Democrats’ fantasies will kill health care

A new study by the prestigious National Academy of Sciences may expose “Medicare for All” as the fraud it is.

The study found that between one-third and one-half of all American physicians experience burnout in their work and learning (residency/training) environments, because of inadequate capacity (supply of doctors), health financing and reporting chaos, and overbearing administrative systems. Medicare for All would exacerbate all of that and crater the system.

Today, most doctors are massively over-worked, comparatively underpaid, and experience extreme stress. The training/residency systems are akin to slave labor. Because of poor health care system administration and rampant understaffing, many complex medical procedures and surgeries are performed by physicians who have gotten little or no sleep for over 24-hour periods. The system is a disaster and getting worse. Those who oversee it appear to be in full denial. 

If health care behaved like every other American market-based industry, large and independent health care providers would address an obvious supply shortage by training more doctors to shoulder the load in practice and residency; would find new and better ways to deliver services; would implement reasonable pricing to compensate professionals and discourage misuse of the system; and would make reasonable capital decisions anticipating new technology and market requirements. In the end, as in all other industries, quality would continue to improve, costs would be effectively controlled, and health care workers would have appropriate working conditions and compensation. 

The fatal flaw is that health care is not a market-based industry. Financing — that is, health insurance, Medicare and Medicaid — is separated from product and service delivery (health care). Market signals do not reach or affect health care resource allocation, new capacity or capital investment. In this hodgepodge, health insurance clerks and Centers for Medicare & Medicaid Services (CMS) bureaucrats, driven by political pressures or by corporate customers, drive the pricing, investment and capacity decisions. 

As would be expected, the result is a mess. Health care has been “simplified” to robotic treatment silos that “name it,” “drug it” or  “cut it,” “bill it,” “next patient” — often in 10-minute intervals. “Health system administration” is an oxymoron.

ObamaCare, attempting to add 25 million new patients to this system, may have been well-meaning, but only exacerbated this problem. Medicare for All, adding even more to the same system — including, in some cases, millions of undocumented immigrants — would cause almost immediate system collapse. We would have “Medicare for None.”

The Democratic candidates for president are dead wrong. It is not about how to find trillions of phantom dollars to pay for their fantasy programs. It is vastly more complicated than the candidates grasp. The problem is that the system itself is dying, none of the current proposals can fix it, and their ideas will do nothing more than accelerate system collapse. To be more accurate, it will split into two systems in which wealthier Americans will pay in cash for quality care and everyone else will find that they cannot get quality care at all. At this stage, political debate is a waste of time.

If the National Academy of Sciences study reinforces one point it is that the American health care system needs major reform, quickly. The system has had a growing cancer for the past 50 years: the public (CMS) and private (health insurance companies) regulatory and bill-paying systems that decide, arbitrarily (from a quality health care delivery perspective), how much is paid for services, capital investment decisions and capacity (number of residents, doctors, beds, etc.). The predictable result is inadequate resources, poor resource allocation and overbearing administrative processes to cover up the underlying mess. 

In this Darwinian environment, many nurses have proven to be much smarter than doctors — they have unionized. Doctors simply burn out or commit suicide. The result is documented in the National Academy report. 

Although the study advances some Band-Aid proposals, the only real answer to this problem is to start with a completely clean slate to design a uniquely American solution — a market-based, fully private-sector system that integrates finance and service delivery (i.e., gets rid of CMS and the private health care insurance system), accelerates the current trend of large-scale integration of health care delivery, and utilizes competition among a group of large, private health care systems to drive appropriate capacity, resource allocation and pricing, with the result of higher quality and lower costs. 

ObamaCare and health maintenance organizations (HMOs) tried to encourage variations on this idea, but never developed competition among a set of integrated systems large enough to assure quality and fiduciary accountability. Now is the time to really get it right.

The true answer will not come from Washington, except to the degree that it changes its overall vision and begins to reduce the corrosive role of CMS and private health insurance and their bill-paying systems. The answer will come from large health care providers, who already are  leading health system integration, and Wall Street, which should see it as the investment play of the century.

Grady Means is a writer and former corporate strategy consultant. He served in the White House as a policy assistant to Vice President Nelson Rockefeller and a staff economist in the U.S. Department of Health, Education and Welfare. He was the White House liaison to the National Health Insurance Experiment and helped write and implement the HMO Act of 1973. Follow him on Twitter @GradyMeans.