The Three Legged Stool of Government, Evidence Based Medicine and Markets in Insurance Reform

The Disease Management Care Blog attended a quarterly meeting of its county medical society tonight. Once again, it came away impressed with these physicians' depth of knowledge and sophistication about health reform. Unsurprisingly, one big topic of the night was the on-again, off-again 21% cut in Medicare physician payment rates. My colleagues were well aware of how we got here, understood the difficult politics and voiced their preference that they not go through a huge pay cut. Yet while there was dismay in the room over just how broken the political process is (if the AMA and the President can't deliver, who can?), the DMCB also detected something much deeper going on.

Almost no one seems to disagree that 'insurance' i.e., the pooling of risk, maintaining reserves to adequately transfer risk, maintaining a buffering surplus and covering administrative fees is a bedrock approach to financing health care. The perception of the brokenness is over how three key viewpoints are interacting over deciding how to deal with a strained health insurance system:

Government: With statutes, regulations, policy, enforcement and seeking redress in the courts, government has to balance oversight versus active management of the insurance industry, including the benefit design, underwriting, pricing and payment.

Evidence-Based Medicine (EBM): This says rational science can guide the allocation of resources in mitigating risk, based on a dispassionate understanding of clinical and cost effectiveness. It has its limits however, since much of clinical medicine is not evidence based and the real challenge is to translate what we already know into actual practice.

The Market: It's up to individuals, or blocks of individuals, to decide on the content of the risk transfer, the price they're willing to pay and which insurers they're willing to do business with. That's assuming, however that the market can be made sufficiently transparent and that persons will take as much time to research their insurance choices as they do in selecting a high definition TV screen.

What the DMCB witnessed tonight among the docs was a thoughtful understanding of how all three approaches are simultaneously necessary and complimentary. From time to time, government has to step in (when markets fail and individuals are facing double digit increases), science should always inform what should be covered (coverage of mammography is a no-brainer) and consumers should be able to make informed choices if it's their money (for example, the DMCB has a health savings account and is planning accordingly). The real work of a competent society is to get all three to add up to a functional system of coverage that is greater than the sum of its parts. Each may have an increased role from time to time, but in general, all three have to work together.

Like a three legged stool, over-emphasis of any single approach can be unstable. Government can meddle by mandating unrealistic premiums and bloated benefit designs. EBM can torpedo mammograms for women under age 50 or decide that certains forms of chemotherapy should not be offered. The market has certainly demonstrated an unending ability to screw unsuspecting consumers with products that strain the definition of insurance.

The DMCB personally thinks that a perfect storm of unsustainable demand for more and increasingly expensive health care services is tilting the stool toward an ascendant role of government. While that may be our best hope to fix the health care mess, the DMCB wishes that the current debate did a better job of considering novel ways to use EBM and the market. Maybe that's too boring and doesn't appeal to our media besotted advocates at the extremes of the political specturm. The DMCB says too bad.

The good news is that there is a clutch of physicians in a county medical society who get it. There are undoubtedly others in other groups of professionals, informed citizens and voters in town halls, living rooms and service organizations. That makes the DMCB more optimistic over the long run.