Editor’s note: Hamilton Davis is a health care expert and columnist who writes for VTDigger.
I have been writing these columns on VTDigger for a while now, and one of the things I particularly like about it is the comments readers append to the text. It’s very different from my early newspaper days when I wrote in big city newsrooms on mechanical typewriters, with spittoons in the corners, and when you had a truly tough story you could send a copy boy or girl out to get coffee and then fire up a cigar to get you through it.
They had letters to the editor then, of course, but those had nothing like the immediacy of today’s interjections at warp speed on the Internet.
It occurred to me the other day that people who are engaged enough to write comments deserve some sort of acknowledgement by the writer. So I have decided to try responding.
A decent respect for the readers requires that I say something about how I’ll do it.
I won’t respond to each one; that would amount to just hot air. I will respond where I think I have something to say to the reader, and especially if it would seem to move the conversation about health care along. I have no problem about critical comments: They often open up the most interesting areas.
For those who say they like what I have written, I say, thank you. For those who say I am clearly an idiot, I would normally respond with something rude, but I also might concede that this reader has lots of company.
The one area I have no interest in is the contention that anything government does must be wrong, not to mention despicable. I am glad that VTDigger runs all comments, but the reflexive anti-government stuff doesn’t interest me. Arguing about that has all the appeal of a debate with the flat Earth society.
So, herewith:
My last column centered on the all-payer issue that is the current big deal in Montpelier. One of the very thoughtful comments came from Eric Davis (no relation that I know of), a retired professor at Middlebury College, who also happens to a very shrewd commentator on Vermont politics. Eric had a couple of points/questions.
1. Would the Vermont system now being contemplated resemble in certain ways the English system, and would the proposed Vermont payment model generate the regular political battles over funding that mark the English model?
Answer: I don’t think so because the ultimate source of the money is different in the two models. In the UK, all the money comes from the national government, which means it is raised by taxation. The only way to argue about that is politically, which as Eric notes certainly happens in England. It is also the case, by the way, in Canada.
By contrast, funding for health care in Vermont and the rest of the U.S. is split roughly in half between the federal and state governments on the one hand, and private insurance on the other. Shortfalls on the government/taxation side get offset by private sector money, a phenomenon called the cost shift. Health care costs rise very rapidly, but no tax system can. Private sector payments, essentially from employers, are much easier to increases than taxes, which finesses the angst around tax hikes. It is interesting to note that Medicare for all, as suggested by Vermont Sen. Bernie Sanders in the current presidential campaign, could generate the kind of political tensions that are now evident in England.
2. Eric suggests that giving the Green Mountain Care Board the power to cap spending across the state is so foreign to American experience that it will be difficult or even dangerous to manage.
Answer: That is certainly possible, but it is not in my view inevitable. Two reasons. One is that any provider can opt out of the ACO on their own initiative, and can revert to the fee–for-service system. For example, when the ACO OneCare Vermont was formed a few years ago, all the hospitals in the state signed on. Subsequently, hospitals in four towns backed out — Gifford, St. Johnsbury, Springfield and Townshend – and they remain where they have been for the past four years — operating under a cap that is imposed now by the GMCB. Independent doctors, including primary care physicians can also decline to join an ACO, and some almost certainly will.
The second, more important reason, is that an ACO is really designed to act like a company. It is not exactly like a business, but it is close. The company, made up of doctors, hospitals, and others, would deliver a service to a block of people for a set price.
The whole American economy works like that. IBM, General Motors, the local pizza stand — all have to deliver a product or a service at a price their customers can afford. It is always a balancing act: The business has to spend enough to make the service or product good enough for its market, but at the same time affordable in that market.
All companies operate under caps: Private sector ones are capped by market forces; monopolies are regulated.
The Legislature has vested the Green Mountain Care Board with the responsibility of deciding what Vermonters can afford to pay, and Vermont hospitals have been operating under a cap set by the board for the past four fiscal years. I think somebody has to do that. Failing to do that has got us where we are today.
3. Given the widespread angst over health care reform, from the public, legislators and the press, Eric asks if we should consider hitting the pause button on the whole idea until the discussion improves.
Answer: We’ve been having the discussion roughly since the early 1970s. The discussion was poor then, has been poor ever since, is poor now, and is never going to get better. Hitting the pause button is not going to help.
4. One of the most interesting of Eric’s points is the question of whether the members of the Vermont legislature explicitly voted for the shift to a different reimbursement structure, and whether, in effect, they knew what they were doing.
That question goes right past provocative to fascinating, so it’s a subject for another column. Soon. Stay tuned.
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Paul Slobodian asks the very important question whether block financing will set up a conflict of interest between the doctor and the patient. If the doctor thinks the patient needs an MRI, for example, would he decline to order it because it could reduce his income.
Answer: In those terms, the conflict of interest exists now. If the same doctor believed his patient did not need an MRI, would he order it because it would make him more money. The effect of that incentive has been an important part of the huge increase in health care costs since the 1970s, and lies at the heart of the whole modern movement to switch from fee-for-service to capitation.
A person might ask, does that mean doctors are all crooks? I do not believe that. There are crooks in every profession, but I believe that there are very few in medicine. What I also believe, however, is that all doctors are human. And that huge financial rewards for overuse clearly have had an effect in Vermont, and anywhere else that operates on a fee-for-service system.
The remedy contained in the federal Obamacare law is to establish a health care “company” (called an ACO) for which the providers work and whose goal is a healthy patient at an affordable cost. The doctor, or hospital, or anybody else in the company would have to be paid an adequate wage for working there. The better work they do, the more the company succeeds; there is no incentive for doing bad work.
If someone is in fact doing bad work, the best chance to repair that is for all the workers in the company to be invested in getting a high quality product and therefore to have a strong incentive to fix the problem.
Companies all over the world operate that basic model every day, and nobody thinks it’s weird.
