Catastrophic Care: Why Everything We Think We Know about Health Care Is Wrong – by David Goldhill

Review

By Brian L. Grant MD

MCN Talk regularly addresses — some would say obsesses about — the health care system in the US. David Goldhill in his book Catastrophic Care: Why Everything We Think We Know about Health Care Is Wrong has created a compelling and essential read for those who enjoy a sense of hopelessness and depression.

Affect and emotions aside, it is a must read for anyone who wishes to understand the scope of the irrational and out of control system of American health care and observe his views of how we may improve upon an out of control if not dire situation.

The book flowed from businessman, not health economist, Goldhill’s experiences with the death of his father in a hospital which he chronicled in an article in the Atlantic Monthly in September 2009. (Hint to those word-challenged readers: some Amazon reviewers suggest this lengthy article is a suitable surrogate to the much longer book).

Reading this with an open mind, it gives this writer pause and is tempering my enthusiasm for the ACA. Don’t get me wrong – I believe the ACA is superior to the system in place before, but that is saying very little. At core, Goldhill postulates and backs up with data and appropriate comparisons to the rest of world that health care, by our reliance on surrogates to pay for all aspects of care (insurance and government) has in place a series of perverse incentives, moral hazards and an absent marketplace that would work for much of the health care spend in improving quality, reducing utilization and curbing price.

He notes that unlike everything else in the economy, we rely upon insurance to pay for everything in health care, from the most routine to the most urgent. The surrogates are the customer and they are the problem, with primary customers – patients — being indifferent to cost and utilization, abrogating decision making and spending to others.

He illustrates that we conflate heath care with health, falsely and at our peril. When commenting on disparate health status of other countries he notes: “The reason Swedes, Japanese and Italians live so long isn’t their (very different) health care systems; it’s that they live like Swedes, Japanese and Italians…” Goldhill does not suggest that we do away with insurance, but that it be a true safety net for truly insurable and rare events, health crises that are “major, rare and unpredictable.” Vaccinations, routine exams, visits for the flu, contraception and the like, all affordable and predictable like a great deal of health care, would not fall under insurance but would be paid for by individuals of reasonable means.

He notes that the usual features of business and the marketplace, including competition, price comparison, and transparency, convenience and comfort, would quickly emerge when the surrogates are eliminated and buying decisions are made – in much the same way that we can dine out, vacation, obtain car repair or electronics – based upon providers who innovate and differentiate to receive our hard-earned dollars. He illustrates from his own experience the indecipherable nature of health care bills and the inefficiency of hospitals because there is no incentive to simplify and improve in the current system that is accountable to payers, not patients.

Goldhill demonstrates that the factors most impacting health are wealth, education and lifestyle, not access to health care. However, we focus on tests, procedures and other interventions that often do little and may harm, because that is where the money is. Most staggering is his illustration of how much the current system costs each of us in terms of real earnings in our lifetime.

He puts the lie to the concept that insurance is other people’s money. Thru payroll taxes both general and Medicare, employer spend, state taxes and other funds, our 18% of GDP currently spent on an inefficient health care system is money that is not going into paychecks and other more productive uses. When I was 13, we spent as a nation 5.8% of our GDP on health care. Today it is 17.6% and rising. Had health care only growth along with the GDP at the same rate over the past 45 years, we would each on average have more than $4,000 to spend annually each year, or $16,000 for a family of four.

Those who defend this increase on the basis of better technology and other factors should be reminded that the rules of economics and innovation generally work to reduce costs and increase quality at the same time. Witness the smartphone in our pockets that pack more computing power than those in the moon launches. We have seen a multi-thousand fold decrease in memory costs and gains in processing speeds and other features with major improvements in most technologies. Why not this same transformation in health care, which claims that technology and innovation is a driver for outsized cost increases?

Goldhill’s closing remarks in chapter 3 “The Disconnect” recaps his basic position: “Consumers don’t have enough information to be good consumers. But the agents we’ve designated to act on our behalf have proved to be worse. When it comes to regulating our health care system – providing real discipline on quality, excess, price and safety – there is no real surrogate. It’s a job that only we can do.”

The newer paperback version of the book is almost 400 annotated pages. Anyone in the business of providing care, overseeing, or paying for care – and perhaps the rest of us who receive care as patients would benefit from reading it.

Quick links:

Catastrophic Care: Why Everything We Think We Know about Health Care Is Wrong – by David Goldhill.

The New York Times Book Review: “Obamacare, How It Should Be Fixed.” David Goldhill’s response.

The Atlantic: “How American Health Care Killed My Father.”