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What A Real Healthcare Overhaul Would Look Like

A stethescopeThe 2,500-page healthcare reform bill has been the subject of great debate since the president signed it into law last March. But while it represents a vast overhaul of the medical insurance system, it does not grapple with fundamental problems of healthcare costs that date back more than a century, according to James Mohr, UO professor of history.

The underlying fee-for-service system of health care was established in the 19th century, driven by basic principles of supply and demand, Mohr observes. Physicians recognized the advantage of having a self-regulated monopoly of the healing trade and, through professional licensing, they were able to restrict their own supply, thereby justifying an increase in costs to patients.

But the arrangement rested—and continues to rest—on a fundamental paradox: Physicians have a vested interest in people getting sick because they are paid to make people better and, generally speaking, the more expensive the treatment, the more the doctor makes.

“By the 1920s,” Mohr said, “the high cost of seeing a doctor had already become a national problem.”

Three congressional bills in the early 1900s aimed at reforming this system were struck down largely through the efforts of the well-organized American Medical Association (AMA). It viewed any form of government oversight as a threat to physician autonomy, not to mention physician salaries.

The fee-for-service system became even more expensive when large, for-profit medical corporations and medical supply companies became involved, leading to the advent of high-priced tests and costly procedures. But the use of these costly services by some have priced an increasing number of others out of the market.

Ironically, the system that originally evolved to protect physicians’ interests has also eroded a good deal of the autonomy they once enjoyed.

“They are now up to their throats in bureaucratic paperwork, answering to several insurance companies at once in different ways, practicing defensive medicine, having no time to spend with patients and not being paid at all for service to poor patients,” Mohr explained. “Moreover, many of them have been forced to join corporate practices simply to have a life. In short, many have lost the independence once associated with their profession.”

As a result, “now you have a bizarre situation, where both the public and the doctors have become co-victims of a system that is spiraling out of control,” Mohr said.

Because the recent healthcare overhaul legislation did not address these structural problems—in other words, did not challenge the basic incentives that feed rampant overtreatment and unnecessary expenses—it was not opposed by the AMA.

But Mohr sees some potential for optimism in the growing number of group practices where doctors are salaried and thus able to employ less expensive and more holistic approaches to patient care without affecting their income.

“I think doctors would welcome incentives to care for people according to demonstrated best practices, rather than thinking always about the bottom line,” he said.

— Anne Conaway

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