Getting beyond band-aids

Health-care reform should be comprehensive and restrain demand

RALEIGH -- Since my job is to take care of everyone who falls through the ever-widening cracks in our heath-care system, I've been encouraged to see that the presidential campaign run-up has re-ignited the debate over universal coverage. But no one seems to have any really new ideas -- it's the same old piecemeal proposals all over again. If we're going to do this, there's no sense pasting Band-Aids on a patient with life-threatening wounds.

In my 20-plus years in the ER I've learned a few things about what makes people go to the doctor. So here are one doctor's thoughts from inside the system about what might work and what won't.

Start with the premise that whatever we do must be comprehensive. It is an embarrassment that in a country as wealthy and advanced as ours, nearly 50 million people have no regular access to basic health services. Tinkering around the edges by extending coverage to a few favored groups will not get the job done. That approach might be politically more appealing and easier to fund, but too many people will still be left out. Either we act boldly or we shouldn't waste the effort.

Universal coverage offers the dual advantages of fairness and simplicity. The substantial costs of medical underwriting would be eliminated, and the risk of catastrophic expense would be spread over the entire population -- which is the point of insurance anyway. A federally mandated system of coverage, open to all, is a must.

THE BIG QUESTION IS HOW TO PAY FOR IT. Here, too, the solution must be broad-based, and there's only one source big enough, namely a payroll tax.

Before you reject this, think about it for a second. For most people, such a tax need not result in any loss in take-home pay. A payroll deduction eliminates the need for employers to withhold salary dollars to pay insurance premiums -- money that should (by law if necessary) immediately flow through to workers to offset any new levy.

For people who earn too little, refundable tax credits would reduce the burden. For higher earners, the payroll tax could be phased out above a certain level (as with Social Security), or these individuals could opt out with proof of private insurance. Such a system assumes that anyone who can work, will -- an expectation that we have already embraced in recent welfare reforms.

The next question is how to administer benefits. To preserve price competition we must maintain free choice, which means continuing our multi-payer system.

Government as a single payer might seem appealing, but such a setup would be coercive to physicians -- stifling innovation, depressing morale and productivity (just look at the Army or VA systems) and accelerating the early retirement of our most experienced physicians. A federal bureaucracy acting as a monopoly would also have little incentive to please consumers.

The solution is standardization. A limited number of defined benefit plans, with companies competing based on ease of claims and access to desired providers, would promote consumer-friendly behavior. Everyone gets basic coverage, with employers free to subsidize more comprehensive plans as an inducement to valued employees. Employees would decide which insurer to direct their health-care dollars to, and providers would retain the option to reject a bad contract.

With just a few plans, everyone would know what was covered and what wasn't, so claims processing would be simpler and less costly.

FINALLY -- AND THIS IS THE KEY -- THERE MUST BE TRUE COST-SHARING. More than any other factor, it is the relentless demand for services that is driving the explosion in health-care costs in this country.

We can't change the demographics of our aging population, but absent some restraint on demand, no new system of coverage can succeed. We've learned that external controls on utilization, a la managed care, do not work. They're expensive to administer and people will go to great lengths to circumvent them.

The only solution is significant cost-sharing for services -- not so much as to discourage people from seeking help when they're really sick, but enough so that every individual has a stake in the game. Each of us must ask ourselves, "Do I really need to go to the doctor right now?" Every dollar spent on unneeded services means that someone else has to go without.

Right now, with the best- and worst-insured among us largely shielded from the cost of medical services they consume, there is no incentive to restrain one's use of scarce resources.

Some may object to having to spend their "own" money for treatment, but I can't overemphasize the importance of true-cost disincentives. As long as an ambulance ride to the ER costs less out-of-pocket than a bottle of Tylenol at Wal-mart, all attempts to reform other aspects of the system will founder.

So there you have it -- one doctor's prescription for what ails us. Think big, maintain free choice and make everyone responsible for the decisions they make. Seems simple enough. Is there a leader tough enough to deliver some strong medicine?

(Victor Lerch, M.D., is an emergency room physician who lives in Raleigh.)