Think of this as Volume 17, Number 33 of the newsletter I have written weekly since March, 1997. Enjoy.
Turns out their answer lay in the words of a man who has been dead for over 100 years.
In his “Autobiography,” the first part of which was finally published last year, Mark Twain wrote this:
“Consider the wisdom and righteousness of the old-time custom – the paying of the physician by the year. Consider what a safeguard it was, for both the physician's livelihood and self-respect, and the family's health. The physician had a regular and assured income, and that was an advantage to him; the family were safe from his invasions when nothing was the matter, and goodness knows that was an advantage to the family.”
The group that handles this in our time is called an Accountable Care Organization. ACOs are common in the Medicare market, where they share in the savings from keeping people out of the hospital. The ACO model works – insurers have been buying ACOs with both hands over the last year because it is profitable. When that model is brought into the rest of the market, the lower-risk population under age 65, it should work even better.
The problem with the U.S. health care market comes down to incentives, and doctors have the wrong ones. They have an incentive, as Twain writes, to see you as often as possible, so they can bill you for as many services as they can. Twain continues:
“What is the common, the universal, custom of the physician with a limited practice? It is this: to keep on coming and coming, long after the patient has ceased to need him – and charging for every visit. Almost as a rule – I might fairly leave the “almost” out – you are driven to the unpleasant compulsion of discharging him, in order to get rid of him. As a consequence, you dread to call him again, and you put it off for as long as you can without peril.”
There is a basic conflict-of-interest inherent in American medicine, and it's over a century old. But the size of this conflict rises when, as Atul Gawande wrote in The New Yorker a few years ago , doctors have financial interests in the clinics, in the imaging centers, and in the hospitals they work for.
Once this happens they're in precisely the position as Twain's doctor, only they're also making money from others' work. All their incentives lie in doing more tests, in scheduling more visits, in prescribing more drugs, in doing more procedures, whether or not they're medically necessary.
An ACO uses more than forbearance to make its money. It uses data. It can tell, from basic medical tests, whether you have or are at risk of contracting a chronic condition like diabetes or heart problems, conditions that represent 75% of all health care spending. We know obesity can cause these conditions, we have an obesity epidemic, and the only way to address that epidemic is with preventive care.
I know this works. My father had his first heart attack at age 47. I'm now 58. But at age 45 I started taking care of my heart. I started taking statins and hypertension drugs that didn't exist when my dad was that age. I began a regular exercise program. I am still waiting for that heart attack. And I haven't been inside a hospital this whole century.
Companies are learning this on their own. The Society for Human Resource Management estimated that the corporate wellness market was worth $14 billion in 2010, even though most companies then didn't know how to measure the return on investment from that spending, which means most companies still weren't doing it.
By merging the income of insurance with the outgo of care, as groups like Kaiser have done for years, and by being accountable for keeping people out of hospitals, as wellness management does, you cut total health care costs. But all this requires a business model. The Affordable Care Act is the business model.
So where is the opposition to Obamacare coming from? Doctors. Doctors who charge per-visit, who charge for each procedure, who have an incentive to go outside best practices, who keep “coming and coming,” are behind the opposition to health reform, along with ideologues who see any government involvement in any market as being anti-capitalism and anti-growth. Because, freedom.
Opponents to the law have been very transparent about their goal all along. One of them, Betsy McCaughey (above), wrote this in 2009:
The health-care industry is the largest employer in the U.S. It produces almost 17 percent of the nation’s gross domestic product. Yet the bill treats health care the way European governments do: as a cost problem instead of a growth industry.
We can't afford for health care to be a growth industry. Not on a per-capita basis we can't. Our trading partners pay half what we do for health care, they cover everyone, and they have longer life spans. Obamacare isn't perfect, but it at least aligns incentives in the right direction, the direction Mark Twain prescribed back over a century ago.