Yes, Mr. President, health care is complex

Posted March 9

Last week, during a White House meeting with the nation’s governors, President Trump discussed his plans to repeal and replace Obamacare. Expressing a measure of exasperation at the intricacy of U.S. health laws, Trump said, “Now, I have to tell you, [health care] is an unbelievably complex subject. Nobody knew health care could be so complicated.”

When I read these words, two thoughts crossed my mind. First, it’s pretty clear that Trump does not have a lot of direct experience working in the U.S. health care system (believe me, there are millions of Americans who do work in health care who know just how frustratingly complex the system really is). Second, I felt a measure of hope that Trump and his administration are beginning to understand that, when it comes to health care reforms, both prudence and precision are required.

Over the last several years, Obamacare has entwined itself into the tissues of our health care system. It will come as no surprise to the readers of this column that I have serious concerns about Obamacare’s impact, particularly the instability it has introduced to the commercial health care insurance market. House Republicans will try to repair this damage with their own sweeping reforms. But with every major political foray into the health care industry, it is the unintended, unforeseen consequences of such efforts that keep me up at night.

The health care market is, indeed, unbelievably complex. It is a market with deep — perhaps unbridgeable — asymmetries of information; around diagnoses (there are more than 68,000 different diagnosis codes doctors are expected to use to identify health issues), appropriate courses of treatment (treatments are as varied as the diagnoses), and cost (each treatment has a different charge, all summarized in inscrutable “explanation of benefits” forms).

It is a market where quality is exceptionally difficult to measure objectively (each patient presents a unique set of problems, and treatments are customized to their individual needs).

It is a highly fragmented market with thousands of independent providers practicing medicine without adhering to common, evidence-based standards and with often-perverse financial incentives.

It is a market with hundreds of suppliers, many of whom exercise significant (often monopolistic) control over prices (especially pharmaceutical companies).

It is a market where customer demand is highly inelastic, meaning huge increases in prices do not significantly lower demand for services (when you are having a heart attack, you are not likely to shop around for the best emergency room prices; your willingness to pay is highly correlated with how likely you are to suffer and/or die from your condition).

Finally, it is the most regulated market in human history, feeding an entire sub-economy of compliance officers and lawyers who (at great expense) try to assist health care providers in navigating through the regulatory reefs and squalls that beset the industry.

I know that many Republicans are anxious to repeal and replace Obamacare. I understand and feel the same urgency. But it will take careful, surgical precision to extract Obamacare from our health care system without killing the overall commercial health insurance market. The simple fact is that Obamacare over the last several years has fundamentally altered that market. The majority of the millions of Americans that purchase health care insurance on the government sponsored exchanges once had insurance through their employers. Today, many of those employer-sponsored plans no longer exist. It will take some time for the commercial insurance market to adjust, recover and heal. So to President Trump and the congressional Republicans, I hope they will apply the Hippocratic oath to their Obamacare repeal and replace efforts. Primum non nocere. First, do no harm.


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