Where will the healthcare debate lead us?

Editor's Note: Welcome to Medical Economics' blog section which features contributions from members of the medical community. These blogs are an opportunity for bloggers to engage with readers about a topic that is top of mind, whether it is practice management, experiences with patients, the industry, medicine in general, or healthcare reform. The series continues with this blog by Ken Fisher, MD, who is an internist/nephrologist in Kalamazoo, Michigan, a teacher, author ("Understanding Healthcare: A Historical Perspective") and co-founder of Michigan Chapter Free Market Medicine Association. The views expressed in these blogs are those of their respective contributors and do not represent the views of Medical Economics or UBM Medica.

There has been much discord as to the proper role of government in healthcare.  Should the government purchase compulsory care for its population?  Alternatively, should the government provide means-tested funds for individuals to purchase care and catastrophic insurance on the open market, making sure all have access?  This would promote individuality along with the patient-physician relationship.  It would be in society’s interest for ALL Americans to be as healthy and productive as possible thereby increasing gross domestic product and thus everyone’s standard of living.

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For those wounded in our many wars there has been broad acceptance that the government should provide access to care.  This has been provided in government facilities. Due to recent VA scandals, some veterans have been given funds to obtain care in private facilities.

The tax-exempt employer health benefit was introduced during World War II to attract workers into factories to augment their price-controlled salaries. The tax-exempt status was codified by Congress in 1954 and became a widespread benefit.  It quickly morphed into pre-paid healthcare along with its huge bureaucracy and attendant inefficiencies.

Dr. Fisher

In Congress, from 1943 till the passage of Medicare/Medicaid in 1965, various plans were submitted to provide healthcare to those in need that reflected different political philosophies. Some wanted all Americans covered by a mandatory government benefit through Social Security. Most nations after World War II adopted government-directed healthcare as a tax-supported benefit.             

Others proposed a means-tested benefit to fund that care. The best chance of passage for this idea was in 1948; a coalition of Republicans and Southern Democrats championed the Hill-Aiken bill that planned to provide subsidies to the states for means-tested support for those in need to purchase private insurance. It stalled in committee because of President Harry Truman’s objections. In the early 1950’s a bill was signed providing federal funds for states to provide means-tested care for the poor, which in most states was poorly administered and ineffective. The problem festered due to the conflict between those who wanted an individual versus those who wanted a government directed solution.    

Next: Give all Americans a choice

The assassination of President John F. Kennedy and the Democratic landslide in 1964 allowed for the passage of Medicare/Medicaid as an amendment to the Social Security law.  As a third-party payment system, it has a burgeoning bureaucracy, uncontrollable costs, interference in the patient-physician relationship with overwhelming physician reporting requirements, excessive lobbying by special interests, changing demographics causing financial strains and politicians at the center of healthcare. Multiple attempts to control costs have been unsuccessful.

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The American Medical Association (AMA), during this decades-long healthcare debate, was rigid and unhelpful, resolving in 1920 against any form of government-funded care. They were concerned that a government-funded benefit would greatly impair the patient-physician relationship. They adamantly lobbied against the passage of Medicare/Medicaid in 1965, despite the need to care for the elderly and poor. The problem was that no compromise solution was offered to meet this need. This could have been done with means-tested vouchers to pay for routine care along with catastrophic coverage. Since the passage of Medicare/Medicaid, the AMA seems more interested in being a lobbying presence in Congress rather than a defender of its once sacrosanct patient-physician relationship.

Despite this vitriolic debate between those who defend a government-dominated, mandatory system and others wanting more individuality with means-tested support, the people of our nation have been providing the solution. The growth of health savings accounts (HSAs) created in 2003, taking advantage of the tax laws and directing one’s own care, has been robust. The number of participants grew to 4.5 million in 2007 to 21 million Americans in 2017, with total assets of $42.7 billion. Another grass roots phenomenon has been the development of direct contracts with physicians providing comprehensive care, laboratory tests and drugs at far less cost.  With direct care physician overhead decreases significantly. At this time, about half of our states have passed laws stating that direct care contracts are NOT insurance. If considered insurance it would destroy the model because of the need for large reserve funds.   

Presently, there already exists adequate government spending to provide means tested federal and state deposits for ALL Americans who wish to participate in tax advantaged HSAs. These accounts should by Congressional action also be able to pay for nationally available catastrophic insurance, routine care and direct physician contracts.  Those who wish otherwise could stay in the present system.

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This would be an American solution to a difficult issue. Let individuals decide the style of healthcare that best meets their needs.

Giving all Americans the choice of a payment or a benefit in healthcare would be a uniquely American solution with its emphasis on individuality.