Re-imagining Health Care Reform
From old paradox to new paradigm
Ani B. Satz, Associate Professor of Law


Vol. 10 No. 6
May 2008

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Battling the Demons
Students, mental health, and the specter of violence on campus

Getting help for troubled students

Video: Dealing with students at risk

“Today a student walks out of a math test and picks up the cell phone, and Mom knows immediately how the test went.
Parents haven’t cut the apron strings, and many little issues get blown out of proportion.”

The thing you’re most worried about is not someone going out and shooting people. . . . Suicide, eating disorders that can lead to heart attacks, alcohol and drug abuse that lead to accidents—those are the ways we lose students. ”

Sustainability and Scholarship
Rethinking the separation of academics and engagement at Emory

Re-imagining health care reform
From old paradox to new paradigm


Forty-seven million Americans have no health insurance, and estimates are that even more may be underinsured. Annual U.S. health care expenditures—more than $1.9 trillion—amount to 16 percent of the gross domestic product. One recent study suggests that 76 percent of the approximately 2 million individuals affected by personal bankruptcy due to medical debt have health insurance when illness begins.

Many of the shortcomings of health care access in the U.S. can be traced to the inherent limitations of the dominant paradigms of health care distribution, which seek to provide a minimum level of services to everyone insured or to ration a certain set of services among covered patients. Proposed reforms focus primarily on improving existing schemes but do little to address the underlying problems of access and cost. A new paradigm may result in adequate coverage while simultaneously controlling costs and preserving a reasonable level of patient choice.

The paradox

Fueling the current health care crisis is demand for convenient access to high technology health care services, which current
distribution systems do not adequately address. High technology care is generally more expensive than traditional health care and involves sophisticated equipment for services such as genetic testing, artificial tissue, organ replacement, and individually tailored medicines.

The problem, reformers say, is simple: More people need access to basic services. But that proposition is not as straightforward as it seems. Both traditional and high technology health care may support the goals of basic health care, which include prevention, diagnosis, and treatment or amelioration of diseases and conditions. Accordingly, basic health care plans should allow greater access to both types of services.

Increasing access to basic health care services under current models is costly, however, and it does not adequately address patient demand for high technology health care. Under the usual standard that health care services be “reasonable” and “medically necessary,” many government programs (with some notable exceptions for Medicare) fund limited, largely traditional care for select groups. Public and private health plans may restrict benefits under certain cost-saving managed care schemes, which means that high technology services may not be covered or may entail higher rates of coinsurance. Further, most Americans receive health insurance through employers, and such coverage continues to decline without legal recourse for beneficiaries denied care.

When high technology basic health care services are not provided, patients seek alternatives, which generates inefficiencies and additional costs. Patients may exhaust unnecessary or less effective traditional services before insurers fund high technology services. Other patients may sue their insurers for access to a broader range
of basic services or pay for uncovered services out-of-pocket, subjecting themselves to un-negotiated rates and risking personal bankruptcy. Patients denied high technology basic health care may become sicker and ultimately require emergency care that is more costly than the denied benefits.

“Basic minimum” and “rationing” models of health care distribution focus on services that yield direct and immediate benefits; however, the benefits of high technology services are often indirect, delayed, and uncertain. For example, predictive technologies may provide patients with security, comfort, reassurance, and the ability to employ prophylactic measures and treatments as they become available, but current health care distribution schemes are unlikely to fund them for adults.

Paradoxically, in order to move toward a solution to the health care crisis, legal structures should support greater access to some of the very technologies elevating the costs of health care under the
current system. Individuals must be able to make trade-offs between traditional and high technology services and choose from among them in order to maximize their health. Their choices would be limited by funding constraints, perhaps by yearly or lifetime caps on spending, and would require physician involvement in making clinically effective decisions.

Freedom and medical decision-making

A new paradigm for health care distribution must allow patients freedom of choice as well as consider constraints on that freedom. Current approaches ignore the nature of patient choices, whether they result from voluntary constraints such as nutrition, education, or career, or involuntary ones such as biological conditions, legal regulation, taxes, or insurance limitations.

For instance, when health care is rationed, a medical resource is presumed to have a particular benefit for most patients. This approach, however, does not account for the fact that some
individuals may walk while others wheel for mobility, for example, so that leg surgery to repair a muscle may have different benefits. Current frameworks based on providing a threshold level of services also struggle to account for biological variation, since the same range of services may not meet every patient’s health care needs. Treatments for individuals with a given condition may involve enhancement of one biological function in order to compensate for a limitation in another. For example, for individuals with hypercholesterolemia and arterial blockage, gene transfer may be used to produce biological responses that ultimately stimulate capillary formation in order to increase blood flow. It is the biological variation among individuals, rather than the range of available goods, that may determine health status. High technology health care may better advance the goals of basic health care for some individuals by accounting for differences in biology. In order to take patient choice between traditional and innovative health care services seriously, our legal structures must support high technology.

Toward a new paradigm

The new paradigm for distributing basic health care services must address a number of issues:

• Both traditional and high technology health services may support the goals of basic health care.

Patients are demanding access to a greater quantity and a wider variety of services. The paradigm must focus on freedom to choose from among a broad spectrum of basic services—traditional and high technology—with physician guidance.

• A distributional framework must both support patient freedom in medical decision-making and serve as a constraint on cost.

Patient freedom in medical decision-making should not be confused with “consumer-driven” health care, in which patients determine how to spend a lump sum of insurance money (that is, resources in a health savings account) with little or no professional guidance. The knowledge of health care practitioners is vital to identifying and comparing medical treatments.

Predictive technologies may confer valuable basic health care benefits that are uncertain, future, and indirect.

A new paradigm—basic capability equality of health care—better addresses patient choice of health care services as well as the benefits of effective, innovative technologies. In very general terms, basic capability equality maximizes capabilities, like those enabled by basic health care across a given population. It values freedom to choose from among different sets of possible capabilities, according to a patient’s biological and economic constraints. Basic capability equality of health care thus considers patient demand for a broad range of basic health care technologies, including high technology health care services, while operating within health insurance limitations. A patient could choose among traditional or innovative medical technologies, constrained by the benefits of the services and economic considerations such as a yearly or lifetime cap on insurance expenditures.

This model would entail a dramatic restructuring of the way health care services are provided and reimbursements are determined. Instead of locking patients into a set of health care services, insurance structures would provide patients with a full array of effective basic health care services. Patients, with the guidance of medical providers, would choose from among these services to maximize their basic health. Operating within financial limitations imposed by a national or other insurance scheme, individuals would make trade-offs among services. Health care expenditures could be controlled by the amount patients are entitled to spend. Although there would be costs to making more basic health care services available, they could be mitigated by statutorily eliminating current inefficiencies, such as duplicate equipment within small geographic regions.

For basic capability equality of health care to be effective, however, other factors must be addressed, such as duplicate, unnecessary, and ineffective services and inefficient distribution of those services. Mechanisms must be developed to judge the efficacy of new technologies, and resources must be distributed through coordinated care. Physician accountability must also be addressed in order to control waste and costly medical error. The thirty-year studies of John Wennberg and Elliott Fisher indicate that physician promotion of ineffective services is a significant burden on the current system. Patients who are unsophisticated consumers of medical care give significant weight to professional advice. The studies demonstrate that when a greater quantity of physicians serve a population, health care expenditures increase dramatically without improvements in health outcome, which is an indicator of waste. Without physician accountability for the promotion of ineffective services, costs cannot be reduced or outcomes improved. Another aspect of physician accountability is medical error, which has a profound effect on both health outcomes and expenditures. A controversial 1999 report of the Institute of Medicine indicates that, in the U.S. alone, as many as 98,000 people die from medical errors, at a cost of $37.6 billion a year.

No one questions that the U.S. is in a health care crisis. Now is the time to explore the flaws in dominant regulatory paradigms and to think creatively about health care reform. Clinically effective but costly high technology basic health care services will continue to grow, as will patient demand for such services. Assuming limits on possible overall expenditures and proper physician guidance, allowing greater patient choice from among traditional and high technology health care services paradoxically may be part of the solution to inefficient and costly health care delivery.

This article is excerpted from “Toward Solving the Health Care Crisis: The Paradoxical Case for Universal Access to High Technology,” The Yale Journal of Health Policy, Law, and Ethics (forthcoming winter 2008) and “The Limits of Health Care Reform,” The Alabama Law Review (forthcoming 2008).