Distinctions in healthcare

Successful reform of healthcare necessarily entails making distinctions upon which to make essential decisions. In the most basic case, that of rationing, there is a natural distinction between those who receive rationed care and those who do not. In a two-tiered system there is the distinction between the tiers; in a public/private system there is a distinction between individual depending on how their healthcare is paid.If the goal of reforming healthcare is to improve cost-effectiveness, and as mentioned in a previous post, minimize the risk of medical penury, then distinctions must be made that are more conducive to those goals. One such distinction was make in a prior post; that between ordinary and extraordinary healthcare. Another essential distinction involves the fairly obvious categorization of people by their use of healthcare resources.

Assuming for the sake of convenience that the population is divided in to deciles by their use of healthcare resources, some useful observations become readily apparent. the first is that the lowest ten percent of the population will consume far less than 10 percent of the healthcare resources, and the upper ten percent will consume far more. It is a quite reasonable assumption that the reasons for this are not arbitrary; that there are characteristics of the lowest ten percent, the next lowest ten percent, etc. that distinguish them from other deciles. Obvious factors would be things like age, over-all health, rate of obesity, smoking history, alcohol use, etc. The key point is that if the goal is to reduce medical penury and begin making healthcare more cost-effective in general, the place to focus is on the last few percent of the healthcare resource consumers. One simple, though ethically infirm and politically non-viable approach would be, for instance, to simply cut off those above a certain level of resource consumption; e.g. once one is above the 98th percentile in consuming healthcare resources, no more healthcare is available within the system. The savings from this two precent will be far in excess of two percent of healthcare expenditures, but again, this is a form of rationing that is neither morally nor politically acceptable. Nonetheless, there are some distinctions to be made among the higher-consuming population and those from lower levels of utilization that can be addressed in more a more reasonable manner. For instance, it would be expected that a significant portion of futile care and unnecessary healthcare expenditure occurs among the the top 5% of healthcare consumers.It would be expected that no-one will support continuing expenditures for futile care, except those that profit from defects in the current system. No one with a primary interest in public welfare or healthcare policy will object to eliminating futile care, regardless of how that may be defined.

Because of inherent differences between the various deciles, separated by their consumption of healthcare resources, it is not only reasonable but essential to prescribe differing policies for different groups. This of course is already done implicitly, and there is no outrage involved in doing so explicitly. It is much cheaper and more cost effective, for example, to treat relatively healthy people than it is much sicker ones. It is reasonable to scrutinize the healthcare of a person undergoing his fourth bac surgery differently than a person undergoing a procedure for the first time. This concept is simply a version of the notion that specialization is,in general, more efficient that generalization. Tailoring available healthcare resources to areas where they are expected to be utilized most effectively is a natural consequence of this fact.

More on reforming healthcare

Imagine a new policy  in which all physicians would be expected to perform all medical services. The general practitioner would be truly general. He would be expected not only to see patients in the office and manage common chronic conditions, but to also perform brain surgery, manage high risk pregnancies, do lumbar fusions, manage dialysis, read MRI scans and PET studies, diagnose and treat schizophrenia, do liver and kidney transplants, heart catheterizations and so on. No one assumes that this is practical or desirable. No one practitioner could possibly become proficient at each of the varied diagnostic and therapeutic procedures that make up modern healthcare.

This illustrates a well-known economic principle, and that is that specialization is more efficient than generalizations. It is more efficient, and presumably better for patient to have a heart surgeon perform 160 bypass operations a year, than to have a more broadly-practicing practitioner perform 3 in two years. There clearly is a benefit to separating practitioners into discernible groups, i.e. specialties, to improve the efficiency of healthcare delivery. A corresponding principle also applies to receipt of those services. Tailoring the delivery of services according to some rough, but useful categorization of patients based on relevant characteristics is on the whole more efficient than treating each person as a fungible consumer of healthcare services. There is a rationale to considering the patient with stage IV lung cancer as a qualitatively different consumer of healthcare than a 30 year old with diabetes. Of course such categorization is complicated by the fact that diseases and healthcare needs can occur in combinations and series, and there is no obvious method of constructing categories with distinct boundaries based onlyh on clinical criteria. A rational approach to healthcare reform would find some other means of classification, and this will be addressed in the next entry.

Reforming healthcare (cont.)

An essential task in reforming healthcare is to prioritize the goals of any such reform. It is not enough to merely assert that things like "comprehensiveness," "access," "fairness," "high quality," "affordability," etc., etc. be among healthcare reform outcomes. These need to be prioritized, with lower priority goals sacrificed in able to achieve more important goals. This process of prioritization is afflicted with the "stakeholder" problem mentioned in the previous post. In the process of reforming healthcare, oxen will be gored. Special interests will wail, epithets will be hurled about regarding how disadvantageous prioritization is "racist," "sexist," "greedy," "oppressive," "classist," "supremacist," and on and on.

It should be uncontroversial that healthcare services are not unlimited resources, and cannot be made so. From this follows the notion that an unlimited resources are not available to pay for healthcare services, and healthcare should not be reformed to make such services more expensive. Reform should result in more cost-effectiveness. It is unavoidable that healthcare reform be intimately concerned with cost, both societal costs and costs to individual people.Society cannot spend ever-increasing percentages of economic production on nebulous healthcare, nor should individuals have to exhaust their assets mid-way through dealing with illness.

The latter eventuality can be avoided by the generic use of health "insurance," or more generally by spreading risk of healthcare-related poverty among a number of people. Private insurance and public payment programs share the common attribute of creating a pool of funds from which which individual healthcare expenses are paid. Insurance companies create these pools through voluntary payment of premiums, and public pools do so through taxation. Both of these approaches are tenuous over longer time horizons because they are focused on buying and selling healthcare related services in individual transactions, without sufficient regard to the value of those transactions, or the ability of the system to accommodate uncertainty associated with those transactions. this state of affairs is largely a failure of prioritization.

A rational approach to prioritization would include certain desirable attributes of a flourishing society: a safety net that rejects societal indifference to individual misfortune; a recognition that processes (as opposed to outcomes) associated with distributing benefits should be insensitive to chance, or political and economic interests; and acknowledgement that because individual circumstances vary, benefits will not be distributed equally. In short, a rational prioritization will not allow the perfect to be the enemy of the good. To this end, the number one priority of healthcare reform should thus be: minimizing (it is unreasonable to think we can eliminate) the risk of healthcare associated penury for families. This should take priority over considerations of fairness, equality, or any of the policy-driven expenses mentioned in the previous post. The first question is thus how do we provide access to medical care for individuals while protecting their families from medical penury? What pool of funds should be used to pay for services that would otherwise bankrupt the patient, and under what conditions, and for which services should a patient have a claim upon these funds? This approach is consistent with the current rationale for "health insurance." Health insurance does no t insure health it insures assets against exhaustion that may result from paying for expensive healthcare services, and also maintains a measure of access by assuring providers that they will not get stuck providing uncompensated services. The priorities in healthcare reform will rationally start with these two purposes.

Once we focus on the priority of avoiding medical penury, we can begin to design a reform process that can sequentially address other priorities.

Reforming healthcare

Reforming the healthcare system is a Herculean task. One reason for this is the current fashion of effecting change via the input of stakeholders. This is a common-sense premise in theory, but in practice eventually becomes "which hogs will have their snouts in the trough?" One basic premise of healthcare reform is that it is impossible to accommodate everyone's pet interests without ruinous cost. As a result, practical healthcare reform must begin with considerations of cost management, and consequently, what is it that makes healthcare so expensive. This question may be divided into two parts: what practical considerations make healthcare expensive, and what policy considerations make healthcare expensive. The former question was addressed here previously. To begin investigation of the latter, we may begin with some empirical observations. To the question "what policy considerations make healthcare expensive?" we can start with:

1. Ideology is expensive. To the extent that healthcare policies are meant to reflect cultural or political interests, they will create inefficiencies and be accompanied by otherwise avoidable costs;

2. Unrealistic expectations are expensive. Pretending that terminal patients are not terminal, or that everyone can receive the same quality of care, or exactly the same level of care creates a financial drain that increases the costs of healthcare with no benefit other than transient pretense;

3. Emotional indulgence is expensive. emotionally satisfying outcomes are often opposed by hard realities. Creating policy prescriptions that assume otherwise is quite costly;

4. Impatience is expensive. Haste does quite literally make waste. Doing the right thing tomorrow is much more cost effective than doing the wrong thing today. waiting for systems and technology to mature and be refined takes time and discipline; profligacy does not;

5. Confusing desires with possibilities is expensive. A great deal of resources may be wasted trying to bring into existence what we think we want rather than what we can actually attain.