Saturday, June 13, 2009

Health Care -- Make it Naturally Sustainable

Here is my simple perspective on health care reform in the US: establish a health care system that has simple natural incentives to keep people healthy.

The current US health care system is too expensive, is not able to cover everyone, and has many inefficiencies. The US spends more per capita on health care than any other UN nation ( yet does not achieve the quality of care available in many other countries (

We all know that an ounce of prevention is worth a pound of cure but that is not how most of the health care systems in the US work.

Our current systems either have lots of government regulation to tell the system how to run and what to do (lots of rules, slow to adapt) or have big bucks insurance companies competing against big bucks medical companies. In the government controlled case, the operative goal is to follow laws and legislation. In the insurance industry vs medical industry case the operative goal is to maximize profits on one side or the other. Neither system has natural incentives and tight feedback loops to keep people healthy. And most of the money is spent at the end of the health cycle when expensive health care is required. It is not spent to keep people healthier up front.

At a recent gathering at Harvard, a health care professional and fellow classmate pointed out that traditional health care is responsible for only about 10% of a person's overall health. Yet that is where most money is spent. Another 10% is attributable to the environment. 40% depends on a person's eating, exercise, and life style habits. The remaining 40% is dependent on a person's socioeconomic status. Spending money on improving healthy habits and educating people has an enormously bigger and more effective impact on improving health while consuming fewer resources (money, etc).

Another of my classmates noted, and I agree, that it is critical for any new health care system to have direct incentives to keep people healthy -- rather than incentives to deny them care (current insurance) or incentives to give them expensive treatments with high profit margins (many medical/drug companies). One of the best current day examples of the way things should work is Kaiser Permanente and some other Health Maintenance Organizations. Kaiser has extensive programs to keep people healthy -- and Kaiser makes more money the healthier it keeps its clients. Kaiser's doctors and staff are reasonably paid without necessarily needing to have patients undergo expensive therapies. It is far cheaper to have them participate in wellness programs. Patients can also reduce their own costs by staying healthy. And both Kaiser and their patients have thorough health data to track what works best.

We need a health care system that naturally balances patient goals (good health), medical provider goals (income), and resource conversation (keeping costs down). Systems like Kaiser are succeeding at this. We need health care plans available to all in the US that can have a similar and sustainable balance.

It is my hope that the Obama administration's efforts will result in such sustainable systems with effective and natural checks and balances but with little or no government intervention required (small government). There are certainly a number of other implementation details to work out -- like how to fund health plans for those who cannot otherwise afford them -- but hopefully we will end up with a plan that achieves a natural balance and is sustainable.

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