Health care in the U.S. suffers from “connectile dysfunction”

Nov 16, 2007

Alain Enthoven can’t help but look to the past with regret. “The Managed Competition Act of 1992 and 1993 was potentially the most far-reaching and beneficial piece of legislation addressing health care,” he told a standing-room-only audience at the law school’s first annual Cooper Health Policy Lecture at Vanderbilt University Law School on Friday, Nov. 9. “If it had been enacted, we would be far better off today.”

Professor Enthoven, a world-renowned economist who focuses on health care financing and policy, is the Marriner S. Eccles Professor of Public and Private Management, emeritus, at Stanford University. Known as “the father of managed competition,” he was the natural choice to deliver the inaugural lecture in newly established Cooper Health Policy Lecture series, which honors Congressman Jim Cooper (D-TN), as Cooper championed managed competition when health care reform was under consideration during the early days of the Clinton administration in the early 1990s. The Cooper Health Policy Lectures also recognize the important health policy contributions of the late Vice Chancellor for Health Affairs, Emeritus, Dr. Roscoe (Ike) Robinson.

Professor Enthoven’s blunt assessment of the United States’ current health care delivery system is that the word “system” is a misnomer. Individuals, employers and health care providers are struggling to navigate a complex mix of publicly and privately funded insurance programs, while approximately 47 million Americans lack government- or privately sponsored medical insurance. Individuals with chronic illnesses, such as high blood pressure and diabetes, Enthoven notes, are at a particular disadvantage, because their conditions guarantee that their health care costs will be higher than average, thus providing an incentive for insurers to screen out these patients. “We have a morally repugnant situation where health insurance plans, which are supposed to be there to pay the expenses of sick people, are scrambling around trying to figure out how to avoid enrolling sick people,” he said.

The disconnect between the health care payment and delivery systems in the United States is only one of many “connectile dysfuntions” that characterizes the country’s health care system, according to Enthoven. In the U.S., few patients have a portable, comprehensive medical record that allows every doctor the patient sees ready access to a complete medical history. In addition, patients – the actual consumers of health care services – who are fortunate enough to be covered by traditional insurance plans are typically insulated from the actual cost of their treatment, giving them no incentive to explore less costly alternatives before opting for the most costly treatment.

Enthoven expressed skepticism at the often-voiced fear that a nationally coordinated health care system would translate into socialized medicine. “In Canada and Great Britain, doctors are employed by the government,” he said. “That just isn’t going to happen in the U.S.”

Instead, he advocates a system that would create regional health purchasing cooperatives, which would make affordable medical insurance available to individuals and employees of small businesses, combined with a “community rating” system that would preclude the exclusion of individuals with chronic health conditions from coverage by assessing risk based on the population of the entire region. “With modified community rating, everyone would pay the same premium for the same coverage regardless of their health status,” Enthoven explained. Premiums for people with incomes below a certain threshold would be subsidized.

Controlling health costs while ensuring access to the system is essential, according to Enthoven, because the high cost the government is paying for health care has substantially reduced the resources available to support other priorities, such as education. “About 60% of national health expenditures flow through public sector budgets, if you include the cost of health insurance for public employees and the cost of tax breaks,” Enthoven said. Employer-paid health insurance is tax-deductible to the employer and tax-free to the individual. According to Enthoven, this costs federal budget "over $200 billion per year. People ask why we can’t afford decent nice schools like the ones we had when I was a kid or why they can’t afford to build bridges that don’t fall down in Minnesota, and the answer is that government at all levels has to spend so much money paying the health care bills that it’s taking resources away from other areas.”

Ballooning health care costs are the inevitable result of a number of factors, including the rapid expansion of technologies and treatments; a corresponding growth in the prevalence of costly, treatable medical conditions, such as AIDS; inappropriate treatment, including costly surgeries that may be presented as the treatment of choice because they are the most financially rewarding to the providers; medical errors, such as hospital-acquired infections, that increase the cost of treating the patient; and errors caused by poorly coordinated treatment, such as adverse interactions of prescribed medications. “By one estimate, 83 percent of health care spending is for treatment of chronic conditions,” Enthoven said. “Right now, there’s no [financial] punishment for errors – in fact, they’re rewarded. And surgeons should not be permitted to be shareholders in the companies whose surgical devices they’re using.”

Enthoven approves of managed care programs, such as California-based Kaiser Permanente, because all physicians have access to each patient’s medical records, ensuring that treatment decisions are made based on good information, and because such programs have a strong incentive to emphasize primary care, health promotion, disease prevention, disease management and “the team practice of medicine.”

“Medicine is a team sport,” he said. “We need to socialize doctors as team players, and the best way to do that is to have them work as salaried professionals with bonuses for results, such as a low rate of errors.”

The Cooper Lecture Series was organized by Vice Chancellor for Health Affairs Dr. Harry Jacobson and University Professor James F. Blumstein, who holds appointments at the law school and the medical school and serves as director of the Health Policy Center at the Vanderbilt Institute for Public Policy. Establishment of the lecture series was facilitated by Dr. Jacobson, Vanderbilt Law School Dean Edward Rubin, Vanderbilt Medical School Dean Steven Gabbe and Dr. Robert Collins of the medical school.

Professor Enthoven was introduced by Dr. Jacobson and by Interim Chancellor Nicholas S. Zeppos. Professor Blumstein, who organized and coordinated the lecture, introduced Vice Chancellor Jacobson and Interim Chancellor Zeppos.

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