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Uploaded: Friday, April 3, 2009, 2:40 PM

A 'total cure' for health care?
Health economist Harold Luft proposes a national health care system devoid of insurance companies -- and delivering better care for all

by Jocelyn Dong
Palo Alto Online Staff

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Ask Harold S. "Hal" Luft about the national health care system, and he will admit: He's been itching to reform it for years.

Luft is a nationally known health economist, director of the Palo Alto Medical Foundation Research Institute, and author of the 318-page book, "Total Cure: The antidote to the health care crisis," published in 2008.

One reviewer for a medical journal called the book "a health care reform plan that could actually work" and a "comprehensive, detailed and practical CTL-ALT-DEL for the U.S. health care system."

The timing is more than coincidental: Luft, a Harvard University-educated scholar and Palo Alto resident, predicted four years ago that a change in presidential administration would re-open the national conversation on health care reform.

He was right. President Barack Obama has made revamping the health system a priority for his administration, and the Congress has set a goal of delivering health care legislation to the White House by July 4.

In December, Obama's staff members convened 3,200 grassroots discussions across the country on health care.

They met with key stakeholders, including health insurers, on March 5. They sent Peter Orszag, White House director of the Office of Management and Budget, to testify before the U.S. Senate Finance Committee March 10. And they have hosted regional forums, the last of which is scheduled for Monday, April 6, in Los Angeles.

Unlike in the 1990s, when Hillary Clinton and consultant/adviser Ira Magaziner led an effort to bring sweeping changes to health care, the political climate today is ripe for collaboration, according to Luft and others.

About 87 million people lacked health insurance at some time in 2007 and 2008, according to a report released this week by the Obama administration.

The health care system cost the United States $2.2 trillion in 2007. Approximately $700 billion dollars of that is wasted on treatments that don't work, according to an oft-cited Dartmouth College study.

But while much attention has been paid to making sure every American has health insurance, Luft takes a different tack, largely sidestepping the long-stalemated debate about whether the system should be operated by a "single payer" or by "managed care." He believes that simply ensuring coverage is not enough. A more compelling starting point is the question of how to improve the quality of care patients receive at a reasonable cost, he said.

"When I talk to people who have coverage, the system isn't working for them very well," Luft said in an interview with the Weekly, citing patients who receive care they don't need or want, some of which is fraught with side effects.

"I was trying to address what I would sometimes refer to as the 'morning after' problem. The morning after health reform you get everyone covered, but the system still isn't working."

Luft's plan, in brief, would offer coverage for all Americans when it comes to hospital stays and treating chronic illness. Those two categories alone account for 66 percent of all medical expenditures in the country, he said.

Half of all personal bankruptcies in the U.S. are caused by health problems and medical bills, according to a 2005 Harvard University report.

Unlike private health insurers, universal coverage would be offered regardless of a person's pre-existing health problems, Luft said.

It could be partly funded by taxes and partly by employers -- though he leaves the details to be worked out by key players.

He envisions a private-public partnership running the system -- "very insulated from politics," he said.

For less drastic health concerns -- such as backaches, flu and other "minor acute" illnesses and preventive care -- Luft advocates a private system in which everyone would choose a primary-care doctor and pay him or her based on services rendered (also known as traditional "fee for service").

The government would help those who cannot afford to pay for medical care by providing subsidies.

One way in which Luft's plan, which he's named SecureChoice, differs drastically from other proposals is that it would essentially eliminate health-insurance companies -- although he diplomatically writes that insurers could take on "new roles." SecureChoice calls for bill-processing businesses that would work for doctors, gathering payments from the universal-coverage pool (for services relating to a patient's chronic illness) as well as from patients themselves.

Luft said the so-called "payment intermediaries" could also help patients smooth out their medical payments to their physician over time by using familiar tools such as co-payments and monthly premiums.

But, Luft emphasizes, the doctors and patients -- not the payment intermediaries -- are the ones who would control decisions about care the patient receives.

Underlying the two halves of SecureChoice would be a new system of incentives, which Luft believes would improve care and decrease costs of health care nationwide.

Currently, health insurers try to keep costs down by refusing to pay for certain medical procedures, not insuring people with expensive health conditions and charging people higher co-payments, Luft said.

Using the carrot rather than the stick method, Luft suggests that one way to ensure quality medical care and lower costs of hospitalization would be to encourage physicians and hospital staff members to work in teams.

Together, they could find more efficient and effective ways to do their work, he said.

To provide an incentive, Luft's universal-coverage pool would pay a hospital team a single, bundled payment for the patient's hospital stay.

If the health care providers can figure out how to keep costs down and quality up, their net income would be higher, he reasons.

Another incentive would be to allow physicians to set their own rates based on their style of practice. For example, primary-care doctors don't currently get paid by insurers to spend time with patients -- some physicians even may be penalized for office visits that exceed 10 minutes.

Luft asserts that not only is quality of care better when doctors spend more time with patients, but that spending time pre-empts unnecessary medical expenses, such as premature visits to specialists and needless testing.

Under SecureChoice, physicians would be able to bill for longer office visits and even follow-up phone calls to monitor the patients' progress. People seeking that kind of care would choose those types of physicians and would pay accordingly, Luft said.

"Total Cure" also addresses issues such as health care rationing, technology innovations, development of a public "health outcomes" database, medical education, legislation and other sticking points for reformers.

Changing a national system as complex as health care may seem audacious, but Luft is not cowed. He has spent 35 years researching and teaching about health policy and health economics, including five years at Stanford University and 30 years at the University of California at San Francisco (UCSF), where he headed the Institute for Health Policy Studies after its former director, Philip R. Lee of Palo Alto, retired.

He was invited to review the Clinton health care reform plan in the 1990s. For the current administration's push, Luft recently hired a consultant to get him on the schedules of key decision makers in Washington, D.C.

He admits that getting heard is a complicated challenge.

"It's difficult getting people's attention, because they are so time-pressured," he said. "There are so many different players that are working on it. There's not just one place you can go to do that."

Despite the great detail that Luft has put into the plan, he does not believe it likely that SecureChoice could be adopted wholesale, given the political realities of so many groups all lobbying for their ideas and protecting their turfs.

"The lesson of the failure of the Clinton proposal was not the proposal itself but in my mind the fact that it was done in secret, away from the political entities and stakeholder groups," he said.

In contrast, Luft said he is willing and ready to negotiate.

"I've had some people recently who've been saying, 'We can't adopt such a big system, such a totally comprehensive change,'" Luft said. "So I've been thinking about pieces of it that would work."

In the accompanying edited Q&A with the Weekly (part 1 of 2), Luft offers a glimpse into the health care system and explains the key components of his SecureChoice plan.

Watch Luft online:

VIDEO: A total cure for health care? - Part one
Luft speaks on the idea of universal coverage for hospital stays and chronic illness.

VIDEO: A total cure for health care? - Part two
Luft talks about primary-care doctors and eliminating health insurance companies.

VIDEO: A total cure for health care? - Part three
Luft answers audience questions at Books Inc. in Palo Alto

Next week: Harold Luft discusses how his plan would allow people to choose their primary-care physicians, how health care providers could access national health data to improve the care they offer, how health care rationing would be prevented and more.

Chat with Harold Luft

Health economist Harold Luft will be online to answer your questions about health care reform. Go to TownSquare on PaloAltoOnline.com at noon on Tuesday, April 14, where Luft will be chatting live with readers.

Comments

Posted by Mike F, a resident of East Palo Alto, on Apr 5, 2009 at 9:18 am

A comprehensive national health care solution has been buried time and time again. Corruption by HMOs for profit over patient care has been so blindingly obvious as seen by the previous Administration to ignore underprivileged kids under the SCHIP program has pushed this issue back into the light of day. To have a feature article in Palo Alto's local newspaper is an important step in getting things right. The Obama administration needs to be empowered by the grassroots to include this solution instead of his compromised partial solution. Harold Luft must be heard in Washington (again).