When the PPACA (“Obamacare”) became law in 2009, it focused U.S. health care reform principally around health insurance expansion. It paid far less attention of other critical considerations:
(1) Sources of health. There is a persistent, widespread belief in policy circles (as reflected in proposals and actions) that a person’s health is determined primarily by medical care. This leads to a focus on health insurance expansion, under the argument that insurance determines access to medical care. Unfortunately, that belief just isn’t true: Medical care accounts for, at most, about 10 percent of how long and how well a person lives. It is dominated by other factors such as personal health behaviors (40 percent), or public health broadly defined (20 percent – control of epidemic infectious disease through immunization and sanitation; environmental factors, such as housing, diet, clean air, and safe water; and social networks/social hierarchies).
(2) Variation in care delivery. Wennberg and others noted that where a person lived, and which health professional that person happened to approach, is more important that whether that person has health insurance in determining the actual care they will receive.
(3) Health care costs. Health care cost increases are consuming almost all income growth for American workers. They are massively stressing government budgets. Without significant change, projected increases will crowd out other essential public goods over time. Quality medical care does depend on access to care, but access depends on whether that care is affordable.
In 2010 the Institute of Medicine published an exhaustive review of waste in current health care delivery. It concluded that a minimum of 35 percent, and probably more than 50 percent, of all health care spending added no value for patients. This year, the United States will spend $3.2 trillion on health care delivery – about $10,000 for every person in the country. Care delivery waste thus represents at least $1 trillion in financial opportunity. Waste is an ideal target: It doesn’t rely on rationing beneficial care to achieve financial stability. It reduces costs, thus improving access, by producing better medical results.
Markets usually abhor waste, and quickly find ways to extract the financial value that waste represents. Why hasn’t that happened in health care delivery? The primary cause is financial alignment. Under current health care payment mechanisms, those who must invest extract waste from the health care system receive almost none of the resulting financial benefit. Instead, they are usually suffer direct financial harm.
A primary focus on the next administration’s health care reform agenda should focus on aligning health care’s financial framework to the health needs of the country’s citizens. It should aim for “the best medical result at the lowest necessary cost.”
