Thursday, May 21, 2009

Saving Money on Health Care

The re-emergence of health care reform as a major issue in U.S. politics is a promising development. The lack of health care coverage for millions of Americans is a continuing national shame, and even those with insurance are often stuck with inadequate care, hidden costs, and the threat of losing everything to a medical catastrophe. Moreover, as I have noted in several recent posts, the key to preventing long-term fiscal problems for the federal government is to reduce the growth of health care costs, which would not only stabilize the finances of Medicare and Medicaid but would improve the bottom line of every American business.

One of the most notoriously expensive parts of the U.S. health care system is administrative costs -- which basically boils down to private insurers hiring people whose job it is to shift costs to other private insurers, which are in turn hiring people to push those costs back, with everyone ultimately trying to get the patient to pay as much as possible. A recent letter to the NYT (the fourth letter here) noted that "[t]he two largest components of health care costs today are administrative expenses (estimated at between 20 and 25 percent of spending, or $450 billion or more) and unnecessary or excessive care (estimated at between 20 and 30 percent)." That is anything but small potatoes. Saving even half of that would bring our health care expenditures (as a share of GDP) significantly closer to the levels of other advanced countries.

The most direct way to try to reduce those administrative costs is, of course, to adopt a single-payer plan. When cost shifting is not possible (because there are no other insurers to stick with the bill), there is no need to waste resources hiring people to deny coverage for pre-existing conditions, etc. Almost two years ago, after Michael Moore's documentary "Sicko" was released, both Mike Dorf (here and here) and I (here) wrote positively about adopting a single-payer system in this country. One of our readers, who made it very clear that he opposed single-payer, offered a link to a Canadian news article that indicated that the widely-decried problems with that country's single-payer system (most infamously long waiting lists to see specialists and for elective surgery) were not a result of the single-payer system itself but of the system's being starved of funds by the Canadian Parliament:
Once upon a time, there were few complaints about lengthy waits for treatment. It was a time when the federal government provided about a third of the money the provinces spent on health care.

But as government belts tightened to deal with record budget deficits in the early 1990s, complaints about access to health care increased. The federal government drastically cut the amount of money it transferred to the provinces to cover health-care costs.
Not surprisingly, when a system has fewer resources, it is less able to provide care to all of its patients. This does, of course, raise a problem that single-payer advocates (like me) usually do not discuss, which is the danger of putting the health care system at the mercy of Congress. If health care becomes just another budget item for future Senators to ridicule on Twitter, then we will all be worse off. I believe that it is both possible and likely that we could set up a single-payer system that is reasonably insulated from such meddling, but it is surely a serious issue.

For the time being, however, this is all moot. In one of his now-classic efforts to be a centrist (which, in a different era, we would have called triangulation), President Obama has made it clear that he will not propose a single-payer plan for the United States. None of the people he is consulting on the issue are single-payer advocates, and the only real question is whether there will be a publicly funded alternative (essentially Medicare for non-seniors) offered along with the private plans that would compete for customers. The private insurers are planning to fight tooth and nail to prevent this; and it is unclear whether Obama will capitulate.

Whether or not we end up with a single-payer plan, a choice of private and public plans, or a choice of only private plans, the fact is that there is a lot of waste in the U.S. health care system. Private insurers should surely have (or be given) incentives to eliminate as much of this waste as possible, just as a public plan should be designed to reduce or eliminate waste.

As it happens, I recently had an overnight stay in a hospital (after minor surgery -- thankfully successful and without complications) in Washington, D.C., which gave me a close-up view of some of the mundane issues that affect the costs faced by any health care system, public or private. Some things are handled quite well, while others are simply embarrassing.

The most notable aspect of my stay -- beyond the skillful surgery and the excellent recovery care and pain management -- was that the hospital staff had clearly been trained to be extremely careful not to give the wrong treatment to the wrong patient. When I was wheeled into surgery, and every time I was given medication, they carefully checked my ID bracelet and asked me to verify my name (including the spelling, which was actually wrong on one of the forms, resulting in a delay) and other identifying information. As a law professor, I could not help but think that this was the unappreciated upside of the fear of being sued. Wheeling me into the wrong operating room and giving me a hysterectomy would have been less than optimal for everyone involved.

The other side of the coin was the chronic, frustrating inefficiency of virtually every aspect of the hospital's operation. I told the admitting nurse and the floor nurse at least four times that I am a vegan, yet I was given a breakfast of sausage and scrambled eggs. The security officer who took possession of my belongings could not locate them when I left the hospital.

The biggest annoyance, however, was the waste involved with simply trying to get out of the hospital. I was cleared to be discharged at 7 am but was not actually able to get out of the place until the middle of the afternoon. This prevented them from turning over the room to a new patient, and it meant that they tried to serve me another meal (with meat, of course). Even with a friend aggressively doing everything possible to expedite the process, it was clear that no one considered it a priority to let me leave. This mirrored my experience during my last hospital stay, three years ago in a Manhattan hospital, where I was virtually imprisoned for a day after I was cleared to leave.

Of course, I do not mean to suggest that faster discharges from hospitals will save us half a trillion dollars each year. This problem is, however, emblematic of the type of issues that ought to be controllable for any health care system, government or private.

More generally, it is very obvious that a lot of money can be saved, and a lot of mistakes can be avoided, if we finally adopt a system of health care records that are transferable. It is astonishing how much time is spent repeating information to each new doctor or nurse, not to verify that information but because they simply have not seen their patients' complete records. Privacy concerns are very real, but electronic health records must be a part of any plan to improve health care in this country.

No matter the ultimate ownership structure of the U.S. health care system, there is plenty of waste that could readily be eliminated. Personally, I am still holding out hope for single-payer, but I will gladly settle as an intermediate step for any system that finally harvests all of the low-hanging fruit of cost savings. It is everywhere.

-- Posted by Neil H. Buchanan


Carla C said...

did they scan a barcode on your bracelet and then on the medication or do a paper based check?

If they did a scan, this also could reduce medication error as well as tie actual administration to a patient for payment reasons.
Don't get me wrong, it IS about patient SAFETY but it is also about PAYMENT. Lots of diversion (which is theft or negligence that gets translated into "waste").

Neil H. Buchanan said...

It was a paper-based check. Interesting information about the theft or negligence that is classified as waste. Thank you.

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