"The beginning of wisdom is to call things by their right names." -Chinese proverb

My first hospital office more than forty years ago was in a Midwestern teaching hospital situated directly across the hall from that of the Chief of Medicine. His stock introductory message to each new crop of first-year residents was direct. "Eighty percent of all human disease is self-limiting," he would say, leaning back in his chair with his feet up on his desk. "Most of your patients will get better with or without your efforts-just don't screw it up!"

Now I don't pretend to know if Fred's "eighty percent" number was accurate. I do know that his comment was in no way intended as a disparagement of sick people who truly need medical care. However his central point-that most patients will recover without medical intervention-is not only true but essential to understanding one of the principle reasons that national health care costs have exploded. Much clinically unnecessary care demand-and the costs associated with meeting that demand-is generated by patients who don't have to pay for it. It is necessary to spend only a few minutes in any hospital's Emergency Department to confirm this observation's validity.

Because "The Patient Protection and Affordable Care Act" inflates public perceptions of entitlement and expands the number of people who have "insurance", it will produce increased demand for health care service. As a result, the only way that national health care costs can be reduced is to dramatically constrain the actual delivery of health care. This is accomplished by simply refusing to pay¹ for any delivered health care that is not "officially approved". This politically-brilliant strategy allows elected officials to appear caring and generous in their promises to voters while shifting the unpopular onus of health care rationing to physicians and hospitals.

The partial menu of "health care reform" initiatives and program mandates shown below² outlines the shape of the rationing mechanism.

• The Electronic Health Record: The EHR mandate requires each hospital and physician's office to create and maintain a continuously updated automated database of complete medical and treatment history, health status, medication record, and demographic information by 2014. Each local database must conform to the template of data fields provided by the Department of Health and Human Services. Each must be able to transmit specified data across organizations. The result is the creation of a gigantic system of linked databases containing information on every patient in America. This is a central planner's dream.  

• Meaningful Use: This program pays providers to create their own local EHR database. Incentive payments and continued full participation in the Medicare and Medicaid programs are dependent upon demonstrating that each local EHR is capable of recording the mandated data set and transmitting data to other database system components. 

• Comparative Effectiveness Research: Comparative effectiveness research "informs patients, providers and decision-makers about which interventions are most effective for which patients under specific circumstances", a provision encouraging providers to treat patients as a data set, rather than a human being. 

• Evidence-based medicine: "Evidence-based medicine (EBM) or evidence-based practice (EBP) aims to apply the best available evidence gained from the scientific method to clinical decision making. It seeks to assess the strength of the evidence of risks and benefits of treatments (including lack of treatment) [emphasis added] and diagnostic tests. This helps clinicians understand whether or not a treatment will do more good than harm." Professional judgment will be subordinated to officially approved evidence. What could possibly go wrong?

• Value-based Purchasing: "Redistributes Medicare payment so that hospitals with higher performance in terms of quality" [editor's note: more accurately, conformance with Medicare statistical requirements] "receive a greater proportion of the payment than do the lower performing hospitals." 

• Pay-for-performance (P4p): Offer financial incentives to physicians and other health care providers to meet defined quality, efficiency, or other officially-approved targets. 

• Readmission penalties: More than 2,000 hospitals - including some nationally recognized ones - will be penalized by the government starting in this month because many of their patients are readmitted soon after discharge, new records show. Together, these hospitals will forfeit about $280 million in Medicare funds as the government begins a wide-ranging push to start paying health care providers based on the officially-defined and administered "quality of care" they provide³. 

• Accountable Care Organizations: "Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other health care providers, who will be financially rewarded when they come together voluntarily to give coordinated high quality care to their Medicare patients" [as officially defined and centrally controlled].

It all sounds so "scientific" but, as the "readmission penalty" footnote at the bottom of this page points out, even patients who share CPT and ICD codes, present with tremendous variation in care needs. Moreover, treatment results also vary and real-world results for an individual patient cannot be predicted from aggregate data. "The Patient Protection and Affordable Care Act" simply ignores these realities. It transforms physicians into clerks whose compensation depends upon their willingness to subordinate professional judgment to statistically-determined and centrally-administered rules. It treats each patient as a dehumanized aggregation of ICD and CPT codes and permits or withholds treatment based on those codes. It perversely incentivizes physicians and hospitals to avoid providing care to the most ill, those patients whose conditions are more likely to produce an unfavorable outcome.

Concealed within the lofty promises amid the fine print is a dehumanizing, amoral, and technically incompetent rationing scheme that grants to faceless bureaucrats the power to decide not only who may receive health care but what the course of that care must be. Mussolini wrote in Fascism: Doctrines and Institutions, "The fascist conception of life stresses the importance of the State and accepts the individual only in so far as his interests coincide with the State." It is not too much to say that "The Patient Protection and Affordable Care Act" operates on exactly this same principle because it places the financial interest of the State above the value of human life.

FJB

¹ This is nothing new. Medicare denied payment for health care provided to 99,546 patients in 2008 because the service provided was "not deemed a 'medical necessity' by the payer."

² Quoted language is taken directly from CMS documents and other official program sources.

³ Perhaps nothing better illustrates the profound absurdity of efforts to ration health care through statistics than the imposition of "readmission penalties". Patients, even those who share CPT and ICD codes, present with tremendous variation in care needs and in their willingness and/or ability to comply with post-discharge instructions. Neither physicians nor hospitals have control over these factors. The inevitable consequence of statistically-dictated "readmission penalties" will be that some patients, potentially those most in need of care, will not receive it.

This site is not affiliated with any political party. Its goals are to advocate for individual liberty, traditional morality, and domestic peace and to resist all forms of tyranny and statism. Please bookmark this link, forward it to others, and return often. Thank you for your interest. 

"It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so." -Mark Twain

That fee-for-service medicine is a cause (if not the cause) of the "health care" cost explosion is a matter of received wisdom for establishment policy wonks. Consider these recent examples:

"There is widespread agreement among policymakers, payers, and health care leaders that the current fee-for-service method of paying for care is one of the drivers of the unsustainable growth in health care costs." Hospital Readiness for Population-based Accountable Care, Health Research & Educational Trust, Chicago: April, 2012 

"This antiquated model [fee-for-service] is the culprit behind exponential health-care cost growth." Judith Barnes, Director of Health Policy, Bipartisan Policy Center, The Atlantic, "Moving Away from Fee-for-Service," May 7, 2012 

"The current fee-for-service system raises the cost of care by 20 to 30 percent for services that provide little or no health benefit." Victor R. Fuchs, Professor Emeritus of Economics and Health Research and Policy, Stanford University, The New York Times, Room for Debate, "Competing for Better Outcomes and Lower Costs", June 28, 2012 

"A new study suggests that global budgets for health care, an alternative to the traditional fee-for-service model of reimbursement, can slow the growth of medical spending and improve the quality of care for patients." David Cameron, Harvard Medical School Communications, Harvard Science, "Moving beyond health care's fee-for-service, Global budget payment model lowers medical spending, improves quality," July 11, 2012 

Really? Then why aren't the costs of haircuts, dry cleaning, and lawn care also overwhelming the economy? These services, like virtually all services in a free economy, are provided on a fee-for-service basis. With all due respect, the conventional wisdom has it completely wrong. The problem is not how charges are generated. The problem is how they are paid.

The total cost of "health care" is calculated as shown below:

N x U = C

Where:

N = Total demand for service
U = Unit cost
C = Total health care cost

Whenever potential consumers of any highly desirable service are shielded from the financial consequences of the consumption decision, demand for that service will be virtually infinite.

Insurance programs and plans that insulate patients from the real costs of medical care (especially Medicare and Medicaid) are the primary cause of exploding health care costs, not fee-for-service medicine. National health expenditures in the U.S. reportedly reached $2.7 trillion in 2011. Of that amount approximately $555 billion was expended by Medicare and $398.6 billion by Medicaid, both of which are technically bankrupt. Moreover Medicaid, which consumes an average of 21% of state revenue, threatens to bankrupt states from California to Illinois and beyond.

It is time to face the music and admit that the insurance model adopted from other casualty loss protection products simply doesn't work as an effective way to pay for medical care. Claims against an automobile, homeowners, or life insurance policy are initiated as the result of an external event over which the insured has no control such as an accident, a fire, or death. In the case of insurance for medical services, the insured controls the claims initiation from start to finish. This is a recipe for disaster.

As Medicare and Medicaid are propelled by immutable economic laws and unforgiving demographic realities toward their mathematically-inevitable demise, defenders of these so-called "entitlement programs" have redoubled their efforts to conceal health care costs from patients by expanding socialization of those costs. "The Patient Protection and Affordable Care Act" manages to worsen a very bad situation on both the demand and supply side of the total expenditure equation. It fuels service demand ("N") by expanding the number of "insured" people even as its resource-consuming regulations constrain health care delivery and drive up unit costs ("U") for hospitals and physicians. 

Albert Einstein once defined insanity as "doing the same thing over and over again and expecting different results." The Patient Protection and Affordable Care Act" is hideously misnamed public policy insanity. It is time to rethink our health care assumptions before the nation spends itself into oblivion in pursuit of an impossible dream. It is time for a Plan "B".

FJB


This site is not affiliated with any political party. Its goals are to advocate for individual liberty, traditional morality, and domestic peace and to resist all forms of tyranny and statism. Please bookmark this link, forward it to others, and return often. Thank you for your interest.