Woody Allen would love the coming health care debate l Opinion

Woody Allen famously said “In life we have two choices, pestilence and annihilation or destruction and distinction. We must choose carefully”.

His quote is not a bad framework for the health care debate which will drone on for the next 18 months of the presidential campaign.

But before I go there, let me set the stage. You may read my earlier columns which comment extensively and offer factual arguments for the following conclusions:

There are plenty of dollars in the healthcare system to take care of everyone in the U.S.

Despite the focus of Congress, healthcare is not principally an insurance coverage problem, it is a cost problem.

The cost problem is driven by excessively high utilization and unnecessary administrative overhead. The use rates of tests and treatments in the U.S. are virtually two times all other countries on a per capita basis (e.g., MRIs, tonsillectomies, C-sections and orthopedic implants). These U.S. rates are driven by fee for service incentives. U.S. healthcare administrative costs are 15% when most advanced countries are 5%. This is predominant product of redundant administrative overhead in commercial health insurance.

So, we are left with two competing positions for the future of healthcare. The Democrats have moved almost universally to “Medicare for all.” Kamala Harris has punctuated that position by saying we should end private health insurance. The Republicans on the other hand have no plan. So, to put the Republicans on a better footing let me suggest that we compare the Democratic plan for “Single Payer Healthcare” through Medicare with an alternative plan which we will for this column call the “Right” plan.

Single Payer Healthcare would transition all individuals covered by private insurance to Medicare. It would aim to cover the 10% of the U.S. population which is not currently insured. This would accelerate the existing $3 trillion in annual healthcare expenditures by an incremental $300 billion per year. The economic model would remain fee for service because it is the only model through which you can micromanage access to specific services.

The “Right” plan would change the economic model from fee for service to a per member per month payment made directly to healthcare providers. This would fundamentally change economic incentives making providers much more concerned about “appropriate” and “necessary” care. This would reduce excess utilization of test, treatments and hospitalizations by $300 billion per year. Having healthcare risk assumed by providers would allow for the elimination of the redundant administrative overhead of commercial insurance companies, another $300 billion per year. (A total of $600 billion per year).

Governmentally run Single Payer Healthcare would increase taxes on those that have incomes in order to provide coverage for those who are unable to purchase insurance ($100,000 per year for the top 1%: 3 million people). The intent of this action would be to create equality of access and equality of outcomes.

The “Right” plan would allow the transfer of $600 billion in existing funds to be expended through Medicare/Medicaid and private healthcare providers to provide coverage and access to the uninsured. It would establish significant incentives to allow for profitability through innovation and reduction of unnecessary utilization.

In keeping with the Democrats’ trend toward socialism, Single Payer Healthcare “Medicare for All” would be run by government bureaucrats engaged in “scientific” planning to predict, organize and meet all the needs of the population. No incentives would be involved, just more structure, process, policies and penalties.

The “Right” plan would reduce the unnecessary regulations in healthcare allowing for innovative methods to meet the health needs of the U.S. population. This would include traditional inpatient and outpatient services, with emphasis on self-care; lower the barriers to acquire drugs currently requiring prescriptions, virtual visits, telemedicine and health education.

“Medicare for All” would face cascading financial difficulties arising from a socialist system without incentives; poor management, and inefficient organization of care. Predictably, “Medicare for All” would take on the characteristics of Canadian and UK systems; too few facilities, rationing of care, lowering service standards.

The “Right” plan would maintain a vibrant commercial/private structure enabling continued advancements in the organization and delivery of healthcare.

While I am an optimist and my bias is for the “Right” plan, it’s unlikely that Congress will turn away from the lobbyists who spend enormous money to preserve the healthcare system the way it is. It is most likely that in the next 5 years, we will continue to do what we’ve done for 50 years. However, it’s nice to know the “Right” plan will always be available.

Howard Peterson, MHA is the founder and managing partner of TRG Healthcare and a member of the Inquirer’s Health Advisory Panel.