Close your eyes and try to think of every health reform plan you've ever heard of – beginning with Hillary Clinton's plan about 15 years ago right up through Arnold Schwarzenegger's plan today. Think left and right. Think big and small. Don't overlook the self-serving plans devised by hospital, insurance and drug company trade groups. And don't overlook Len Nichol's plan, which is supposed to be rooted in the Old and New Testaments and the Koran.
Yes, I know. No one should have to do this on a full stomach. So you may want to put this exercise aside for a few hours and then come back to it. But if you really concentrate, at least three or four dozen plans should easily spring to mind.
In a previous alert, I argued there are three important questions to be asked of one and all:
1. Does the plan force anyone – any patient, any doctor, any nurse, any hospital, any insurer, any employer, any government agency, any anybody anywhere – to choose between health care and other uses of money?
2. Does the plan force any provider of care – any doctor, any nurse, any hospital, any anybody on the provider-side – to compete for patients based on price and/or quality of care?
3. Does the plan allow patients now trapped in schemes that ration care by waiting – Medicaid, S-CHIP, Medicare, emergency room free care, VA system, CHAMPUS, Indian Health Service (Indian Health? yeah, why not?) – to have the same access to doctors, hospitals, clinics, etc., that privately insured patients have?
If the answer to the first question is "no," the plan will not control costs. If the answer to the second question is "no," the plan will not improve quality. If the answer to the third question is "no," the plan will not increase access to care. If the answer to the full set is "no, no and no" (and I believe in almost all cases it is "no, no and no"), the plan is hardly worth talking about.
Two hundred years from now, anthropologists will look back on our era and wonder why there was so much sound and fury over plans that from the get-go could not possibly succeed. To help them out, I plan to entomb this Alert in a cornerstone somewhere.
Health care is a complex system. It may be the most complex of any social system. Complex systems cannot be managed, planned, controlled, etc., from above. If they are functional, it is only because the people down below face good incentives and feedback loops. If 300 million potential patients make just 10 health care decisions every year, that's 3 billion decisions on the demand side of the market alone. No one can manage, plan, control, etc., 3 billion decisions, to say nothing of the supply side of the market. The problem with all of the plans you have been thinking about is that they all violate this principle.
How do we know if the participants in a complex system face good incentives and good feedback loops? We can begin by asking whether they have the power to make things better. Although the three questions above are very good questions, here are three that are even more fundamental:
4. Does the plan allow doctors and patients to freely recontract, so that a better, higher-quality bundle of care can be provided for the same or less money?
5. Does the plan allow providers to freely contract with each other to reduce costs or raise quality?
6. Does the plan allow the insured and the insurers to freely recontract in order to change the boundaries between self-insurance and third-party insurance and arrive at more desirable allocations of risk?
The really disconcerting thing is not that the answer is "no, no and no" for all of the plans. I'm sure you already anticipated that. The really troublesome thing is that the answer is "no, no and no" for the current system.
Sorry if I ruined your day.