Bacon's Rebellion

Democracy Thrives in Sunlight

Business As Usual in Health Care

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by

James A. Bacon
in

Bills that would begin to dismantle the state’s innovation-stifling process for approving and regulating health-care facilities died in the House Health, Welfare and Institutions Committee yesterday, reports Tammie Smith with the Times-Dispatch. Del. John M. O’Bannon III, R-Henrico, a physician, asked that his deregulation bill be stricken after a key stipulation was removed during a hearing. Smith provides some of the background:

Lobbyists for hospitals, nursing homes, physician specialties and other groups spoke for and against aspects of O’Bannon’s bill, which would have made several significant changes. For instance, projects would no longer need approval from regional planning agencies. Also, equipment valued at less than $500,000 would be exempt from the regulatory process.

As it stands, proposals for new medical facilities or costly pieces of equipment must go through a regulatory process, with local planning agencies considering how the service or equipment will affect the health-care market and recommending for or against approval. The state health commissioner ultimately signs off on regulated
projects.

Critics have charged that this regulatory process protects existing health care providers by restricting the entry of new players into the marketplace. Some say the future of health care is to evolve from a system of general hospitals, whcih provide a wide range of services, to medical “factories” specializing and excelling in particular disciplines and procedures. The specialists tend to have higher productivity, lower costs and better patient outcomes. But hospitals, which dominate Virginia’s health care industry, claim that such competition would “skim the cream,” and make them less profitable. As a consequence, Virginia has very few focused medical enterprises.

The health care system is so complex, of course, that no one set of changes will bring health care inflation under control. But a good starting point would be to encourage new business models in a sector where such innovation is conspicuously lacking.

Does anyone seriously think that an economic sector regulated by state government and policed by the established health care constituencies can build a better mousetrap? As O’Bannon put it: “The question is how tightly are we going to control health care in Virginia? Are we going to control it down to every blood pressure cuff?”

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10 responses to “Business As Usual in Health Care”

  1. Anonymous Avatar
    Anonymous

    Just as other states are ahead of the federal government in terms of energy policy, other states are of the federal government in universal, single payer health care.

    Virginia, as usual, is dragging up the rear.

  2. Jim Bacon Avatar
    Jim Bacon

    Anonymous 9:23, universal, single-pay insurance might eliminate administrative overhead from the U.S. health care system, but it will also freeze the system into its existing configuration. There will be little room for entrepreneurial creativity in new business models or delivery models, much less in the technology medicine. As bad as the system is, it’s better than what would amount to universal Medicare.

  3. Matthew Avatar
    Matthew

    Jim, when bashing “universal Medicare,” a term used only by opponents of single-payer, please back up your criticisms with facts or statistics, perhaps from the other industrial nations which have this system. Incidentally, all other industrial nations have single payer health care, and most score higher on general health indicators such as infant mortality and life expectancy. My least favorite aspect of this debate is that both sides use anecdotes, scare tactics, and baseless prognosticating to prove their point.

    There’s no reason that instituting single-payer health care would necessitate “freezing” the current system. It will, no doubt, have drawbacks, but what system doesn’t? The question is, really, what values do we want our health care system to embrace, and which system will best embody those values? Historically, US legislators have not ranked “universal” (should really read national) access to health care as a top value, therefore we have a piecemeal approach to insurance. I think the national conversation has become more focused on figuring out how to ensure “universal” coverage, as evidenced by MA and CA, and single-payer is one of many options to accomplish that goal. I for one, say the conversation is long overdue-but let’s keep it civil, informed, and make sure that we articulate the reasons (or values) that motivate us to advocate for one system of another.

  4. Jim Bacon Avatar
    Jim Bacon

    Matthew, You’re right, other countries do have higher general health indicators than we do in the United States. But how many of those countries have 10 million or more poor, illegal immigrants who bring their health care problems, like tuberculosis, with them? Further, how much of our health problems in the United States are related to our lifestyles, not the health care system — obesity, adult-onset diabetes and cardiac diseases most prominently?

    Am I a defender of the current U.S. health system? No, I’m not. We have many grievous flaws. But a single-pay system only addresses one of our problems — the multiple layers of paperwork — and not the others. Do we really want a health care system designed by the federal government, the same people who brought us the Medicare and Medicaid programs?

  5. Larry Gross Avatar
    Larry Gross

    How come in the bastion of capitalism we pay more for health care than any other industrialized country in the world while most of our health statitics are worse?

    How come when I go to the doctor, I have to fill out a paper form that never makes it to an electronic shareable form that would remove the need for a mountiain of clerical help?

    How come I cannot find out which doctor/hosptial has the higest rating and the lowest rates?

    What we have is NOT a market-based health care system.

    What we have is a government-sanctioned virtual monopoly by an industry that is exempted by the government from competition and kept in place by special interests at the expense of ordinary Americans.

    Which is the worse of the two evils – the current US system or the single-payer system for virtually every other Industrialized Nation?

    well.. it’s no contest…

    I’D LIKE to see a true market-based system and I would have hoped that our Repubican friends would also but it’s clear they can’t advocate reform at the same time so many of them have their hands in the cookie jar.

  6. Jim Bacon Avatar
    Jim Bacon

    Larry, If the only choice were between the existing system and a single-payer system, you’re right, it might be a tough choice. But there are people who advocate a true market-based, consumer-driven health care system. The challenge is to understand how the current system (a hybrid of capitalism and socialism) interferes with the functioning of a free, consumer-driven market and begin systematically fixing it. The Certificate of Public Need, which protects the territorial monopolies of hospitals, is a one place to start. Mandated insurance benefits, which limits the ability of providers to create inexpensive insurance policies, is another. Professional licensure, which transforms the medical professions into turf-protecting guilds, is another. And all those issues occur on the level of state government! We don’t have to wait for Uncle Sam to reform.

    And then we get into some of the ideas propounded by the Kaine adminsitration, some of which are pretty good — getting people to take more responsibility for their own health rather than expecting “the health care system” to fix them up after the fact.

  7. Larry Gross Avatar
    Larry Gross

    JB – how to get there… yes…
    especially with special interests in charge of the apparatus….

    I keep asking my doctors when my info will be stored electronically so that it can be shared instead of shuffling paper and the costs of doing so incorporated into my bill for services.

    Their answer.. a clipboard and another piece of paper to fill out.. often a request for a medical history extracted from my brain while sitting in their appropriately named “waiting room”.

    On this one issue – I see no marketplace that rewards more efficient and productive medical practices much less my ability to know which practices are cheaper and which ones are higher quality.

    Wait for change?

    Let’s turn this around.. WHICH direction of the two evils is likely to happen quicker?

    Hint: Most Doctors are small business Republicans.

  8. James Atticus Bowden Avatar
    James Atticus Bowden

    Sorry that the reform didn’t make it. We have a Mixed Economy – Business and Government. Reducing the regulations and approval process – eliminating as much as possible – would be a huge improvement. Too bad.

  9. Ray Hyde Avatar
    Ray Hyde

    Some time ago, I was seriously disabled, lost my job, and my health insurance. I was unable to buy insurance, at any price. I was able to buy some for my wife.

    It was canceled, retroactively, after she had a few claims. This practice recently made the front page on USA Today.

    I was bemoaning my situation to my Social Security counselor, who happened to be from Canada.

    His advice was that I emigrate to Canada.

    Take it for what it is worth.

    The other thing people seem to forget, is that even with universal health care, there is still a market for private health care: if you can afford it. It is now common to fly to South Africa or India for plastic surgery and coronary surgery.

    The market always wins out.

  10. Larry Gross Avatar
    Larry Gross

    Our health care system is controlled by special interests who derive personal wealth from the existing dysfunctional system.

    Ray’s situation is just one of millions of people.

    We have portable pensions – good.

    But our system actually limits the average person’s job mobility because they are forced into decisions that involve either having health care or not.

    This also absolutely kills our competitiveness in a world market because most of our products, like autos, have a significant health care cost built into the price.

    Ditto with Call Centers and other jobs outsourced overseas.

    Our embedded health care costs encourage corporations and companies to seek cheaper labor – labor that does not have health care costs embedded.

    In the long run – as Ray predict – our American companies will LOSE against worldwide competition.

    All of this because of the ruse being perpetrated on our citizens that we must keep a free market health care system.

    It’s NOT free-market and it’s not destined to be a free-market as long as special interests control Congress – both sides of the aisle.

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