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Health Care Won’t Heal Itself

J. Edward Hill, MD
Medical Progress Today
March 3, 2006

America's $1.9 trillion per year health care system has a very bad case of the shakes. Last month, the U.S. Centers for Medicare and Medicaid Services actuaries told us health spending will consistently outpace gross domestic product growth. They speculated health care costs would consume one-fifth of GDP by 2015.

Media outlets trumpeted $1 in $5 as the "cost" by 2015. What they missed is the fact that, right now, we’re spending $1 in $6, or 16 percent of GDP.

And both parties continue to miss what I see as a looming revolution in health care in this country. It is a revolution in payment systems, in pricing systems, in the way care is delivered and the ways patients become decision-makers not passive consumers.

Medicare and Medicaid face bankruptcy. Health insurance plans draw the ire and fire of premium-paying employers, their workers (our patients) and regulators, alike. The books written thus far on how best to reform the system would fill a bookcase to overflowing.

Meanwhile, the physicians of America continue delivering the finest quality of medical care to the most people of any nation on earth. The spending – nearly 18 times that of 1970 on a per capita basis – has paid rich dividend. One University of Chicago study claims increases in longevity from 1970 to 1990 produced $2.8 trillion in perceived value every year for the nation.

Show me a stock I can buy for $1.90 and sell for $2.80, and I'll make that deal every time.

So, what’s wrong?

Why are 46 million Americans uninsured and another 15 million underinsured, dreading the catastrophic impact of an accident or major illness? Why are double-digit medical liability insurance premium increases driving out obstetricians and others high-risk medical specialties? Why are our medical schools producing too few physicians to meet impending demand? How has the medical profession gotten itself locked in the jaws of price controls and stifling red tape?

The answers are many and varied, but one thing is perfectly obvious. As high-priced management consultants will tell you, the system is perfectly designed to produce the kinds of results we have.

Reform proposals fixated on cost will only exacerbate system problems. Reform proposals fixated on patient value-received are what we so badly need.

That is why the American Medical Association proposed a series of small changes at the margin, to begin to steer the massive Ship of Health Care into safe waters.

Medical liability reform has to begin, we believe, by placing caps on the non-economic damages in cases where negligence occurs. A $250,000 cap seems reasonable. It is working well in California and other states that have tried it. A federal limit seems appropriate. Pending that, the AMA is working at the state level to support reforms one at a time.

Medicare, the preeminent argument for preventive health care, is under siege in Congress. In its four-decade lifespan, Medicare evolved a physician payment system that now is counterproductive to the Congressional intent of fair payment for services received. Now Congress calls for zero growth this year and a cumulative 26 percent cut in physician payments by 2012. Some call this cost control. I would call it false economy, even disastrous when, in the same period, physicians will shell out 15 percent more in operating expenses.

Unless we replace the fatally flawed physician payment formula, more and more doctors will be forced to take on fewer and fewer new Medicare patients. And this at the time when Baby Boomers turn 65 by the hundreds of thousands a week.

The AMA wants to see those 46 million uninsured Americans given some help, as well. Far from advocating another entitlement program from Washington, we are pressing for the adoption of a consumer-driven, market-based plan to expand coverage through a combination of individually owned insurance, sensible insurance market reforms and direct payments to those who need them.

Health Savings Accounts are part of the answer for many. The initial popularity of HSAs, the experience of the first 3 million users, surprised many. That 1 million of them formerly were uninsured is an encouraging indicator.

Once the majority see the advantages of HSAs coupled with low- or high-deductible insurance – the kinds we choose for our cars – the days of one-size-fits-all health care coverage will be numbered.

Making economic changes at the margin is one strategy we advocate. Making positive change in individual lives and the practice of medicine is another.

The AMA is providing effective programs to help improve the health of individuals, calling attention to the hundreds of billions of dollars of waste caused by just eight behaviors that can, in fact, be changed. The combined health care costs, lost wages, lost productivity and other societal costs of tobacco, alcohol and drug abuse; accidents and violence; obesity; teen pregnancy, sexually transmitted disease and suicide tally in the hundreds of billions of dollars a year.

That's why we're working so hard to lead patients from slavery to these cruel masters to freedom to lead happier, healthier, more productive lives.

Finally, physicians themselves, recognize the need to increase the quality and effectiveness of what they do every day. Continuous quality improvement has been the watchword of American medicine since 1848, when the AMA was formed, to this very day.

No other profession can boast the kinds of quality and productivity gains American medicine has racked up in the last 15 decades. But the price of that reputation is to add to it, recalling how it was won and who benefits from the process. [Example here of reforms that would make quality in healthcare more transparent?]

When seniors enjoy another decade of lively living, when infant leukemia rates decline, when chronic diseases are controlled, society benefits.

Collective benefits of healthcare reform cannot be predicted with accuracy. But, when I read that one-third of early adopters of HSAs formerly were uninsured or when I read that quality improvement pays enormous dividends in cost-avoidance, I'm convinced reforms, transparency and performance enhancement are keys to a richer future for us all.

Our focus is on our patients. And they appreciate our efforts. A recent Harris Interactive poll tells us 86 percent of Americans trust their physician at a time when other polls show approval ratings for government and big business in the 30-percentile range.

Our challenge is clear. We are committed to meeting it. Not for ourselves. Not even for our profession. But for the patients of America.

J. Edward Hill, MD, is the President of the American Medical Association.

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