"Making the sausage" that will reform broken system

There's an old saying about politics and process that goes: Laws are like sausages -- if you see either being made, you may lose your taste for them.

The quote has been attributed to both Mark Twain and Otto Von Bismarck -- the time, the late 19th century.

More than a century later, the sausages are still being made in our own political system as I write this column at the beginning of the third week of July.

AMA policy is created through a representative democracy -- our House of Delegates. All physicians in America -- not just members -- are represented through the organizations that vote in the House of Delegates.

That includes all state and territorial medical societies; more than 170 national specialty societies; and special groups and sections representing medical students, residents and fellows, medical school faculty, young physicians, international medical graduates, minorities, women, the military, and public health officers, among others. The list goes on.

For more than 25 years, our AMA House of Delegates has debated how to create and refine health policy to strengthen American health care. Our freedoms, our innovation, our ability to save lives with cutting-edge technologies are unique and the envy of the world.

What else is unique is how we pay for health care. There are only three ways to do it. The first is for the individual to pay for the health care they receive. All of it. For some medical conditions, that might mean an annual bill of more than $50,000, which only about 1% of Americans can afford.

The second way to pay isn't really "payment" at all -- it's the provision of charity care. We know that those who get care through charity have few choices and little control of their fate. They live sicker and die younger.

The last way is through pooling of money to pay for health care. That pooling can be formed in various ways, such as charging premiums or through taxation.

AMA policy rejects a single way to pay and deliver care for Americans. But it does recognize a need for pluralism. And that may put into play the three ways to pay for health care. Let me take you on a little magical mystery tour of recent developments in American health care.

For non-seniors, access to health care in America is essentially guaranteed only through the Emergency Medical Treatment and Active Labor Act passed in 1986. Under the act, emergency departments can't turn away patients.

For many, relying on the emergency department for care is a last resort, and for some it's the end of the road. It results in patients not getting the preventive care they need. And it's costly, adding tens of billions of dollars to the nation's medical tab that the rest of us are left to pay. It tells us that charity is not the future of health care payment or delivery.

So we are left with two payment options. The individual can pay for all care themselves. That requires the need to ensure that the ability to contract privately for services is preserved and that prohibitions to provide such are removed.

For the other 99% of Americans, the only realistic option is pooling. A mechanism is needed to administer that process. The current system is wasteful, fraught with redundant efforts, forms, policies and procedures. When a for-profit entity administers the pool, part of the premium goes to pay dividends to stockholders who may not be part of delivering or receiving health care. This means less money is available to pay for care.

When it's a nonprofit entity, that part of premium to pay stockholders should be kept in the system to pay for health care. But experience tells us that sometimes those resources go to administrative costs, including salaries for those who administer but do not deliver care.

One can pool money through taxation and then pay for health care. Medicare and Medicaid are two examples. The Dept. of Veterans Affairs and the Dept. of Defense are examples of pooling through taxation where those who deliver care are also employed by the payer.

We know that Medicare is a transfer of funds from the younger generation to seniors, and that those who receive medical care do not completely pay for all the care delivered. Medicare has never paid the physician what the cost of care is.

Until 1997, physicians could collect the difference between what Medicare paid and what the care cost to deliver, but that was ended that year in the Balanced Budget Act.

Medicaid, a state-administered program for low-income people, has never covered its costs, and the expectation that patients could afford the difference between what is paid and the actual value of care was never realistic. For some physicians, the administrative hassles are such that it is less expensive to provide the care as pure charity than lose money on the transaction between administrative requirements and reimbursement.

That's our current system in a nutshell, and it's long overdue for reform. At this historic moment, the AMA is working to improve our health care system for patients and physicians. We must fix what's broken and keep what's working.

As a physician, I know that doctors focus first and foremost on providing the best patient care we can within the confines of a broken health care system. As a physician, I'm also concerned with the rising cost of care, and I need better data on which treatments work best to help patients and physicians together make better-informed health care decisions. Research should guide and support clinical decision-making -- not dictate it.

Physicians work tirelessly for their patients, and the health system should help them do this. In addition to covering the uninsured, health system reform should repeal the broken Medicare physician payment system and improve the broken medical liability system. The private insurance market must work better for patients and physicians forced to navigate a maze of bureaucracy. Huge savings can be attained by simplifying duplicative administrative requirements for payment of insurance claims.

The debate is far from over. The AMA is at the table, helping improve the final reform legislation, including pushing for liability reform. When President Obama and the leaders in the House and Senate sit down to reconcile their differences, we'll be there.

Physicians are at the heart of the health care system, and the AMA considers its position at the center of the health reform debate an honor and a serious responsibility. This year, we have a historic opportunity to change the health care system for the better. If we don't seize it, our patients -- and history itself -- may not forgive us.