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More for Less?

The absurd logic behind the public option.

11:00 PM, Dec 1, 2009 • By STANLEY GOLDFARB
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The Urban Institute, a prominent liberal think tank, has come out with a report that proposes that the best reason for a strong public option is that it will actually strengthen the power of private insurance companies to bargain with the local powerful medical groups and hospitals as the latter are the real culprits in the rising cost of health care. Only through the combination of public and private insurance companies can large hospital based provider groups be brought to heel and heal more cheaply. Our new bogeyman is no longer the insurance companies, it is now the doctors and hospitals. Moreover, the public option, in the view of the Urban Institute, will not be government run, only government subsidized, and therefore of no real concern to Joe the plumber or anyone else worried about government intervention.

Where to begin? The Colorado Hospital's DATABANK project has compared financial data for 658 U.S. hospitals and published their findings in, The Impact of the Economic Crisis on Health Services for Patients and Communities. They found that 50% of U.S. hospitals were losing money, eight cents on every dollar earned. The Urban Institute's plan should work really well for the money losing operations. Perhaps they can be forced out of business altogether and solve the over-bedded situations in America? Oops, Derek DeLia and Elizabeth Wood writing in the journal Health Affairs in an article entitled, "The Dwindling Supply Of Empty Beds: Implications For Hospital Surge Capacity," point out that even a moderate uptick in swine flu admissions would overwhelm the bed capacities of hospitals in 30% of U.S. counties. Closing these hospitals is unlikely to help the situation unless the economists at the Urban Institute have a really complex formula that turns this finding and the rest of logic on its head.

So we have 50% of hospital losing money and 30% of the counties with a potentially dangerous lack of hospital facilities and the plan is to create a public insurance company that can control health care costs by reducing payments to hospitals? They really must be kidding.

The reason we have an expensive health care system is due to every part of the health care system. Malpractice costs, great availability of technology and advanced care even in small community hospitals, aggressive care in the last year of life (of course, it is not easy to know it is the last year of life), cross subsidization of medical education and research by large teaching hospitals, innovative therapies that cost hundreds of millions of dollars to develop and whose developmental costs must be recaptured, enormous levels of regulation on hospitals and medical providers, and increasing capacity to treat patients with enormously complex medical conditions.

If we ask the health care system to provide each of these components in a fashion that Americans have come to expect and yet demand that it continue to provide all these components with reduced payments, only a catastrophe awaits us. The system is at the breaking point now. Emergency rooms, which are used primarily by those with health insurance as documented in a study published by the Journal of the American Medical Association in October 2008 are enormously overcrowded. Only about 17 percent of E.R. visits in the United States were by uninsured patients, about the same as their share of the population. Providing universal health insurance coverage would not change the underlying situation. The Urban Institute report would have us believe that reducing payments for emergency services would somehow reduce this problem?

Let's control auto accidents by increasing the power of insurance companies to control auto insurance premiums, reduce home fires by raising the cost of homeowner insurance, and extend lives by reducing the rates of life insurance. These are as rational as expecting that without a fundamental reform of the delivery of health care--including malpractice reform, rationalizing technology development, and reforming the reimbursement system--we can cut the cost of health care by lowering health insurance premiums. It is absurd.

Stanley Goldfarb MD is associate dean of clinical education at the University of Pennsylvania School of Medicine and a nephrologist.