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Belmont Club

Getting better

July 25th, 2009 - 4:37 pm

Bala Ambati, who is an MD, takes a sober and well reasoned look at the healthcare debate on his site, Daylight’s Mark. He breaks out who has health care coverage; why or why not; where the potential cost savings are; where the ripoffs may be located and finally lists out the measures which, in his opinion, can really make health care system better.

Now, how would I go about deciding what to cut and how to save money and “bend the future cost curve”? I would rate behaviors & services on a scale of evil (which for this discussion I define as greed:utility ratio). So things that I’d like to see happen that I think would curb costs without degrading current or future quality of care would be:

1. Significant tort reform…

2. Assigning the cost burden of unnecessary or likely futile services to patients or their families . Eliminating television and direct to consumer pharmaceutical marketing (which all started only in the late 1990s) (drug company marketing is now about $57.5 billion annually, according to a PLOS study by Gagnon & Lexchin in 2008, which nearly equals the $58.8 billion spent in R&D by the drug industry. This would help reduce costs by allowing physicians breathing room to recommend older yet equally effective medications to their patients.

3. Breaking the oligopolies of health insurance coverage present in many states & regions. … Government could do a great service by jumpstarting the infrastructure to create such a true free market but it should not take over such a market.

4. Encouraging charity care: Lawyers can treat pro bono work as a tax deduction; hospitals treat charitable services (which are often overcharged in the first place) as a tax write-off and get income tax exemption for being nonprofits. Physicians currently have no such benefit.

5. Cost Transparency: … Patients are charged wildly different amounts, and quite often indigent patients get stuck with full charges while Medicare or large insurance company patients get charged much less due to contractual arrangements. This process is just insane…
6. Encourage innovation: Increasing tax credits for R&D, establishing prizes for translating discovery for big problems, and extending patent protection for new molecular entities while limiting patent extension for me-too drugs maneuvers turning Prozac into Sarafem or Wellbutrin into Zyban, would promote advances in drug and device development and maintain America’s edge in science & technology.

Here’s his take on what is good and bad in the health care proposals.

Is the likely Democratic plan a good idea? I have to say no. Expanding Medicare & Medicaid for all (which is basically what it boils down) opens the door to government price controls, which will devolve into wait-lists, poor quality personnel, salaried staff (who by definition are incentivized to give minimum effort), increasing physician refusal to see Medicare & Medicaid patients, and underinvestment in research and facilities (see Great Britain, and Canada)….

Which of the plans bouncing around have useful ideas? I think the Daschle-Dole idea of giving tax credits to all who pay income or payroll taxes to purchase health care is a good thing – equalizing the playing field of those with employer health coverage and those without. We want health insurance to be available to all contributing or productive members of society, but we don’t want free health care as a dole to contribute to persistent unemployment.

He warns that as the population ages, it is unavoidable that society will spend more on health care.

I think Dr. Ambati’s post is a wonderful and constructive piece. Surely the present system can be improved but finding the direction of optimization in a complex system can be hard job. Dr. Ambati has taken a good, non-ideological look at the problem and has come up with definite ideas.


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