Yes, America has passed health care insurance reform. But (maybe in 2014), we have not addressed the 900 pound gorilla in the room- our overall health care, itself. Here’s an example of the problem- childhood asthma. Of all emergency visits for children (think for a second of how many broken limbs), about 15 to 20% are due to this disease (and much, much higher in cities, where there are less broken limbs from playing in fields).

Asthma in children- before it gets worse- is eminently treatable. (It does require a cocktail of drugs- and almost always require several essays to find the proper mix and components for each child (sorry, Charlie, this is no one size fits all).  It seems that Children’s Hospital in Boston- using private foundation money-  developed a coordinated team approach to deal with asthma.  Home health care aides, case managers, community involvement all were trained- and needed to make this happen.  In less than 200 days, ER usage dropped more than 60%; hospitalizations dropped 80%.   So, that’s great— right?  NO! because the insurance industry will NOT fund the program, even though they are saving money (and MA has universal health care).  Go figure.

The real problem is our fee-for-service mentality.  Insurance pays for quantity (and quality be damned).  Think about it.  When I contracted (and spent a fortune) for a new kitchen/porch/patio, I did not agree to pay the contractor an hourly wage while he did his thing.  Trust me, doing that only adds hours and costs.  And, if things are done incorrectly, he/she gets paid more to fix them.  No, I agreed (???) to a fixed fee for the whole job- that’s called bundling.  The contractor now has an incentive to get it done right the first time.

And, the government tried this before- for bypass surgery in a demonstration project (as well as for dialysis).  The results- shorter hospital stays, better survival, lower costs.  RAND has studied this concept for several areas in health care (including these two and health care information systems, and a few others) and determined this would reduce FIVE (5) percent of our health care expenditures.  That is the savings we need- it counteracts the slow creep up of everything else.

Here is the problem, as I see it.  What happens when one kid just is not compliant- maybe not personal habits, but medically compliant (the former means he doesn’t take the medicine properly [right time, right dose, right frequency]; the latter- the drugs fail to work one time) so he needs treatment via heart-lung bypass. Well, there goes the budget- since that uses up the funds for about 50 kids with asthma.  So, small hospitals can’t afford to join in such a  program.  So, you say, let’s have all these hospitals join up into a co-op. Well, that can lead to health care monopolies, where cost control is way out of control.  (The New York Times, among many others, reported on this merger problem recently.)

Some six months ago, the Washington Post  (the article is no longer on their website) reported that most doctors are involved in 35 or so uncompensated efforts- all urgent. As I read it, I decided what we need to do is pay each practice a certain fee- say $ 5 per patient per month (remember, every insurance company requires you to pick a primary physician) for uncompensated activities for each month a patient is not hospitalized for a non-accident related event.  And, now I hear about a program developed under funding from the Robert Wood Johnson Foundation (New Jersey, and yes, the obvious connection exists) that makes payments for health care in a unique fashion.  Just as everyone thinks, payers reimburse providers for all fee-for-service claims submitted, but clinical payment budgets are set prospectively (that part is new). And, on top of that (here’s the truly creative approach), quarterly actual spending for typical and potentially avoidable care is reconciled against the budgets; when actual spending is under budget, the difference is paid out as a bonus and when care costs are over budget, some payment is withheld.  The writers termed this the Prometheus model.  So, the caregiver gets positive incentive to treat properly and avoid complications. Money drives the organizational changes.

Assume this applied to our asthmatic children case.  A typical child with SEVERE asthma costs the insurer normally $ 3500; moderate asthma runs about $ 2800.  Now, we pay the bundled/coalesced group $ 1500 a year.  If we reduce 80% of the emergency visits, the costs drop to $ 2500 and $ 2300.  Now, the insurers cough up another $ 1000 bucks, saving at least $ 500 per patient- and with a typical mix about $ 750.  Why are these not part of impending health care regulations?  And, for other disease models as well?

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