Health Care, Linda Gorman, Obamacare

Book Review: Myth Busters, Why Health Reform Always Goes Awry

In a new book aimed at anyone who wants to have the knowledge to evaluate what people are saying in the state and national health care debates, nationally known health policy expert Greg Scandlen provides clear, concise, common sense explanations of why generally accepted health policy ideas fail the reality test. A good guide to separating fact from fiction in the ideological battleground of US health care policy, Myth Busters: Why Health Reform Always Goes Awry provides the basic information needed to evaluate policy proposals and a useful roadmap for unwinding the policy mistakes of the past.

File photo - Todd Shepherd
File photo – Todd Shepherd

The book covers 30 health care myths, ideas widely believed to be true even though they are false. Unfortunately, these myths underlie the policy initiatives at the root of the last 50 years of US health care reform failure. Promoted by able advocates who failed to look at all the evidence, rarely questioned their own assumptions, and succeeded in marginalizing their critics, these ideas are costly to comply with and contribute nothing to patient care. Scandlen argues that they are behind the growing regulatory colossus has made US health care far more expensive than it should be.

Presented in rough chronological order, each myth comes with three or four pages of explanation. They range from “Roemer’s Law,” an “if you build it they will come” misunderstanding that was the basis for Certificate of Need regulation, National Health Planning, and Hospital Price Controls, to the discovery of uncompensated care and the resultant hysteria over the uninsured.

Mr. Scandlen gives examples of how this happened. Uncompensated care was about 6 percent of hospital payments in 1978. It was about 6 percent of payments in 1997. Retailers lose more than that to shoplifters. It became a crisis when academic health policy researchers discovered it around 1984. The only way to solve the “crisis” was to insure everyone. This made the number of uninsured a crisis even though the percentage of people without coverage was stable at roughly 16 percent for every year from 1987 to 2010.

The section describing the malign effects of the 1974 Employee Retirement and Security Act (ERISA) provides a concise explanation of a complex law. ERISA exempted multi-state employers from state pension and health insurance laws so that they could provide the same benefits to their employees in all states. Never mind that they managed to cope with different state rules on wages, taxes, building permits, and environmental restrictions, or that ERISA also covered companies operating in one state if they were large enough.

ERISA protected employer insurance plans from lawsuits by people injured when health plans denied their claims. It insulated large employers from any effects of state insurance regulations. When the wave of insurance regulation swept through the states in the 1980s and 1990s, only insurance companies, small employers, and the individually insured had an interest in resisting new mandates and new regulations.

“Insurance companies are easy to revile and small employers don’t have much political influence,” Mr. Scandlen explains, “so it was ‘Katy bar the door,’ and costs soared, leaving many people without coverage.”  This, he believes, is a prime example of “Washington’s policy elite screwing things up and escaping any responsibility for their actions. The insurance companies got blamed for raising prices and the politicians got off scot-free.”

The myth that fee-for-service payment is inflationary because encourages physicians to prescribe more services is compared to the demand for roof repairs, computers, legal services, and tax accountants. As in health care, the average person knows little about any of these services, and though all are paid for on a fee-for-service basis, no one claims the way legal services or computers are purchased is a national crisis.

Mr. Scandlen explores claims about the benefits of bundled payments and observes that the only other system in which bundled payments has been almost universally deployed is higher education. It, as everyone knows, has a worse cost inflation problem than health care. Value Based Payments, the latest panacea for health care costs being promoted by academics, is explored and summed up with the observation that “even with the same cost and the same medical outcome, the ‘value’ of a service will be different for every patient” just as the value of a luxury car is different for every car buyer.

Then there’s the population health myth, a concept accurately described as including “everything under the sun” and dreamed up by people who are bored with the messy process of dealing with one person at a time, “especially when actual people are not very pleasant to deal with.” Population health experts advocate spending a little bit of money on preventive care but forgoing organ transplants to get “an improvement in the health of the population at very low cost.”

Mr. Scandlen is an independent expert on health care who pulls no punches in laying out his unique perspective on health care reform. Myth Busters is well worth the investment in time and money.

Linda Gorman is Director of Health Care Policy at the Independence Institute, a free market think tank in Denver.


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