What are the barriers to real health reform?

By Marcia Angell, M.D.

PNHP note: The following text contains the prepared remarks of Dr. Angell at a panel titled “Persistent Barriers to Reform of the American Health Care System” at the 27th Annual Policy Research Conference of the National Academy of Social Insurance in Washington, D.C., on Jan. 28, 2015.

This country has long subscribed to the ideology that the best and most efficient way to distribute anything is through a private market, and we’ve applied that ideology to health care. We distribute it like a market commodity, according to the ability to pay, and not like a social service, according to medical need.

But there’s a great mismatch between the ability to pay and medical need. The people who most need health care are precisely those least able to pay. So while the private sector concentrates on those who can pay, as businesses are supposed to do, those who can’t pay go without adequate care or depend on the government to step in.

At the same time, well-insured people often get far more medical care than they need or is even good for their health.

This reliance on a private market to distribute health care is what leads to the grotesque inadequacies, maldistribution, and inefficiencies in our system, and what distinguishes us from every other advanced country. Even in countries that permit the sale of private health insurance, the prices and benefits are tightly regulated, and care is delivered in a predominantly nonprofit system.

A welter of financial incentives

There are different financial incentives at work in our profit-driven system, depending on who you are. Employers and insurers, including government insurers, have every incentive to stint on care. The best way to do that is to refuse to insure high-risk people at all, if possible; to shift costs to patients at the point of service by increasing deductibles and co-payments; and to limit the benefit package.

In contrast, hospitals and other facilities have every interest in expanding, so that they’re in a better position to bargain with insurers for higher prices. In Boston, for example, we’ve witnessed a colossal struggle over the years between insurers and Partners Health Care – the giant entity created by the merger of the Massachusetts General Hospital and the Brigham and Women’s Hospital. Partners now controls large panels of physicians, and facilities throughout the region. Since no insurer can afford to leave Partners out of its network, it can command much higher prices than other hospitals in the state.

For their part, physicians just want to keep their income up, while the wars between insurers and hospital conglomerates rage around them. Like society at large, however, the inequality among physicians is huge.

While primary care doctors struggle, specialists are thriving – particularly procedure-oriented specialists. They are mainly paid fee-for-service, and those fees are greatly skewed to reward tests and procedures. Specialists thus have every incentive to do as many of them as possible, particularly when prices are controlled.

There’s much talk now about aligning these disparate incentives. But in our current system, none of these incentives is good for patients, and perhaps the last thing we should want is to align them.

The main problem: costs

We need to remember that the main problem with our health system is costs, because everything else depends on that. After all, if money were no object, everyone could have all the health care they could possibly use or want.

But money is an object. And sadly, the Affordable Care Act is a misnomer, because it’s not really affordable. Yes, it has expanded access, but the costs will not be sustainable – unless deductibles and co-payments are greatly increased and benefits cut.

The problem is that the ACA attempted to reform the system while retaining the private insurance industry and the profit-driven delivery system, with all its distortions and waste. It even made the private insurance companies the linchpin of the reform, providing them with millions more publicly subsidized customers.

The thought was that anything else was politically unrealistic. Given our politics, that may have been so, but that does not mean that the ACA can work. It’s unrealistic for different reasons.

A lesson in point. In 2006, Massachusetts implemented Romneycare, the prototype of Obamacare, in a state that had everything going for it – an already high rate of insurance, a large fund to provide for the uninsured, and a Medicaid waiver. But the state now spends more per capita on health care than any other state in the union (in 2009, about $9,278 per person, compared with a national average of $6,815). Health spending now consumes over half the state budget, at the expense of nearly every other state function – including education, public safety, human services, and infrastructure.

We need Medicare for all, but …

I believe the only way to provide universal and affordable health care is to extend Medicare to everyone – perhaps gradually, by lowering the qualifying age one decade at a time. The public, I’m sure, is much friendlier to this idea than Congress, despite the latter’s protestations to the contrary.

Max Baucus, the chairman of the Senate Finance Committee who pushed Obamacare through Congress, received more money from the health industry that year than any other member of Congress, so it’s no wonder that he dismissed the idea of Medicare for all as politically unrealistic.

But Medicare for all is not enough. We also need a less profit-driven delivery system in which physicians are paid by salary, and hospitals are not permitted to divert operating income to expansion.

So what are the barriers to achieving such a reform? Much of the public now opposes the new health reform law, and it’s often claimed that their opposition reflects the American public’s antipathy toward big government.

I see no reason to believe that. While it may be true for some people, I believe it’s largely a canard promulgated by the health industries and many public officials (such as Max Baucus) and the media.

The issue for the public, I suspect, is not the size of government, but the feeling that it often doesn’t work for their benefit, and instead serves special interests. I have no doubt that if instead of Obamacare, the plan had been to extend Medicare to everyone, most of the public would have been delighted.

In fact, polls have consistently shown that a majority of Americans favor such a system; the percentages vary according to the framing of the question, but they are almost always well above 50 percent. Americans have no problem with government programs that serve their interests, such as Medicare, Social Security, or, say, the National Institutes of Health.

But they are very suspicious of the private health industry, which now has the largest lobby in Washington – even larger than the defense industry. The major barrier to real reform, then, is money – the wealth of the medical-industrial complex.

Dr. Marcia Angell is senior lecturer in social medicine, Harvard Medical School, and former editor in chief, The New England Journal of Medicine.