With the presidential election coming, is the time ripe for health-care reform? And is it a good idea?

Asch: I understand the important distinction between talking about health-care reform, however we define it, and actually getting the political traction to achieve it. But I believe that substantial health-care reform is possible. People used to say that the Veterans Health Administration couldn’t change, that it was too complex—too mired in the personal interests of bureaucrats, clinicians, beneficiaries, politicians, and industry—and that in that setting, the status quo was the safest political option. And while I don’t mean to suggest that VA health care is as complex as U.S. health care more generally, many of the same stakeholders and their interests exist in both settings. Over the last 20 years, the VA has transformed itself from a system people used to snicker at to one of the leading systems in quality and efficiency in the U.S. I certainly hope the next administration doesn’t decide health reform is too hard.

Grande: Strong presidential leadership is a must for health-care reform, so the election offers a great opportunity. The country appears to be ready for the next great debate on health care. During the [1993-94] Clinton debate, managed care was offered as a solution. It obviously didn’t work; the public sees this, and wants change. Beyond overcoming powerful interest groups, the biggest obstacle for reform is that most of the country has insurance and it is easy to stoke the public’s fear of change. That was the primary strategy of the “Harry and Louise” ads.

Pauly: The time is ripe to talk about something that could be labeled reform. Past history does not suggest unbridled optimism, however.

Is it a good idea? Depends on what kind of reform you have in mind and what you mean by “good.” Reducing the number of uninsured by paying substantially higher taxes (say, about $1,000 more per family per year) is what I personally would prefer to do, but I doubt there is a majority of taxpayers in favor of paying the $100 billion needed for this kind of reform. Some of the Democratic candidates have come out in favor of spending the kind of real money needed, but others would rather talk about “improving efficiency” first. Republicans tend to favor smaller-scale incremental reforms.

I personally am dubious that the kinds of resources needed to pay for the care that the uninsured currently go without can be raised by reducing waste, fraud, and abuse. I fear there is not enough inefficiency that we know how to stop to pay the high price tag for providing real insurance to substantial numbers of the uninsured.

Rosoff: In order to have major reform in any context, the parties in interest have to agree on a solution. That’s difficult enough, but if they don’t even agree on what the problem is, gaining consensus on the solution is well-nigh impossible. That’s the situation with U.S. health care.

A large proportion of Americans have insurance and are concerned that it’s too expensive, getting more expensive, and has too many coverage limits. Then there are the more unfortunate ones, some 47 million, who don’t have insurance; for them the problem, while still a cost problem, is fundamentally different. Sadly, the solution for the first group is likely to disadvantage the second group, and vice versa.

A move to a government-run system, either a single-payer system or some form of managed competition, might help both groups; but it would be such a reversal of our long-standing beliefs and practices favoring private-sector mechanisms over governmental control that it’s not likely to be politically achievable. The Clintons ran into that buzz-saw in 1993-94!


The U.S. spends a very high percentage of its GDP on health care, and a good deal goes to administrative costs and returns to private health-insurance shareholders. Why is our variegated private system a good thing? Are we getting our money’s worth out of it?

Asch: Just because people in our diverse nation make varied choices doesn’t mean that these choices are good ones. It isn’t just that choice costs money. It’s also that when it comes to health care, people often make poor choices. That is true of physicians and patients and health-care managers. For example, there are some obvious forces that encourage the use of expensive technologies when cheaper ones are better.

Pauly: This is an important and popular error. The main reason for high spending in the U.S. relative to other countries is because we provide higher incomes to doctors, hospitals, and drug-company stockholders than they do. Administrative costs would be reduced in the U.S. if private insurance was mandated, since the largest share of administrative costs goes to pay for selling insurance and for collecting premiums. There may be some scope for reducing administrative costs through better information technology, but large private insurance groups can achieve about the same administrative cost as public Medicaid.

Why is our variegated private system a good thing? Because we do not all want the same thing. Eighty-plus percent of Medicare people buy a plan that is different from the basic uniform government-run plan, either by adding Medigap, going on Medicaid, or using private plans. And this variation occurs even though the people choosing the plans are not paying for them. The variation across plans and the voluntary [nature] of coverage for people under 65 are the reasons for somewhat higher administrative costs. In health care as in dining, ordering a la carte costs more. If income were distributed more evenly and people were more similar in terms of preferences for risk, lifestyle, and waiting on line (say, if we were more like the Swedes), there would be much less of a case for offering choices through a private system.

I do not favor the current uneven distribution of income in the U.S., but the population generally seems to accept it. Given wide and acceptable variations in income, we will not be getting our money’s worth by having either a uniformly lavish or uniformly stingy plan for all.

Are we getting our money’s worth out of it? We are certainly better off than we would be if we spent less on health care or health insurance and did not change anything else. Research shows that the growth in spending has, in the aggregate, been “worth it,” with conservative estimates of the money values of benefits from the new technology that spending goes for being four to seven times the value of their cost. But the uninsured are left out of this, and even lower-income people with insurance may not value the benefits so highly, relative to other ways they could have used their incomes.

As with many other things, in theory we could get more for less. But although many claim to know the amount of inefficiency in the system, I do not know anyone who knows a good way to reduce it.

I do think that, if any institutional structure will offer incentives for greater efficiency, it would be some type of competitive market—differing, in my view, from current insurance markets by having lower subsidies to upper-middle-income families like mine and better information for people when they choose insurance.

Rosoff: I think we went down the wrong road conceiving health care as a consumer service in a market-based free-enterprise system. And I say that despite having been a proponent for years of market-based, competitive, managed- care models. I believed—as did many others, and as many (mostly Republicans) continue to believe—that competition is the key to achieving quality care at reasonable cost.

Competition is great in some applications, but there are important reasons why competition among health plans will not deliver to Americans the benefits traditionally claimed for market-based systems. Effective competition requires choice among alternatives. Choice costs money. Unless the public has the ability, will, and energy to use its latitude of choice wisely and well, it is money thrown away.

I think the prescription for health-care reform in this country should focus on choice of providers rather than choice of health-care plans. That is essentially the Medicare model. Whether we can achieve that for the mass of our population is an open question.

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