Book Review – Catastophic Care

By | July 28, 2014

In “Catastophic Care: Why Everything We Think We Know About Health Care Is Wrong”, David Goldhill does a very good job of laying out many of the biggest issues in US health care pricing, a field I actually happen to know a lot about. From his experience running a company and being on the board of the Leapfrog Group, Goldhill is in a good position to understand the excessive, and growing, costs of our current system to individuals and companies, as well as the challenges in achieving price and quality transparency in health care.

Although he superficially comes out against the ACA, he seems to accept that it was the only thing politically possible at the time, though he would have liked something even more extreme. The short period of history since the book has been published has not been too kind regarding some of his speculative criticisms of the ACA. In particular, he suggests that the uninsured population may actually increase after the introduction of the ACA, when in fact it has decreased by about 10 million. His arguments against the ACA are some of the weaker parts of the book. One good point he does make about the ACA is that despite all the uproar, it actually affects a relatively small percentage of the population.

Where the book shines is in laying out the fundamental problems with our health care system regarding the relationships between health plans (a.k.a., health insurance companies, insurance carriers and payers), medical providers, employers and employees and their dependents. The financial incentives for providers have inevitably brought us to the situation where fee for service leads providers to perform more (and more costly) procedures. Similarly, health plans acting as third party administrators of self funded plans for medium to large employers. generally, those with more than 1,000 employees, are incented by higher volumes. Some of this is being addressed by Accountable Care Organizations and corrections to the Medicare reimbursement system, but it is the tip of the iceberg.

Goldhill also does a fantastic job of explaining how and why so much unneeded care is performed, and why it is not only economically bad, but actually produces worse clinical outcomes. More care can be worse. But, he also understands that in the extreme case of the heat of the moment when a family member or loved one is very ill, it can be very hard not to want the doctors to do everything possible to save them, regardless of cost or likelihood of success. Since the max out of pocket on insurance plans is roughly around $10k, the costs aren’t typically borne by the family, but are spread across everyone in higher premiums.

In a section on cost sharing and price transparency, he mentions my company in a footnote as a potentially successful startup. We’ve since had a successful IPO this year and we experience continued rapid growth. Maybe this health care pricing transparency thing has something going for it.

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