A former champion of market-driven healthcare practices now condemns them. Private medical marketplace forces, long held out as the only alternative to a government-controlled system, have aggravated rather than alleviated the problems plaguing the U.S. health care system, according to a new book, ``Oxymorons: The Myth of a US Health Care System,'' written by medical economist J.D. Kleinke and published today by Jossey-Bass.
``Managed care is the private market failure in overdrive,'' says Kleinke. ``Commercial managed care was supposed to fix our health care system by introducing rational economic pressures. This belated attempt at rationalization has actually made our system that much more economically at war with itself, for reasons few of us in the health care community anticipated. Managed care has replaced the chronic disorganization of American medicine with acute overorganization.''
Oxymorons represents a major departure for Kleinke, an outspoken champion of market-driven reform of the U.S. health care system during the 1990s. It is the much anticipated follow-up to his ``Bleeding Edge: The Business of Health Care in the New Century,'' published in 1998 and hailed as the definitive roadmap for health care organizations seeking to prosper under managed care.
``Managed care represents a ham-fisted attempt to protect the economic interests of employers, who remain stuck in the middle of our health care system because of an antiquated part of the U.S. tax code,'' Kleinke says. ``Because our health coverage is tax-free when provided through work, but not when we buy it on our own, our employers are continually forced to make choices that too often are not in our best interests as consumers and patients. And as better, more expensive medical technologies emerge every day, the conflict between what we want and what our employers are willing to pay for grows that much worse.''
Managed Care's Broken Promises
Oxymorons provides a detailed analysis of the impact of managed care on the quality of care delivered to insured populations. It finds that an estimated $90 billion in annual health care spending -- the equivalent of $1,000 per American family -- is ``siphoned off to pay for managed care's intrusions into our provider-patient relationships and medical decisions,'' according to Kleinke, ``few of which provide any actual clinical benefit.''
``What do we get for the 40 cents of our health care dollar consumed by insurers and providers in an administrative grudge-match over the other 60 cents?'' Kleinke asks. ``A comprehensive review of the clinical literature indicates that we get nothing except more confusion, more chaos, more micro-process, and less medical care.''
Kleinke argues that managed care's essential failure is really a failure of the broader U.S. health care system. ``We have been asking commercial insurance companies to do a job no one can do,'' he says, pointing to the many conflicting pressures on today's managed care organization. ``We expect HMOs and others to control costs while simultaneously improving quality -- to improve a population's health while simultaneously controlling that population's access to the best doctors and medicines. Managed care is a slave with too many masters, which explains why it has failed to attain even its most modest quality goals.''
Has Kleinke given up on private market forces in health care altogether?
``On the contrary,'' he says. ``The U.S. health care marketplace has failed because it does not even resemble a real marketplace. Standing between the typical patient and typical physician are third, fourth, fifth and often sixth and seventh parties, ranging from the patient's employer and its consultants, to numerous management organizations designed to help physicians and other providers cope with managed care. Each party has its own economic agenda and administrative process, and each is ultimately in conflict with all the others over the same medical dollar. The result is not a fluid, responsive marketplace, but an ever-expanding Tower of Babel of paperwork and rules that even the most tenacious patient often cannot navigate.''
Regulatory Reform Plan for Health Care's Tower of Babel
In its survey of the U.S. health system's worst architectural features, Oxymorons identifies several guideposts for what we can reasonably expect the marketplace to fix. It also proposes broad regulatory solutions for those things we should no longer expect the marketplace to fix, informed by more than a decade of managed care's desperate and often destructive attempts.
Central to the list of proposed reforms is Oxymorons' argument that insured consumers -- when let loose into the health insurance marketplace with their own dollars -- will drive significant system reform through price-performance demands that employers have never been good at making of health insurers. ``Such liberation requires a simple re-writing of the U.S. tax code,'' according to Kleinke, for the creation of what he calls ``a tax parity that will allow consumers to purchase, with their own pre-tax dollars, whatever health insurance plan offers them the best combination of price and quality.''
The other reform proposals included in Oxymorons are designed to work in concert with the establishment of tax parity for health insurance purchasing. They center on the creation of uniform regulatory standards, benefit mandates, and health insurance plan designs across the nation.
``Such a broad-based streamlining of our health insurance system,'' according to Kleinke, ``will save billions of dollars currently chewed up in the administration of health care's ever-expanding chaos. It will drastically lower costs, make health insurance much more affordable, and bring millions of uninsured Americans back into our system.''
J.D. Kleinke is a medical economist, health information technology executive, and the founder and President of HSN, a medical software development company headquartered in Colorado. During the 1990s, he served as Vice President of Corporate Development for HCIA Inc., helping grow the company from a start-up hospital data analysis firm into a pioneering, publicly traded provider of health care information systems and products. Before joining HCIA, Kleinke was Director of Corporate Programs at Sheppard Pratt Health System, where he developed and managed the nation's first provider-based managed mental health care system. Kleinke's work has appeared in The Wall Street Journal, JAMA, Barron's, Health Affairs, the British Medical Journal, Modern Healthcare and numerous other publications.
``Oxymorons: The Myth of a US Health Care System'' (November 2001, ISBN 0-7879-5970-7, Cloth, $35.00) is available by special order in bookstores nationwide, by calling Jossey-Bass customer service at 800-956-7739, or via all major online booksellers and at www.josseybass.com.
