Buying medical care is not like buying a car

By Charles V. Allen, M.D.
The Modesto (Calif.) Bee, Oct. 23, 2012

David Brooks ("It's past time to change Medicare," Oct. 11) is right when he says Medicare costs are too high now and will get worse unless things change.

But, no, Mr. Brooks, the solution is not in competition, free enterprise and market forces.

Buying medical care is not like buying a car. If we bought cars the way we buy health care, the car salesman would tell us when we needed a car, what kind of car we need and how much it would cost. But we wouldn't care how much it costs because we aren't paying for it. The more cars the manufacturer produced and sold, the more money he would lose. And because 20 percent of the customers buy 80 percent of the cars, he would know exactly whom to not sell cars to! Confused? No wonder.

Translation: The patient/customer usually has little control when illness hits, no choice of what must be done (the doctor/hospital decides) or what the cost is, but doesn't care (insurance is paying).

Insurance companies seek to insure mostly the healthier members, knowing that 20 percent of the public will consume 80 percent of the health dollar. Avoiding that 20 percent is mandatory to remain profitable — and most non-Medicare companies are for-profit.

Medicare was designed to be available to all — healthy or sick — and so was Medicare Advantage but a funny thing happened along the way. Call it what you may — cherry-picking or skimming — but Medicare commercial insurance companies have successfully managed to insure a population healthier and less costly than average, leaving a sicker and more expensive membership for regular Medicare — and the taxpayer.

"In 2012 alone, private (Medicare) insurers are being overpaid $34.1 billion, or $2,526 per Medicare Advantage enrollee. … It's clear that having Medicare Advantage programs compete with Medicare doesn't save us money. In fact the opposite is the case," says one physician economist a report to be published in the International Journal of Health Services. So much for competition, market forces, private enterprise and Medicare vouchers.

The second factor is less appreciated: We have not one but four medical care systems: the uninsured (50 million), Medicaid (50 million), Medicare (50 million) and the commercially insured, mostly for-profit, under 65 (150 million).

Each has its own set of rules, regulations, payment schedules and deficiencies. Reforming one without changing the others is not possible, and a major overhaul in today's political environment is unthinkable.

Regardless of political belief, there no one, given the chance to redesign our system from scratch, would end up with the mess we now have.

A handful of other countries — all first world, industrial, democratic and yes, capitalistic — nations have achieved four things we have not: coverage of all citizens, costs half to two-thirds our cost, equal or better medical outcomes and a level of public support higher than ours.

How? First is the accepted principle that health care for all is a social obligation as important as public safety and education.

Second, all have a single efficient system with one set of rules and financial process, often a public/private partnership with private, independent providers. Imperfections? Of course, but none like ours.

And some of these countries make cars as well or better than we do — the old fashioned, market-based, free-enterprise way.

Allen is a semi-retired physician in Modesto and regular community column contributor.

PNHP note:  This article was originally published under the title “Medicare is imperfect, but it works for U.S.”