Health Care System in State of Disequilibrium, Costs Increasing, says Former Partners CEO

There has been a shift of power, he said, from payers–generally health plans, managed care companies, and insurance carriers–to providers, which are usually hospitals and doctors. Thier, professor of medicine and health care policy at Harvard Medical School, provided a brief overview of health care in Massachusetts in recent years.

"Payers were competing with each other for premiums, which had nothing to do with the cost of providing care," explained Thier. "For six or seven years, we saw a total six percent increase in premiums, but inflation in health care ran 30 to 35 percent. That put providers into a hole, and they had to adjust to come out of the hole, which is why we had such a steep increase in expenditures [and the closure of hospitals]."

Thier blames the increase in costs on the general level of national inflation, medical inflation, increased administrative costs, inefficiencies, the equivalent of taxes levied against providers, and an increased demand from consumers, including a burgeoning population of the underinsured and uninsured. The fastest growing medical expenditure is outpatient care, which is accompanied by the slowest growing expense payment to doctors.

"We need to figure out what it is we want to buy, and then how to pay for it," Thier said. But that may be easier said than done. Referring to an HSPH/Robert Wood Johnson Foundation/International Communications Research poll last year, Thier said that he agreed with the findings that "the public wants something done, but there’s no agreement as to what that something is." The national poll conducted by HSPH Professor of Health Policy and Management Robert Blendon found that the public supports universal health care but cannot agree on a single proposal. The poll found that every plan described in the survey was the first choice for about 20 percent of the people interviewed.

Health care in America has always been a two-tier system, Thier asserted. Led by physicians educated in England and Scotland, the U.S. system began with hospitals for those who could pay and alms houses for those who could not. After the Civil War, Harvard University, the University of Michigan, and the University of Pennsylvania opened teaching hospitals affiliated with their medical schools. Johns Hopkins University set the standard for medical centers, he said, establishing exceptionally rigorous requirements. Between the 1860s and the 1920s, the number of hospitals in the U.S. increased sixfold.

Tremendous advances in all sciences followed World War II, and that, in turn, drove consumer demand for access to top-notch medical care. The level of demand prompted the need for health care insurance, further driving a wedge between those who could afford the insurance and those who could not. Later, legislation created the Medicare and Medicaid programs. Still, Thier said, there was no ideological commitment to providing care for all.

Escalating health care costs in the 1970s and 1980s prompted the development of managed care, which eventually led to complaints of benefits denials and of coverage dictated by businessmen, not health care providers. A population of people went without any kind of health insurance. By the end of the last century, politicians were extending promises to "fix" the nation’s health care system.

Referring to the Clinton Administration’s efforts to reform the system, Thier said that officials were successful in attracting popular support and then failed to follow-through quickly, losing essential momentum and politically mismanaging the process.

If public opinion gets rallied, "you better get policy right behind it," he said. "Process is as important as product." He criticized the Clintons, in particular, for carrying out the process of reform "in camera," or behind closed doors.

Thier expressed outrage over the high number of uninsured in the country, approximately 18 percent of Americans, and offered a proposition for correcting the problem. His solution revolves around cost, commitment, and concept.

"Our system of care should maintain and/or restore the health of as large a proportion of our population as possible," he said. "When it cannot restore health, it should protect functional autonomy and relieve suffering."

He continued, "If we had agreement on the goals of a system, we could begin the debate on how to reorganize to meet those goals. We should ask who, what, where, and how health care should be delivered. When we need data to answer those questions, we would be defining one agenda for research. The more firmly we base our answers on evidence, the more strongly we can insist on performance measures."

A strong believer in the collection and use of data, Thier told public health professionals that some of the burden would fall on them to design the tools needed to test the organization of services, measure value, track access to and use of benefits, and develop pilot projects related to benefits, payment, and organization.

Thier sees a great need for increasing the nation’s investment in health care-related information technology, as well as for loosening the strictures of anti-trust laws that limit cooperation between providers to the detriment of payers.

"We must simplify administrative costs, reduce the dollars spent on anything but patient care, move to a no-fault/expert panel system [to adjudicate malpractice issues], and rethink drug and device pricing," he argued.

When Americans have "data-driven, competency-driven, efficiency-driven care" he said, "then we must invest in research and innovation, or the system will run down and stop."

Although a believer in reform, Thier said: "I am not a supporter of a single-payer system. When you have one provider and 200 payers, the payers have no leverage. When you have the reverse, the providers have no leverage."

On the plus side, Thier is pleased the medical community is finally admitting to its own mistakes and omissions. "I think we’ve behaved too much like a business and [need] to get back to the social contract," he said.

--PHC