Patient Choice Can Prevent Rationing Abuses

Any managed care system will have rationing. But forcing providers to fight to keep patients will insure that beneficial care is never cut.

This is the fourth installment in a series on correcting the mistakes in the Democrats’ health reform bill.  Click here to read the rest of the series.

Uniting insurers and providers into an integrated health delivery system would better preserve patient choice, insure quality care and manage costs than the Democrats’ health reform bill.  Rising health costs could better be managed when insurers provide a budget and affiliated providers make decisions about care within that cost structure.

But equally importantly: an integrated health delivery system with insurers and providers tied together would still protect patient choice.  Patients would be free to leave their plan and jump to a competing system.  The integrated insurer/provider system might have incentives to cut costs, but they will also need to compete amongst each other to retain patients.

The key to an integrated health delivery system is protecting competition.

A national healthcare system without competition will inevitably lose the power of incentives to drive innovation. A system without competition will take on the flavor of a government-run bureaucracy. While some point to Medicare or to the Veterans Administration as proof that government-run systems do work, one must also point out that these systems must function in a way that does not lead to an obviously inferior set of outcomes or services compared to the private health system.

Politically, Medicare could not provide a drug benefit, for example, that was much less robust than that which private insurance provided or no one would have chosen it! It is competition with the private sector (or at least comparison with the private sector system) that requires a standard of care and service that allows the public sector systems to be successful.

What will the roadmap for creating integrated insurer and provider health delivery systems look like?

The first step is to create the infrastructure -- a robust information system -- not so it will save money (it will not save any money for many years) only so a true system of care can subsequently be created. Systems cannot manage patients in a medical delivery system unless they have extraordinarily robust information systems. They need to know which patients need a particular test, which ones have missed appointments, which ones are at risk for complications, etc. They can only control costs with such information.

The next step is to organize the current systems into integrated entities in combination with existing insurance companies. Medicare and Medicaid could be part of such integrated systems. The next step is to allow systems to enroll patients in their designated plans – through incentives – and penalize them for failing to do so. The final step would be to create the oversight system by which the government monitors care.

Why is this plan better than other proposals? First, it recognizes the absolute need for a competitive component in the healthcare system.  Competition guarantees the innovation and incentives needed to maintain a high quality of care so that patients remain in a given system.

Second, this plan puts the requirement to control spending in the hands of the delivery system, not the payers. This allows rational, patient-based decisions about new technology, use of services, and utilization of resources. This is the greatest opportunity for savings. Now hospitals have to compete by providing the latest technology even if it may not actually advance the quality of care. If hospitals were grouped together and had the incentive to organize care so that duplication was minimized, then substantial savings could be produced.  Yes, patients might have to travel a few miles to get an MRI but if they had to travel too much, they could pick another system which was better organized.

Third, this plan would grant the government the key role of oversight and regulation -- its natural role in a diverse and democratic nation.

Fourth, it accepts the proper role of information technology as an integrating function which can allow a more fair and rational healthcare system to emerge.

What are the deficiencies of this plan? First it does require an entity, perhaps the government, perhaps a “base-closing commission” enterprise, to create the organizational structure in each region to build the integrated delivery system. This will be politically difficult – but political difficulty is inherent in fixing the unsustainable system we currently have.

Second, it does not deal well with rural environments where there is little competition - but they are already healthcare-deficient areas now.

Third, it does contain elements of “rationing” but in truth, there is no way to reduce healthcare costs unless there is less spending. There will be rationing of care in any system. The question is whether it will be beneficial care or unnecessary care that is rationed. Who better to decide this than the entities entrusted to deliver care in partnership with patients? How better to guarantee this than to give patients a choice in where they obtain their care?