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Reactions to Reinventing American Health Care: How the Affordable Care Act Will Improve our Terribly Complex, Blatantly Unjust, Outrageously Expensive, Grossly Inefficient, Error Prone System by Ezekiel J. Emanuel

Reinventing American Health Care: How the Affordable Care Act will Improve our Terribly Complex, Blatantly Unjust, Outrageously Expensive, Grossly Inefficient, Error Prone SystemReinventing American Health Care: How the Affordable Care Act will Improve our Terribly Complex, Blatantly Unjust, Outrageously Expensive, Grossly Inefficient, Error Prone System by Ezekiel Emanuel

My rating: 4 of 5 stars

Zeke Emanuel’s book on the American health care system and the Affordable Care Act can be a bit of a bumpy ride, but on the whole this rather breathless tour de force is well worth the attention of those interested in the country’s largest, most problematic industry.

Reinventing American Health Care comprises three roughly stitched-together parts, focused respectively on describing the American health care system and the origins of its crazy distortions, the process of creating and passing the Affordable Care Act, and the contents of the law itself – plus a sort of tacked-on set of predictions of how the system will evolve as a result of this legislation and other trends.

The first section would be a great short book in itself – the best (only?) comprehensive explanation of why the United States pays vastly more for health care than any other nation, yet gets at best average outcomes. It’s matter-of-fact, generally apolitical, and entirely masterful – absolutely worth the price of admission for anyone who wants to understand the system.

The second section’s focus on the inside baseball of policymaking is a more specialized. Kudos to Emanuel for highlighting the oft-unexplained role of the Congressional Budget Office score on the prospects of any policy. He brings clear attention to the resulting distortions that come with the CBO’s generally well-intended and well-executed purpose.

The third section feels a little rushed, especially its bonus predictions. Emanuel deserves credit for making quantitative forecasts about the impact of the ACA and trends in health care in general, though he often tries to tie the former too tightly to the latter.

Emanuel is full of personality, with an unabashed progressive bent – he takes as a given that central government policy is the solution to economic distortions. He acknowledges a great many flaws in the ACA, readily granting that unforeseen problems will arise in its wake, but almost blithely asserts confidence that further legislation will fix them.

While my own views tend the other direction – that well-regulated but decentralized and transparent markets lead to better outcomes – I’ve not seen a path to improving the health care system as masterfully and thoroughly argued from that point of view.

In my field of software product management we’ve adopted a saying from mechanical engineering, “Ugly airplanes don’t fly.” While by any definition (including Emanuel’s) the ACA is a very complicated, inelegant, ugly airplane; and while I would prefer to see solutions that reduce rather than increase regulation, tax distortions, and the like – I came away from Emanuel’s book thinking that on the whole, Americans and the health care system will be better off with the ACA than continuing on the earlier course.

As one would expect from a book of this scope, as many questions are raised as answered. But occasionally those questions come from what seem like purposeful evasions that materially undermine Emanuel’s overall convincing argument.

  • Emanuel glosses over a key issue, one of U.S. health care’s two “Original Sins” (my term): how and why did “insurance”, a financial instrument to spread risk for catastrophic events, get conflated with “financing”, the way to pay for routine procedures? No other service or industry combines the two – people do not file auto insurance claims when they get their oil changed – and in health care, this tie has led to the devastating equivalence of access to “insurance” to access to basic health care.
  • He pays considerable attention to the second “Original Sin”, the employer tax break for health care benefits that led to the problematic linkage of access to insurance with full-time employment. Emanuel suggests removing the tax break, showing that it “costs” the government far more than any other tax break (including the mortgage interest deduction). But he conspicuously avoids the idea of breaking the link by simply extending that same tax break to individuals directly.
  • Self-insurance, the mechanism through which large employers bear their employees’ own health risk by paying for health care directly, is an important consequence of the employer-oriented system (and used by nearly all employers of a thousand employees or more). In itself self-insurance is neither good nor bad. But self-insured employer plans are regulated differently from the “fully-insured” plans purchased by smaller employers. Emanuel skips over a new fee (tax? the terms are infamously mixed when it comes to the ACA) on members of fully-insured plans. Insurance companies will pass those fees along to small employers, leading to more self-insurance, with important ramifications for the system.
  • Emanuel does address the Taft-Hartley Act and related legislation, which encourage labor unions to create their own pooled health plans (funded by employers). However, he avoids addressing the union objections to the ACA because of these structures (moving health insurance to the government, which the ACA generally does, takes away one of the few remaining benefits that unions claim to offer their members). From the outside, it looked like an embarrassing oversight by the authors of the legislation – where’s the story of how the labor-sympathetic policymakers overlooked this issue, and how the unions were ultimately bought off placated?
  • In many ways, Emanuel reveals the disingenuousness behind the idea that the ACA will reduce cost. For example, he never explains why the law requires new taxes and fees (described in detail, especially Nancy DeParle’s negotiations with drug and device companies on their new taxes to “fund reform”), while also arguing that the ACA reduces government spending. How should the lay reader understand the need to “fund” legislation that is supposedly cheaper than what it replaces?

Reinventing American Health Care has other indications of bias and general carelessness that are big enough to detract from its ultimately convincing argument.

  • The term “reform” is used as an apparently self-evident synonym for “universal access to health insurance paid for by active wealth redistribution”. Why couldn’t “reform” mean a market-based system where people buy the care they need directly, in which insurance just provides protection from catastrophic expenses, or one in which people have the option to voluntarily purchase health insurance individually with the same tax advantages as employers?
  • Spelling errors are rife, especially of company names. “Medtronics” [sic], “Thompson Reuters” [sic], and “Endeon” [sic] (my employer, Emdeon – for whom I do not speak on this blog!) are just a few. What’s more, subject and verbs occasionally do not agree.
  • The terms “revenue” and “profit” are often used interchangeably. This error is perhaps a subtly revealing indicator of how the left-leaning policymakers (mis)understand corporate finance, but not acceptable in a book about the economics of the country’s largest industry.
  • The order of the discrete sections occasionally works against itself. For example, the section on the legislative and judicial history of ACA references individual provisions not explained until the subsequent “What’s in the ACA?” chapter.
  • Emanuel tries too hard (and unnecessarily) to attribute broader trends in health care to the ACA, such as in his forecast on the increase in telemedicine.

Even with these flaws and omissions, Emanuel’s book is a success. It’s erudite, heartfelt, compulsively readable – and for all that, convincing. I would love to see its mirror image – a similarly passionate and masterful argument from the right. But until the point there’s a similarly convincing policy from that side, Emanuel has convinced me that we’re better off in the ugly airplane of the ACA than on the path we were on.

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