The Ryan Plan and the Affordable Care Act--can market forces improve quality and cost in health care?

In today's New England Journal of Medicine an article by Republican health policy analyst, Gail Wilensky, brought up several excellent points. The article is entitled "The Shortcomings of Obamacare". She points out that the Affordable Care Act does not directly address the forces that have lead to high costs and less than optimal quality in American health care.  She points out that physicians are paid according to a relative value scale that creates perverse incentives to do more procedures regardless of whether they work, and that this has not been addressed by the ACA. She says that if we want to use market forces, putting consumers in a place where they can have an impact on cost and quality of the care they receive, we should look to Paul Ryan's health care proposal.

So I did.

I read the version called "Summary of the Legislation" in a .gov site dedicated to the "Roadmap Plan" that is part of a republican budget. It is much simpler than reading the ACA. Perhaps if it is in the form of an actual bill it will also be 1000 pages, but I doubt it since it covers much less. It appears to be a tax and insurance reform that allows people to pay for health insurance with tax credits, and aims to transition medicare to a voucher system which gives medicare recipients an amount of money equal to the average cost for a year's healthcare on medicare to be used to buy private insurance. The medicare change would not go into effect until 2021.  People would be able to keep their insurance when they changed jobs, and insurance companies could sell coverage across state lines which would improve competition and maybe costs. There were also provisions for income tax reform and for privatization of social security.

The amount of tax credit that a person would receive was less than I pay for my super high deductible plan by a substantial amount, and my family has no health problems. A medicare voucher equal to what medicare pays out per person would come close to buying insurance for a healthy elder but would not approach the cost for someone with multiple medical problems.

But that isn't the big issue with the Ryan Plan. The big issue is what Gail Wilensky said in her article: market forces are not acting to reduce costs and improve quality. There is no way that market forces will do what they do so well as long as people depend on insurance companies to pay their bills. Dr. Wilensky implies that the Ryan Plan will do that, but it won't. With the Ryan Plan people would maybe shop smartly for health insurance, but even that is questionable. Health insurance companies are so good at misrepresenting their product that it would take a genius with nothing else to do to figure out which plan does what and for whom. But even if we were able to find cheaper, better insurance through the magic of the free market, we would still be financially detached from our actual health care. We would still continue to be seduced into more, better, fancier, technologically more advanced care which might but probably would not make us healthier.  This would happen, is happening, because insurance pays for these things, and it is always nice to get as much care as possible after paying a hefty health insurance premium. Doctors would continue to make more money for doing more stuff, but not for better outcomes. At least the Affordable Care Act, in its more than 1000 pages, has some provisions that would create incentives for doctors and hospitals to keep patients healthier.

Dr. Wilensky also says this thing that people say when they talk about what's wrong with our system: she says that it is a big problem that such a large number of people in America are uninsured. That just isn't the issue. The problem is that such a large number of people don't have adequate medical care. Many of these people are insured. Costs have gotten so out hand, due in part to the third party payment by health insurance companies, that the consumer's portion of the cost is still out of reach for many people. They can't afford to go to the doctor or buy the medicines they are prescribed because the out of pocket costs are just too high. There is also a looming primary care shortage which means that, even with money, many people who live outside of the metropolitan areas where doctors are plentiful can't get a good doctor at all.

What I see in hospital practice is that many patients are getting expensive procedures done that really don't work. A patient will get 3 or 4 cardiac stents put into minimally narrowed arteries when they were not really having troubles that couldn't be solved by taking a medicine or improving their lifestyle. These stents cause their own problems, require their own dangerous pills to work, and often cost hundreds of thousands of dollars. People get multiple ablation procedures for heart rhythm disturbances which don't work. People get joint replacements which don't reduce their disability. All of these procedures are life giving and wonderful when used appropriately, but since insurance pays for them and doctors, hospitals and medical device companies make lots of money when they are performed, many more are done than are truly beneficial.

I would like to see everyone get adequate medical care. Health insurance companies have been in the business of making money for themselves and their shareholders for a very long time. They are not our friends. I don't think most of them have the ability to be repurposed to help channel the truly adequate amount of money we presently spend on health care such that it buys health rather than the commodity of medical services. Community based cooperatives have the potential to do this. Transitioning to this would be slow and maybe painful, but ultimately so very worth it. We need to stop thinking of health insurance companies as the disagreeable but necessary body guard that stands between us and health care related financial ruin, because there are other options.