My column on the potential impact of the 2010 health care legislation on private practitioners is now more than 6 months old; yet it continues to generate discussion.
Lately, many of the questions have become more fundamental in nature: What, exactly, is broken in our current system? And does the Affordable Care Act address any of the core problems?
There are no simple answers, of course, but in perusing the voluminous literature on this subject, there are a few basic truths on which most seem to agree. First, some kind of tort reform must be implemented. Second, the encroachment of third-party payers on the physician-patient relationship needs to be reined in. Yet neither of these basic issues was even on the table during the health care debate.
Most experts also agree that the present system of employer-financed health care is fundamentally flawed. Allowing employers to control health insurance has created thorny (and largely avoidable) problems. Think about it: What would happen, for example, if employers controlled food purchasing and employees could go to a grocery store, pay a $20 copay, and take as much food as they want? Clearly, food prices would increase enormously (and artificially) in a big hurry; but employees wouldn’t care, because they would never see the bill.
That is basically what has happened with health care: Costs have skyrocketed, but because most bills go from hospital or clinic to insurance company to employer, most patients are left completely out of the loop and have no idea of what their treatment costs.
The strange part is that nobody planned this nongovernmental, non–free market model. It was created through a series of historical accidents, beginning around World War II. During the war, a wage freeze was imposed to control inflation, but the war effort also created huge production demands and a worker shortage. Because businesses were unable to lure good employees with higher wages, they resorted to offering generous fringe benefits, especially health insurance. Before World War II, only 10% of American citizens had employer-based health insurance; by 1953, 60% did.
Ultimately, in response to lobbying by business and insurance interests, Congress enshrined this arbitrary system into the tax law. Tax incentives were created for employers to offer health insurance: For every dollar they contributed, employees would get about $1.30 in benefits. Businesses were given incentives to offer even more insurance than employees would normally buy for themselves. So most patients were – and are – overinsured, and health care is far more expensive than it needs to be.
Furthermore, insurers are competing for human resources departments rather than for the people they insure or for those who provide care. As a consequence, the plans they offer are generally good for employers, but bad for patients and doctors. Meanwhile, insurers continue to encroach on the practice of medicine through financial decisions that are driven by simplistic profit motives rather than by quality of care. Again, this situation is largely opaque to patients.
The fix seems pretty obvious, at least to me. A market-driven system in which individuals buy health insurance the way they buy anything else (cell phones, computers, cars, and yes, auto insurance) would eliminate most of the inefficiencies embedded in our current system. Yet Congress never considered this option during the reform debate.
In fact, many of the reform law’s provisions will only worsen the current situation. Small businesses will be given more tax-credit incentives to insure their workers. And the Small Business Health Options Program (SHOP) Exchange, which allows small businesses to pool their resources to buy health insurance, will only compound the problems of employer-based financing. On top of that, employers who do not offer coverage will face fines and other penalties.
So if employer-based insurance is a big part of the problem, why is Congress encouraging it rather than eliminating it? Obviously, there are big players (insurers, in particular) who have a lot more lobbying money than do either doctors or patients and who have a major interest in maintaining the status quo.
Basic economics and common sense tell us that staying the course will result only in a continuing exponential rise in costs; but until Congress understands that, there is little chance of any real reform.
Dr. Joseph S. Eastern practices dermatology and dermatologic surgery in Belleville, N.J.