Our current health care system is “an edifice that is fundamentally unsound,” yet most approaches for ‘fixing’ the system “will put yet more patches on the walls” of the edifice “and then build that edifice higher.” So writes business executive David Goldhill, a self described Democrat, in this Atlantic Monthly article.

The article is provocatively titled How American Health Care Killed My Father. Goldhill describes how his still working 83-year-old father went into “a well-regarded nonprofit hospital in New York City” with a case of simple pneumonia, only to become infected in the hospital with sepsis. Goldhill watched over the next five weeks as “a wave of secondary infections, also acquired in the hospital,” killed his father.

“My survivor’s grief” writes Goldhill, “has taken the form of an obsession with our health-care system.” Although not a health care professional, he has done loads of research and interviewed people from various facets of the industry. This has led him to the conclusion that the system is deeply structurally and unnecessarily flawed in ways that are completely unacceptable.

It is commonly claimed that we have the best medical system in the world. That may be correct in some ways, but it ignores extremely serious failings. After noting that our American hospitals manage to cause about 300,000 entirely preventable deaths every year, Goldhill asks, “How did Americans learn to accept hundreds of thousands of deaths from minor medical mistakes as an inevitability?”

Goldhill is amazed that no one is focusing on the root causes of our health care system woes and that most efforts to improve matters will invariably make matters worse. We are continually spending “more money just to keep the system from collapsing” — to simply give us more of what we have, including flaws. The root causes Goldhill cites include:
  • A wasteful insurance system.
  • Distorted incentives.
  • A bias toward treatment.
  • Moral hazard.
  • Hidden costs and a lack of transparency.
  • Curbed competition.
  • Service to the wrong customer.
The article is one of the best descriptions I’ve ever seen of what ails our health care system. Although the article is very long — nearly 11,000 words long — Goldhill doesn’t waste words. It is worth reading it at a rate that permits deep absorption, since nearly every sentence is packed with value.

Throughout the article, Goldhill explores the various “structural distortions” of our “heavily regulated, massively subsidized [health care] industry.” He repeatedly calls for more power being transferred to the patient by returning the patient to the status of consumer for most health care transactions. He anticipates and takes on most arguments against such a model.

Goldhill notes, for example, that a typical 22-year-old starting a career can expect to put out nearly $2 million over the rest of his life in total health care expenditures, including insurance premiums, co-pays, Medicare and Medicaid, and non-covered expenses. When someone asks how people are supposed to be able to afford to pay for most of their medical care out of their own pocket, he asks, “Well, what if I gave you $1.77 million?”

Since Goldhill does address most concerns about a more free market in health care, please don’t even think about posting criticisms of such a plan until you have read and completely digested every single word of Goldhill’s article.

Being a Democrat, Goldhill would like to see the Obama health care proposals do some good. But he knows they won’t. Rather, he suggests that government centric health care reform will end up creating such an untenable situation that Americans (and their politicians and industries) may finally cry uncle and consider real health care form. He writes:
“The most important single step we can take toward truly reforming our system is to move away from comprehensive health insurance as the single model for financing care. And a guiding principle of any reform should be to put the consumer, not the insurer or the government, at the center of the system. I believe if the government took on the goal of better supporting consumers—by bringing greater transparency and competition to the health-care industry, and by directly subsidizing those who can’t afford care—we’d find that consumers could buy much more of their care directly than we might initially think, and that over time we’d see better care and better service, at lower cost, as a result.”
Something commonly said at meetings where I work is that it’s fine to air complaints, but that doing so carries with it an imperative to offer ideas for solutions. Goldhill doesn’t fail in this regard. He suggests a system that is very close to Kevin Delaney’s Medical Savings and Loan concept. He even describes the role of the Healthcare Advocate. But, as one might expect from a self-described Democrat, Goldhill expects a lot more government involvement than does Delaney. It is possible, however, that Goldhill’s plan might be more politically feasible. He says:
“A more consumer-centered health-care system would not rely on a single form of financing for health-care purchases; it would make use of different sorts of financing for different elements of care—with routine care funded largely out of our incomes; major, predictable expenses (including much end-of-life care) funded by savings and credit; and massive, unpredictable expenses funded by insurance.”
Like the Medical Savings and Loan, Goldhill’s plan would provide three tiers of funding:
  • Catastrophic insurance that all Americans would have to get. This would have to be truly catastrophic insurance with such a high threshold that “only a minority of us should ever be beneficiaries,” kind of like fire insurance.
  • Post-tax health savings accounts (HSA) with mandatory minimum balances adjusted by age. Most of our health care expenses, including end-of-life expenses, would be paid from these funds.
  • Automatic credit for ‘gap’ expenses that exceed savings up to the catastrophic minimum. Such credit would essentially be borrowing against future HSA savings.
While Delaney would have the catastrophic insurance privately provided, Goldhill thinks that it would have to be provided by the government. He also seems to suggest that HSAs would have to be provided by the government rather than being privately provided.

But what about those with chronic health problems and the poor? Goldhill’s plan would add a lower catastrophic minimum for those with expensive chronic health issues and would mandate automatic direct government funding for lower-income Americans who can’t fund all of their catastrophic premiums or minimum HSA contributions.” It’s not that Goldhill can’t see the moral hazards involved in this kind of welfare; he just thinks that it is the most feasible way to make the best of a bad situation.

Goldhill admits that, being a human designed plan, his system isn’t perfect and would not solve all of our health care system ills. And he says it would take a generation to gradually but fully implement such a plan. But, he asserts:
“I believe my proposed approach passes two meaningful tests. It will do a better job than our current system of controlling prices, allocating resources, expanding access, and safeguarding quality. And it will do a better job than a more government-driven approach of harnessing medicine’s dynamism to develop and spread the new knowledge, technologies, and techniques that improve the quality of life. We won’t be perfect consumers, but we’re more likely than large bureaucracies to encourage better medicine over time.”
While I can see inherent value in many facets of the outlined plan, it seems to me that Goldhill glosses over the inevitable lobbying that would ensue, seeking to continually expand the catastrophic coverage to include all kinds of issues and expenses. I have problems with required minimum HSA balances, but perhaps this might be a price to pay in exchange for a freer system.

One thing that is for certain is that the current medical industrial complex would pull out all the stops to kill this type of proposal. These folks are the real “defenders of the status quo.” And they’ve got a heck of a lot of lobbying power. Just check to see who is funding most of the current government-driven health care campaign. They’re not even trying to keep quiet about it.

In the current political climate, I doubt that anyone with any amount of clout in either major party would even bother to give Goldhill’s proposal the least cursory glance. But perhaps Goldhill is right in thinking that after we have managed to utterly devastate our health care system, Americans will finally become willing to consider a market model similar to that which has brought us efficiencies, innovation, and reduced costs in so many other facets of our lives. I hope I live that long.

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