Health Care Musical Chairs

While Republican health care efforts have bombed, there is little reason to cheer.  The American health care system is still failing.  Democrats applauding the end of "repeal and replace" celebrate at the expense of the American people.  The Affordable Care Act (ACA) may have provided more care, but one can hardly credit it with being more affordable.  Too many Americans have faced rising premiums and deductibles and fewer policy options. 

Certainly, neither Republican bill would have helped.  Both focused on lowering insurance premiums for healthy Americans and the money the federal government spends.  Yet, the per capita cost of health care now tops $10,000 a year, has risen during the ACA, and is projected to continue rising above the rate of inflation.  So, if Republicans wanted the federal government and healthy individuals to pay less, someone would have had to pay more.   Welcome to the musical chairs of current health care reform thinking.

There would have been at least five possible outcomes from Republican bills: (a) more costs would be passed on to the states; (b) states unable (or unwilling) to pay higher costs would scale back services under Medicaid, thus rationing care; (c) individuals would have higher deductibles; (d) sick individuals would pay very high premiums; and/or (e) individuals who cannot afford insurance would end up in emergency rooms, where their costs would be passed on as higher fees to those who could pay.  In short, when the "repeal and replace" music stopped, someone would have been left standing with the bill - most likely those with the least power to avoid it.

Not surprisingly, the rising cost of health care and the fact that everyone wants to pay less has left almost everyone - sick people, aging people, healthy people worried about becoming sick, insurance carriers, medical providers - trying to make sure that whoever pays more is not them.  Thus, it's no surprise that both bills had strong negative poll numbers.  But polls do not show love for the current system either.  While only 23 percent favored "repeal and replace," 71 percent want the ACA improved.

We are in a zero-sum game. Anyone who benefits would do so at the expense of someone else, for whom a musical chair is pulled away. 

Perhaps we are asking the wrong question, framing the problem in the wrong way.  When the Bush administration asked 'how can we get rid of Saddam Hussein,' they did not ask 'how can we ensure stable government and strengthen civil society in Iraq and surrounding nations when he is gone?"  The result: chaos and war in the region.  When policymakers asked 'how can we get more Americans into new homes,' they did not ask 'how can we make sure people can afford their mortgage payments.'  The result: the financial crisis of 2008.  Framing questions when formulating policy matters.

So, while Republicans and Democrats have argued about who should pay, few have asked how to cut the national cost of health care.  We still spend twice as much per capita as most other developed nations.  One of the best ways to lower government costs and consumer premiums is to reduce the overall bill.  Instead, we are like a group of restaurant diners who accept a bill's total, argue about who should pay how much, but never look at the prices on the menu.

If we frame the question differently, we must look at what makes up each health care dollar.  To illustrate, research suggests the following as reasonable portions of that dollar: (a) prescription drugs (10 cents, with double and tripled digit price increases not uncommon); (b) administrative costs (8.1 cents - twice that of Canada and more than any other nation); (c) medical fraud and the costs of fighting it (5 cents); and (d) medical liability/defensive medicine to prevent lawsuits (2.4 cents).  Current thinking thus leaves over a quarter of every health care dollar untouched.  With a national health care bill over $3.4 trillion, that's $850 billion a year that we seem ready to accept as a given.

It's not that we are unaware of some of these and other contributors to the high cost of health care, such as the fee-for-service model which perversely rewards providing more health care than may be needed, and an aging population requiring more medical services. Indeed, the ACA has tried to create incentives to nudge change, though these have so far not produced significant enough cost savings.  It's that we have too often taken the current contributors to the high cost of health care as untouchable politically or unsolvable due to lack of imagination. 

This is not an either-or problem.  There is nothing wrong with wanting to lower the government share of health care costs and make premiums more affordable.  But there is something wrong with doing so while assuming that the size of the overall national health care bill can be ignored.  Republican proposals, including just repealing the ACA, miss the point, but so do Democrats, who seem content with just seeing Republicans lose.  Unless and until we frame the conversation more productively, too many people will be left without a place to sit when the health care music stops.