Democrats Health Plan Neglects Competition and Choice

The high quality of health care in the United States which is widely recognized worldwide arises because of two key factors, competition and choice. The Democratic initiative under way to change the health care delivery system will alter the basic market mechanisms producing these societal assets.

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President Obama has said he is going to accede to congress on the details of the new Democratic initiative on health care. Most likely much of what will be pushed is called the Baucus Plan named for the Chairman of the Senate Finance Committee, Max Baucus (D-Montana). He has been working on a health care plan for some time which was memorialized in a report, Call To Action, released in November 2008. Former Senator Tom Daschle although denied nomination as the next Secretary of HHS has also had great influence over the health care industry and his fellow Democrats in persuading them on the concept of a Federal Health Board which would centrally control health care as described in his best selling book, Critical What We Can Do About the Health Care Crisis. Mr. Daschle was Obama's key adviser on health care during his Presidential campaign. The Democratic plan would continue the tradition of health care being employer based but beyond that diverts radically from the conventional health care model There would be a sliding scale of tax breaks and subsidies so that the wealthiest Americans would pay the most for insurance and poor Americans would be subsidized. All employers would have to pay into the mandatory system. The new stratagem would pay for more preventative care than currently is covered say its advocates as well as care that is necessary for illness. Instead of fee for service care there would be a "gradual" shift to a concept called value-based purchasing. Instead of paying for an incident of care the government wants to move towards budgeting of care over time. Based upon government directed "scientific" evaluations of best practices and community needs outlays for that budget will be made. Simply put, the government will determine what is necessary and what is not. Market demands and consumer choice will no longer play a role in the value of health care. Instead of paying for the individual doctor chosen by the patient the Democratic plan wants to make the system much more disparate. Bundled payments will be divided among the parties as for example currently there are separate bills for surgery from an anesthesiologist, surgeon, and radiologist but under the new plan all this would be covered by a single payment to single entity covering all the care for a population over a period of time. Doctors will become employees of large entities and thus patients will become patients of large corporate entities not of a private physician. In the United States today there is some competition in urban areas between somewhat vertically integrated medical delivery systems and the traditional private practice model. University based systems and non-profit corporations like the Mayo Clinic have gradually been gaining ground there. They still collect the individual fees for physicians but all their employees are on a salary. The vertical integration of record keeping, building space, billing, contract negotiations, and administration cuts costs by efficiency. In addition their size and reputation inevitably makes them competitive in any medical market they enter. Physicians who join these organizations do not have to worry about their overhead or building a practice. Very experienced specialists usually receive some productivity incentives. The more standard private practice physician must assume all the costs of overhead himself rather than share them with others. Federal antitrust laws make it impossible for separate private practice physicians to negotiate fees or even other considerations such as office rent because they are not employees of a single entity. Although these doctors are becoming less common in urban areas they still remain the norm in America's smaller towns and rural areas. The Democratic health plan will literally make it impossible for physicians who treat patients in the hospital to continue in a classic private practice setting. They will have to become an employee of either a medical school, non-profit care provider such as the Cleveland Clinic, or join an entity that both finances and gives health care such as Kaiser. There is truth to the concept that a lot of administrative costs for things like waiting rooms, billing, and administrative staff if combined could be of benefit in reducing the costs. These organization are most cost effective than the regular private practice model of medicine and often give very high levels of quality care. They function in areas of the country where the public is fairly well educated and has many options for treatment. Apart from very large cities which could hold several competing entities beside each other what will likely develop is controlled monopolies of care in most of America. One of the benefits of the current private practice scenario is that patients have some choice about doctors and hospitals because they are in competition with each other. Under the Democratic plan there will only be one mega-provider in most geographic regions. The new Democratic initiative wants to base care reimbursement on physician and facility "report cards". On the surface it seems reasonable to pay good doctors and good hospitals more right? Lets take a look at what has happened in treatment of heart conditions in the elderly. Technology breakthroughs in the treatment of coronary artery disease has resulted in many patients with less severe disease having treatment by catheterization which is much less invasive and cheaper than by open heart surgery. Hospitals soon figured out they could make more money doing the less invasive procedure than open heart surgery. In order to keep their statistics looking good hospitals began to "cherry pick" their cases. Patients with more complicated problems were transferred to other facilities. Facilities that tried to become centers of excellence for heart surgery by necessity had to avoid the worst cases. Medicare penalized centers with higher morbidity and mortality rates while paying more for those centers with less sick patients. When their complication and death rates were compared with those facilities that "cherry picked" the cases they looked worse on paper. This week Canadians are in a state of shock over a scandal that amazingly is not being reported in the liberal American press. The Canadian health plan is very similar to what the Democrats are now proposing for the United States. They have a publicly funded centrally controlled organization. A special investigation by Justice Margaret Cameron found that at least 400 women with breast cancer were likely mistreated. She makes a dramatic statement that sums up what happens when there is a government run and controlled health care program ""A regional health authority does not produce widgets," she wrote. "Its clients have no choice but to use its services; they cannot stop going to the hospital because the services received on the last visit were unsatisfactory." In the United States potentially thousands of veterans treated at Veterans Hospitals in Tennessee, Georgia, and Miami have been determined to be at risk of contracting the AIDS causing virus after it was discovered that inappropriate procedures were used to clean instruments after medical procedures. Both of these events make the point that a Canadian Justice has made of what can happen when patients have no choice and there is no competition. Competition and choice are the best protections Americans have to guarantee a high level of quality in the care they receive. The Baucus plan will allow private insurance to compete with an open Medicare system. Although the New York Times today said that fears that the government will eventually force the private sector out are unfounded many including myself still think this will likely happen and is the true agenda of the left.