Maggie Mahar’s “Money-Driven Medicine” and the American Health Care Revolution

[cross-posted from Graham Firchlis blog]

Revolutionizing health care in America – and it is in fact a revolution that is underway, not just “reform” as it is being billed in order to avoid further frightening the timid – will require that Americans fundamentally change the way in which we think about health care goals and delivery. Maggie Mahar, a brilliant financial analyst and health care expert praised for her work by Paul Krugman and Bill Moyers among numerous others, has written what many including myself consider to be a seminal work on the nuts and bolts of that requisite revolution in thinking.

A powerful new film addressing America’s heath care crisis has been produced based on her work. That film will be screened in the US Capital next Tuesday, October 27, and DVDs will be distributed to all members of the US Congress. (Watch the film now online.)The hope is that this effort will tip the legislative balance in favor of enacting reforms we need to put an end to unsustainable increases in health care costs, while simultaneously providing rational health care to all citizens.

Among the most difficult things we can ever attempt is to change ourselves. Even more difficult is trying to change others, something that can only be achieved if we first begin change within ourselves. It is only evolutionary-imbedded human nature to cling to what is known, because the familiar appears to be safe, and to avoid change because in change there is always a level of uncertainty that may contain danger. This fear of the unknown is what motivates most of those protesting against health care change in seemingly irrational ways, and it is also what drives a considerable portion of those in congress who are reluctant to support reform; the safe stance for the average politician is always to stay with the status quo.

This resistance to change among both politicians and the citizenry they represent is the primary obstacle that President Obama and the Democratic congressional leadership have to overcome, not just the financial influence of lobbyists. What is being attempted with this “reform” of health care is more accurately a revolution, a radical restructuring of the way Americans think and feel about their health care. It is not an easy task, and requires those of us including Obama who desire this transformation to also change the way we approach the issue.

In Money-Driven Medicine: The Real Reason Health Care Costs So Much (Harper-Collins), Mahan lays out how health care product manufacturers, using guile and guilt, have joined with health care providers to create demand by the general public for ever more expensive health care. The effect has been to drive up health care costs to more than double what other comparable societies expend, while simultaneously failing to provide anywhere near the world’s best health care. What we produce is a massive quantity of poor quality health care, much of it ineffective and a considerable part of it harmful.

For health care in the US today we spend more than twice the per capita average of the world’s 30 most economically advanced nations,

health care cost per capita 2007

a difference that remains double even when the costs of insurance premiums and administrative overhead are excluded, yet our expected life span is less than people in many of those nations

life expectancy 2004_2006

and our infant mortality rate is among the worst.

infant mortality by country 2007

(Granted that overall mortality can be slightly misleading, as in the US we have far higher rates of death from vehicular accidents and murder than do most other advanced nations and our racial demographic is somewhat different, and reasonable argument can be made that differences in infant mortality are in part due to societal behavioral choices including primarily a lack of competent birth control education and support for teenagers, but still – If, as critics of health care reform on the Right would argue, our outcomes are not all that different from other countries, it cannot be denied that we are paying twice as much as we should for our health care outcomes.)

While many advocates of a government-run public health care system, single-payer or otherwise, seem to believe that simply competing with private insurers through a public not-for-profit plan will be enough to control future health care cost increases, the facts say otherwise. Private insurance covers only 35% of US health care expenditure, while government programs cover nearly half and the rest is paid for out of pocket by consumers or through directly managed private sources.

US health care expenditure sources 2007

Even with their excessive overhead and the added burden on providers from dealing with private insurer payment complexities, the potential annual savings that could be realized by eliminating private insurers altogether is just $100 billion (assuming such a system in the US would have total administrative costs similar to other modern nations with purely government-operated single-payer systems) and only about $35 – $45 billion if we were to end up with a highly regulated mixed public-private system like that in Germany or Switzerland.

But health care costs have soared at an average annual rate of 8.5% since 1980, and the trend is accelerating.

US total health care expenditure 1960_2007

While the cost reductions from elimination or minimization of private insurer expenses would be welcome, they only represent a savings of 1.5% to 4.5% of our total annual health care expenditures. Clearly, more must be done to hold down health care cost escalation over the long run.

Several estimates are now circulating that purport to estimate the amount of “waste” in the US health care system. PriceWaterhouseCoopers has estimated waste at $1.2 Trillion annually, although they are now walking that number back somewhat. Mahar pegs the number at $750 Billion of which $350 Billion can readily be realized, based in part on the Dartmouth Atlas studies. The true number is presently unknown but it is clearly substantial, and without curbing inappropriate and ineffective treatments US health care costs will climb until they consume more that we as a nation can afford. I have my own thoughts on the matter, and will return in a later post to provide examples of waste that could be cut without endangering patients and, in most cases, actually improve patient safety.

Another consideration that proponents of universal coverage often overlook is that while many patients die each year from lack of health care, perhaps 45,000 or so, it is also true that our current health care delivery system injures hundreds of thousand patients annually through medication and surgical errors along with misdiagnosis and inadequate treatment, killing perhaps 200,000 of them. It is certainly dangerous to be excluded from the health care system through lack of insurance, but inclusion is no guarantee of safety or security either. We need not just universal health care availability but universally improved quality of care, as well as greater emphasis on preventive and early interventional care with less emphasis on last-ditch heroics and prolonged attempts at salvage when any realistic hope for recovery is gone.

There is a simple ethical test for what constitutes appropriate health care. Anything that extends life or improves the quality of life should be considered beneficial; anything that prolongs death should be considered harmful. The economics of health care follow that dictum; extending life is relatively inexpensive and generally rewarding, while prolonging death is very expensive and seldom worthwhile. It is this revolution in thinking that we as a society need to embrace, that not every possible measure should always be undertaken and that utilization of every available treatment regardless of cost is not just an invitation to waste but also an invitation to needless suffering and too often a premature death. It may seem off-putting, and to some ears even barbaric, to forego heroic treatment but from a standpoint of human suffering it is in fact the kindest and most humane approach. From a practical economic standpoint, it is simply all we can afford.

The film about Mahan’s work, produced by Academy Award winning filmmaker Alex Gibney and directed by Andrew Fredericks, can be viewed online between now and mid-November thanks to funding by a consortium of organizations including Consumers Union and the non-profit San Francisco based distributor California Newsreel. Everyone interested in the issues underlying health care costs and our current dysfunctional health care system should take the time to watch it and, if possible, read the book.

Mahan’s approach is not a perfect critique and her recommendations may in some ways be flawed, but this is an enormous challenge and there may well not be any perfect answers. What she offers though is solid research and provocative thinking, and that at least is better than the drivel being hyped on most of the airways and chewed over in far too many blogs these days.

An interview of Mahar by Terry Gross is here, one with Sam Seder is here, and a brand-new debate segment on Lou Dobbs is here. Mahar’s blog, Health Beat, can be found here.


One response to “Maggie Mahar’s “Money-Driven Medicine” and the American Health Care Revolution

  1. Pingback: Maggie Mahar’s “Money-Driven Medicine” and the American Health Care Revolution « Graham Firchlis has a blog

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