Why is our health care system so messed up? It would seem that the efficient delivery of health care could be accomplished with much less stress, muss, and bother. We have a defined population (Americans), we have measurable outcomes (infant mortality,  chronic illness care markers, cost of care, cost in last 6 months of life, etc), we have a defined delivery system run by a set of professionals who are licensed (physicians), and we have a physical infrastructure already in place (hospitals, offices, long term care facilities, etc). What’s the problem? To quote a post from the blog naked capitalism, in a post about the financial mess:

[O]pacity, leverage, and moral hazard are not accidental byproducts of otherwise salutary innovations; they are the direct intent of the innovations. No one at the major capital markets firms was celebrated for creating markets to connect borrowers and savers transparently and with low risk. After all, efficient markets produce minimal profits. They were instead rewarded for making sure no one, the regulators, the press, the community at large, could see and understand what they were doing.

In the words of health care analyst Paul BataldenEvery system is perfectly designed to achieve exactly the results it gets.” There is a lot of money in the current system, thus a lot of folks who want to keep the status quo.

Medicare, with the least opaque payment structure, is the most recent delivery payment vehicle to come under scrutiny by the pundits. A very efficient, though open ended system of paying for care through a fee-for-service model has been the hallmark of this program from the start. Congressman Paul Ryan has set his budget-cutting sights on this program (as I discussed here). This program, interestingly, is the one program where defined population (ALL Americans over 65), measurable outcomes, and existing resources would allow us to easily transition to more efficient, less expensive care.

The Affordable Care Act created a myriad of changes to the delivery system. It created incentives to improve the delivery of care, improvements to the delivery of information to those who pay the bills, and provided information that allows patients to become wiser care consumers. Surprisingly enough, it may now be working for Medicare, even before the provisions take effect:

While our elected representatives wrangle over slicing entitlements, virtually no one seems to be paying attention to an eye-popping fact: Medicare reimbursements are no longer accelerating at a break-neck pace. The new numbers should be factored into any discussion about healthcare spending:  From 2000 through 2009, Medicare’s outlays climbed by an average of 9.7 percent a year. By contrast, since the beginning of 2010, Medicare spending has been rising by less than 4 percent a year. On this,  both Standard Poor’s Index Committee and the Congressional Budget Office (CBO) agree. (S&P tracks healthcare spending with the help of Milliman Inc., an independent actuarial and consulting firm.)

Why? As pointed out previously, systems are designed to achieve the results they get:

Zeke Emanuel, an oncologist and former special adviser for health policy to White House Office of Management and Budget director Peter Orszag, is certain that this is what is happening.  When I spoke to him last week, Emanuel, said:  “This is not mere chance: this is directly related to the initiation of health care reform.”  It is  not the result of reform, Emmanuel emphasized.  The reform measures that will rein in Medicare inflation have not yet been implemented.  But, he explained, providers are “anticipating the Affordable Care Act kicking in.”  They can’t wait until the end of 2013: “They have to act today.  Everywhere I go,” Emanuel, added, “medical schools and hospitals are asking me, ‘How can we cut our costs by 10 to 15 percent?’”

Combine a change in incentives with increased transparency regarding insurance and perhaps we can continue achieving different results.