Communities Shaping a Vision for
America's 21st Century Health & Healthcare
Background "White Paper"
Wye River Group on Healthcare (WRGH), a 501c3 not-for-profit, non-partisan organization representing virtually every major sector in health care, is a nationally known forum for collaboration and the open exchange of ideas to promote constructive health system change. A dynamic process that works to stay ahead of the emerging trends in healthcare financing and delivery, WRGH identifies ideas with broad application to health policy and the marketplace, and works to advance these ideas through multiple outlets.
For six years we have been involved in national health policy activity, serving as a sounding board and ad hoc advisory panel to bipartisan state and congressional leadership. We have vetted healthcare financing proposals, quality initiatives and infrastructure concepts and have been highly effective in advocating for change through our individual sponsors. The strength of WRGH lies in the diverse cross-section of stakeholders and partners committed to advancing mutual goals, and in the inclusive process employed in reaching agreement on issues.
WRGH is also deeply involved with community-based initiatives and other projects. Our two-year-old initiative called "Communities Shaping a Vision for America's 21st Century Healthcare" is designed to elicit from healthcare stakeholders around the country their ideas about the core principles and values that should form the basis of our health care system. Through this effort, we have demonstrated that public-private collaboration and community-based partnerships among healthcare stakeholders throughout America can help us identify ways to successfully address the challenges facing our healthcare system.
Without doubt, health care is one of the most difficult public policy issues to discuss rationally. We are all vulnerable to reacting emotionally on an issue as personal as our health. It's understandable. No one wants to be sick and no one wants to die. Faced with decisions that could be "life or death" or that could substantially impact our quality of life, most Americans don't want to make trade-offs, and they don't want cost to be an issue.
But cost inevitably and increasingly is an issue in health care. In fact, the public's number one concern about health care today is the continuing surge in the cost of care - from prescription drug costs and hospital bills to insurance premiums. This tension between wanting the best health care money can buy, and not wanting to actually pay what it costs, is the paradox facing our healthcare system and our country today.
This issue is not one that the marketplace can solve on its own. Health care is not like other commodities and services. Normal market dynamics that are present in other industries are not present in healthcare. Instead, we have a system of third party payment that has skewed the normal supply and demand principles and fostered a greater role for government in regulation and oversight.
In healthcare, unlike other service industries, the consumer of goods is not necessarily the purchaser, and the supplier generally determines how much and what kind of product or service is needed. Thus, there is little incentive for consumers to "shop around" for the best value, or for providers to control costs or focus on appropriate utilization of healthcare services.
As a result, Americans experience a health system that most would agree is the very best in the world from the perspective of physician training, medical technology and pharmacology. Yet, as we know, it is one that is extraordinarily expensive, inefficient, inconvenient, inequitable, only sometimes effective and quite often harmful.
In 1992, WRGH invited healthcare pollsters from both sides of the political aisle to share their perspectives on the public perception of healthcare today and the changes needed to create a more satisfying system. We learned that around 33% of the public supports radical change in our healthcare system. This sentiment is particularly strong among populations who tend to be disenfranchised and have little political clout, such as low-income people and people of color, as well as among women aged 35-54, who are a relatively powerful political cohort. These dynamics suggest that significant change may be inevitable. Yet many people also feel threatened by change, particularly when they anticipate they may be adversely affected.
People perceive health insurance as really "healthcare coverage" - and they want healthcare covered! If they cannot afford something potentially beneficial, they may feel cheated. The consumerism movement in other industries has helped to fuel the 21st century notion that we can have it all - we can have more choice, lower prices, and higher quality - and without trade-offs. As Robert Shapiro put it, "At the heart of economics in healthcare is the oldest problem in economic policy; what should government [or markets] do when people want more of some good than the economy will produce at prices they are willing or able to pay?"
The public's number one concern about healthcare today is the surge in costs. But most of the public thinks of "cost" only in terms of what the individual consumer pays out of pocket, not the total cost of a healthcare service. The public believes that health care used to be more responsive to people's needs and that doctors had a more personal connection with patients. In the past decade, however, there has been a perception that the doctor-patient relationship has been compromised by the "corporate" model of healthcare.
Furthermore, as our population ages, concerns about healthcare and retirement security are increasingly intertwined. Healthcare costs become a critical issue to seniors when retirement funds are not adequate, as health care is a big part of living comfortably. Healthcare, more than any other industry, lies at the very heart of how we live, work and enjoy life.
The foremost challenge facing healthcare consumers as well as healthcare leaders is finding ways to effectively address health system ills while at the same time protecting and preserving what we all cherish about health care today. The second and even more difficult task is to do so while establishing rational approaches to delivering care that will optimize care for the individual as well as the health of the community.
These are ideas that challenge the public to understand and accept abstract concepts. For example, evidence-based medicine, in the eyes of the public, is an abstract concept; therefore its benefits can be difficult to understand. For that reason, it is susceptible to attack. To be acceptable to the American public, recommended modifications in the current system must be well informed by healthcare preferences and expectations. Change must recognize that values vary among individuals and over time.
To begin to address existing deficiencies, there seems to be a consensus among healthcare stakeholders and the public that we need to focus on critical issues - the uninsured, health care quality and infrastructure - while promoting more consumer control and more health system accountability. Achieving such goals will require both fundamental rethinking about how we organize, finance and deliver health care as well as some degree of evolution in the roles of all healthcare stakeholders. While there are clearly different perspectives with regard to degree and direction, most opinion leaders agree some change in accountabilities for the different sectors - physicians, hospitals and other providers, insurers, employers, and government - will be necessary to optimize healthcare financing and delivery.
At the heart of this type of re-organization and realignment of responsibilities is the need for a fundamental reaffirmation of basic principles and values around healthcare. If we can achieve agreement on these important cornerstones, it will help guide our thinking and provide a framework that puts the population's health, as well as that of individuals, at the center of the model. There is common ground with a common bond that should hold us together in an ethical and moral society, no matter how diverse our culture. The path to this common ground is identifying and re-creating a sense of community. Constructive long-term change will require a new language that resonates with the majority of American consumers - a language that is culturally palatable and supersedes politics.
While it is unlikely that we would choose to tie health insurance to employment if we were designing a system today, our employment-based healthcare financing system has done a good job for 50 years. Currently, it meets the needs of 160 million Americans, and employees place a high value on this benefit. But we can't ignore the fact that more than 40 million Americans are not well served by the current system, as they have no health insurance.
As we evolve toward a system that preserves the appropriate advantages of employer-sponsored health insurance and addresses its faults, we need to ensure that we do not undermine the security that most Americans enjoy under the current system. In other words, we need to keep in mind that there is a fundamental disconnect between the generally negative perception of the healthcare "system" and the general satisfaction that is expressed by most people when talking about their own health insurance and healthcare.
And what is the system that would better meet the needs and expectations of all Americans? Are models from other countries informative?
Our challenge is not unique. In an article in The Economist in 2002, Milton Friedman writes: "Since WWII the provision of healthcare in the US and in other advanced countries has displayed three major features: rapid advance in medical science; large increases in spending; and rising dissatisfaction with delivery of care. A key observable difference in medical care and other technological revolutions is the role of government."
Most other advanced nations are also searching for a more cost-effective way to deliver healthcare services. Interestingly, a Health Affairs study from 1999 showed that large majorities of Canadians, Britons, Australians and New Zealanders also think their healthcare "system" is broken, yet all five countries have different systems for financing health care. The common element in each case is that payment by someone else - whether government, employers, or insurers - is masking the true cost of care. In every case a promise is essentially made that citizens can have all the care they want for free. In no case is it true. Each country has its own way of limiting access and controlling costs, such as limiting the supply of doctors, using waiting lists for services, rationing by price, using "medical necessity" standards, or outright denial of care. In every case, third party payment is accompanied by third party rationing.
In this country, the shielding of consumers from the true cost of health care has been exacerbated in recent years by managed care. In 1960, over 55% of total health care was paid for directly by consumers. That number dropped to 27.8% in 1980, 19.6% in 1998, and 15% in 2000. Americans now believe low-cost health care is an entitlement. When the user of a service does not know what it really costs, more of the supply is used and the demand curve goes up, creating what economists call "moral hazard." To correct the problem, consumers of health care are going to have to become actual consumers again. And we need to establish incentives that encourage a fundamental reexamination of how we provide care.
Experts believe we desperately need a national debate about equity and economics. Few in the system are assessing the true value of health care, and there is a fundamental conflict between expressed concerns about cost and demands for choice and freedom. This conundrum will require a fundamental shift in how we view the value equation in health care.
Many thought leaders believe that a more consumer- or patient-centric system is the answer - or at least is the right direction for our healthcare system. Others are less enamored of this approach, citing significant and legitimate concerns. Let's take a look at what is ahead.
Burgeoning pharmaceutical innovation, genomics and medical technology will have an unprecedented impact on cost, values and ethical decisions. If it is not already evident, it will soon become clear that the system may not have the economic resources to pay for everything that will become available and is potentially beneficial. The struggle will be to define which treatments and therapeutics will be covered by insurance and which are lifestyle enhancements that, if desired, will have to be paid for out of pocket. It is vitally important for us to set social priorities and find ways to balance competing interests. But who will make the difficult decisions and how will they be made?
Although most industrialized nations depend on the public sector to ration scarce resources, this approach does not appear to win votes with the American people. Professor James Robinson of UC Berkeley observes that managed care, developed as a private sector alternative to government regulation, has been an economic success but a political failure. Consumers and providers were angered by a system that promised comprehensive coverage then imposed barriers to access.
As a result, Robinson posits that the consumer is emerging by default as the locus of control and resource allocation in healthcare, a movement that is facilitated by "widespread skepticism of governmental, corporate, and professional dominance" in allocating resources. He goes on to point out that the movement "builds on deeper social trends… [such as] distrust of big government and big business, increasing diversity in health-related attitudes and preferences, and the emergence of Internet technology….." He continues: "The retreat from managed care promotes access but also removes the brakes on health care cost inflation. The individual consumer and patient is the last candidate for the difficult but necessary role of balancing resources and expectations."
Robinson cites several challenges to the healthcare system of an enhanced consumer role - issues that have been further elaborated on by others. However, he points out that "rising informational, cultural, financial and political challenges are by no means limited to consumerism and plague both managed care and highly regulated health systems."
To quote Robinson, "If the right thing for health care is defined as an approach without potential problems of equity, efficiency, and clinical quality, then consumerism fails the test. But if the right thing is defined as the approach most compatible with the nation's social culture and political institutions, the candidate that remains standing after other contestants are vanquished, then consumerism is not only the likely but indeed the right thing for US health care."
A much less sanguine view of consumer-directed healthcare is expressed by Stanford economist Victor Fuchs. He believes that consumer-directed health plans "will be another nail in the coffin of health insurance as a form of social insurance." He states that the problem began when private health insurance companies entered the market and used actuarial approaches to institute experience-rated premiums. Managed care exacerbated the problem by eliminating the ability of providers to cross-subsidize the care of sick poor persons.
Fuchs believes that use of actuarial models in healthcare "conflicts with a sense of justice and collective responsibility." He thinks that, ultimately, "the extreme actuarial approach will be rejected by the people of the U.S. as an unsatisfactory way of providing basic healthcare for all…. The case for the fairness of the social-insurance model will be strengthened as people realize that most health problems have, at least in part, a genetic basis."
So what about the future? It appears that there are essentially two competing visions: A government-run or single-payer system, which proponents believe is the only way to ensure equity but detractors say will severely stifle innovation, or a system of patient-directed healthcare, which advocates say will provide consumers with choice and control and promote accountability throughout the healthcare system. But others question whether, if given choice, individuals will make good decisions and point to problems with access to information, risk adjustment and adverse selection. Are the social and actuarial models at odds with each other?
More than anything else, it is critical that we identify and begin to move health care purposefully in the direction that is most compatible with the values and principles embraced by the majority of Americans. The spirit that has guided this initiative over the past two years is one that endeavors to develop a greater shared sense of community; re-establish trust within and between healthcare leaders; articulate a set of common goals; and hold each party accountable for progress toward those shared goals.
We hope that our work and that of like-minded organizations can help us to move past what Louise Kertesz calls the "perpetual sneer" -- in other words, the simplistic and cynical public comments that are designed to demonize sectors of healthcare and which only serve to mask the complexities of our uniquely American healthcare system. As Kertesz writes, "Respectfully acknowledging the person in each healthcare encounter, and behind each healthcare decision, will not cure the obstinately negative, but it is surely good medicine for coping with the anxiety of change."
Whether public or private, single payer or not, we must begin to build on our preferences and expectations. Healthcare is a complex business of relationships - among patients/consumers, family members, physicians and other healthcare professionals, hospitals, employer-purchasers and payers - as well as trade-offs to optimize health, and not just minimize illness, for individuals, populations and communities.
WRGH's overarching goal for the "Communities Shaping a Vision for 21st Century Health & Healthcare" initiative has been to identify and articulate those key values and principles, preferences and expectations held by the majority of Americans. A secondary goal is to broaden the perspective of our sponsors and their members in discovering new relationships upon which they can build constructively. These are challenging, even daunting, objectives! But by tapping into the diverse thoughts, experiences and ideas of community leaders in healthcare organization, financing and delivery from across the nation, we believe we can achieve success.
Donelan, Karen, Robert J. Blendon, Cathy Schoen, Karen Davis, Katherine Binns, The Cost of Health System Change: Public Discontent in Five Nations, Health Affairs, May-June, 1999 http://188.8.131.52/readeragent.php?ID=/usr/local/apache/sites/healthaffairs.org/htdocs/Library/v18n3/s23.pdf
Friedman, Milton, Rethinking Health Insurance, The Economist, June 23, 2001.
Fuchs, Victor, "What's Ahead for Health Insurance in the US?" NEJM, June 6, 2002. N Engl J Med 2002; 346:1822-1824, Jun 6, 2002.
Kertesz, Louise, Health Care Quarrels, Healthplan Sept/Oct 1998.
Robinson, James "The End of Managed Care," JAMA. 2001;285:2622-2628
Robinson, James, "Renewed Emphasis on Consumer Cost-Sharing in Health Insurance Benefit Design, Health Affairs-Web Exclusive, March 20, 2002. http://www.healthaffairs.org/WebExclusives/2103Robinson.pdf
Shapiro, Robert Health Econ 101, New Democrat, Aug 1993
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