Dr. Rakesh Ahuja/Wikimedia Commons
The health-care debate has focused on why medical costs, decade after decade, have increased far faster than other goods and services, as if the laws of inflation don't apply to medical services. Various explanations have been advanced, but three circumstances, and their synergy, have largely escaped attention. The first of these is our society's propensity to pay for things without regard to utility. This is illustrated by what might be called the cataract test.
In the early '90s, while living in Europe, I developed a rare eye disease that among other things led to a cataract in the affected eye. Fortunately the disease had bypassed the other eye. Still, it chastened me to learn that the public health system would not approve a cataract operation in the sick eye: a person with one healthy, cataract-free eye could live more or less normally, and therefore had no entitlement, I was told, to a procedure underwritten by the public sector. The socialized healthcare system covered only the minimum needed for utilitarian purposes.
Years later, once the disease had rendered the affected eye useless in any event, I came to agree with the logic. Being half-blind hasn't diminished my access to a driver's license, for example, in any of the several states I've lived in since returning from Europe.
Be that as it may, the health insurers I interviewed recently all stated that their policies would have covered the surgery — “lens, prosthetic (intraocular) with cataract extraction, one-stage, with second eye healthy,” to use the official terminology. They also stated that they would pay for such exotica as frequent urination and chronic fatigue syndrome, or “yuppie flu” (conditions I myself have “suffered” from, but whose classification as diseases leaves me bemused), assuming “medical necessity” — a very malleable criterion in a society where someone is trying to profit from virtually every facet of medical care.
It is hard to resist the conclusion that health insurance is trending toward covering more and more conditions and procedures, at more and more expense. Those diagnoses and procedures are catalogued in an arcane, periodically revised set of codes known as the international classification of diseases, or ICD. The latest revision of this lengthy roster will make it much longer still, going from 17,500 to 140,000 codes. But Rhonda Buchholtz of the AAPC, medical coding's professional association, says that the new ICD will add only specificity, not new diseases and therapies; the one code for an ankle sprain will become 72, for example.
The revision could perhaps best be described not as an expansion, but as a translation into a more detailed language. More to the point, however, the ICD cannot include procedures that do not yet exist; nor can it anticipate what conditions future medical researchers might “discover” to be pathological. MRIs didn't have codes before their development 40 years ago. (They now have nine.) The ICD's 1965 version made no mention of chronic fatigue syndrome. Medicine is an expanding universe, forever entering new realms.
President Obama's health-care reform act remains an uncertain factor in these developments, but it is difficult to argue that it will shrink the scope of recognized, insurable care. As Marianne Udow-Phillips of the Center for Healthcare Research & Transformation has pointed out, no one can say whether fertility services and eating disorders, to cite two rubrics, will acquire the status of “essential benefits,” as defined by the reform statute, and therefore become legally required elements of health insurance.
We can assume that lobbyists are lining up to tip the decision-making process toward the ailments and procedures they (so to speak) champion. Whether the ultimate decision-maker, the U.S. secretary of health and human services, “will be able to be conservative is a real question,” Udow-Phillips opines. “Politically, it is easier to be more comprehensive when it comes to benefits than to limit the scope of coverage.”
The steep curve of medical inflation thus appears to involve more than the habit of buying. The second factor — this proliferation of innovative procedures and capabilities, and of new diagnoses — is peculiar to only certain sectors, the medical industry among them.
Medicine exists because of factor three: Fearing death and disease, we seek longer and healthier lives. Medicine's capacity to answer that longing is always increasing, and that allows medical marketing to reach ever further (and with ever-greater cunning) into our lives, and into our conceptions — even fantasies — about what our lives, given our ability to pay, might be.
Medicine thus differs fundamentally from potatoes and restaurants and real estate, which are less susceptible to those last two factors.
“If someone sees the ad for the purple pill on TV,” says Jim Stevenson, communications director at the Washington State Health Care Authority (HCA), alluding to the acid-reflux drug Nexium, “if they see the brand name being advertised, if they go to a medical provider, the provider has not had the tools to convince the patient to accept a cheaper medicine.
“Thirty percent of what goes into healthcare today goes into treatments that don't work,” Stevenson adds, citing a Dartmouth College study.
The HCA manages numerous state health-care programs, including Basic Health, the insurance program for low-income Washingtonians.
Stevenson sent me a document laying out the state's so-called Global Medicaid Modernization Initiative. The dense, 17-page treatise was completed last month and sent to Kathleen Sebelius, U.S. secretary of health and human services, with the enthusiastic support of Gov. Chris Gregoire. The governor sent it to the other Washington to ask for regulatory flexibility to test possible improvements in our state's publicly financed health-care programs.
The flexibility would, among other things, give the state more power to refuse payment for dubious treatments and procedures, in favor of “a system that pays on the basis of quality of outcomes instead of the number of medical procedures performed.” The state would also be able to “revise public coverage to include payment for new services…only when there is supporting evidence of clinical value.”
“There are lots of new treatments that appear, lots of new technology, but I don't think that in the past that it's gotten the scrutiny it deserves, and we're trying to reverse that,” Stevenson says. “And that's true of the insurance industry generally.”
The durable model of the U.S. medical industry — the payment of a fee for a service — is at the heart of the problem, in his view. “In the long run,” he says, fee-for-service “has paid for a volume of treatment without necessarily good outcomes.”
But all this is a bit off the point. Fraud, corrupt business models, and the propensity for lawsuits are established, perennial factors in the medical industry just as in the rest of the economy. What we need to know is which factors led to this fact reported by the Bureau of Labor Statistics: The nation saw a 1.4 percent inflation rate in its overall consumer price index (CPI) in 2010, but a 3.3 percent boost in its health-care CPI.
In trying to resolve that question, I keep returning to the combination of the factors outlined above, and the expansion of medical possibilities in particular. Those factors appear to add up to a statistical wild card, producing a more exponential curve. In a nation as driven by marketing and money as ours, the constant expansion of medicine's reach is a goose with a limitless supply of golden eggs.
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