Fixing Health Care: Five Easy Pieces?
Ruth Marcus ably describes in her column, “Crunch Time for Fixing Health Care,” (Washington Post, March 22) five complex pieces of the policy jigsaw that need to be put together to achieve health reform. She is right about the importance of the issues: (1) the public insurance option, (2) paying for the program, (3) individual mandates, (4) cost containment, and (5) politics. Marcus, however, is too rooted in the standard “inside the beltway” solutions. Like Jack Nicholson in the 1970 classic, “Five Easy Pieces,” who simply wanted plain toast from a waitress who holds to the “no substitutions” line on the menu, we need creative solutions to the health reform puzzle.
We need both public and private plans, but not in head-to-head competition as envisioned by those in the debate. Instead, the public plan should cover directly (or through reinsurance offered to private plans) hospitalization and chronic illness, the areas most problematic for insurance markets. Medicare already uses a better method to pay for hospital care than private insurers—bundling payments. This idea should be expanded to include physician services. Medicare fee constraints, the bane of providers, however, can be relaxed if physicians’ incentives are aligned to encourage cost containment.
Most of the uninsured have their hospitalization paid after-the-fact by Medicaid or cost shifting to paying patients. As is evident in every international comparison, the money already is in the system. We need to better allocate those dollars.
An individual mandate is critical, but most people without coverage are young and healthy—their premiums for just hospitalization and chronic illness care will be quite low. Expanded coverage can be optional. Income-based limits on the tax-deductibility of employer contributions plus income-based subsidies for premiums can give us the desired equity.
Cost control via a public board is politically fraught and likely ineffective. Rationing is not necessary if physicians have new incentives. Costs are driven less by what physicians charge than by what they order. With better compensation methods, physicians can substitute their time and expertise for additional tests and expensive drugs.
The political question of how much muscle is needed to achieve reform will be answered inside the beltway. Looking at the puzzle pieces in new ways may allow the various parties to see how compromise can be achieved. If the pieces fit, not much political muscle will be necessary.
Harold S. Luft, Ph.D.
Palo Alto, CA
The writer is the Director, Palo Alto Medical Foundation Research Institute, and the author of "Total Cure: Antidote to the Health Care Crisis" (Harvard University Press)