State of the Union January 2009

The Issues: Health Care

Virginia Postrel and Shannon Brownlee assess the prospects for health care reform in the midst of a financial crisis
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VIRGINIA POSTREL: Happy Inauguration Day.

SHANNON BROWNLEE: It was pretty inspiring to see all those people on the Mall!

VIRGINIA POSTREL: But I felt bad for the folks in Hawaii, where it was 6 a.m. It's West Coast sympathy.

SHANNON BROWNLEE: As somebody who was born and raised in Honolulu, and who went to the same school as our new president, I would imagine a lot of people in Hawaii were wide awake and happy to be watching from the warmth of their livingrooms.

VIRGINIA POSTREL: I'm sure they were. I just feel bad for them, because I'm not a morning person.

The financial crisis may have put off an attempt at sweeping health care reform, but the Obama team has made improving computerization of medical records part of their stimulus plan. How optimistic are you about that process?

SHANNON BROWNLEE: I'm not so sure that the financial crisis will put off sweeping health care reform, but we can return to that question in a minute. I think it was smart to put electronic medical records into the stimulus package, for a couple of reasons. If the federal gov't devotes real money to helping providers get wired it will be a nice boon for the high tech sector. It will also help make health care more efficient—though maybe not as easily as some think.

There are big technical hurdles standing in the way. I think the buzz word is interoperability, but basically we need a way for your doctor's computer to be able to read records from the hospital and other doctors, and vice versa. I'm no techie, but I understand that's a huge challenge.

VIRGINIA POSTREL: Whenever the idea comes up, privacy groups always raise concerns. I'm not sure patients worry as much as organized groups, but that's an issue.

And interoperability is, in any computer system, a huge challenge. Bank of America's California computers can't interface with the rest of the bank's computers—years after the merger.

SHANNON BROWNLEE: It's funny, but people are more worried about somebody looking at their medical records than at their bank records. We seem perfectly happy to have electronic banking.

That's pretty depressing about Bank of America!

VIRGINIA POSTREL: When I moved from Dallas back to L.A., I had to close the accounts we'd opened in Texas to get one the banks here could access—even though it was all B of A.

SHANNON BROWNLEE: And banking is pretty simple compared to the information contained in a medical record. We may need the federal gov't to simply set a standard platform—everybody has to be interoperable with Kaiser's system, or UCLA's. Assuming UCLA Medical Center even has electronic records.

VIRGINIA POSTREL: UCLA Medical Center has excellent electronic records. In fact, my internist, whose office is in Beverly Hills, can access my hospital records, including radiology reports, from his office, because he's part of the UCLA system.

SHANNON BROWNLEE: But here's the problem with hanging our hopes on EMR—they can't create order out of the chaos of our current system on their own.

VIRGINIA POSTREL: But it would be tremendously costly, not just in dollars but in lost information and transitional errors, to try to start from scratch. It's certainly a difficult problem, though one that everyone in medicine seems to agree needs addressing.

SHANNON BROWNLEE: So maybe UCLA's standard could be used in Southern California. The point is, somebody may have to say this is the standard, live with it.

Starting from scratch is what many hospitals have been doing.

VIRGINIA POSTREL: As a stimulus, my economist husband jokes that maybe they should just hire lots of people to do data entry. After all, laid-off retail clerks and journalists can't design computer systems.

But, of course, you need a system first.

SHANNON BROWNLEE: What's interesting is the fact that the federal gov't has to get involved in stimulating EMRs in the first place. I can't think of another major industry that has not decided to invest in computerized records. Why not health care? Because you don't get rewarded for doing a better job of caring for patients, or doing it more economically, two things that EMRs could help providers do.

SHANNON BROWNLEE: I would imagine providers will have to hire people to enter data once they go digital.

VIRGINIA POSTREL: You can do amazing things with scanners these days. Just ask Google.

Your point about rewards is an important one. Health care is remarkably insulated from the normal feedback we see in other industries.

SHANNON BROWNLEE: EMRs aside, I would argue that bringing down health care costs should be seen as a long-term stimulus because insurance premiums are a drag on other businesses.

In the rest of the market, high cost generally indicates higher quality, better service, a better product. Not in health care.

VIRGINIA POSTREL: Sometimes, though my Civic is an awfully great car at a low price.

Even aside from the economics, patients don't shop around much. I'm shocked that anyone in L.A. who has a choice goes anywhere but UCLA for cancer treatment, but they do.

SHANNON BROWNLEE: If we built cars the way we pay for and provide health care, it might look a little like this: cars are built not by companies, but by individual artisans, each of whom specializes in a different part. You got your engine guys, and then you have engine specialists who only build valves. You have electrical specialists, chassis specialists, brake specialists. Each specialist does her thing and then passes that part of the car to somebody else. But there's no rhyme or reason to who she passes it to. Now imagine that we pay for our cars not on the basis of how well they run or what kind of mileage they get, but on the number of parts each specialist used to put his or her piece of the car together.

VIRGINIA POSTREL: I'm not sure about insurance premiums being a drag on business. It's something you hear a lot, but it's a complicated question. Insurance is part of employee compensation, so it may keep money wages somewhat lower, but you have to pay people what the market will bear. And the Big Three automakers, about whom we hear so much, are burdened by paying for contracts they made with retired workers, who are covered by Medicare.

SHANNON BROWNLEE: I'm less convinced than you are that UCLA would be the right place to go.

VIRGINIA POSTREL: Maybe I'm a deluded patient, but it worked for me.

Everyone I know who interacts with the medical system says the same thing: Why can't these people talk to each other? Why isn't there one person in charge of my case?

SHANNON BROWNLEE: Insurance premiums have long- and short-term effects on employers. Over the long term, employers generally can shift the cost of rising premiums to workers in the form of lower wages. But over the short term, rising premiums can make it harder to make other investments that would allow a business to grow, or become more efficient.

Retired workers are not all covered by Medicare. The average auto worker gets to retire long before Medicare kicks in.

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