Health Care Anew

Muddling Through

Yale Professor Charles Edward Lindblom made something of an academic splash when in 1959 he published an article suggesting that ‘Muddling Through’ was a better way of dealing with social issues than the ‘Rational-Comprehensive’ approach then popular among political scientists. His basic argument, as I understand it, was that social issues are simply too complex to be contained within any rational and comprehensive theory and so are best dealt with incrementally by trial and error.

Long-time friend Bill Busby recently sent me a clipping from the Albuquerque Journal, reporting on a speech made by consultant Brian Klepper to the Albuquerque Chamber of Commerce Regional Policy Forum. Klepper argued that the current health care system is economically unsustainable and must ultimately be reformed by the businesses that are paying a large portion of the nation’s health care bill. He opined further that the reason it hasn’t happened up to now is that business is intimidated by the power of the health care industry.

I think there is merit in what he says. I would add that the health care industry is powerful because it enjoys so much popular support. Everybody complains about high cost and poor results, but when somebody tries to do something about it, like limiting choice of physician and putting restraints on medical decision making, people get their knickers in a knot and both business and government back off. That is what happened with managed care in the 1990s.

Klepper’s presentation was weaker when it came to suggesting what exactly it is that businesses might do. He mentioned things that needed to be done, like avoiding expensive treatments that do more harm than good and making better use of information technology. He also gave examples of some institutions that had done some very positive things in terms of improving quality and controlling cost. But he didn’t specify a course of action that businesses might adopt.

I think that what businesses need to do is to search for ways to use the power of the purse to pressure the providers of healthcare to improve their performance while at the same time persuading the employees for whom they are providing health insurance to tolerate some unpopular measures. Experts like Klepper would be more helpful if they offered some specific suggestions on how to do that. Businesses could then experiment with those suggestions to see which ones worked and which ones didn’t.

That may be muddling through, but it’s probably the most promising way to go.

The Psychology of Insurance

In 1929 Justin Ford Kimball founded health insurance by guaranteeing Dallas school teachers 21 days of hospital care at Baylor University Hospital for $6 a year. At the time, he probably had in mind nothing very much more complicated than the realization that it was easier to get small amounts of money from large numbers of well people than large amounts from small numbers of the sick.

But his scheme also had the consequence of subjecting health care to the psychology of insurance.

There is something in human psychology that mentally disconnects the cost of insurance from the cost of what the insurance covers. If I have a car accident or storm damage to my house, I look upon the insurance settlement process as a sort of game in which I should try to get as much money as I can from the insurance company. If I am admitted to the hospital and my insurance covers the whole thing, it gives me an internal glow like winning the lottery. In neither case does it concern me that the more generous the settlement, the higher the insurance premiums.

During most of the 20th century, there was no thought that too much money might be spent on health care. Any measure that caused more to be spent was seen as progressive. So the psychological implications of health insurance were irrelevant.

But now that the level of expenditures has become too high, that psychology is a serious barrier to doing something about it. When people complain about the high cost of health care, they are in most cases really complaining about the cost of health insurance, which they are inclined to attribute to the insurance companies. No doubt there are health insurance companies that charge more than they ought to, but the main factor determining their rates is the amount they pay to hospitals, doctors, and other health care providers. The psychology of insurance obscures that and thereby shields providers from the social and economic forces that might otherwise cause them to lower their costs.

It is not obvious what can be done about it. There is talk about making patients more cost-conscious by giving them a larger economic role through Health Savings Accounts, higher co-pays and deductibles and the like, but we are not about to abandon the use of insurance to protect people against being financially harmed (or even pinched) by injury or illness.

It is another example of the central role that public attitudes play in the health care issue and the magnitude of the change required to achieve real health care reform.

Curious Priorities

On our most recent departure from Logan Airport in Boston, we were greeted in the security line by an agent who scrutinized our drivers’ licenses with the aid of a little blue light. It seemed that he was looking for special markings otherwise not visible as a means of screening for forgeries.

Indelicate impulse led me to comment “this thing gets more ridiculous by the day, doesn’t it?” Unperturbed, the agent replied “if it saves one life it may be worth it.”

It being a Thursday when this happened, it occurred to me that medical errors in Boston hospitals had probably killed at least a half-dozen people so far that week with few being the wiser. No doubt there were safety efforts going on in all of them, but nothing to compare with the US Transportation Security Agency and its long-shot effort to save lives by finding airline passengers with bogus driver’s licenses.

There is no accounting for priorities.

11-12-07 Numbers That Are Both True and Misleading

When public figures talk about health care reform, odds are that they are referring to the 47 million Americans who are not covered by health insurance. On the face of it, that seems to be a disgraceful situation crying out for remedy.

Remedy may be in order, but according to Harvard Economics Professor N. Gregory Mankiw, the situation is not as disgraceful as the numbers might indicate.

Writing in the November 4, 2007 Sunday New York Times, Professor Mankiw points out that:

- Of the 47 million, 10 million are illegal immigrants who most likely would not have coverage even under national health insurance.
- The number includes unknown millions who are eligible for Medicaid but have never applied.
- The Census Bureau reports that 18 million of the uninsured have family incomes of more than $50,000 per year, putting them in the top half of the income distribution.
- About a quarter of the uninsured have been offered employer-provided insurance but have declined coverage.

Among other things, these observations may cast some light on why concern about the uninsured seems to be concentrated more among health care providers and political activists than among the uninsured themselves.

There are for sure people who need health insurance but either can’t get it or can’t afford it and something needs to be done about that. But according to Professor Mankiw there are fewer of them than we are being led to believe and he poses the question of whether their number is sufficient to justify drastic changes in a system that is working well for most people.

I think he has a point.

The Cost of a Healthy Life Style

Further to the matter of presidential candidates and the positions they are taking on health care, Don Arnwine has asked for my reaction to the views of candidate Mike Huckabee, former governor of Arkansas. According to Don, Huckabee is emphasizing “the costs and impacts of obesity and other personal behaviours such as smoking.”

To begin, I’d like to make clear my support of efforts to deal with these behavioral issues and the health problems associated with them.

Wife Marilyn and I are enjoying an active retirement that good health makes possible. It is a blessing we wish for everyone. But we are also examples of how long life adds to the cost of health care.

For most of our lives, we were rare users of health care services. Three babies, an appendectomy and a minor accident now and then were about it.

However, I’ve recently been diagnosed with what in pre-political-correctness days was called senile diabetes. So I’m now on medication for the rest of my life and a permanent customer for blood glucose testing supplies. And I’ll be seeing the doctor every three months or so, rather than every few years as had previously been the case.

Marilyn has had a hip replaced and may some day be looking to replace a gimpy knee that has seen surgery twice. She recently had rotator cuff surgery. Within the week she had an episode in the local airport that fractured a metatarsal that twenty years ago might have bent rather than broken.

Add to that menopause and mild asthma and the medicine cabinet that used to contain only personal toiletries and cosmetics is gradually coming to look more and more like a small pharmacy.

Then there is dentistry, which is a story by itself.

Had we been overweight smokers during all of our adult lives, we might well have departed this world by now, thus avoiding all this health care expense.

So what we need to do is to live healthy life styles and deal with the cost problem so that we can afford the long and active lives that will result.