Wash Your Hands

[quote]Dr. Peter Pronovost sought to reduce the incidence of hospital-borne infections by promoting a simple checklist of ICU procedures governing physician hand-washing and other sterilization procedures.

Hospitals implementing Pronovost’s checklist had enjoyed almost instantaneous success, reducing hospital-infection rates by two-thirds within the first three months of its adoption. But many physicians rejected the checklist as an unnecessary and belittling bureaucratic intrusion, and many hospital executives were reluctant to push it on them.

When David Goldhill learned of this very shortly after his own father died from just such an infection he began to investigate the real problems in our health care system. As a grieving son, he wished for a culprit only to find that there really is no bad guy, no incompetent doctors, greedy insurance or drug companies, or any other scapegoat. The problem his research exposed was a system of perverse incentives and unrealistic expectations (like expecting that hundreds of thousands of deaths per year from hospital infections is acceptable or unavoidable and expecting someone else to pick up most of the cost of our care). Like Goldhill, anyone wishing to tackle the issue of health care must wash their hands of pre-programmed political prescriptions and rampant half-truths being promoted by people on all sides of the debate.

I have long been a vocal proponent of the value of Health Savings Accounts (HSAs) but after reading Goldhills lengthy analysis I realized as never before that while HSAs are probably the best tool that we currently have to stem the tide of our growing health care problem they are woefully insufficient to actually fix any of the root causes of our troubled system.

All of the actors in health care—from doctors to insurers to pharmaceutical companies—work in a heavily regulated, massively subsidized industry full of structural distortions. They all want to serve patients well. But they also all behave rationally in response to the economic incentives those distortions create. Accidentally, but relentlessly, America has built a health-care system with incentives that inexorably generate terrible and perverse results. Incentives that emphasize health care over any other aspect of health and well-being. That emphasize treatment over prevention. That disguise true costs. That favor complexity, and discourage transparent competition based on price or quality. That result in a generational pyramid scheme rather than sustainable financing. And that—most important—remove consumers from our irreplaceable role as the ultimate ensurer of value.

I would suggest that a full reading of Goldhill’s conclusions is a necessary first step for anyone on any side of the issue before they have any business adding anything to the debate. Whether they then agree or disagree with his conclusion anything they say must either refute some or all of his claims or else they must demonstrate how their ideas address the issues he outlines.

One especially important conclusion by the self-described Democrat that must be addressed in the current debate is this:

A wasteful insurance system; distorted incentives; a bias toward treatment; moral hazard; hidden costs and a lack of transparency; curbed competition; service to the wrong customer. These are the problems at the foundation of our health-care system, resulting in a slow rot and requiring more and more money just to keep the system from collapsing.

How would the health-care reform that’s now taking shape solve these core problems? The Obama administration and Congress are still working out the details, but it looks like this generation of “comprehensive” reform will not address the underlying issues, any more than previous efforts did. Instead it will put yet more patches on the walls of an edifice that is fundamentally unsound—and then build that edifice higher.

Goldhill himself makes recommendations that should be familiar to people who have read my writing before (although I do not agree with him on everything he would like to see done):

• Replace our current web of employer- and government-based insurance with a program of catastrophic insurance.
• Noncatastrophic care should eventually be funded out of HSAs.
• Americans should be able to borrow against their future contributions to their HSA to cover major health needs.
• For lower-income Americans who can’t fund all of their catastrophic premiums or minimum HSA contributions, the government should fill the gap—in some cases, providing all the funding.

To those who argue that this is an impossible prescription to accept he offers two responses – first, it will take a long time to phase in such a system (we’d better get used to that no matter what course we wish to pursue), and second, he draws on his experience as a businessman to show how much we are paying right now – between ourselves and our employers it turns out that we are paying over $30,000 per year per family in premiums, co-pays, and health related taxes – that should cover a decent catastrophic insurance premium and a hefty deductible right out of the gate.