In Managed Care, Putting Patients First Is More Important than Choosing One Model Over Another

Abstract

There is no question that healthcare is evolving rapidly. The question is whether anyone can foretell exactly what the healthcare delivery paradigm of tomorrow will look like. Evolution is likely to be a more complex process than Michael Sachs seems to suggest, and he appears to have underestimated the ability of today's health plans to anticipate and adapt to tomorrow's needs and expectations. Forecasting the future of an economic sector as inherently complex as healthcare is undeniably difficult. Ten years ago few analysts were predicting that managed care health plans would be providing care to the majority of Americans by 1997. Five years ago it was unclear whether policymakers at the national level would give their blessing to a marketplace model of healthcare or opt for a more centralized, government-administered model, which at the very least would have changed the course of events by creating significantly different incentives and disincentives for those involved in organizing and delivering healthcare. A longrange forecast based on reasonable but erroneous assumptions about the outcome of the 1993-94 national healthcare reform debate would be of limited value today, just three years later. The moral is that forecasting, while essential for strategic planning, has inherent limitations imposed by the complexity of the subject and the number of variables involved. Things should be made as simple as possible, Einstein said, but not simpler. Mr. Sachs, in attempting to describe the healthcare paradigm of tomorrow, appears to downplay the very real probability that there will be a variety of paradigms. The baseline fact from which all current healthcare forecasting must proceed is that healthcare in the United States is predominantly purchased not directly by consumers but by their employers, largely as a result of the fact that employers during World War II, facing a wartime shortage of skilled workers, were not permitted to compete for them by raising wages (which were frozen but were allowed to offer attractive fringe benefits, such as health insurance. Thus, the dynamics of today's healthcare financing system continue to be driven, in large part, by the system's origins a half a century ago as an unplanned by-product of wartime inflation controls. This model of employer-financed healthcare did not initially encompass incentives for quality improvement or cost containment. Philosophically and as a practical matter, both were largely beyond the scope of conventional insurance. The earliest and most primitive version of employer-provided healthcare was basically a blank check: If the particular treatment or service was covered, it was paid for. Perhaps an argument can be made that under this model the consumer had the best of all possible worlds, but that could have been true, if at all, only temporarily-until overutilization of healthcare resources led to an inevitable collision between healthcare costs and other corporate commitments, principally wages. When that collision took place in the 1980s, employers turned increasingly to health plans for a solution. It should be emphasized that from the beginning, managed care has offered more than the ability to contain costs. Pioneering health plans such as Group Health Cooperative of Puget Sound and Kaiser Permanente had long since proved that a system of comprehensive benefits and coordinated care could work to the advantage of employers and employees alike. But in the 1980s, increasingly desperate to reduce their exposure to ever higher and more unpredictable expenses, many employers had to make it their first priority to bring year-to-year increases in costs under control. Health plans accomplished that initial objective largely by squeezing much of the waste out of the healthcare system. As was widely recognized, the old fee-for-service, purchaserpays-all system had created powerful incentives to fill hospital beds and to over-rely on specialists. …