In The New York Times editorial today, “Obama’s Other Surprise,” Thomas Friedman says:
Obamacare is based on the notion that a main reason we pay so much more than any other industrial nation for health care, without better results, is because the incentive structure in our system is wrong. Doctors and hospitals are paid primarily for procedures and tests, not health outcomes. The goal of the health care law is to flip this fee-for-services system (which some insurance companies are emulating) to one where the government pays doctors and hospitals to keep Medicare patients healthy and the services they do render are reimbursed more for their value than volume.
Friedman continues by saying that entrepreneurs are developing applications that sift through mounds of data to find the best health outcomes. Thomas Friedman is half right. While I am not sure what notion Obamacare is based on, other than what might have been politically possible, it is true that our incentive structure is wrong. We do need to stop paying for fee-for-services, and that is part of the problem. The other problem is the for-profit insurance industry, which has high administrative costs and attempts to avoid paying for clients’ medical care. The solution is a single-payer system that establishes global budgets for health care providers. This would still leave the market open for entrepreneurs because medical providers would want the most effective care to lower costs.
Our national health care cost as a percentage of GDP is currently at least 50 percent greater than any other nation. To reduce these costs, we need to eliminate all unnecessary expenses, whether they are unnecessary medical procedures or unnecessary administrative expenses caused by insurance companies that increase costs without adding value. Currently, 84 million people will be without health insurance at some point this year.
A single-payer system would cover everybody and reduce costs providing the best and only viable solution to our current and future health care dilemmas.