Before moving ahead any further on a health care overhaul, the president and members of Congress should stop and read Roger Battistella's new book, Health Care Turning Point. It won't take long; the text of the book is a slim 134 pages. But those pages are packed with facts and analysis that have the potential to change the way readers think about health care. I learned a lot from it, and I thought I already knew a lot about health care.
Mr. Battistella, emeritus professor of health policy and management at Cornell University, frames his argument as a critique of proposals for a single-payer system, in which the government would pay for everyone's health care. But there are all sorts of useful insights here even for those who were skeptical of a single-payer system to begin with. The book is not mainly directed at the debate over ObamaCare, though those interested in that debate and involved in it will find much that applies.
I was left impressed that Mr. Obama's plan has managed to get as far along as it has, given the budget constraints. Just maintaining Social Security and Medicare at current levels would require an increase in the combined payroll tax to more than 50% in 2030 from the current level of near 15%. Mr. Battistella essentially makes the case that America can barely afford the existing entitlements, let alone set up new ones.
The existing federal health care programs have their problems. A Harvard professor, Malcolm Sparrow, estimates that as much as 20% to 30% of federal health spending is consumed by fraud, the book says.
More generous federal health benefits, Mr. Battistella suggests, would only invite more fraud. He offers the example of Sweden: "During recent World Cup soccer finals sick leave among Swedish men rose by 55 percent." In Italy, in 2005, state employees took an average of 18 days sick leave, while workers in America average five sick days a year. The definition of "sick," in other words, is readily expandable along with government benefits.
The examples of countries other than Sweden and Italy aren't much more encouraging. In England, tens of thousands of patients were told they'd have to wait a year for heart, cataract, or joint replacement surgery. In Canada, the Supreme Court ruled that a ban on private health insurance was unconstitutional.
Not that the current American system is perfect, by any stretch. Even outside Medicare and Medicaid, health care maintains characteristics of what Mr. Battistella calls a "cottage industry." Where the trend in much of the rest of the economy is toward scale and consolidation – Wal-Mart, big law firms, big banks – "over 40 percent of physicians practice in groups with fewer than six colleagues while one fourth of all physicians practice solo."
Our health care system can be downright dangerous; medical errors are either the third or the eighth leading cause of death in America, some of them related to problems as simple as the continued use of hard-to-read handwriting on prescriptions and medical orders. Even the low-range estimate of medical errors places them ahead of car accidents, breast cancer, or AIDS as a cause of death, the book says.
Think the banks are the biggest lobbyists in Washington? Nope. According to Mr. Battistella, since 2006 the health industry has spent more on lobbying than any other sector of the economy.
So how to improve upon this mess? Not with central planning or control, Mr. Battistella advises: "The sheer complexity of real world conditions surpasses the capacity of experts and their analytical models, no matter how brilliant or sophisticated they are."
When dealing with obstinate interest group opposition, "improvements occur faster and with less acrimony when left to market competition than if the same objectives are sought through legislative edict or planning regulations," he writes.
Among Mr. Battistella's predictions: "employers will seek to follow the precedent established with pension benefit programs and transform health care from a defined benefit to a defined contribution plan in which vouchers are an important component." The Federal Employee Health Benefit Plan already functions somewhat like a voucher; the author explains that, "when individuals select a plan with a premium less than the government's contribution, they keep the difference. Conversely, if they chose a more expensive plan, they pay the difference out of their own pocket."
Runaway health care spending will finally be curbed, he writes, only when consumers start being "intimately involved in paying for the cost of their care rather than relegating payment to a third party." Those consumers "need access to user-friendly reliable price and quality information on specific providers to enable knowledgeable comparisons."
In the area of quality information that will help enable knowledgeable comparisons, Mr. Battistella has, with this book, made a formidable contribution of his own.
Disclosure: My father had Professor Battistella as a teacher at Cornell and they have kept up over the years.
