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Adam Gaffney: It’s the financing system, stupid.

October 24, 2019

Topics: Quote of the Day

A decade ago, Harvard surgeon Atul Gawande helped popularize the idea that U.S. health care spending is high because we use too much medicine. He was wrong: it’s the prices, and who pays them.

By Adam Gaffney, M.D., M.P.H.
Boston Review, October 17, 2019

Priced Out: The Economic and Ethical Costs of American Health Care
By Uwe Reinhardt
Princeton University Press, $27.95 (cloth)

Reinhardt helped reorient the health care reform discussion from quantity to price, which was a step in the right direction. Yet high prices should be seen less as the underlying disease than a symptom of the true malady, our uniquely privatized and fragmented financing system.

That system leaves millions uninsured and underinsured—by current counts upwards of 87 million are inadequately insured. It is premised on the notion that private insurers can control costs by forming restrictive provider networks—increasing their market leverage but reducing patients’ choice of providers—but this scheme invariably results in out-of-network bills of the ruinous sort Kliff and others describe.

By the same token, it is our financing system that has accommodated, and indeed rewarded, hospitals that transform into capitalistic, consolidating, revenue-maximizing behemoths—because those institutions can then extract higher prices from payers through greater leverage of their own. It is the way we pay for health care in the United States that has led to an arms race of administrative bloat, as insurers and providers fight over payments with legions of bureaucrats and billers. And it is our financing system that has allowed some hospital systems to flourish and expand facilities of ever-increasing technological prowess and splendor, but that forces others—the unprofitable ones—to wither, and sometimes die.

And in the end, it is not just empirical questions that are at stake, but ethical ones. “Unfortunately,” Reinhardt notes in the prologue of his book, “we are too shy in this country to debate forthrightly the ethical precepts we would like to see imposed on our health care system.”

But debate them forthrightly we must. For above all, it is our financing system that is increasingly giving way, as Reinhardt recognized, to the rationing of care according to economic class, as policymakers seek to control costs by passing them through to patients instead of doing what high-performing universal systems across the globe have long done: control that spending at its source. The way we pay for health care has produced a curious but deadly mix of deprivation and excess. There is no great mystery behind it. It’s the financing system, stupid.



By Don McCanne, M.D.

Although at first glance this is camouflaged as a book review, it is far, far more than that. It is one of the most important treatises ever written on the U.S. health care system.

It is a long article, studded with links to supporting references, so it will take time to read and digest. Graciously, Boston Review does not use a paywall, so the entire article can and should be accessed at the link above (without the necessity of including the entire article in this email).

This is essential reading for the health policy community, politicians, and stakeholders, especially patients. We will need to reduce this message to simple terms in order to inform the large segment of the population that is driven more by memes than by sophisticated discussions of policy science. But the message is fairly straightforward so we should be able to do that.

Your task right now? Select a time that you can read the full article, whether it is now, or perhaps sometime this weekend. Then join with others in communicating this message to the nation. It needs to become the meme that drives health care justice in America.

With thanks to Adam Gaffney and Uwe Reinhardt, we have confirmed that it is the financing system that is the source of the ills of the U.S.health care system, and understanding that fact is not so stupid after all.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

About the Commentator, Don McCanne

Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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