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Affordable Health Care Requires a New Legal Framework

Howard's Daily by Philip K. Howard

There are three major structural causes of unaffordable health care in America. One is defensive medicine (3-10% of total costs), caused by unnecessary tests and procedures done in part to help protect doctors from possible lawsuits for not "doing enough." Second is the "fee-for-service" reimbursement system, which incentivizes providers to provide more (not better) care, accounting for an estimated 20 to 30% of extra costs. The third is bureaucracy—a torrent of bureaucracy—that invades every nook and cranny of caregivers’ days, costing twice as much per capita as the next most bureaucratic state, or an extra 15% of the healthcare dollar on excess administration. Doctors spend over 20% of their time on what used to be known as paperwork.

None of these sources of waste is a secret. The drafters of Obamacare tried to deal with aspects of them, as Ezekiel Emanuel recounts in his new book, Reinventing American Health Care. But change is hard. Change scares people. Change disrupts special interests. When things are working really badly, anarchist Peter Kropotkin observed at the turn of the last century, people cling even harder to the status quo, "lest [change] may make him more wretched still."

Change happens, but typically when the old system collapses. Wasting a trillion dollars a year on inefficient health care—that’s about $10,000 per family—will eventually cause the branch to break. So what should the new system look like?   

Solving these problems requires entirely new frameworks. Fee-for-service systems should be replaced by "accountable care organizations," in which a provider takes care of all of a person’s health needs for one annual fee. When a patient needs specialized care, it should be done as "bundled payments," basically a fixed fee for everything to do with that problem.  

Defensive medicine is the area of waste that Common Good is trying to solve. What’s needed is clear: replace unreliable jury-by-jury verdicts (and years-long emotionally-charged proceedings) with expert health courts that reliably sort good care from bad care. Only then can doctors go through the day relying on their best judgment instead of listening to a little lawyer on their shoulders. See here and here

The Obama administration and Dr. Emanuel have been helpful in advancing the cause of reliable healthcare justice; for example, in 2011 Obama presented a budget that included $250 million to help fund medical justice reform initiatives, including special health courts. I met and spoke with Dr. Emanuel several times during his tenure as a key healthcare adviser. 

But Dr. Emanuel is not accurate in suggesting that the Affordable Care Act advances the cause of reliable justice. Yes, early drafts of the Act included provisions for pilot projects of alternative systems of justice. But Senate Majority Leader Harry Reid is a champion of trial lawyers. In the law as enacted, these pilots are permissible only if they "provide[ ] patients the ability to opt out of or voluntarily withdraw from participating in the alternative at any time."

Keeping the jury, of course, eviscerates the whole idea of consistent decisions. One jury can decide a case one way; another jury on the same facts can decide exactly the opposite way. Most studies suggest that an expert court would be fairer for injured patients as well as more reliable for innocent doctors. But the Affordable Care Act is unwilling to countenance a pilot project that doctors could rely upon.

President Obama’s heart certainly seems to be in the right place on this issue. But it will take more than a suggestion to an obdurate Senate to advance this reform. The public, polls show, overwhelmingly supports special health courts. But no change is likely to happen until there’s firm leadership from the President, or a crisis.