d e c e n t r a l i z e d g o v e r n a n c e
E C O N O M I C
INTRODUCTION
“Current projections indicate that government debt owed to the public will reach
90% of national output in 2021, a decade from now.
There is nothing magic about this number, but many observers fear
that if the debt reaches that level and is headed still higher,
savers here and abroad will come to doubt the capacity and willingness
of the United States to service its debt.
Should such a loss of faith occur, the interest rate
that the government — and borrowers — would have to pay would soar.
Rising interest rates would multiply the debt burden, simultaneously aggravating
the government’s fiscal problems and discouraging private investment and consumption.
Such a panic would be catastrophic.” (38)
Henry J. Aaron ( 1936 – )
Henry J. Aaron, Ph. D. is an economist at the Brookings Institute in Washington, D.C. He is the author of a PERSPECTIVE essay that appeared in the New England Journal of Medicine during the summer of 2010. The quotation cited above is a portion of that essay. The PERSPECTIVE focused on our nation’s costly healthcare industry, and its economic impact on our national economy.
Please add my voice to the chorus of many physicians who believe that improving the efficiency of our nation’s healthcare industry is the most important goal for the reform of this industry. Initially, it is the only goal that really matters. Compared to the performance of all the world’s developed nations, the excess cost of our nation’s healthcare probably represented nearly $1 Trillion in 2016 alone. For the excess cost of our nation’s healthcare, the Federal government paid 40% or approximately $400 Billion. This excess expense to our national government represented 80% of the Federal deficit in 2016.
PARADIGM PARALYSIS
The increasing cost of our nation’s healthcare industry will substantially decrease our nation’s future autonomy within the world-wide community and the global market-place arena for its RESOURCES. By 2021, the portion of our nation’s economy devoted to the healthcare industry is on-track to have increased by 350% as compared to 1960. For our nation’s economy, the increase represents an especially devastating example of Parkinson’s Law (see the OVERVIEW Page and its Sub-Page by that name).
TRADITIONS
CHANGE
Defining a national strategy to achieve Primary Healthcare that is available to and accessible by each citizen represents a very difficult challenge. It represents a special challenge because any expansion of Primary Healthcare would simultaneously need to reduce our nation’s total health spending. Plus, a new national mandate affecting 18.0% of the gross domestic product (GDP) in 2016 would disturb most of the legal, medical, social, economic and innovation traditions that contribute to each citizen’s healthcare. In 2016, the cost of our nation’s healthcare industry represented $3.46 Trillion. As proposed on the HOME PAGE, the necessary improvement in efficiency from 18.0% to 13.0% of the GDP would have represented a reduction of $850 Billion for our nation’s spending during 2016 alone. To further emphasize the future magnitude of this change, the Medicare Office of the Actuary has predicted that our nation’s health spending will increase to 19.6% of the GDP during 2021, as compared to 5.0% in 1960.
The need for a major change in the healthcare for each citizen is clear. But, the ideal strategy for achieving the required changes is largely unknown. Furthermore, the anticipation of reducing our nation’s healthcare spending from 18.0% of our nation’s economy to 13.0% ten years later would likely encounter a widely expressed concern that the changes will produce unintended, negative consequences. In spite of the risks, our nation’s annual deficit needs a carefully considered strategy for promoting the reform of our healthcare industry, preferably by itself. Importantly, the Initiative Page and its Sub-Pages describe the details of one possible strategy for healthcare reform, including a special emphasis on improving its efficiency. This new strategy is configured to honor the Design Principles proposed by Elinor Ostrom for managing a common-pool resource (CPR). For our nation’s economy, the CPR for our nation’s healthcare is its sustainable portion of the GDP. I propose that this represents 13.0% as an initial GOAL for healthcare reform.
To be sure, the ultimate goal should be near 11%. But, it is unlikely that this level would be attainable within a 10 year reform process. But, in thirty years, it should remain the ultimate accomplishment. Remember that to survive as a nation, there are several other investments in social capital that will be required, as in education and disaster preventive mitigation. The ROI (Return On Investment) for education generally is 3:1 and 7:1 for early childhood education. Recent studies indicate that disaster prevention mitigation has a 4:1 ROI.
To be clear, improved efficiency means an average decrease in the cost of healthcare per person per year. To reach a national level of healthcare spending at 13.0% of the GDP for 2016, health spending that year for each citizen would have been near $7,000 instead of more than $10,000. By comparison, the health spending by the other 34 OECD (ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT) nation’s of the world cluster @ 12 % of their economy, with the Netherlands at a peak of 13.1%. Finally, changing our nation’s health spending could be accomplished eventually by an increase in economic growth that is 0.5 – 1.0 % more than any annual increase in healthcare spending. In this situation, there would be no net decrease in health spending, only a decreased rate of increase.
The Initiative Page and its Sub-Pages describe an evolutionary process for sponsoring the social capital investment necessary to reform the essential traditions of our healthcare industry, community by community. A nationally sanctioned and broadly supported new strategy to engage these traditions may have the best opportunity to successfully mobilize a national commitment to healthcare reform. Since there is no nationally sanctioned institution with the widely supported authority to improve the healthcare industry, NATIONAL HEALTH is the agent of change described by the Initiative Page. The financial cost for promoting this social capital investment would be limited to a Federal expense of $1.00 per citizen, annually. This Federal expense would represent an increase of 0.01% to our nation’s health spending. On the date marking the initial Meeting of its Board of Trustees, this expense to the Federal treasury would be cost-of-living and population adjusted annually.
HISTORICAL ADAPTABILITY
Over the last 70 years, our nation’s healthcare industry has successfully achieved many outstanding benefits for the Basic and Complex Healthcare Needs of each citizen. Simultaneously, many deficiencies have also evolved. The fixed character of these deficiencies can be identified by asking a few questions. Currently, there are no widely supported, comprehensive answers to these questions:
ASK someone with congestive heart failure and chronic lung disease about the stability
of their HEALTH after losing their health insurance when no longer employable?
ASK a physician who works in a hospital’s Emergency Department about the crowding
of their facility because many of their patients do not have a Primary Physician
who they perceive as accessible?
ASK any Congressman about the options available to pay for the national budget demands
that will occur from a doubling in the number of citizens who are Medicare eligible
between 2000 and 2030?
ASK the Dean of any medical school to explain their strategic plan for training
enough Primary Physicians with the skills necessary to confidently manage
the future obligations of our nation’s healthcare?
ASK any Primary Physician about our nation’s treatment strategy for achieving
Stable HEALTH for each citizen with breathing problems since asthma,
emphysema and similar conditions now represent the most poorly controlled
category of life-threatening illness?
[ COMMENT: The annual death rate per 100,000 citizens for Chronic Obstructive Pulmonary Disease was 21 in 1969 and 42 in 2013. No other major category of mortality had worsened between 1969 and 2013. The mortality rate for Stroke declined from 157 to 36 during these 44 years. ]
ASK the Mayor from any large city about how she intends to sponsor
the community leadership dedicated to improving her city’s capacity
to offer enhanced Primary Healthcare to the homeless men, women and children
who live in her city?
ASK the Dean of any School of Public Health to explain why
our nation’s maternal mortality ratio ( see DEFINITIONS Sub-Page ) was 7.2
in 1987 and 24.9 in 2015, a worsening by 3.8% compounded annually for 28 years?
ASK the Chief Executive Officer of any pharmaceutical company how their company
justifies the unusually high proportion of their cash income, @40%, that is allocated
to profit and promotion?
ASK every physician whether or not they own stock as a part owner of the hospital that
they also use for providing healthcare to their patients? And, if the answer is “yes,”
do they regularly acknowledge this financial conflict of interest to their patients?
Certainly, there are many other issues that represent similarly difficult questions. These questions identify the severity of the problems that will soon produce a nearly unsolvable crisis for the healthcare of each citizen. A few minutes of reflection about the “ASK” statements should be more than enough time to understand that our nation’s financial crisis, as aggravated by our nation’s healthcare, is very troubling. To further magnify the character of this financial crisis, our nation does not have a widely supported and nationally sanctioned institution to sponsor the reform necessary for improving the over-all allocation of resources within our nation’s healthcare industry.
FUTURE ADAPTABILITY
As described above, the chief financial deficiency of our nation’s healthcare is its total health spending as a portion of our nation’s economy, its GDP. Since 1969, the progressively increasing, health spending for our nation’s overall healthcare suggests a future scenario of continuous crisis management (11) rather than long-term, stability. To date, the healthcare industry has demonstrated little adaptability to assure its future stability. This low-level of adaptability is easily recognizable since there are no connected or cohesive answers to the “ASK” statements given above. The details of the Initiative represent an effort to endow NATIONAL HEALTH with a unique structure and authority to promote a self-sustaining adaptability within our nation’s healthcare industry. The fullest expression of this structure and authority would be necessary to achieve a new level of enlightened reform based on a new strategy and three national projects. If the healthcare industry were to fully support the role of NATIONAL HEALTH for healthcare reform, Altruism . Excellence . Cooperation . Reciprocity . Trust could become the over-riding V A L U E S for the healthcare of each citizen. Within 10 years, the health care offered to each citizen based on a nationally sanctioned and supported reform strategy could be the norm.
SOCIOECONOMIC CONFLICT-OF-INTEREST
An underlying commitment for NATIONAL HEALTH would be its ability to reduce the essential conflicts-of-interest that occur throughout the healthcare industry. The most important of these is a poorly acknowledged but pervasive, conflict-of-interest that has evolved over the last forty years. It is yet another example of the Hans Christian Andersen fable, “The Emperor’s New Clothes.” This conflict-of-interest exists within the institutions that pay for healthcare. It has occurred because the “payors” have also historically defined the healthcare benefits that are eligible for these payments. As a result of a slowly evolving decision process, the payment process has preferentially rewarded the growth of health care for Complex Healthcare Needs at the expense of a relative decrease in the reimbursement patterns for each citizen’s Basic Healthcare Needs. True reform within the healthcare industry is unlikely to be successful without a publicly supported resolution of this deep-seated conflict-of-interest, as in the unseen “Emperor’s New Clothes.”
Because of the slowly evolving reimbursement disparity, the innovation necessary for the advancement of enhanced Primary Healthcare has not occurred. The financial disparity contributes significantly to the over-all paradigm paralysis affecting the healthcare industry. Simply stated, Primary Healthcare is currently under-capitalized. To promote fundamental change, a certification process for Primary Healthcare is an essential requirement for reform. Most importantly, the certification process would compile a list of attributes for Primary Healthcare that would improve its recognition as having the skills to offer enhanced Primary Healthcare and, as such, its eligibility for the augmented reimbursement of its health care. Within the AVAILABLE + ACCESSIBLE Sub-Page of the APPENDIX Page, I discuss the basis for a substantial improvement in the over-all efficiency of healthcare, occurring as a result of enhanced Primary Healthcare that becomes equitably available to each citizen.
REIMBURSEMENT STRUCTURE
Given the current status of our healthcare traditions and its financial trends, a multi-factorial set of socio-demographic factors will continue to substantially increase the level of national spending for healthcare. In July of 2012, Medicare predicted that healthcare would represent 19.6% of the Gross Domestic Product in 2021. (42) Every new cancer medication, advanced surgical robotic technique or construction of a specialty hospital represents a new challenge for each public and private source of healthcare reimbursement or financial support. When a citizen receives a new type of health service, each source of reimbursement attempts to devise its own means for allocating financial resources to the new health service. This is a problem that ultimately cannot be solved by the various forms of indirect and disconnected rationing that characterizes our current payment processes. Even by limiting the payment for new types of health services, many sources of health insurance also limit the benefits for Basic Healthcare Needs. Unfortunately, enhanced Primary Healthcare for Basic Healthcare Needs is the specific health benefit that could improve the financial efficiency for the health care of Complex Health Needs by a persistently managed process to achieve Stable HEALTH regardless of the underlying Causes of Disease. (see Personal Survival Plan Sub-Page of the HEALTH FORUM Page.)
The absence of a nationally defined list of minimum criteria for the insurance benefits of Basic Healthcare Needs is a major problem for any person who is an infant, is disabled or homeless or is a woman requiring maternal healthcare. As an isolated example, routine tetanus immunization in the absence of an injury was historically not a Medicare benefit. Historically, this coverage definition was probably an attempt to prevent the cost of health care for any citizen who is given more tetanus immunizations than they needed. However, the lack of Medicare coverage for routine tetanus immunization also reflects the inability of the Medicare benefit structure to support a standard immunization schedule diminished the value of Primary Healthcare necessary for Basic Healthcare Needs. In many other situations, an integrated coverage benefit by any source of insurance to support the coordination of health care for Basic Healthcare Needs is less definable based on actuarial efficiency. As a result, the healthcare for these Basic Healthcare Needs is less insurable given the absence of any standardized criteria for defining the operational characteristics of effective and efficient Primary Healthcare. This deficit applies particularly to any citizen who eventually may require continuing, intense health care for Complex Healthcare Needs.
It is a fundamental assumption for NATIONAL HEALTH that the actuarial efficiency of Basic Healthcare Needs requires a process to recognize whether or not a Primary Healthcare clinic is fully operational to offer effective as well as efficient health care. Under the APPENDIX Page, there is a Sub-Page with a title: “HEALTH SECURITY certification.” It is a preliminary list of criteria for recognizing a Primary Healthcare clinic as having the capability to offer and arrange effective and efficient health care. Without a national strategy to promote this level of Primary Healthcare, there is probably no future alternative for cost control but to implement increasingly stringent rationing. The restrictions associated with rationing would be a particularly difficult problem for any person requiring accessible health services for Complex Healthcare Needs. Thomas Bodenheimer, M.D. describes the profound importance of these issues in his commentary “Coordinating Care – A Perilous Journey through the Health Care System.” (5)
MANAGING CHANGE
Beginning in 1993, Congress acted almost annually until 2015 to solve the problems associated with how Medicare pays its affiliated physicians for their health services. Almost annually before April, there was a political scramble by Congress to prevent a reduction in payments to Medicare affiliated physicians. The annual Medicare physician payment problem reflected a continuing pattern of increasing financial demands by the healthcare industry. Finally, Congress in 2015 changed the payment structure of Medicare to a new process beginning in 2017, known as MACRA. The future stability of this payment structure and its ability to adequately finance enhanced Primary Healthcare is unknown given its substantial increase in reporting requirements for physicians. This new initiative represented special problems for its Primary Physician since their automated algorithms for defining a person’s Primary Physician was only 70% accurate. This portion of MACRA was eventually terminated late in 2017. Its future was undeclared at that time.
To avert a continuing crisis within our healthcare traditions, a strategy for promoting a widely acknowledged, national consensus should be the guiding attribute for any new direction to the reform of our nation’s healthcare. The consensus necessary for improved financial efficiency will require a national commitment to a new level of Altruism, Excellence, Cooperation, Reciprocity and Trust. NATIONAL HEALTH would be a new semi-autonomous institution, Chartered by an Act of Congress, having no direct involvement in the financial reimbursement of healthcare. The Congressional Charter would eventually be ratified by each State’s legislature. Since each state controls the private health insurance companies operating within their state, each legislature would recognize the NATIONAL PRIMARY HEALTHCARE BENEFITS PLAN. As proposed for NATIONAL HEALTH, each state would honor the same coverage benefit structure as a minimum for the health care of Basic Healthcare Needs within their state for reimbursement by private health insurance and Medicaid. Similarly, the Congressional legislation for NATIONAL HEALTH would do the same for all benefit structures managed by the federal government. The direct allocation and distribution of payments by all current financial systems would not be directly regulated by the presence of NATIONAL HEALTH.
RESOURCE ALLOCATION
A period of at least five years would likely be required to achieve a significant improvement, as in a DECREASE, in the total number of citizens experiencing inadequately available Primary Healthcare. The Congressional Charter for NATIONAL HEALTH would define three specific projects necessary to improve the efficient and effective use of our national resources: 1) a NATIONAL PRIMARY HEALTHCARE BENEFITS PLAN, 2) a NATIONAL PRIMARY PHYSICIAN EDUCATION PLAN and 3) a HEALTH SECURITY CERTIFICATION PLAN. The NATIONAL PRIMARY HEALTHCARE BENEFITS PLAN would define the specific health services reimbursable by any payment source offering health care benefits for Basic Healthcare Needs, including the economic support from Medicare, Medicaid, the Indian Health Service, the Community Health Services, the Defense Department including the Veterans Administration, State and Federal agencies or private health insurance. The actual payment would still be defined by the respective source. This PLAN would be limited to Primary Healthcare benefits.
Similarly, the NATIONAL PRIMARY PHYSICIAN EDUCATION PLAN would define a national process for the education, post-graduate training and continuing education of Primary Physicians, eventually limited to HEALTH SECURITY certified Clinic Physicians. This PLAN would be especially attentive to the availability of the physician resources necessary for the Basic Healthcare Needs of all citizens, community by community.
The HEALTH SECURITY CERTIFICATION PLAN would define the operating character necessary for a Primary Healthcare clinic to be recognized as “certified.” All currently established national, regional, state or local institutions that are associated with the improvement of our nation’s healthcare, both non-profit and governmental, would be invited to become involved in the implementation of these three national projects.
Additionally, NATIONAL HEALTH would define the options to be used by any economic reimbursement source to augment the financial support of HEALTH SECURITY certified Primary Healthcare. The increase would be important for improving the operating character of enhanced Primary Healthcare through its augmented capitalization. Among many other needs, this improvement would promote an increase in the number of physicians committed to a professional career as a Primary Physician. Finally, NATIONAL HEALTH would be given a mandate by Congress to achieve a specific proportion of the Gross Domestic Product dedicated to healthcare within ten years of its authorization. Currently, a goal of 13.0% or less by 2029 should be the Congressional mandate. A substantial and broadly supported mandate will be necessary to mobilize and focus the required national commitment within our Nation’s entire healthcare industry, however painful the transition might be. With a highly focused, community by community, improvement in the SURVIVAL COMMONS for the citizens of each community, it may be eventually possible to lower the health spending by our nation’s healthcare to 11% of our nation’s economy. This would also be more likely to partially stimulate an associated national economic growth rate of 4 – 5%, a rate that would more effectively support our nation’s autonomy within the world’s global economy.
REIMBURSEMENT SYSTEMS
NATIONAL HEALTH is not intended as a future institution to mediate the direct financial reimbursement for health services. The Initiative reflects an observation that the necessary changes will not occur as a result of any new national payment system. In fact, the current level of chaos in our nation’s healthcare is partially related to the fragmented character of its current reimbursement processes. To improve the efficiency of this process, a single federally mandated institution for the reimbursement of all healthcare has been periodically proposed in Congress for nearly 70 years. However, there has been a complex understanding at many levels of our society that a centralized payment process associated with the Federal government would involve unacceptable changes given our nation’s legal, medical, social, economic and innovation traditions.
COOPERATION, RECIPROCITY and TRUST
To counteract the “easy solution” concept of a single payment institution, NATIONAL HEALTH as described on the Initiative Page would maintain a sustained and widely recognized responsiveness to regional and local needs. This responsiveness would be achieved by an operational structure based on the Design Principles For Successfully Managing a Common Pool Resource as formulated by Elinor Ostrom, especially its decentralized governance. Professor Ostrom intended these Design Principles as applicable to managing any “common-pool resource” in a manner to prevent the destruction of this resource. Promoting a widely supported tradition of regional and community involvement would be necessary for NATIONAL HEALTH to successfully sponsor healthcare reform. Initially, the regional and community connection to healthcare reform will use the Design Principles of collective action to assure the equitable availability of enhanced Primary Healthcare for each citizen, community by community.
Nearly 800 Community HEALTH Forums would be necessary. Each locally initiated Forum would be assisted by a District Council for its training and technical support. Each Forum would serve the HEALTH needs of approximately 400,000 citizens, on average. The Forum for each community would establish and annually revise a Community HEALTH Plan for assuring that equitably available Primary Healthcare exists for each community citizen. Eventually, each Plan would specify that this Primary Healthcare is also SECURITY HEALTH certified. Monthly, each Forum would evaluate its success by tabulating the total number of hospital days used by its citizens during successive calendar months as a basis for monitoring the success of its Community HEALTH Plan.
With the improvement of locally driven adaptability, the healthcare industry can be engaged to achieve an improved commitment to national priorities. Equitably available and ecologically accessible enhanced Primary Healthcare that achieves an improved level of economic efficiency can be achieved. Prompted by this process, reliably effective healthcare would follow, as the details of daily resource allocation acquires greater surveillance and attentive precision.
COMPLEX HEALTHCARE NEEDS
Given this perspective of our nation’s healthcare, it is important to understand the human immediacy that is the ultimate mandate for a new strategy to reform our nation’s healthcare. The real-life healthcare currently offered to the neediest of our citizens represents that immediacy. Life events may be the best means for understanding the profound challenges requiring a new level of adaptability within our nation’s healthcare. The seriousness of the need for change is obvious by reading the Personal Health Stories of just five people (see APPENDIX Sub-Page PERSONAL HEALTH STORIES ). They are generally representative of a small group, 5-10% of our citizens, who require 70-80% of the resources devoted to healthcare in our country. Only five Personal Health Stories are necessary to describe 1) the simultaneous occurrence of many separate, life-disrupting health conditions requiring an intense, daily effort to achieve and sustain a citizen’s Stable HEALTH and 2) why our current healthcare industry results in a higher level of eventual and uneven effectiveness for these citizens.
The Personal Health Stories describe the needs of five fictional people. Yet, each story comes from common, real life events. They represent the issues that healthcare in the future must accommodate, through the actions of either NATIONAL HEALTH or another strategy for the reform of our nation’s healthcare industry. It is possible that NATIONAL HEALTH could be the least likely of the reform options to eventually require a formalized rationing process to achieve substantially improved financial efficiency. Simply stated, a process of healthcare reform must apply to all citizens as the basis to achieve a uniform level of high quality for the healthcare of citizens who have, or may soon have, highly unstable Complex Health Needs.
the V I S I O N
People with health conditions similar to the citizens described by the PERSONAL HEALTH STORIES Sub-Page of the APPENDIX Page are familiar to every Primary Physician. Our nation’s healthcare will not improve its efficiency OR effectiveness until we are reliably able to serve the needs of these five people. At some time, a member of almost every citizen’s Extended Family is likely to have Complex Healthcare Needs similar to one of these five people. NATIONAL HEALTH would represent a new strategy for promoting the social capital to strengthen each community’s SURVIVAL COMMONS for the benefit of these five citizens as well as all the other citizens of our nation.
To guide this view of healthcare reform, I have chosen a long-term V I S I O N for NATIONAL HEALTH: STABLE HEALTH FOR EACH CITIZEN.
PARADIGM SHIFT
A nationally sanctioned institution could reduce the cost of the healthcare industry through a dedicated, nation-wide effort to promote enhanced Primary Healthcare for each citizen, neighborhood by neighborhood and community by community. The augmented level of social capital promoted by NATIONAL HEALTH will generate a halo effect for resolving co-existing community needs, such as homelessness, early childhood education and the “mindless menace of violence” described by Senator Robert Kennedy in 1968. Most importantly, the ultimate value of the social capital created by the new strategy and the three national projects could be measured in the future by the improved autonomy of our nation within the world-wide community and the world’s market-place arenas for its Resources as well as for its Human Dignity and Knowledge.
