and ideological welfare of the country.” Interestingly and not
coincidentally, the perceived problem almost suggests its own
solution: Let the “invisible hand” take care of business—literally.
The differences between the real problem and the perceived
problem are significant. So, who would be interested in preserving
a system that has inflicted so much pain on society? To find out,
we pose the fundamental question: cui bono?
The list of players deserves close scrutiny:
■ The public—It has been said repeatedly that insured patients
demand immediate access to the best care and that they value
freedom of choice and cost control. Even though the United States
does not deliver on any of these criteria, the perception is that
the systems of other countries are not as good. The fact remains
that public opinion could force real improvements, but it doesn’t
do so because it is divided, manipulated, and lacks an effective
mechanism to impose its will.
■ Employees and employers—Employers act rationally by shifting costs to employees as health care expenses reduce earnings to
levels that are not acceptable to management and owners. In the
process, employers display their “negotiating” strength—force,
some would say. Employees, with no real power to resist cost
shifting, have seen their net pay reduced and are becoming more
vulnerable to financial problems that range from manageable
inconveniences to financial catastrophes. Employers understand
that even with increasing employee contributions, their share of
benefits will continue to rise much
faster than productivity; such an environment will become unsustainable.
For this reason, employers are likely
to support mechanisms that limit
their financial commitment (not
obligation) to provide benefits and,
as a byproduct, control health care
inflation. This could mean that, indirectly, employers support initiatives
to improve quality and efficiency.
■ Politicians—Decisions in the political machinery respond to
personal convictions, concern for the welfare of citizens, eagerness for support to remain in power (typically through monetary
contributions), and desire for personal gain. Because money buys
influence and money comes from interest groups, it is reasonable
to conclude—like the authors of the Federalist Papers did—that
when the dust is settled, in the absence of effective counterbalances,
private interests rule. The consequence is that an influential sector
of the political apparatus will oppose changes that negatively affect
the interests of its financial supporters.
■ Providers/vendors—These are the key players due to their
ability, predicated on economic power, to influence public
opinion and buy political clout. The list of providers/vendors
is long and includes the usual suspects—insurance companies,
physicians, hospitals, and drug manufacturers—but also IT
vendors, biotech firms, consultants, wellness program firms,
and any group that profits from the health care industry. To be
sure, certain products and services are highly valuable, priced
fairly, and fundamental to the proper functioning of the health
care system. But others are not.
Cui bono? Providers/vendors and some politicians who
receive contributions from them. This statement requires elaboration: Although anybody who derives pecuniary gains from
the health care system is unlikely to support initiatives aimed
at eroding his earnings, this fact, by itself, does not mean that
such earnings are unreasonable or that social value—and in
some cases great value—is not created. One can easily come up
with examples of providers/vendors that have made enormous
contributions to the well-being of Americans. In a similar vein,
some politicians who receive contributions from providers/
vendors may honestly believe that the interests of the country
are aligned with the interests of contributors, and such an assessment could be correct. Some of these politicians could be
so committed to their views that they might pursue them with
or without financial assistance.
In principle, then, providers/vendors that create social value
are not part of the problem, even though their driving force—like
everybody else’s—is profit. They are, in fact, part of the solution.
How can things go wrong? Brent James, Intermountain Health
Care’s chief quality officer, and Gregory Poulsen, Intermountain
Health Care’s senior vice president and chief strategy officer,
show how in their article “The Case for Capitation” published
in the July-August 2016 issue of the Harvard Business Review.
James and Poulsen recount how
Intermountain’s LDS Hospital in
Salt Lake City reduced the mor-
tality rates of patients with con.
gestive heart failure and, in the
process, lost $3.2 million a year in
revenues. They also describe how
obstetricians and neonatologists
at Intermountain’s American Fork
Hospital reduced the intubation
rates of premature babies, thus
curtailing the use of intensive care units—and, unfortunately,
depressing revenues. The authors bluntly pose the question:
“Should care delivery groups invest in quality improvements
that reduce costs if it could mean their own financial demise?”
Although the politically correct response is that savings some-
how benefit everybody, the authors suggest an approach that
allows for quality improvements and preserves provider/vendor
earnings—and preserving earnings is the key point.
Almost anybody who would be worse off with spending
reductions will oppose them. In the U.S. health care system as
currently constructed, personal gain trumps the common good.
This is the crux of the matter and the reason why the Tragedy of
the Commons is such an important model. This is why costs in
the United States are out of control and will remain so until the
country faces a major crisis that forces the common good ahead
of private interests.
;e future depends
on what you do today.
A Rigged Game?