[Mb-civic] Bush's Turn to Health Care - Sebastian Mallaby - Washington Post Op-Ed

[William Swiggard]

Bush's Turn to Health Care
Is the President Ready to Expand the Public Role?

By Sebastian Mallaby
Monday, January 16, 2006; A17

This time last year, President Bush was preaching Social Security 
reform; that got nowhere. This time six months ago, his team was 
thinking tax reform; it soon got cold feet. Now the new theme is health 
reform. "This is a big priority for the president," Al Hubbard, the 
White House national economic adviser, told me Friday. "The system has 
got to be reformed."

He's right, of course. The U.S. economy as a whole is extraordinarily 
efficient: Since 1995 productivity has grown twice as fast as in the 
1980s and 50 percent faster than in euro land. But U.S. health care is 
the opposite. It's notoriously inequitable, it generates tens of 
thousands of fatal errors annually, and it's unbelievably wasteful. It 
achieves shorter life expectancy than the British, French, German, 
Canadian or Japanese systems, but it eats up 16 percent of the resources 
in the economy, compared with between 8 and 11 percent in those other 
countries. The difference -- 6 percent or so of economic output -- 
suggests that the waste in the American system comes to $700 billion a year.

Back before Bush was elected, Hubbard convened a private-sector group to 
wrestle with this challenge. He recruited three academics -- R. Glenn 
Hubbard of Columbia University and John F. Cogan and Daniel P. Kessler 
of the Hoover Institution -- who continue to influence Hubbard as he 
ponders what Bush should say about health care in the forthcoming State 
of the Union address. Conveniently, the trio's thoughts are not a 
secret. Their five fixes for health care have just been published as a 
short book.

Some look at the U.S. health mess and see a failure of the market, but 
the authors insist that government clumsiness prevents the market from 
working. Modest tort reform would free doctors from practicing expensive 
defensive medicine. Tougher antitrust policies would prevent 
price-raising alliances among hospitals. Pruning mandates on health 
insurers -- which often reflect lobbying by doctors' groups -- might 
free insurers to cover only the most cost-effective procedures.

So far, so plausible: Nonpartisan health experts agree that these ideas 
push in the right direction. But they don't push to the goal line, nor 
anywhere near it. By the authors' own estimates, the proposals eliminate 
only a fraction of the waste in the American system.

Enter the authors' really big idea -- the one on which the White House 
is likely to build a story about its grand health-reform vision. To make 
the health market work, the trick is to create and then empower 
consumers. You create them by making individuals pay more out of pocket. 
And you empower them by forcing hospitals and doctors to publish 
information on quality and price.

The idea appeals to Al Hubbard, a bluff, no-nonsense business type with 
a genial, uncomplicated style. Hubbard invited me to imagine a world in 
which companies paid for their staffs' groceries: Employees would load 
up with more food than they needed; supermarkets would seize the chance 
to mark up groceries; pretty soon, they wouldn't even bother posting 
their prices. So it is today with medicine. You don't know the cost of 
your hospital visit until a few days later, when the bill arrives.

There's a weakness in this thinking. The country has moved far enough 
already toward out-of-pocket payments, which promise hardship for 
low-income people without much reduction in waste. Health is simply too 
complex for people to make smart, waste-reducing decisions; when you go 
to the hospital with screaming stomach pains, you have no idea how many 
tests you need -- and you're not in a fit state to embark on comparative 
shopping. A celebrated study by the Rand Corp. showed that out-of-pocket 
payments deter needed health consumption as much as wasteful 
consumption, confirming the point that ordinary people aren't going to 
become savvy health shoppers.

But the White House is right to press hospitals and doctors for better 
information on price and quality. Limited state-level experiments 
suggest that public ratings shame the poorest performers into rethinking 
their procedures; doctors want to help their patients, and if they are 
confronted with evidence that they are failing to do so they are willing 
to shake themselves up. A few health plans have begun paying bonuses to 
hospitals and doctors that score well on quality and price measures. A 
recent study led by Harvard's Meredith B. Rosenthal found that these 
incentives work.

So the White House is half right. If it sticks to the good bits of its 
program, it could help bring down health care inflation -- which in turn 
would create more space for wage gains and would also stem the growth in 
the ranks of the uninsured. But this still raises a nagging question.

Beyond the imperative of restraining prices, the biggest challenges in 
health care are to get insurance to everyone and to create incentives 
for preventive treatment -- even though prevention may pay off 30 years 
later, by which time the patient will have gone through multiple 
switches in health plans. The most plausible subsidizer of universal 
insurance is government, and the only entity with a stake in lifelong 
wellness is the government. Is the administration ready to see that?

http://www.washingtonpost.com/wp-dyn/content/article/2006/01/15/AR2006011500929.html
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