Can Economics Help Us Build a Sustainable Health Care System?

Summary

Dr. Mike Schur, a healthcare policy professor at Harvard Medical School, discusses the challenges of integrating market forces into healthcare due to insurance, altruism, and the inability of individuals to effectively search for care. He advocates for a shift from fee-for-service to global payment models and emphasizes the need for regulation to address market failures without stifering innovation. Schur highlights the importance of risk adjustment and antitrust considerations in developing a sustainable healthcare system.

Takeaways

• 💡 Healthcare spending is a significant driver of the national debt problem, particularly Medicare.
• 📈 If current trends continue, tax rates may need to rise dramatically to unsustainable levels to cover healthcare costs.
• 🛡 The current healthcare system lacks effective price signals due to insurance shielding individuals from the true costs of care.
• 👵 Altruism and concerns about individuals' ability to make informed healthcare decisions have led to reduced reliance on market forces.
• 💼 Fee-for-service payment models encourage micro-billing and gaming the system rather than focusing on quality of care.
• 🌐 A shift towards global payment models, where a single payment covers all aspects of care for an episode or period, is necessary.
• 🤔 Political debates center on setting update rates for global payments and whether to allow charges above the global rate.
• 🏥 Market-based solutions must consider disparities in access and affordability, especially for lower-income individuals.
• 🛠️ Regulating the healthcare system to promote quality while preventing overuse is crucial for a sustainable healthcare model.
• 🔍 Risk adjustment is a complex issue that needs better tools to ensure fair payments for treating both healthy and sick individuals.

Q & A

What is the main issue discussed in the transcript regarding healthcare?

The main issue discussed is the unsustainable growth of healthcare spending, particularly Medicare, and its impact on the nation's fiscal future.

Who is Dr. Mike Schur and what is his area of expertise?

Dr. Mike Schur is a professor of healthcare policy at Harvard Medical School. His research focuses on controlling healthcare spending while maintaining or improving quality care.

What is the role of Dr. Mike Schur in healthcare policy?

Dr. Mike Schur serves as the vice chair of the Medicare Payment Advisory Commission and on the Congressional Budget Office's panel of health advisors.

What is the significance of the statement 'economics is the dismal science'?

The statement 'economics is the dismal science' refers to the often gloomy or challenging nature of economic forecasts and analyses, as Dr. Schur discusses the bleak fiscal future due to healthcare spending.

Why does Dr. Schur mention the Soviet Union in his talk?

Dr. Schur mentions the Soviet Union to illustrate the consequences of getting prices wrong, as their factories were paid based on quantity rather than quality, leading to poor product quality.

What are the three reasons given for the absence of effective market forces in healthcare?

The reasons are: 1) the risk of health issues and the use of insurance to shield costs, 2) societal altruism and government involvement in healthcare financing, and 3) discomfort with individuals' ability to search and make informed decisions based on price.

What is the proposed solution to the healthcare financing crisis according to Dr. Schur?

The proposed solution is to move towards a global payment system where a single fee is paid for an episode of care or a period of time, rather than paying for each unit of service.

What are the two broad areas of disagreement regarding global payment systems mentioned in the transcript?

The two areas of disagreement are: 1) how to set the update rates for the global payment over time, and 2) whether to allow payment above the global payment rate.

What does Dr. Schur suggest needs to be done to move towards a more sustainable healthcare system?

Dr. Schur suggests that we need to: 1) move away from a fee-for-service system, 2) reorient regulations to promote quality, 3) redefine the role of fee-for-service, 4) address risk adjustment, and 5) consider antitrust issues.

What is the importance of risk adjustment in the context of global payments?

Risk adjustment is important to ensure that organizations are paid fairly for treating sicker patients, who naturally require more care, and to prevent organizations from selectively treating only healthier patients.

What is the potential consequence of not controlling healthcare spending as warned by Dr. Schur?

The potential consequence is a significant increase in tax rates, possibly up to 70%, which is unsustainable and would lead to broader economic decline.