5 Myths About Health Care We Believe
Catastrophic Care(Vintage Books, 2013) proposes a completely new approach that will change the way you think about one of our most pressing national problems. Author David Goldhill explodes the many myths we believe about health care. In the following excerpt, discover five of the common myths we accept and often live by.
1. “Cost” instead of “price”
In the spring of 2008, gasoline prices shot up, increasing from a national average of $2.95 a gallon to $4.05 in just five months. Consumers were up in arms; polls showed that 71 percent of Americans believed high gas prices were causing them financial hardship. And no wonder: higher prices meant the average American household would spend $1,200 more that year on gasoline.
In the same year, health care costs grew by roughly the same amount: $1,110 per American household. In fact, health care costs per household had grown by similar amounts in the two previous years: $940 in 2007 and $990 in 2006.
Why do we get so incensed over increases in gas prices yet remain so accepting of even greater increases in health care costs?
One explanation can be found in the language we use to discuss health care. Notice how we always talk about gas “prices” but health care “costs”? How often do you hear someone talk about health care “prices”? I suspect the reason for this is that with gasoline—as with every other product and service—we believe there’s an actual someone setting an actual price. We blame OPEC, or the major oil companies, or even our local service station, posting its prices on a big sign.
But in health care, our language reflects a different understanding of reality. We seem to accept what we pay as an inevitability, as something somehow generated outside the business decisions that drive health care. Health care seems too complex to have prices in the sense that other industries do. Interestingly, only in pharmaceuticals—where the large drug companies are visible actors—do we talk about “prices.”
Our language also reflects wishful thinking. For many of us, it feels somehow inappropriate for health care to come at a “price.” It’s uncomfortable to think of our beloved family doctor setting a price for her services or of the local hospital charging a price for emergency care. Much more comforting to think of health care “costs” somehow imposed on these trusted servants by the system itself.
But of course, all health care costs are merely prices. Every bill for every appointment, test, and procedure ultimately reflects the price of someone’s labor (salary, wages, etc.) or of someone’s capital (interest, dividends, etc.). As with every other human activity, there are no costs independent of these prices.
The distinction isn’t just a linguistic one—with “cost” serving as a polite synonym for “price.” Calling costs “prices” would recognize that they are in fact the industry’s active and calculated responses to incentives created by us.
On the Mainland, prices are signals that drive the allocation of resources, encourage innovation and competition, and force efficiency. But because we don’t acknowledge their existence in health care, prices have a hard time doing their job. On the Island, no one refers to health care costs as invaluable market signals; instead, costs are cited as problems in need of regulation and better management.
So language does matter. Island-speak—like confusing “cost” and “price”—is what prevents us from seeing the health care mess clearly and from considering solutions that will bring the health care system back to the Mainland.
2. Health care isn’t health
“Money is honey,” my grandmother used to tell me, “but health is wealth.” She said “health,” not “health care.” When we listen to debates over health care reform, it is often difficult to remember that there is a difference.
Health care is merely one component of our overall health. There’s no question medical advances have extended life spans and improved quality of life. But nutrition, exercise, education, emotional security, our environment, and public safety are now—and have always been—more important than care in determining the length and quality of our lives. Over the past thirty years, our spending on health care has grown from 6 percent to almost 18 percent of our gross domestic product. The average life span during this time has increased by roughly five years. It’s impossible to directly measure how much of this increase can be attributed to more spending on health care, but many studies suggest it’s not much. The Centers for Disease Control and Prevention shows death rates consistently declining over the past seventy-five years, by 60 percent in age-adjusted terms. In the past half century, the single greatest contributor to the increased longevity of Americans has been a decline in early cardiovascular deaths. A 2007 study published in The New England Journal of Medicine estimated that approximately half of the recent decrease in deaths related to coronary vascular disease was attributable to lifestyle changes (reduced smoking, better diet, more exercise) and that expensive treatments like angioplasty and heart bypasses accounted for only 7 percent of lives saved. Almost half of all deaths in the United States each year are caused by heart disease, diabetes, lung cancer, homicide, suicide, and accidents—all of which are influenced as much by environment and lifestyle choices as by health care.
Health is about probabilities, not certainties; health care, at its best, is about efforts to influence those probabilities to our benefit. We’ve all heard of that two-pack-a-day smoker still going strong in her nineties and that fitness fanatic who suddenly dropped dead at forty. But exercise is far more likely to increase your life span, and smoking to reduce it. And both are far more likely to determine your health than health care.
3. Health insurance isn’t health care
How often have you heard a politician say that 15 percent of Americans “have no health care,” when what she means is that they have no health insurance? How has a method of financing health care become synonymous with health care itself?
The notion of comprehensive health insurance is so ingrained in our cultural conversation that we forget it’s a relatively recent concept. Private group insurance was introduced in 1929, and employer-based insurance began to blossom only during World War II, when wage freezes prompted employers to introduce other benefits as a way of attracting workers.
As late as 1954, only a minority of Americans had health insurance. That’s when Congress codified tax rulings that employer contributions to employee health plans were tax deductible without the resulting benefits being taxable to employees. Not only did this seemingly minor tax benefit encourage the spread of traditional catastrophic insurance, it had the unintentional effect of making employer-funded health insurance the lowest-cost way of financing any type of health care. Over time, employer-based comprehensive insurance crowded out alternative methods of paying for health care expenses until it became the default mechanism for most employed Americans. In 1965, when the government was designing Medicare and Medicaid, it essentially replicated this same comprehensive-insurance model for its own spending, spreading the insurance net to an additional 15 percent of the population. In short, a minor tax benefit passed more than half a century ago is the source of all of our cultural assumptions surrounding health care.
Of course, the United States is not alone. Germany enacted the first national health insurance program in 1883, and for decades insurance remained a sensible model for paying for health care. When these early programs were designed, health care resembled other insurable occurrences. Most families saw a doctor only in cases of extreme emergency. Even as late as 1965, roughly a third of Americans did not see a doctor each year.
We’ve become so accustomed to our setup that we no longer recognize how unusual it is. On the Mainland, we would never attempt to pay for tune-ups with our auto insurance policy or for a paint job with our homeowners’ insurance. But on the Island, we all assume that our regular checkups and dental cleanings will be covered at least partially by insurance. Most pregnancies are planned, and deliveries are predictable many months in advance, yet they’re financed the same way we finance fixing a car after a wreck—through an insurance claim. For all of life’s other necessities—shelter, food, clothing, and education—we accept that a variety of funding mechanisms are appropriate. Not with health care. Anything we spend out of our own pockets is considered an inadequacy of our insurance plan.
4. Health insurance isn’t really insurance
We call it health insurance and think of it as a type of insurance, but in reality health insurance has little in common with traditional insurance and provides few of its benefits.
Remember what insurance is supposed to do—spread the cost of a loss among a group of people who each face a risk of that loss. Let’s look at a simplified example: say there are a hundred of us who each own a house, and there’s a one-in-a-hundred chance that a fire would destroy one of our houses. Let’s say each house is worth $50,000. We could all go without insurance, letting the unfortunate person whose house actually burned down bear the whole $50,000 cost. But none of us want to take that chance—none of us want to be the person who loses $50,000. So Enterprising Company forms an insurance pool of the hundred of us. Each of us pays a premium of roughly $500 (the $50,000 loss multiplied by the 1 percent chance of a fire), and whoever has the house that burns down will get reimbursed by said Enterprising Company. For $500, we each avoid ever having to lose $50,000 on a fire.
This type of insurance offers an important form of risk sharing for almost every economic activity. But with health insurance today, the idea of bearing a small premium and a little extra expense to avoid the possibility of a major loss is turned upside down. In our current health insurance model, we all pay a large premium and bear a lot of extra expense to fund the certainty of a major loss.
5. Procedures aren’t necessarily good care
If one broader implication of the insurance model is the complex and costly system of paying for care, another is far more important to our health—what is often called treatment bias. Health insurance is designed to pay for tangible products and services such as tests, procedures, pills, and surgeries; it hates paying for time. So as insurance has taken over the payment of health care, those providers in the business of selling quality time with patients (general practitioners, pediatricians, geriatricians) have lost out to those who are in the business of selling procedures (specialists, surgeons, device manufacturers, pharmaceutical companies). The whole health care system has a bias toward performing procedures, which I’ll discuss later at greater length. And performing procedures is not necessarily the same thing as providing care.
If you’ve been to a doctor in the past decade, you know something our politicians apparently don’t: the explosion in spending on health care has not necessarily led to an improvement in health care. It’s led to an explosion in treatments, in billable procedures. Somehow, we’re buying a lot more care, yet we’re receiving ever less quality time with physicians. Not surprisingly, we’re facing shortages of generalist doctors (as chapter 7 will cover in greater detail); medical students long ago learned that the best economic model was to practice a procedure-based specialty.
We patients have mostly bought into this model, demanding useless antibiotics for viral infections, tests to rule out improbable diagnoses, surgical solutions to lifestyle issues. As I’ll discuss in chapter 5, perhaps the greatest victims of treatment bias are our seniors. Many of the conditions of senior years—loss of energy, declining motor skills, memory impairment, depression—are related. Yet Medicare is set up to pay for specific procedures aimed at a specific diagnosis. So seniors get an extraordinary number of treatments from specialists working independently of one another. Meanwhile, the number of geriatricians—doctors who are trained to deal with these interrelated problems of old age— has now declined to only seventy-two hundred for the whole country! That’s one geriatrician for every fifty-four hundred seniors. All this is a direct result of the way our system prioritizes health procedures over health care, which is itself a result of our use of insurance to pay for everything.
From Catastrophic Care by David Goldhill Copyright © 2013 by David Goldhill. Published by arrangement with Alfred A. Knopf, an imprint of The Knopf Doubleday Publishing Group, a division of Random House LLC.
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