Health Reform

I have spent some time over the past several weeks to read and get educated about various health reform proposals.   As can be expected - there is a lot of dialog on this topic given the political season.    Health Affairs has some good articles up if you want to get informed about the Presidential candidates proposals.    Maggie Mahar has a great post up at The Health Care Blog detailing some current thoughts of one of my favorite economists on the topic,  Prof. Uwe Reinhardt.

However, the more I consider and read about the topic, the more skeptical I get about the prospects that we will have meaningful reform anytime soon...which is a real problem.    I am concerned by both the lack of understanding and by the politics!   I guess I am an naive idiot for being surprised.

I am generally biased towards market based capitalism and individual rights and accountabilities.   But as we all know -- markets have and require rules to properly function in setting prices and allocating resources (prime reasons why they are more effective than alternative economic forms).    Look at Russia today -- without the rule of law -- they can't sustain their autocratic economy.

In the U.S. Health 'system' - we sometimes have the worst of both worlds.   As Prof. Reinhardt points out -- there is no legitimate reason to tie one's health insurance to employment -- it has perverse consequences.   We have rigid rules on the supply side (what Medicare will pay for, how Medicaid reimburses and so on) -- which contribute to a lack of innovation on supplying economically cost effective services (tele-medicine for example).    Consumers are also legitimately confused on the demand side -- neither knowing what things cost or why they need to think about providing for their future health like they have to provide for their future retirement income.

The political debate is often framed around covering the un-insured.   While an important consideration -- it is not the most important issue.   The most important problem is how to create a framework where we get more value out of the current spend on health.    This is the key economic and policy question.    If we can improve the value delivered (health outcomes/economic inputs consumed) -- then there will be more dollars available to cover the disadvantaged (social, economics, genetics).    If we can't improve the former (value delivered) there is little chance we can afford the latter (more coverage).

Many smart folks realize this -- but they have not figured out how to make this argument effective with political soundbites (neither have I).   So the current political dialog is shallow and does not help frame the real debate we will have to have in the coming years.

The meltdown of the U.S. financial markets is instructive to health IMHO.   Not that hospitals or doctors are using leverage inappropriately, as in the financial sector.   But rather that the rules and incentives matter, that transparency matters (does anybody really understand pricing in hospitals?) and that a system out of whack (imbalances -- such as docs leaving private practice) ultimately leads to a systemic problem.     Many recognize the 'system' is sick, many even understand how the trends are getting worse not better - but there is not a clear path forward because of the incredibly gargantuan, yet fragmented nature of the 'system'.    Hence my current skepticism towards progress.