Dec 18, 2018

The Din of Healthcare: Melancholia, Metamorphosis, and Miracles

Making the Healthcare Debate about Better Care for More People at Lower Cost
Robert Graboyes Senior Research Fellow

This is the fifth and final installment in a series on the fallacies and gaps in America’s healthcare debate.

The five articles in this series argue that healthcare discussions are distorted and degraded by three distinct problems. First, a set of tropes—all exaggerations, half-truths, non sequiturs, or outright falsehoods—pervade thinking across the political spectrum. Second, healthcare professionals and policymakers are surprisingly unaware of many innovations that improve care, expand access, and lower costs. And third, profound philosophical conundrums are never distant; economics and ethics are obviously interlaced and unintended consequences are heavily veiled.

Recognizing and accommodating these myths, marvels, and meditations is essential to shattering the stasis that seals us inside the musty box of conventional wisdom. The associated conventional policy choices delay and deter improvements in the delivery of care.

Public debate over healthcare is steeped in melancholia, with all sides reduced to a depressing, bitter, zero-sum squabble over redistributing care as it currently exists. A better approach is to think in terms of metamorphosis—how today’s care can give way to new modes of delivering health. In this way, we get a stream of miracles—extending life and reducing suffering without impoverishing us along the way or asking bureaucrats to determine who shall live and who shall die.

Melancholia

For a decade, the central issue in American politics has been the vicious partisanship over healthcare. However Left, Right, and Center may frame the issues, that battle has never been about improving, expanding, or economizing on care. The debate hovers over distribution and redistribution—who gets what, when, why, where, how, and for how much?

My “Cutting Health Care Costs—the Calendar Test” and “Real Health Care Reforms Pass the ‘Calendar Test’” presented this problem via metaphor. From the first article:

“Suppose a primary care doctor works 10 hours a day. For five hours, she does things other than seeing patients—reading, meetings, traveling, practice administration and editing electronic health records (EHRs). Later, she sees 20 patients for 15 minutes apiece. … Now, imagine someone hands out four gift coupons, good for one visit with this doctor today. There are four possible responses. First, the doctor can work an extra hour—which increases costs. Second, the doctor can squeeze the extra patients into the five hours by shortening all visits to 12.5 minutes—thus compromising the level of care. Third, the doctor can cancel four previously scheduled patients—obliterating their care altogether.”

The way out of this depressing loop lies in what I call the “Calendar Test,” described in the “Miracles” section below.

None of these three responses yields better care for more people at lower cost—the implicit or explicit promise of the Affordable Care Act (“Obamacare” or “ACA”), “repeal and replace” counterproposals, or the recent push for single-payer (“Medicare for All”).

The ACA didn’t significantly alter the supply of healthcare resources (doctors, nurses, therapists, hospital beds, medical machines, drugs, et cetera). For the most part, those resources were fully utilized. Doctors didn’t lead a life of leisure, whittling to fill their empty time. Nor did the ACA significantly alter how we combine those resources to provide care. The ACA extended insurance coverage (hence, promises of care) to perhaps 20 million people and reduced point-of-service costs on dozens of procedures for all 325 million Americans. To pay for these services, financing burdens were shifted onto taxpayers and onto various segments of the population (such as people making just a bit too much to qualify for federal insurance subsidies).

The bottom line is that none of the mainstream proposals do much in the way of expanding healthcare or significantly altering how we use it.

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Republicans, who despised the ACA from the start, have introduced a string of bills to undo some ACA provisions. A central assumption behind their proposals is that state governments will exhibit more efficient, creative governance than will the federal government. My “Why Both Sides Are Losing the Health Care Debate” and “Why Repeal and Replace Will Never Work” explore how criticisms of the ACA extend to Republican counterproposals.

In 2018, another attempt to scramble the distribution of care and financing—single-payer insurance rebranded as “Medicare for All” (M4A)—sat atop America’s debate. In “The Costs of a National Single-payer Healthcare System,” my Mercatus colleague Chuck Blahous estimated the unprecedented cost that M4A would impose on the federal government. In follow-up articles, I explored why M4A likely wouldn’t lower overall healthcare spending (“Medicare for All: Explaining the Math”) and would likely depress the overall economy: (“Medicare for All: Taxes and Tradeoffs”).

The bottom line is that none of the mainstream proposals do much in the way of expanding healthcare or significantly altering how we use it.

Metamorphosis

Unfortunately, our healthcare debate consists largely of normative exhortations. The Left insists that healthcare is a right. All people deserve healthcare. Care should be as evenly distributed as possible.

The Right speaks more about the sanctity of doctor-patient autonomy; the federalist vision of states as laboratories of democracy and experimentation; the innate superiority of private markets over government direction.

How do we change the conversation and shift toward better care for more people at lower costs? We can glimpse an answer by exploring what happened over the past 30 years or so.

The Economist notes that between 1981 and 2013, “the number of people in absolute poverty has fallen by about [one billion] and the number of non-poor people has gone up by roughly [four billion].” This rise is unprecedented in human history.

An important contributing factor has been the information technology (IT) revolution—the spread of mobile telephones and laptops. In the 1980s, my work took me all over Sub-Saharan Africa. I sometimes traveled with the knowledge that no friend, relative, or acquaintance knew where I was—and I had virtually no ability to tell them. Even in the cities, I had almost no access to outside events, other than a daily half-hour of BBC World News.

Today, the remotest villages on earth have cellular signal, and the poorest people carry affordable smartphones and laptops whose chips are smarter than any computer that existed on earth around during my travels in Africa.

The farmers in those villages have the same access to weather data as you do, giving them the ability to optimize harvests—picking crops before a monsoon hits, for example. Those same farmers use cellphones to determine which markets will yield the highest prices. The fog of uncertainty under which they suffered just a few decades ago is gone. Across Africa, banking and healthcare are routinely delivered via mobile devices—sometimes in ways we Americans have not yet begun to explore.

Connectivity has been a great equalizer. 25-30 years ago, here in America, I knew only one person with a cell phone. That device, like the six or seven houses she owned, indicated great wealth. Since then, markets and a nearly unfettered ability to innovate drastically reduced the cost of mobile electronics and greatly increased the power and functionality of the devices.

In large part, the explosive development of IT happened because federal laws and policies (notably, the High Performance Computing Act of 1991 and the Clinton Administration’s The Framework for Global Electronic Commerce) effectively removed federal regulation as the powerful barrier to innovation that it had been for decades.

As the internet grew at mind-numbing speed, benefits spread worldwide. Cellphones went from toys for the very rich to—borrowing a phrase from healthcare—universal coverage. This happened mostly through the power of private markets, not the willpower of national governments.

Let’s imagine an alternative history. Suppose in, say, the 1960s or 1970s, we as a society had decided that the central issue in information technology was the inequitable distribution of machines and connectivity. Suppose we had made equity and universality the central focus of public policy regarding IT.

In this alternative world, government agencies define what computing and telecommunications are. Bureaucrats determine what to pay for and what not to pay for. Prices are set. An alphabet soup of separate agencies provide IT for poor people, IT for senior citizens, IT for veterans, et cetera.

The federal government meets with IBM, Honeywell, AT&T, and Western Electric to define IT standards, set prices, and establish rules for access by hundreds of millions of Americans. If the federal government agrees to pay $100,000 for a certain quantity of computing or communication, no one has any motive to reduce the cost below that level—especially if federal reimbursements dropped as production costs dropped.

IT agencies won’t pay for substandard products offered by uncredentialed entrepreneurs—companies like Apple and Microsoft. In this alternative world, we still use gigantic, dimwitted mainframes and argue ferociously over whether the current distribution of machines and access to those machines was fair.

In this alternative world, remote villages in the developing world still languish in electronic darkness—vulnerable to the whims of the weather or remote product markets. The rise from poverty is stunted.

As I like to say—flippantly: The political Left believes it is the federal government’s job to impede innovation and deny consumers the medical services they desire. The political Right believes the task of impeding innovation and denying choices should be left to states and to state-empowered private actors.

For a half-century, IT has been governed not by US law, but rather by Moore’s Law—the inexorable, remarkably rapid increase in the power of microchips. In healthcare, however, the disturbing trend is described by Eroom’s Law, which shows that the development of new drugs is becoming slower and costlier with the passage of time. (“Eroom” is “Moore” spelled backward.) A cause, perhaps “the” cause, is the tightening noose of regulation that surrounds the approval process.

The process of innovation is akin to what has been described as the miracle of compound interest—small increases today yield gigantic increases shockingly soon. New innovations today induce a cascade of new innovations down the road. Stop a critical innovation from happening today, and no telling which potential miracles will not happen next year or five or ten years down the road.

Miracles

The challenge going forward is to apply the miracle of compound interest to healthcare innovation. The miracles lie in discovering ways to avoid today’s frustrating, divisive tradeoffs between economy and equity. A better goal is to get more care and better care for less than we spend today. Three decades ago, we learned how to call manna down from Heaven in IT. While we may view IT and healthcare differently, the processes that govern innovation in both are virtually identical.

A better approach is to seek ways to see more patients in the same amount of time (or less time) without degrading the quality of care.

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A section above alluded to my “Calendar Test.” In those articles, we faced the problem that redistributive solutions yield unpleasant changes in the doctor’s daily calendar. For the busy doctor to accommodate new patients, she must either extend her day (and commensurate costs), cut the time spent with each patient, or cut out some old patients. These are the approaches embodied in the ACA, repeal-and-replace, and single-payer. All seek to manipulate the demand for care while leaving supply nearly unchanged.

A better approach is to seek ways to see more patients in the same amount of time (or less time) without degrading the quality of care. Installment number three of this series—“Marvels and Makers”—names at least three ways to do this: shift tasks from physicians to lower-paid non-physician providers; shift tasks from physicians to intelligent machines; and shift tasks from physicians to patients themselves.

These are the changes that present-day laws, regulations, and customs frustrate most heavily. And the underlying reason for these obstacles, I believe, is that most of us accept the myths, ignore the marvels, and fail to mull the meditations. 

Photo credit: Leon Neal/Getty Images

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