Changing something familiar can be a huge gamble, especially in policy making. The odds that lawmakers will actually reform the health care system are poor at best. Whatever legislation does emerge won't achieve more than a few tweaks and modifications of what we know so well. No lawmaker is willing to accept the political risk in addressing the underlying problems, no matter how severe they might be – at least not yet.
Myriad cost, quality and access issues mean different things to different people. Hospitals, physicians, benefit managers, health plans, drugmakers, and patients each hold different views on how the system should change, none of which align with each other.
Physicians, for example, follow certain guidelines designed by health plans (the folks who pay them), whose interests often conflict with patients (the folks who don't pay them). A pricing mechanism simply doesn't exist to establish uniform measures of quality among these different stakeholders.
Stephen Hyde's excellent book Cured! The Insider's Handbook for Health Care Reform offers both a refreshing examination of health care's perverse economics and an important framework for putting the system into working order. Cured! is not only relevant to today's reform debate, but will also serve as an important reference document for years to come.
| |
In 1976, Mr. Hyde, an actuary, became the federal government's first chief financial regulator of the nascent HMO industry. He later founded Peak Health Care, which he merged with United Health in 1986 to become the market leader in managed care. Since then he has founded companies functioning in the medical and pharmacy spaces, and serves as an industry consultant and a board member of numerous health care companies. This is his second book, and follows Prescription Drugs for Half Price or Less.
Cured! cuts through political veneers to expose the health care system for what it is: "a balkanized system of private and government programs that lack a comprehensive focus on meeting the medical needs of America's consumers in an economically sustainable fashion".
Health care's market failure begins and ends with the insurance markets, and their method of reimbursement. Not until patients actually purchase medical services themselves, with the protection of catastrophic insurance, can health care ever reform. The litmus test is the consumer's ability to answer two basic questions:
- Who are the best doctors and hospitals for my medical needs?
- Which of them are the least expensive?
Perhaps Mr. Hyde's best work occurs in his book's detailed background sections. He dedicates over 250 pages to analyzing misconceptions and truths about the bloated $2.3 trillion industry, revealing the dark undersides of complex topics (such as the market positioning of the managed care and pharmacy benefit management industries) so that the man on the street can understand the issues as well as any academic or industry expert.
"One might think of forced health insurance enrollment as a mandatory license to breathe," he writes, in discussing health care as an obligation. "Indeed, once you see the price, sharp inhalations may be unavoidable. The glib but irrelevant argument-by-analogy is 'you must have health insurance, just as car owners must have auto insurance.' But driving has long been viewed as a privilege subject to numerous regulations to protect the public safety. The requirement also includes the right to abstain from driving, and indeed there are almost 100 million non-driving Americans. Also, the purpose of mandatory car accident liability insurance is to protect the victims of the insured drivers' mistakes, not the drivers themselves. Car insurance is not relevant to health insurance."
Mr. Hyde's upfront, concise approach makes Cured! a compelling read. He has written this book for the consumer. But in making it readable, he neither condescends as a 40-year veteran of his stature might, nor circumvents the complex workings of his concepts, whether addressing adverse selection, hybrid managed care models, or philosophical questions about health care as a right.
His readers could – and should –include health care's most seasoned insiders, from corporate CEOs to physician practitioners.
The final third of Cured! features Mr Hyde's solution: the American Choice Health Plan ("ACHP"), a congressionally established regulatory mechanism. He proposes seven basic rules to meet eight goals that he introduces in the first pages and details throughout the entire work: universal insurance access, sustainable value and affordability, free rider prevention, voluntary participation, financial protection, choice of insurance and providers, portability, and personal responsibility for prevention.
ACHP's seven rules enable a self-sustaining regulated market for health insurance to take root. These rules are universal annual open enrollment, competitive and regulated insurance market, conversion from defined benefit to defined contribution, voluntary individual participation, enrollment limitations, health funding account, and BAGLE premium pricing. BAGLE refers to premium adjustments for behavior, age, gender, location, and employment/extracurricular risks. His proposal opens premium pricing to the markets, expunging it from the purview of regulators.
Fundamentally, ACHP removes government and employers from the business of insurance, and exposes providers and health plans to a market-based determination of value. It transforms the current group-based insurance model into a fully individual one, so that insurance can be, well, insurance.
Most important, ACHP's fully transparent, patient-centered structure would satisfy the most aggressive coverage and care delivery goals, and achieve 50 percent cost savings at the same time.
"Like the farmer and the cowman in the musical Oklahoma, insurers and policyholders need to turn in their adversarial relationships to become, if not friends, then co-conspirators. Their common goal? High-quality, low-cost health care. American Choice will deliver that."
To be sure, Mr. Hyde faces a considerable challenge in the degree of reform he proposes. As oppressively inefficient as health care might be today, it's not so terrible that policymakers are willing to consider actually changing the system. Proposals working their way through Congress are half measures that more-or-less emphasize the current system. Large employers will still self-insure, Medicare will still force cost shifting, and individuals will still have no clue about the value of care they receive.
But even if policymakers aren't ready for Cured!, consumers could be. Confusion over what health care reform means provides the perfect opportunity for Mr. Hyde to publish this book. And the more consumers know about what they could have, the more likely they'll demand a new system.
Unfortunately, it may take a complete system failure either financial or in delivery of care for ACHP to receive the attention it deserves.
Let's hope we never reach that point, and that we see its fair hearing well ahead of time.
