From Dr. Hsiao, With Irony and Courage

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imageThe discussion around health care reform reached a milestone worth noting last week with the publication of an article in the New England Journal of Medicine from William Hsiao, PhD, architect of the resource-based relative value unit scale. In “State-based, Single-payer Health Care—A Solution for the United States?”, Hsiao describes how he and colleagues from Harvard retained by the state of Vermont came to recommend a single-payor system for that state. It is somewhat ironic that Hsiao would be advocating a system that spells the end of the carefully crafted underpinnings of the fee-for-service payment system for physicians. But then he never was pleased with how his work was implemented. One year after the system he developed was implemented in 1992, Hsiao was criticizing how it was implemented and blamed the system for encouraging physicians to compensate by performing more lucrative services, like diagnostic tests. The really amazing fact is that in both the lead-up and follow-up to the enactment of PPACA, and despite numerous examples around the world, this is the first time the single-payor idea has been seriously raised in the medical literature as an option.

The article was brief, so I will not go into the details now other than to say that Hsiao et al proposed financing the system through a payroll contribution on all Vermont wages, split between employer and employee. The solution aimed to preserve Vermonters’ platinum standard benefits and maintain overall net income of physicians and hospitals. I hope there will be a more detailed description of the proposal available at some point.

I encourage you to review the article and join the discussion. Politicians on both sides of the aisle have demonstrated their inability to address the unsustainable cost of health care in America. The death squad episode in the health care reform debate illustrated how readily reasonable ideas can be hijacked by politicians and special interests. Nonetheless, reason and honest, open discussion of the issues driving health care costs are what is needed. It is the responsibility of every physician, health care executive, and employee to engage in the public discussion of what is driving health care costs in America. It is the only way to drown out the strident talking heads and the special interests.

I applaud Hsiao for his leadership in raising this subject. States, including my own state of California, are struggling mightily with the issue of unfunded liabilities for the health care of public employees. Here in Los Angeles, the $10 billion in unfunded liabilities for health care promises to current employees of the LAUSD could very well sink the school district. It currently is spending 13% of its budget on retiree benefits. A single-payor system in California could help preserve public services, but if plagued by the fraud, abuse, and mismanagement rampant in other bloated state utilities, it could very well sink the state.

Could this work in your state?