Commentary
What We Need to Do to Really Reform Health Care
Only by addressing issues such as Medicare eligibility, tort reform, and fair payment can we truly start to fix the system.
By Terry R. Tone
I am neither a Democrat nor a Republican. I’m a health care administrator with more than 30 years of experience. During my career, I have witnessed eight national and three state initiatives to overhaul the health care system, none of which was successful. These attempts failed because they focused on changing only part of the system rather than the whole. For example, in the 1990s, health maintenance organizations kept costs down, but patients were dissatisfied because they lacked choice. Earlier efforts also failed because they didn’t take clinical outcomes into account or address tort reform. Given this history, I have come to the conclusion that we will not see meaningful reform until we address several core issues simultaneously.
Means Testing for Medicare
The Medicare program has grown to the point of being unsustainable. In 2009, the boards of trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance trust funds reported to Congress that Medicare’s Hospital Insurance trust fund’s assets were projected to run out in 2017.1 Medicare was originally designed to be a medical safety net for the elderly. As such, it is the only government safety net program that does not require that people demonstrate a financial need in order to be eligible for it. A 1997 paper by Hudson Institute economist John C. Weicher pointed out that 60 percent of the nation’s wealth was held by people who were middle aged and older.2 Given that a portion of older Americans has substantial means, does it make sense to provide all older Americans with Medicare discounts and charge limits without consideration of need?
Medicare currently pays 51 percent of the billed charge for procedures and office visits. Overhead costs alone amount to 55 percent of those charges. In addition, Medicare has frozen payments to health care providers since 2000. Thus, clinics often treat Medicare patients at a loss. To make up their costs, they pass them along to patients with other forms of insurance, causing premiums and co-pays to rise. In essence, we are offering a discount on the price of health care to what might arguably be the wealthiest demographic in the country, and we’re doing so at the expense of working Americans. As more baby boomers become eligible for Medicare, the cost-shifting is likely to increase, unless we address this issue now. If we means test for Medicare, we’d significantly reduce the burden currently borne by younger Americans who are trying to establish their careers and families.
Tort Reform
There is no question that a patient who is harmed should be compensated. Our system of justice provides for this. But a number of changes related to medical malpractice need to be made.
The first is related to who makes the decisions in these cases. Currently, decisions about malpractice are determined by a jury of our peers. But I submit that having a jury of peers making decisions about complex medical cases is no longer practical. Medical care is so complicated that average citizens often struggle to comprehend the facts of cases.
Recently, our clinic was hit with a lawsuit related to the birth of a child with cerebral palsy. The jury was made up of eight local citizens. None of them had medical training, only one had a college degree, and all had only basic medical understanding. Was this a jury of the provider’s peers? The attorneys had two weeks in which to educate the panel on issues in neonatology, perinatology, pediatric neurology, pediatric neuroradiology, obstetrics and gynecology, and family medicine. In the end, the jury awarded $10 million for pain and suffering.
What was needed was a panel of trained experts who could decide whether standards of care had been met and determine the outcome of the trial based on scientific evidence and not the emotionally charged presentations of attorneys.
Another change we need to make is preventing attorneys from reaping benefits that rightfully belong to patients. If a patient is truly harmed and has future medical needs, why should attorneys receive 30 to 40 percent of the award in a malpractice case? They have not been harmed. Let them recover their costs in the same way other businesspeople do—by billing for their time. Allowing them to reap windfall profits from medical malpractice cases gives them the incentive to win at any cost and by any means. The goal of resolving these cases ought to be achieving a just end, uncovering the truth, and supporting those who most need help—patients who have truly been harmed.
Finally, we need to cap pain and suffering awards in malpractice cases. This would help ensure that medical care will continue to be available in rural parts of the country. Already, there is a shortage of obstetricians in rural areas because they are no longer able to assume the financial risks associated with bad outcomes. Our recent case involving the child with cerebral palsy had the potential to bankrupt a 150-provider clinic with 1,000 employees in eight counties. In all but two of those counties, we are the only health care provider, and in all the counties we serve, we are the only surgical specialty care provider. Capping pain and suffering awards needs to be viewed as a public policy issue.
Provider Transparency
Minnesota has been a leader in providing outcomes information about medical care. Detailed data about outcomes have been collected and made available to payers, employers, and patients through MN Community Measurement for several years. This needs to be expanded to the rest of the country. It is not good enough for health care providers to simply say they are good at what they do. They need to report results, and the public needs to have access to them so that they can make informed decisions about their care.
Provider Payment
There also has to be more equitable compensation by government payers such as Medicare. It is patently unfair that providers in some states receive payments that are two to five times higher than those providers in other states receive for similar services. Most of these inequities are the result of historical charge structures that penalize providers in states with lower health care costs, often rural Midwestern states. Reasonable and equitable payments are just as important in rural states as they are in heavily populated ones. This payment inequity is already contributing to a severe provider shortage in some rural communities. If it continues, we will end up subsidizing rural health care providers in much the same way we do hospitals that are part of Medicare’s critical access program. In the end, it will cost all of us a lot more to keep rural providers afloat through subsidies than if we fix this payment/access problem now.
Finally, providers need to have some skin in the game. Not only should they be required to provide information about health outcomes, they should have some financial responsibility for patient outcomes. Under the current system, a patient can go from doctor to doctor seeking help, and all of the providers they see will get paid similarly regardless of whether they address or solve the patient’s problem. We need to somehow ensure that doctors have a financial stake in their patients’ outcomes. This is particularly true for patients with complex medical conditions who need the services of many providers.
Health Insurance Coverage
All Americans should have health insurance. A pre-existing medical condition should not affect one’s ability to seek better or different employment or to relocate. And employment changes should not affect one’s ability to have insurance. Also, lack of health insurance should not send individuals and families into bankruptcy.
In addition, insurance companies should not be in a position to determine the amount or the kind of care that is provided to patients if the care is within acceptable medical standards. Decisions about care should only be made by patients and their providers. And patients should have a financial stake in those decisions. It would be prudent to ask patients who use tobacco or abuse alcohol and other drugs to pay more for insurance, given that they likely will need more medical care later in their lives than those who make healthier choices.
Finally, no patient or family should be able to opt out of coverage, leaving the rest of us to subsidize the cost of their care by paying higher prices for emergency and clinic care, higher health insurance premiums, and more taxes. Everyone needs to have and pay for at least a basic level of health insurance coverage if coverage is to be affordable.
Many other issues need to be debated and many other problems need to be solved as we seek to make true reforms in health care. But I believe that we will never see meaningful change unless we start by addressing these concerns in aggregate. MM
Terry Tone is administrator of Affiliated Community Medical Centers, a multi-specialty group serving eight counties in southwestern Minnesota.
References
1. 2009 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. Washington, DC: Centers for Medicare and Medicaid Services. May 12, 2009. Available at: www.cms.gov/ReportsTrustFunds/downloads/tr2009.pdf. Accessed November 9, 2010.
2. Weicher JC. The rich and the poor: demographics of the U.S. wealth distribution. Review (Federal Reserve Bank of St. Louis). 1997;July-August.