Part 2: The four tenets of health care’s social contract with America

As I outlined here, there has been a precipitous drop in the public opinion of America’s health care system.  I argued that this drop in perception can be connected to a perceived violation of the social contract the health care sector has with the rest of society.

While opinions about what constitute this contract can vary widely, and should, I would submit that this contract can be largely distilled into four areas.  This is based on my observations of the system across almost two decades, as a convener and consultant.  These might be close, or they might be off.  I’d encourage your reflection and feedback.  But I think these four constitute the broad agreement we have with one another.

The first two are relatively non-controversial.  The last two inspire more debate.  However, I think each represents a fundamental pillar of the social contract the US health care system has with society as a whole.

 

1.  The healthy will care for the sick or infirm

This seems relatively straightforward, and relatively speaking, it is.  However, one only need look to history to see this hasn’t always been the case.  Lepers have been cast out of society without support from the healthy ranging in time from the days of Jesus to those of Fr. Damien of Molokai in Hawaii.  In fact, it was such an act of selflessness to care for the sick in this instance that the Catholic Church made Damien a saint. You know what they did with Jesus…

Closer to the present day, recall what it took to get clinicians to care for AIDS patients in the 1980’s.  These were acts of love that were nonetheless uncommon for a sector where the healthy will care for the sick or infirm.

We take this tenet of the social contract for granted. However, when it is violated, or better yet, when some fulfill it in spite of the reluctance of the sector at large, we hold up the examples in honor of fulfilling the promise of our contract with one another.

 

2. The middle aged will care for the young and the old

Each society handles the question of care for young and old differently.  For many in the US, care and support comes through public programs, namely Medicaid (for kids and pregnant women, in particular) and Medicare (for those over 65).  Notably, when these programs were developed as part of President Lyndon Johnson’s Great Society, 1 out of 2 seniors lived in dire poverty.  Child mortality in the US was 25.7 deaths per 1,000 live births in 1967 to 6.5 deaths per 1,000 live births in 2016, as evidenced in the chart below.

These programs were borne out of a belief that the US was letting down both its children and its elders.  At the signing of the law creating Medicare, former President Truman joined President Johnson and offered comments on the importance of the new legislation.

Not one of these, our citizens, should ever be abandoned to the indignity of charity. Charity is indignity when you have to have it. But we don’t want these people to have anything to do with charity and we don’t want them to have any idea of hopeless despair.

America owed better to its seniors and its kids, as a result of a long standing social contract with one another, and so Medicare was born.

 

3.  We will pay for each other’s care through a community financing model called insurance

The first two tenets are reasonably settled today, though I’ve outlined historical antecedent that shows this wasn’t always the case.

This third plank of the social contract is a central pillar of the Affordable Care Act.  As such, while there is some concern about it, I think it is increasingly both settled law and largely embraced by a majority of Americans (though I know some might disagree with that and are organizing to prove the point incorrect), particularly in states that have embraced the ACA.

Think of this plank in this way:  do you want to pay for the cost of hospital care, cancer treatment or open heart surgery out of your pocket, and do so without insurance?

Surely the answer is no.  You want to have insurance to do this.

In fact, the premise of paying with insurance is so broadly shared that the vast majority of health care services – I’d guess easily over 98% of care – is financed through a form of insurance payment.  Practically all providers have a reimbursement that is driven not by the consumer marketplace, but via a process of negotiation with health plans.  Providers are paid what they can negotiate.  Even the infamous charge master, the very high list of prices that hospitals would charge without insurance, is mostly a function of negotiations with insurance companies.  It sets out a marker to begin discussions with health plans, a marker that is seldom (and, depending on the institution, sometimes never) actually used to determine pricing for consumers.

So, both consumers and the industry have broadly accepted that the mode for paying for health care is through insurance.

There are generally only two ways to pay for this insurance:  through premiums and through taxes.  For commercial or employer based plans, these are generally purchased with premiums.  Those premiums are often paid via a mix of employer and employee contributions.

For Medicare, Medicaid, DoD, and VA benefits, those are generally paid for via taxes.  These beneficiaries receive a subsidy from the public treasury for their care as a result of the social contract they have with society.  (Military and veteran service members strike a contract with society:  provide for our common defense and security, and we will cover your health care benefits, among a range of other compensatory actions.)

The individual marketplace is something of a hybrid, where premiums are paid for by personal contribution.  However, in about 75-80% of cases, individuals also receive taxpayer funded subsidies, known as “premium supports,” for purchase on an exchange.

None of this mitigates personal individual responsibility, a central tenet in the core American social contract.  In fact, this part is so central that to forego individual responsibility would be to forego what it means to be American.

But, individual responsibility applies in different ways and in different times.  We don’t expect children to demonstrate individual responsibility any more that we don’t accept that seniors have already paid their share.  One cohort is yet to fulfill its responsibility, the other already has.  Therefore, time is a central component to individual responsibility.

The idea of Medicaid expansion and premium supports on the exchange, both a result of the Affordable Care Act, is to support individuals while they get back on their feet financially.  These programs don’t undermine personal responsibility, they support it by recognizing that such responsibility is often fulfilled in different ways and in different periods during ones life.

So, again, while there is still something of a conversation on this topic, particularly in states that have yet to expand Medicaid, I believe this is increasingly settled law.  The same was true for Medicaid following its 1965 establishment, even though it took until 1982 for Arizona to create its Medicaid program, making it the final state to do so.

While final adoption may take time, the idea that care will be paid for via a community mechanism of insurance is now a firmly held tenet of America’s social contract with health care.

 

4.  The health care sector will be good stewards with the resources we provide it

This final plank of the social contract is perhaps the most difficult one for America to deal with.  Many health care organizations argue they are good stewards with the dollars provided by private and public contributions.  Nevertheless, the US continues to be the most expensive place among industrialized nations to receive the lowest quality care.

Protecting against exorbitant health care costs is a central piece of the social contract.  President Johnson spoke to this during his comments announcing Medicare in 1965.

No longer will illness crush and destroy the savings that they have so carefully put away over a lifetime so that they might enjoy dignity in their later years. No longer will young families see their own incomes, and their own hopes, eaten away simply because they are carrying out their deep moral obligations to their parents, and to their uncles, and their aunts.

And no longer will this Nation refuse the hand of justice to those who have given a lifetime of service and wisdom and labor to the progress of this progressive country.

More recent policy discussions have largely focused on costs.  Of late, pharmaceutical prices have been a primary target of this debate.  Before that, it was hospitals.  Before that, it was insurers.  Before that, it was specialists.

The cost discussion is not a new one.  It is simply an evolving one, just as the previous three elements of the social contract have been.

This is also where tremendous consternation among the American public rests.  Medical bankruptcies continue, in spite of the coverage expansion under the ACA.  In 2016, the Kaiser Family Foundation estimated that approximately 1 million bankruptcies a year are the result of medical expenses.  This is after the ACA coverage expansion, highlighting that the issue is lingering rather than is resolved.

 

Bottom line

The idea of a social contract isn’t new, though it may be new to those that think about health care and health policy.  These four tenets are, I believe, the primary elements of this contract.  Each tenet is largely held by a majority of Americans, I believe, though I recognize this is open for debate.  However, I would submit that the public policy issues in health care today are themselves reflective of trying to apply these contractual terms to modern problems.

People might differ on how to pay for insurance, for example, and whether that should be through taxes or premiums.  But the reality is that today it’s both, and the liklihood of either model – premiums or taxes – being done away with is minute.  Likewise, while advocates might differ on pricing terms and the reasons for America’s astonishingly expensive health care system, most believe that good financial stewardship is a responsibility of the health care sector, regardless of overall pricing and costs.

Until item four is as settled as items 1, 2, and 3, America will continue to wrestle with policy options that meet the terms of our social contract with one another.