This week's White House session on reforming America's health system marks the end of the beginning of a simple idea that has finally become a key part of the debate -that a massive amount of our medical spending is wasted and explains why we spend more and are less healthy than people who live elsewhere.
This is a big idea. Experts estimate that costs could be cut by at least 30% if we could stop doing things that don't work. For years, it has been obscured by other issues (like how much we spend on administrative costs) and a misguided perception that the real problem was that many people were being denied the care they needed because they couldn't afford it. Meanwhile, our national health bill rose to an international record, exceeding 16% of our national income.
This idea has been quietly kicking around since Reagan's election. Its transformation to something that seems both intuitive and inevitable has not come easily. At this pivotal moment when our focus shifts from whether this a good policy to how to implement it, a short history of the process might help others in the policy arena wrestling to gain public acceptance for their ideas.
The father of this idea is a Dartmouth physician named John Wennberg, who in the early 1980s was surprised to learn that amount of care delivered for any given diagnosis differed significantly from one geographic area without impacting health status. In other words, the fact that doctors did twice as many tests and procedures in one place didn't help their patients.
Coupled to that idea, based on research initially done in Boston and New Haven, but subsequently replicated all over America, was the realization that demand drives supply in medicine. In an area with many hospital beds, patients were much more likely to be hospitalized. And in an area with many doctors, people tended to see doctors more often. But using more resources didn't make people healthier
Wennberg didn't initially opine publicly about the optimal level of care, although he wasn't hesitant to speculate privately that it was toward the low end of the spectrum.
The data became increasingly rich as the Dartmouth operation surveyed state after state. In recent years, it began to compare Medicare spending and detected the same pattern. And it undercut suspicions that cutting edge institutions tended to do more, spend more and save lives by comparing costs at respected marquee institutions ranging from the Mayo Clinic (cheap), to Johns Hopkins (more expensive) to famous New York and Los Angeles hospitals (most expensive).
Researchers suggested that changing behavior using the low-intensity markets as a model would be a step in the right direction. Wennberg suggested that Medicare spending could be slashed by 30% without impacting quality with this strategy. But no one ever came up with an implementation strategy beyond suggesting that physicians would change their behavior if they were made aware of the data.
They have been very slow to do so. Some politicians believe that patients could drive this change if they were spending more of their own money on care and not totally insulated by insurance, but such consumer-driven efforts have made little progress. In the 1990s managed care efforts in this direction were rejected, perceived as insensitive strategies to save money by compromising care.
While the media was slow to pick up on the idea that the system was doing a lot more than needed to be done, journalists unsurprisingly found dramatic stories of patients denied needed care more compelling. The issue hovered in the background and surfaced occasionally, in articles like Reed Abelson's on an angioplasty factory in Elyria, Ohio, or Gina Kolata's about the high number of expensive scans that were useless.
Gradually the need for efficiency gained traction within Congress. Newt Gingrich with an appetite for technology and big problems, embraced electronic medical records as a way of avoiding duplicative testing and dangerous and expensive drug interactions. Hillary Clinton came to a similar conclusion. And the ousted Senate Majority Leader, Tom Daschle, wrote a book on health reforms that called for a federal agency that would certify what worked.
Meanwhile, Peter Orszag, an economic and political wizard who had worked in the Clinton White House became director of the Congressional Budget Office, where he quickly realized that spending restraint and balanced budgets were impossibilities as long as health spending went unchecked.
He responded by putting together a presentation which debunked some conventional wisdom (the health bill was rising because Americans were aging) and raised another facet of the efficiency issue. Costs were rising, Orszag concluded, because of growing intensity. Each year the response to any medical problem became more complex and expensive, without necessarily improving care.
The key, Orszag concluded, lay in funding research that would determine what worked and then driving the system toward meeting that standard.
When Obama named Orszag as his budget director and initially picked Daschle as his health reform czar and then proposed a stimulus package that would invest in electronic medical records, all the pieces were in place.
The conservative response which married Daschle's plan, Orszag's proposal, the spending on records technology and concluded logically that this could lead to a sort of cookbook medicine where government told doctors and hospitals precisely how to treat any given problem.
Betsy McCaughey published a piece making the link that was picked up by Rush Limbaugh and subsequently became the basis of a newspaper editorial warning that "instead of the human touch of a physician's individual diagnosis, patients get treatments on their ranking on statistical tables of data compiled by faceless bureaucrats with endless spreadsheets," which appeared to be a rather harsh view of what others see as evidence-based medicine.
All were portraying the idea as a threat, but their response completed the process of making it credible.