The Economics Of Being Kinder And Gentler In Health Care

poor“Rather than embracing a single-payer system, the United States is more likely to stumble, in fits and starts, toward something resembling officially sanctioned tiering of the American health care experience by income class…”  Uwe Reinhardt

“Imagine going to a physician’s office and finding two waiting rooms. Since you are wealthy (even after taxes)  and have “real” insurance, you are directed to the waiting room on the right. Comfortable lounge chairs, coffee bar and large full screen movie playing in the far end while computer stations on the other end for your personal use while waiting for the doctor. But alas, you won’t have much time to surf the net since waiting times in the room on the right averages 10 minutes or less.

Those other, less fortunate and lower income patients with government insurance are directed to the waiting room on the left. Wooden church pews are loaded with sad eyed mothers with squalling children. It’s cheaper to take the children to the doctor than hiring a babysitter, so the whole family is there to provide moral support to little Johnny and his runny nose. They know the drill…….out comes their sack lunches since the waiting times can be two, three or four hours before they get to see Sarah, their favorite nurse practicioner…..”  William Rusteberg

By Uwe E. Reinhardt The New York Times, December 20, 2013

In the late 1980s, about 35 million respondents to large nationwide surveys declared that they lacked health insurance of any kind. The comparable number now is close to 50 million.

Then, as now, the endless “national conversation” went on and on, pondering ways to achieve truly universal health insurance coverage, a feat most other developed nations accomplished long ago.

Then, as now, news organizations and the health services research community reported on the financial and physical hardship that many low-income, uninsured Americans face when they fall ill.

And then, as now, the prices for identical health care goods and services were more than twice as high in the United States as they were – and still are – in the member nations of the Organization for Economic Cooperation and Development.

For all the wonderful things the United States health system has done for the American people, then, as now, it has also helped price some degree of kindness out of our souls, a side effect of their treatments that the leaders of American health care at some point must begin to contemplate.

My interpretation is that opposition to the Affordable Care Act largely reflects the age-old reluctance among many of the nation’s haves and the healthy to help purchase for America’s lower-income families and the chronically ill the super-expensive health care that the haves enjoy themselves. That attitude is all the more striking because of the generous federal indirect subsidies enjoyed by many of the haves, especially high-income Americans. (I am thinking specifically of the generous tax preference accorded employment-based health insurance, the largest tax expenditure in the federal budget.)

Some people on both the extreme left and right seem to believe that the current travails of implementing the Affordable Care Act and the possibility of a so-called “death spiral” in the market for individual health insurance may usher in single-payer health insurance in the United States – say, Medicare for all.

I do not find that a likely prospect. Rather than embracing a single-payer system, the United States is more likely to stumble, in fits and starts, toward something resembling officially sanctioned tiering of the American health care experience by income class, as follows:

FOR MEDICAID BENEFICIARIES AND THE UNINSURED, a budget-constrained system of public hospitals and public clinics. It would allow politicians to ration health care (through tight budgets) without ever having to acknowledge that they were doing so. In other words, it would reduce the price of being kind.

FOR THE EMPLOYED MIDDLE CLASS, a mixed system with defined contributions by employers, private health insurance exchanges and reference pricing by insurers. Under a restructured Medicare program also based on a defined contribution model, reference pricing would be likely to apply to Medicare beneficiaries as well. Depending on how it is operated – e.g., if it were solely based on cost, in abstraction of quality – reference pricing also permits tiering of the health care experience by income class, without anyone having to say so openly.

FOR THE UPPER-INCOME GROUPS, boutique medicine, which is already growing in the United States. Here the sky will be the limit.

And what do readers think?…