Where health care is headed

The trend lines in U.S. health care keep getting clearer. Employers are shifting larger percentages of the coverage costs to their employees (see here). At the same time, private insurers try to evade the Affordable Care Act's prohibition against excluding people with serious or pre-existing conditions by making them pay more for their drugs (see here).

by Daniel R. Hoffman, Ph.D.

Published Sep. 30, 2014, 2:23 p.m. ET

Both types of cost shifting will start to seriously limit access and the skimpier benefits will lower the quality of care. Higher out-of-pocket costs produce exactly this kind of double-whammy. Some people postpone seeking proper treatment when faced with higher out-of-pocket costs and others that do see a physician are less likely to follow the therapy regimens prescribed for them (see here). In other words, as costs continue to rise, access and quality are both poised to get worse.

Insurers also obstruct coverage by deliberately complicating the claims process. A health care analyst in West Chester recently expressed his personal frustration with the complicated road blocks that insurers create. His grief started when a car hit him while he was riding his bicycle. After the bills started coming in, his health insurer took the position that the driver's auto insurance should cover many of the items. The auto insurer responded by claiming those same costs were the health underwriter's responsibility. "I have absolutely no idea," he wrote, "how an average consumer, lacking a specialist's knowledge of the way the health care system works, could possibly manage this stuff."

Unfortunately, until the +/-60% of full-time employees covered through their jobs either lose that source of health insurance, find it unaffordable or thoroughly inadequate, there will not be enough public pressure to scrap the existing, for-profit system. Right now all the major players — insurers, providers, manufacturers — still look at health care as a source of unrestrained, windfall profits.

This pursuit of society-be-damned profit characterizes more than just the obvious players in health care. Last week, for example, someone explained in a personal conversation how medical schools also create a substantial problem because their outrageous tuitions mean that almost every physician starts practicing with a huge burden of debt. Since physician incomes in the existing, fee-for-service system vary according to the number and kinds of tests/procedures doctors order for their patients, tuition debt encourages them to pile on questionable and even unnecessary services.

Until widespread public discontent forces a fundamental reckoning that removes health care as a source of enormous profit, this downward spiral of more costs and skimpier coverage will continue.

At that point America's atavistic devotion to for-profit business as a moral ideal and a preferred solution to every problem will give way to some unavoidable realities. As a result of health care consuming 20% of the country's GDP, the United States will lack the necessary resources to preserve the country's position as a top-rate economic power. Infrastructure, education, and scientific research will all suffer. As the country's economic underpinning starts to erode, the defense industries that make America a national security state, together with Wall Street, will acknowledge that even more imperialism and warmongering represent only short-term solutions to an inevitable national decline created by spending too much on health care. That's when private insurers and managers at provider networks will be made to swallow hard and accept the fact that the U.S. must default to a single-payer system and to non-profit provider networks where all physicians work as salaried employees.

After that awakening occurs, the remaining question is what will rein in the insatiable, short-term avarice of health care manufacturers, especially the pharma companies? That problem may not be as intractable as it first appears because even the bought and paid-for politicians won't be able to save pharma from its monopolistic excesses that include charging $1,000 a pill and attempting a "forced switch" that would push patients into buying a vastly more expensive molecular manipulation before a generic becomes available.

Once single-payer and nonprofit providers bring those two sectors under control and in line with the rest of the world, pharma's cowboy capitalists will eventually follow. That part of health care reform will not come easily. As the Senate's Kefauver committee showed more than fifty years ago, government has exempted pharma from market forces since at least the 1950s. Nevertheless, when the defense contractors, oil companies and investment bankers realize that their own rigged deals with the government cannot continue if pharma continues draining the treasury, then the clout of these other sectors will checkmate the drug industry.

Pharmas now get away with "forced switches" and charging $1,000 a pill not because the health care system is broken, but because it's set up for that to occur. Eventually the U.S. will reform monopolistic pharmas the way it busted rate-rigging railroads and oil trusts between 1890 and 1914. The health care system's failures and its effects on the rest of the U.S. economy will force some long overdue changes.

People in this country should try to hang on until that happens. It won't be easy because things will have to get worse before they can get better. In the meantime, if people don't die from postponing care because it is too expensive or go bankrupt in the process, they should feel optimistic knowing that the U.S. will have a better system in another fifteen years.