head. Reduce the tax bill of all individuals by the amount they spend on their own, or their family’s, non-elective health care. I’ll have to think about that.