Health Care Cost Control: A Better Way

Instead of Obamacare's piecemeal approach to cutting health costs, we need a model which forces patients and doctors to control their spending.

Is rationing required to control healthcare costs? No. Not if you define rationing as denying care to a particular person with a specific illness. That is neither necessary nor even possible given our healthcare system or our legal system. Dr. Donald Berwick’s appointment as CMS Director may be a hoped-for step towards adopting the British system by some, but it won’t work.

Rather, we need a system that focuses on eliminating the moral hazard where neither patients nor doctors have a direct stake in the cost of care. This notion was widely discussed in the debate over Obamacare but seems to have fallen off the political radar screen.

What elements need to be in place to achieve this cost consciousness? First, physicians need to have some of the concerns about the cost of care be embedded in their clinical treatments. This need not pit physicians’ interests against patients’ interest, although clearly that risk needs to be closely monitored. Risk/benefit decisions now are almost entirely made on the concern of risk to the patient’s safety versus the possible uncovering of useful clinical information.

There are many excellent of examples of the common sense benefits of considering costs in clinical decision-making: Use of computed tomography of the head for minor trauma has been well studied and the data are quite clear that unless a patient has headache, vomiting, an age over 60 years, drug or alcohol intoxication, deficits in short-term memory, physical evidence of trauma above the collar bone, or a seizure, a CT of the head has a less than a 1% chance of uncovering a problem that would require any active intervention. It would be a mistake for a physician who still had some concerns about the patient despite the absence of these criteria from being enjoined to order the study. However, the physician should be not only free to follow these well documented guidelines but also free from the risk of a lawsuit if the guidelines are appropriately invoked. Right now, there is absolutely no economic reason for a physician to hesitate to order a CT scan in this setting. While many emergency room physicians are well aware of these guidelines and adhere to them, there are many who do not. Avoiding the CT scan would save costs and also lead to less radiation exposure. There are literally thousands of such examples.

The best way to have physicians concerned about the costs of their diagnostic tests and therapies is to create a competitive model in which both doctors and patients have to worry about how much they are spending.  In fact, it may be the only way. While it will take a long time to achieve this type of payment system, it is likely the single most logical approach. The main Obamacare plan model is not to promote such individual responsibility but rather to maintain the piecemeal approach of fee for service care with either price controls or, in progressive-world nirvana, a central administrator determining allowable care. These two approaches will create a nightmare for physicians and patients. Remember that these national healthcare schemes in Europe are fine as long as you are not too ill or not ill at all and really do not care about runaway government spending... Of course everyone loves a “free” system that treats your poison ivy rash and gets you right back to work. But if you have invasive skin cancer, be prepared to wait to see the specialist.

The recently described reorganization of the National Health Service in the UK is not a plan that would be acceptable in the US. They plan to turn the entire healthcare system into the province of primary care physicians. This is a political response favored by progressives who really do not favor real progress. A modern, technologically advanced healthcare system needs knowledgeable and skilled specialists to provide optimal care. Sure, it is good to have coordination of care and treatment for less complex problems but that kind of care should supplement the care of complex and critically ill patients. The latter is more efficiently and more effectively delivered by specialists. A “new age” healthcare system will focus on diet and vitamins and other lifestyle nostrums that have rarely been shown to matter all that much (except for smoking). There are 17.9 million or so patients with cancer in the U.S. They need more than a daily helping of fruit.

In order to make a prepaid system work, a very difficult but achievable reform of the delivery system is required. Obamacare does propose some demonstration projects that look into some aspects of this idea but the whole plan lacks the one element that could make physicians and hospitals aggressively pursue reform models that could work -- incentives and competition. Plans with these characteristics can be designed and created but they put far more responsibility in the hands of doctors and patients than Mrs. Pelosi finds acceptable.

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