Woe to the hospital that turns to the courts to collect its patients' debts. It is widely known that health-care costs have recently become the single most common cause of personal bankruptcy in the U.S., and when we hear of such cases we frequently regard indebted patients as unfortunate victims, while casting hospitals as greedy predators. After all, patients did not intend to fall ill and require prolonged and expensive medical care, while the marbled lobbies and elaborate amenities of many new hospitals smack of surplus wealth. Who could feel sympathy for a billion-dollar corporation?
On the other hand, even non-profit organizations, which include about 62 percent of U.S. hospitals, need to generate revenues that exceed their costs, or they will go out of business. In the individual case -- the single mother of five who needs a million-dollar organ transplant -- it is difficult not to side with the patient. But if we expect health-care organizations to forgive all such debts, we may soon find ourselves bereft of hospitals to turn to. A hospital that liberally provides free care will soon find itself besieged by its competitors' non-paying patients.
These situations are often portrayed as conflicts between noble moral sentiments (the desire to care for the poor and infirm) and hard-hearted financial realities (the imperative to make money or disappear). In the best of all possible worlds, we would never turn away a single patient due to inability to pay, and everyone would get all the health care they need. But because such a world is not the one we inhabit, we need to ask patients to bear the costs of their care, or else repair to someone else, such as a private insurance company or the government, to do so for them.
Yet such a portrayal is simplistic, superficial, and dead wrong. One of the reasons our health-care system is ailing is the fact that we habitually insulate decision makers from the consequences of their choices. Many patients have no idea of the costs that are being generated when their physician orders a test or performs a procedure. As a matter of fact, many health-care professionals, including colleagues of mine in the medical profession, have little idea of the retail prices or actual payments collected for the work we do every day.
For decades, both patients and physicians have carried on blithely unaware of such financial realities, secure in the knowledge that financial experts, insurance companies, and state and federal governments are on hand to make sure that all the bills get paid. This situation foments moral hazard, in which the incentives favor more care, greater tolerance for inefficiency and waste, and escalating costs. The patient wants nothing less than the best that medicine has to offer, the physician gets paid for each test and procedure, and no expense is spared. People who don't expect to pay the bill tend to disregard the tab.
Similar incentives apply at the institutional level. Hospitals tend to overbuild and overbuy, creating excess capacity that must be utilized to finance itself. Consider the case of medical helicopter transport. Many big cities have more helicopters than needed. Why? Because few large hospitals want to admit that they lack such services. Nurses and doctors in flight suits also make for good marketing. So each hospital secures a helicopter. Hospitals, medical practices, insurance companies, medical device manufacturers, and pharmaceutical firms have all profited with rising health-care costs.
In other words, rising costs have richly rewarded those who generate them. For decades, physicians and executives have been earning handsome incomes, and in some cases growing wealthy, by exploiting these incentives to do more. In the meantime, other potentially more efficacious approaches, such as providing patients with incentives to take better care of themselves and incentivizing physicians and health-care organizations to keep costs down, have suffered from neglect. Insurance will pay for your bypass operation, but not your gym membership.
It is not as though we have not tried. Remember health maintenance organizations? In the past, efforts to underwrite truly prudent and parsimonious care have failed, largely because lack of accountability for costs looks so attractive. There has been simply too much money to be made from a system in which no one really understands what is happening, especially when those directly involved - health-care professionals, hospitals, and insurance companies - stand to earn more by keeping the system byzantine and accountability for costs diffuse.
In fact, the term "system," as in health-care system, is probably a misnomer. There is very little systematic about it. This is not to say, however, that the solution is to appoint a health-care czar, housed in the federal government, who would rationalize our current agglomeration into something truly systematic. To do so would merely further institutionalize the perverse political incentives that have long distorted American health care. What we need is not more systematization in Washington, but more transparency and accountability at home.
Let us be clear. The plea to care for the poor is not the only moral argument in the health-care debate. As Yoda might say, there is another. Our failure to give this second argument its due is one of the principal reasons that U.S. health care has become so dysfunctional. For lack of a better term, this principle might be called accountability. But this is not accountability as in "accountable care organizations," which seek, among other things, to tie health-care payments to reductions in costs for assigned groups of patients. This is a quite different sense of accountability.
We need to guard against the tendency to think of patients and health professionals as accountable purely in terms of our roles in health-care. Every patient and every health-care professional is also a citizen and a human being. And if we are to acquit ourselves well as free and responsible citizens and human beings, we need to hold ourselves accountable for the consequences of the decisions we make or fail to make. To be sure, no one chooses to get cancer, and no one wishes to be unable to pay for care. But when our choices entail costs, we should not insulate ourselves too much from them.
The Patient Protection and Affordable Care Act (AKA Obamacare) imposes escalating penalties on people who elect not to purchase health insurance. Inevitably, some will choose not to do so, especially early on. In this circumstance, we should resist the impulse to forgive all the health-care costs of those who fall ill. Parents who, when their children make poor choices, always step in and make everything right are not doing them any favors. In fact, they wreak genuine harm. If we do not bear the consequences of our actions, we literally do not know what we are doing -- a principle that applies in health-care no less than life.
I have witnessed a number of community clinics that provide health-care to the poor. One feature that characterizes an increasing proportion of the most successful among them is an expectation that those receiving services make a payment. This payment is based on financial means, so that those who have less pay less. But everyone is required to pay something. Often this is less than the cost of the care, which is why such organizations require philanthropic support. But they are successful in large part because they treat patients with the dignity of expecting them to contribute something to their own care.
In the old days, physicians often accepted unorthodox forms of payment. Otis Bowen, MD, former Governor of Indiana and U.S. Secretary of Health and Human Services in the Reagan administration, once described how poor families in his northern Indiana medical practice would sometimes pay him with chickens and the like. It was important to them to offer something in return for the services they received. Such traditions signify a healthy community, one in which people expect and even want to bear the responsibility of paying for the services they have received.
John Stuart Mill famously wrote that a nation that dwarfs its people will soon find that with small human beings no great thing can be accomplished. As patients and health-care providers -- and more importantly, as citizens and human beings -- we must avoid the seemingly charitable impulse to insulate ourselves and others against bad decisions. As free and responsible human beings and citizens, we can be our best only if we bear at least some of the costs of the health-care choices we make.