Power Breakfast panel debates health care reform

October 17, 2009


Over utilization is a real driver of health care costs. And doctors themselves say they order many tests and perform many procedures to cover themselves against patient lawsuits. How can we reform health care without tort reform?

That’s a great question. In Indiana it’s a red herring. Let me tell you why. Indiana has tort reform. There is a cap on damages in Indiana. It’s a relatively low cap. There aren’t large punitive damage cases here, so a doc or an administrator that empowers a doc to overutilize has nothing to do with tort reform in this state. It’s a psychosocial issue. It’s back to what Craig said: Does the system [encourage] us to overutilize? The answer is clearly yes. But blaming tort reform for that is an inappropriate blaming. We have to change the incentives, not tinker around the edges, and that would be major tinkering, not really changing the underlying issue.

BRATER: Close the law schools.


EVANS: Now we would like to announce his retirement from IU. Nobody quote him saying that. OK, the guys with their BlackBerries out, put them away right now.


In this health care debate, why hasn’t the cost of care been discussed, only the cost of health insurance? Should we be talking about the cost of care more than the cost of health insurance?

DEFUR: If we want to come together with a system that truly is reformed, that really is not just a financing mechanism but that’s going to make the most sense for taking care of all of our citizens, the uninsured, as well as everyone else, we have to come together, we all have to feel the pain in that. I think that the hospital systems have come together and have put $155 billion as part of our contribution in this process.

EVANS: The essence of your question is how things are priced, as I understand it, not what they cost. Price is different than cost. The price we all charge has one root cause in its variation—cost shifting—and if health care reform doesn’t solve cost shifting, then the price will continue to be de-linked from the cost and there will be frustration in groups like this. Most of you are commercially insured, so the cost is shifted to you to pay for the shortfall [from Medicare, Medicaid and the uninsured]. So how do we get more cost out of you? We raise your price. That’s the system. So if we had universal capitation and accountable health care organizations, there wouldn’t be the incentive to shift the cost by overpricing to somebody else.

I have in my office a 1932 price brochure of Methodist Hospital that Ernst & Young gave me several years ago. The last page says, “Those people who came before you paid for your health care. Please sign this. It’s a quitclaim deed.” In other words, they were asking patients in the Great Depression to give away their homes to get care. So as bad as we think it is now, it was worse.

We can improve it, but the only way we can improve it is by saying the truth. And the truth is the price list is a cost-shifting scheme that you have asked for by telling your congressmen, “It’s all right to under-reimburse for Medicare and Medicaid. It’s OK.” Well, then you leave us with no choice but to shift the cost back to you. So that’s the hidden tax. That’s the hidden cost in your health premiums for this cost shifting, it’s between $800 and $1,500 per year per family.

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