Essay #1 - What is the most important role for the U.S. Health Care System? Why? And how can it better fulfill that role?
In recent years, many people have posed the question as to what the main role of the United States health care system should be. The answer to this fundamental question has a number of very notable solutions, most of which have been debated vigorously during the passing of the Patient Protection and Affordable Care Act (PPACA). Based on the PPACA legislation, some may argue that providing access to the health care system is, and should be, the prominent role. Still, others may argue that containing out of control costs and providing financing for medical care, or, provision of the highest quality care with innovative technologies should be the primary role of the system. While these views are both fundamentally sound and backed by many notable health economists and policy experts alike, I believe they are all secondary outcomes of a much larger role of the system.
What is the health care system? Before I can discuss its’ role in America, I think it is important to define what it actually is. The health care system consists of individuals from a variety of backgrounds. This includes physicians, patients, third party payers, hospitals, and both state and federal government. Ideally, they work in tandem to produce what we know as the health care system (Shi & Singh, 2012). It is important to note that because of this amalgamation of different parties taking part to produce health care, defining a central role of the system is difficult. Every group represents its own set of special interests. At times, these interests are in line amongst various parties within group. However, since the advent of PPACA, I would argue the goals of these different groups have never been further apart.
The role of the health care system should be to provide necessary care to all citizens of the United States. How this feat is accomplished is up for debate. I would contest that this goal is achievable using market driven solutions. Others may disagree, stating the need for higher levels of government involvement in the health care system. However, regardless of the approach, providing necessary care to the citizens of the United States should be a central tenant of the system. It is through health that we as citizens can participate in activities such as work or recreation.
I take the view of health from the perspective of an economist. According to health economist Michael Grossman, health should be viewed as a durable good. Durable goods provide the consumer with sustained use over some finite period of time. Over time, it is expected the usefulness of the good will decline. Due to this expectation of decline, individuals are able to invest in the durable goods, such that they may decrease the rate at which they decline (Grossman 1972a, 1972b).
In health, individuals are born with a given level of health stock. Over time, that stock will decline as a result of both endogenous and exogenous factors. However, the rate of decline in one’s health stock may be augmented through investments, such as exercise or a healthy diet (Feldstein, 2005), (Santerre & Neun, 2007).
Understanding individual health from this perspective, I can take it a step further and look at the health of a group of people, be it at the state or federal level. Aggregation of individual health status shows not only the durable good side of health, but also the public good component of health. Public goods, when consumed, produce what economists call externalities, or unintended consequences (good or bad) from the production or consumption of a good, not realized in the market transaction (Pindyck & Rubinfeld, 2009).
In the case of aggregate health status, I would argue the public good carries a positive externality. The social benefit from an individual (or group of individuals) taking care of themselves has a greater social benefit on the margin than the private benefit. For example, my choice to vaccinate myself benefits society as it decreases the probability that I could carry a deadly disease.
So how can the health care system accomplish this role? First, the federal government needs to remove themselves from the health care system. Their current role in both Medicare and Medicaid is crippling these programs. Administration at the state level, as proposed by Representative Paul Ryan (R-WI), would be one method of handling the matter (House Committee on the Budget, 2011).
The United States is built on the ideals of the market economy, yet in health care we ride the line between a market approach and non-market approach. We need to come together as a country and make a decision as to which approach we value more. Given the fall out since PPACA was signed into law, my feelings are that America values the market based approach more. To that end, I would argue insurance provision in this country is long overdue for some drastic changes. Opening purchasing across state lines to increase market size (and consequently risk pools as well) is just one market solution that could drive costs down and thereby drive up supply to meet current demand.
Essay #2 - What is the single greatest challenge to the U.S. Health Care System in the near future (e.g., between now and 2025)? Accordingly, what is the best strategy for tackling this greatest challenge?
Many policy decisions made concerning health care are often based on value judgments. The single biggest value judgment in question is whether or not we as individuals have a right to health care. The answer to this question is difficult, as each of us has separate belief systems. However, we need to come together as a society and have this debate, as meaningful reforms to health care, especially those that could control costs, rely heavily on the answer.
The single greatest challenge faced by the U.S. health care system is costs. While the term “costs” is not overly specific, it is clear that they are proliferated throughout the health care system. On the patients end they face copays, coinsurances, deductibles, and premiums. Providers must deal with the costs of producing health care. Third party payers have costs associated with reimbursement. Cost is the primary driver of the health care system. It is a sign of continuing production from all parties involved, and it is because it involves all parties, that I believe it is the single greatest issue the system faces in the near future.
How do we control costs? It is clear that costs are rising, but by how much is up to interpretation. The World Health Organization (WHO) estimated health care costs in 2009 to be approximately 16% of GDP, and could reach as high as 19.5% of GDP by 2017. These estimates do not take into account recent health care legislation (PPACA), and economists have not yet determined what the precise effects will be on costs going forward. With that said, I still believe there are places where new policies can be considered in order to take meaningful steps toward controlling cost growth in health care.
The first meaningful step toward controlling health care costs is to change the health insurance industry. From the policy perspective, health insurance purchases should be allowed across state lines. In expanding the market for insurance, the companies would be forced to compete more heavily for your business. Simple economics predicts the outcome would be increased supply of insurance at a lower price. However, insurance pricing is also based on risk. So, increasing the size of the market and competition also increases the risk pool an insurer may draw from. Larger risk pools lead to more cost sharing among those insured, and should theoretically lead to lower insurance costs.
This proposal does have a few drawbacks, mainly, the discontinuity of physician networks from state to state. By removing the regulations on insurance purchasing, insurance companies would need to better integrate networks from state to state. Doing so could potentially raise costs by some degree. However, with the advent of health information technology and electronic medical records, it is feasible to integrate physicians in a national network for billing purposes. I suggest utilizing the current National Provider Identifier (NPI) system as one way of establishing this network.
Health insurance plans, and what services they cover is one example of policy reform that heavily relies on the outcome from this debate. For those who believe health care is a right, then the aim of reform should be to provide some level of care to every citizen of the United States, regardless of their ability to pay, because by definition, they have a right to health care. On the contrary, if you believe that health care is not a right, then reform should focus on making the patient, (the individual) responsible for the financing of basic health care. This view returns insurance back to its’ original intent as a means of protection against “catastrophic” events, as opposed to the wide scope of coverage we see today.
As an economist I can say that shifting costs to the patient for more basic health care needs, such as primary care, reduces the burden of risk to insurance companies, such that they may provide more extensive catastrophic event coverage than currently available. The model of health savings accounts is one example of insurance that could greatly benefit from these cost shifts if implemented on a system wide scale. However, further policy changes are necessary for health savings accounts to be a more viable option for the masses.
I have very strong beliefs, not only on health care, but on America, the government, and politics as a whole. Without trying to sound cliché, I do believe this country was founded on principles that many of us have forgotten about. History has become irrelevant in many American’s lives. Yet, to effectively debate health care issues (or any social issue), we first need to remember who we are as Americans, and what that means. To me, it means we need to return to the founding documents and read the words or our founding fathers. We need to understand what they wrote, and the vision they had for America. Only then can we effectively debate the social issues such as health care with purpose and understanding.
Essay #3 - Consider the advancement in and potential for, evidence-based decision-making/medicine and clinical guidelines. Should 'purchasers' of health insurance (e.g., the federal/state governments for Medicare/Medicaid and employers for employer-sponsored health insurance) pay only (or at least more) for those treatments deemed 'evidence-based' - when such evidence and guidelines exist?
Put another way: Should the patient have to pay more out of their own pocket the additional costs associated with treatments beyond or different than evidence-based guidelines suggest OR the provider get reimbursed less if they provide care different from evidence-based guidelines (and that is unjustified)? Why or why not? Is your opinion determined by cost, quality, principle, or other reasons?
In recent debates over the rising costs of health care, some have proposed that purchasers of health insurance (Medicare, Medicaid, and other private third party payers) base their reimbursement strategies on evidence-based medicine guidelines. While I believe that evidence-based medicine (EBM) guides have potential to impact the medical services industry, I think a system wide implementation as tools for structuring reimbursement would be a large mistake.
Through the evolution in the medical services industry, we have seen the decision making ‘privileges’ of physicians be severely diminished by the ‘purchasers’ of health insurance. The insurance industry has instituted fee schedules for medical treatments, formularies for prescription drugs, and timelines of reimbursement for physical or occupational therapy. These policies have vastly augmented how physicians practice medicine. Instead of using their best judgment on the appropriate treatment or therapy for their patient, they must first consider, (or at least deal with) the guidelines and rules established by insurance companies.
I would submit that while some of these rules and guides are established by physicians and pharmacists, they do so with a perspective on cost-effective outcomes. They do not have a personal relationship with the patient. Every patient is different, and what works for some, may not work for others. Our government (though Medicare and Medicaid) have continued to push reimbursement policies with the good of the ‘collective’ in mind.
In consideration of EBM, there are some important questions to address. Who sets these guidelines? Are they standardized across ‘purchasers’ or do they differ between public and private insurers? What if the proper treatment for a particular patient is not part of the EBM guide, or, what if all the EBM tested treatments have failed? Who makes the decision in this case? What are the outcomes of these decisions? Anytime politicians or society in general consider making changes to the current system, it’s as if we only ever look at the potential outcomes that are right in front of us. We never consider outcomes that are two, three or four steps down the road. Asking important questions like the ones I’ve posed here are important to looking down the road and having a long term perspective. This is not so different from any small or big business. While they operate in the short run, they always plan for the long run.
I base my theories on the principles of small government and classical economic theory. I believe very highly in the constitution and the declaration of independence. I also believe in the free market (capitalist) system. For country built on free market enterprise, it continually amazes me that the government continues to increase their presence in the health care sector. While I agree that health care markets do not fit the ‘ideal’ model economists talk about with respect to the theory of the firm, I contest that it’s never been allowed to function in a fully free capacity. Additionally, in other sectors of society, the federal government has fostered the ‘welfare’ or entitlement state. These sentiments continue to fuel the position of big government supporters who believe we need more government involvement in health care.
It is this blend of issues, (economics, health care policy and general politics), that I want to focus my career around. I want to be a part of meaningful research projects and teams with a focus on smaller government and patient centered solutions. I believe we need to focus on putting the practice of medicine back in the hands of physicians and out of the controlling interests of third parties. We need to at least attempt to institute a full free market model and foster an environment for it to flourish. Doing so could likely improve outcomes as well as drive down costs all the while maintaining the doctor-patient relationship.
Through the evolution in the medical services industry, we have seen the decision making ‘privileges’ of physicians be severely diminished by the ‘purchasers’ of health insurance. The insurance industry has instituted fee schedules for medical treatments, formularies for prescription drugs, and timelines of reimbursement for physical or occupational therapy. These policies have vastly augmented how physicians practice medicine. Instead of using their best judgment on the appropriate treatment or therapy for their patient, they must first consider, (or at least deal with) the guidelines and rules established by insurance companies.
I would submit that while some of these rules and guides are established by physicians and pharmacists, they do so with a perspective on cost-effective outcomes. They do not have a personal relationship with the patient. Every patient is different, and what works for some, may not work for others. Our government (though Medicare and Medicaid) have continued to push reimbursement policies with the good of the ‘collective’ in mind.
In consideration of EBM, there are some important questions to address. Who sets these guidelines? Are they standardized across ‘purchasers’ or do they differ between public and private insurers? What if the proper treatment for a particular patient is not part of the EBM guide, or, what if all the EBM tested treatments have failed? Who makes the decision in this case? What are the outcomes of these decisions? Anytime politicians or society in general consider making changes to the current system, it’s as if we only ever look at the potential outcomes that are right in front of us. We never consider outcomes that are two, three or four steps down the road. Asking important questions like the ones I’ve posed here are important to looking down the road and having a long term perspective. This is not so different from any small or big business. While they operate in the short run, they always plan for the long run.
I base my theories on the principles of small government and classical economic theory. I believe very highly in the constitution and the declaration of independence. I also believe in the free market (capitalist) system. For country built on free market enterprise, it continually amazes me that the government continues to increase their presence in the health care sector. While I agree that health care markets do not fit the ‘ideal’ model economists talk about with respect to the theory of the firm, I contest that it’s never been allowed to function in a fully free capacity. Additionally, in other sectors of society, the federal government has fostered the ‘welfare’ or entitlement state. These sentiments continue to fuel the position of big government supporters who believe we need more government involvement in health care.
It is this blend of issues, (economics, health care policy and general politics), that I want to focus my career around. I want to be a part of meaningful research projects and teams with a focus on smaller government and patient centered solutions. I believe we need to focus on putting the practice of medicine back in the hands of physicians and out of the controlling interests of third parties. We need to at least attempt to institute a full free market model and foster an environment for it to flourish. Doing so could likely improve outcomes as well as drive down costs all the while maintaining the doctor-patient relationship.
Enjoy!
All three essays submitted were authored by Anthony Pirrello to fulfill requirements for a course in Health Care Policy at The University of Iowa, College of Public Health.
All three essays submitted were authored by Anthony Pirrello to fulfill requirements for a course in Health Care Policy at The University of Iowa, College of Public Health.
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