Bow-tied and forthright, economist Lawrence Van Horn looks at the politics of healthcare with some pessimism. An associate professor at Vanderbilt University’s Graduate School of Management, Van Horn directs the school’s programs in health affairs and sustainable healthcare finance.
Looking at what he considers a not-very fruitful political discussion about healthcare, VanHorn wishes his kids could vote, so that the next generation’s healthcare bills might not be so enormous. He’s not very optimistic, but he thinks what the political process can’t achieve in healthcare reform, the market may be able to.
Van Horn and two colleagues recently published the results of a two-part survey on healthcare priorities, with attendants at a healthcare industry conference in 2009 and a national sample in spring 2010, after the Affordable Care Act was signed into law.
They found, surprisingly or not, that the most significant differences fell along political party lines, regardless of whether people worked in the industry. Democrats and Republicans had pretty much completely opposite preferences, especially when asked about increasing taxes to pay for services at their current levels. Nearly all Democrats polled favored an increase in taxes to support healthcare, especially to pay for preventative services and for the uninsured, while about a third of Republicans rejected the tax.
Elsewhere, a recent Gallup poll found Americans nearly evenly split on the Supreme Court’s ruling on the Affordable Care Act. Another Gallup poll found that a majority of Americans think the law will generally benefit the sick and uninsured — while also making life harder for taxpayers, businesses, doctors and people currently insured.
Either way, says Lawrence Van Horn, whatever the country’s opinions, if Americans want a sustainable healthcare system, the public debate needs to include an honest discussion about healthcare economics.
Q. To what extent do you think average Americans understand the complexities of the health care system and the incentives that drive it?
A. The majority of Americans don’t understand the economics of the healthcare industry. They don’t understand the economics of insurance. And they are confused. What they perceive to be health insurance is not really insurance. It’s prepaid healthcare consumption.
It really is striking to see just how our country has changed over the last 40 years around their attitudes towards healthcare and what the individual’s responsibility is towards funding it.
If I go back 40 or 45 years, when I was a kid, my parents paid for me to go to a pediatrician out of pocket. My parents paid for me to be born out of pocket. They viewed it was their responsibility to pay for these things. Now, as a father of four kids, it’s the expectation that I shouldn’t have to pay the full price of a well child visit. I’ve got my insurance to pay for it. I’ve got somebody else to pay for it. And it’s a huge cultural shift in the last 40 years to a mindset where people view somebody else the payer for their healthcare and their not the primary payer.
Q. How do you think these sentiments evolved?
A. The 1980s and early 1990s were the generation of Health Maintenance Organizations, with the idea that, “Man if we made access to physicians really inexpensive with a $5 co-pay, we could really improve people’s health.” What that effectively did was disconnect people from the true cost of going to a physician and consuming medical care and absolved them of any responsibility of their underlying health conditions. What we saw over the 80s and 90s and through the 2000s was growing obesity in the United States, such that it’s now an epidemic. And the reality is that the primary determinant of health in a population are lifestyle choices. We need to be held accountable for it. When I drive a car, if I speed and get tickets, it affects my rate. Similarly here, my lifestyle choices will influence the likelihood that I consume healthcare and my health and I should have an incentive to care about my decisions and how they affect my risk and my rates.
Q. How do you think the policy changes taking place — with the individual mandate, insurance exchanges and rebates, for instance — will affect how average consumers understand and view their healthcare?
A. I think the mostly likely outcome is really going to be driven independent of the healthcare reform debate and the role of exchanges and what not. The plurality of Americans receive their health benefits through their employer and those employer-sponsored health benefits are in the process of changing. They’re changing towards a catastrophic high deductible insurance product, as opposed to a prepaid healthcare benefit, much along the lines of what we probably went through 40 years ago, when we moved from pensions being a defined benefit to retirement contributions and the 401K. I would expect that 10 years from now a significant portion of the American population will receive a defined contribution from their employer that they can use to go out and purchase health benefits. And as that happens — independent of what the government does with healthcare reform policy — individuals will be bearing a greater share of the cost out of pocket. And that’s a good thing, as an economist.
Q. You regularly give a talk titled, “What Everyone Should Know about Healthcare but Probably Doesn’t.” Most of our readers work in healthcare, in finance, management, IT and policy. What do you think industry leaders should know, based on the research you’re doing?
A. The primary thing people need to understand is that a significant proportion of the healthcare that’s delivered has limited clinical evidence to suggest that it has benefit, that we are consuming healthcare at a rate that is impossible for us to fund, and the nature of our future healthcare obligations are so great that it’s impossible for us to deliver on them. And that’s very troublesome. So the reality is we need to fundamentally re-visit what care is delivered, where it’s delivered and our ability to supply that. What we’ve done to date is not something that we can continue.
Q. Do have any optimism that that debate will be had in the political realm?
A. No. Unfortunately addressing this is a lose-lose-lose. Benefits to Medicare and Medicaid beneficiaries need to be curtailed. People need to pay a lot more when they consume healthcare. And nobody is going to like that. The only winners of that will be future generations. And right now, unfortunately, my kids can’t vote.