Legitimacy: The Hidden Issue in Health Care Reform

<!– @page { size: 8.5in 11in; margin: 0.79in } P { margin-bottom: 0.08in } –>Despite all the debate about health care reform, the most basic issue remains unspoken: who can legitimately deny a person or (more importantly for most people) that person’s child, spouse or parent needed care?

Back in late 1997 and early 1998, Helen Hunt’s diatribe against Health Maintenance Organizations (“HMOs”) in the film, As Good as It Gets, both shaped and embodied the zeitgeist.  In a time when people heard stories about “drive through deliveries” in the obstetrics (“OB”) ward, the majority of the public were leery of HMOs and other Managed Care Organizations (“MCOs”) denying care, especially where they were for-profit and the denial looked to benefit the entities’ bottom line more than the patient’s welfare.

This drove the emergence of Preferred Provider Organizations (“PPOs”) which offered often lower reimbursement for physicians and institutional providers (for example, hospitals, independent diagnostic and treatment facilities [“IDTFs”] and clinics) in return for more autonomy for patients and steady volume and a reduced fear of capitation (imposition of a global treatment budget and financial risk for treatment decisions) by HMOs and MCOs for physicians.  As may be expected, lower rates, sometimes called “factored discounts,” did not long control health care cost inflation, which HMOs and other MCOs had reduced in the mid-to late 1990s.

With today’s weakening economy, competitively disadvantaged US industries and rising health care costs, thoughts again, as in the 1993-’94 Health Care Reform Debate, turn to reform.  Many people in this forum support a single payor system.  The question that has to be asked about a single payor system is whether the Federal government has the legitimacy or the will to ration care where rationing is needed.

This is a Country that, by and large, very much believes President Reagan’s statement that “Government is the problem” in many, if not all, cases.  Would many of you, for example, be willing to entrust life and death decisions about your child, spouse or parent to the same entity that planned the Iraq War or which runs the Post Office?

If the answer to that question is either “no” or is Jack Benny’s famous answer (to the command, “Your money or your life”) “I’m thinking,” then the next question must be what sort of entity would have the legitimacy to say “no?”

Ideally, I suggest, most people would want that “decider” to be one that reflects the input of the Plan’s participants and beneficiaries into standing policies, one that makes the decision considering more than just outcomes data, one that values and considers human relationships and one which gives due consideration to the input of the treating physician.

I believe that the experience of the 1990s indicates that HMOs/MCOs, despite Richard Nixon and Paul Ellwood’s great hopes in the early 1970s and Hilary Clinton and Ira Magaziner’s great hopes in the early 1990s, are not the entity for the task.  Despite the relative success of Medicare since 1965, its lack of financial solvency (it is currently projected to be insolvent by 2017) and sometimes Byzantine rules and procedures suggest that a single payor system is unlikely to have the requisite legitimacy to make tough decisions, either.

Instead, the time is probably ripe to create a new health care entity that would have the required legitimacy.  The Tenth Amendment gives the states and individuals (and, thus, groups of individuals such as not-for-profit corporations) the rights and powers not reserved to the Federal Government.  The late management gaon, Peter Drucker, envisioned using not-for-profit corporations, a form also admired by de Tocqueville, as a medium for people to band together to take health insurance back from both employers and the government.

An existent entity in another area provides one model.  USAA provides inexpensive auto insurance and consummate service to its active and retired military members, by using its large membership to acquire discounts no single individual would be able to acquire.  It is a surprise to me that Sen. McCain, a retired Navy Captain who probably insures his cars through USAA, did not suggest the use of this model, rather than his quixotic and ineffective suggestion of tax breaks for individuals.

Applying such a system to health care, large not-for-profit entities, probably built around unions, professional groups and fraternal organizations, would bargain with payors for quality, cost and access, much as sophisticated employers like the General Electric Company do today.  The coverage would be written around the needs of the members (for example, while elective cosmetic surgery might not be a covered necessity for the United Auto Workers [“UAW”], it might be for the Screen Actor’s Guild [“SAG,” no pun intended]) and participants, beneficiaries and physicians would have input into coverage decisions and guidelines.

While the current burgeoning expansion of outpatient services (ranging from office visits to diagnostic procedures to ambulatory surgical procedures) and other growth areas would be controlled, that control would come from an entity likely shaped, owned and responsive to its participants and beneficiaries.  The control would come from other co-venturers and not from either a distant Federal government or self-interested for-profit businesses, like HMOS, MCOs, PPOs or other payors.  Such an entity would be designed to have the requisite legitimacy to say “no” where “no” is required.

Such entities would be subject to both Federal regulation as participants in inter-state commerce and to state regulation as charities.  Oversight would be substantial and necessary.

Additionally, creating such entities would create greater resiliency, as thinkers like James Kuntsler and John Robb have suggested may be necessary.  These not-for-profit affinity groups, which would not be operated or owned by Federal or State governments, would be another bulwark for society in the event of Hurricane Katrina-like disasters.  It is worth noting in passing that when the government of Somalia collapsed in 1991, many of its functions were continued by an Islamic charity that cut across clan and regional lines.

The Twentieth Century, from Lochner to Griswold to Roe, was the century of the Civil War Amendments.  The Twenty-first Century will likely be the century of the Tenth Amendment.  This could be the first test of this concept.  Can we create a legitimate structure that can say “no?”