Papers -001 How to Fix Our Health-Care System (The Atlantic) "It's hard to find anyone who defends the structure of American health care. Every incentive is misaligned. Patients have little incentive to be prudent in their use of services, or to pay the costs of their own unhealthy lifestyle. Under the fee-for-service model, doctors and hospitals get paid more the more they do. Fear of random lawsuits causes them to practice "defensive medicine," and chills open interaction with patients and other professionals. Insurance companies make more money by denying claims." "These misaligned incentives, most experts believe, are largely responsible for the notorious inefficiency of American health care -- costing more than $8,000 per person, or twice what most other countries spend. The total tab -- $2.6 trillion in 2010, or 18 percent of GDP -- is substantially responsible for America's trillion-dollar deficits. The federal government pays roughly a third of the total national health care bill, mostly through Medicare (health care for the elderly) and Medicaid (health care for the poor). It also spends hundreds of billions -- $177 billion in 2011 -- in tax expenditures for employer-provided health insurance." "Instead of aligning human incentives, the structure tries to contain costs through bureaucratic restrictions." "About 75 percent of health care costs are attributed to chronic disease (a significant portion of which is brought on by obesity and smoking). About 30 percent of Medicare costs are spent in a patient's last year of life." "The solution, widely embraced by providers as well as patient advocates, is to create reliable health courts." "The way to align incentives, many experts agree, is by providing care through a single provider -- known in jargon as an 'accountable health care organization' or an 'integrated care provider.' Instead of being paid a fee for each service, the provider is paid a fixed annual price to do everything for the patient (with limited exceptions for catastrophic care). Instead of making more money by dialysis and amputation of limbs of patients with diabetes, the provider now has an incentive to keep the patient healthier by nudging them towards better lifestyles. The provider hires social workers in lieu of more surgeons." 05-12

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