By: Marty Anderson

The following was published in the Providence Journal in December 2009. It asserted that the problem with the pending health care law (now the ACA) was not its “universal coverage” mandate, but that it was proposing an extraordinarily complex central administrative structure that was beyond human capability to manage.

In recent months the Federal government has deferred the mandate for large companies to provide the coverage in the Health Care Act; announced that even its IRS IT systems cannot handle verification of low income patients, so they will be able to “self verify” that they are eligible for subsidized health care; and has issued several hundred pages of Federal directive that conflict with the mandatory State exchanges scheduled to launch in 3 months.

Because of this, it seemed useful to re-post this op ed….because who knows, maybe the failure of the mandated system will allow innovation and entrepreneurship to flourish in meeting our nations’ immense health care challenge.

Creating A Health Care General Motors
Op Ed – Providence Journal December 2009

The U.S. is close to appointing the most powerful manager – public or private — in the history of the Republic, with a span and depth of direct control over human life unmatched by even presidents of the United States.

The secretary of defense controls only the military. Treasury influences central banking, not where you can bank. State controls little, influences much. Commerce issues limited standards. Go down the list. There are powerful people sitting at the president’s table, but none of them has anywhere near the scope and depth of control over citizens’ lives proposed for the central administrator of the nation’s health-care system.

As this is written, there are two bills likely to define the central administrator of health care. One would mandate a central health choices commissioner. On Nov. 21 the Senate hijacked a House bill that would extend mortgage subsidies to veterans, and inserted into that bill – HR 3590 – the DNA code of a more complex and covert plan. HR 3590 would, through Byzantine modification of existing laws, make the secretary of health and human services the central administrator.

As any ‘lifer’ in the federal government knows, presidents come and go, but the senior management of a Cabinet department really runs the long term show.

Because of this “lifer” power, and because both HR 3962 and 3590 propose fundamentally the same central management structure…

…either the secretary or the commissioner will become in truth, the Emperor of Health Care.

Why “Emperor?” Because both bills literally grant a single human more direct control over 300 million citizens than even the president. No president could ever understand the complexity of the new health system. The president will be dependent on the emperor who runs the actual system.

The emperor will fail.

Not because she or he is evil or incompetent. Not because Congress is ill-motivated. But, because current bills will place her or him in an administrative system that no country on earth could make function.

We as a people need to focus on this administrative structure right now, or our grandchildren will be living, and dying, with our mistakes.

Congress is proposing good health care…..But it is also proposing an unnecessary and flawed administrative structure.

Current congressional health-care proposals would mandate two things:

a. the content of health care delivered, and

b. the administrative structure to deliver the content.

In fact both bills are administrative bills before they are a health-care bill. They propose:

a. raise revenue,

b. establish the central administrative structure, then

c. in 2013/2014 attempt the first experiments in 100 percent centrally-administered care (both public and private plans under one administrative system).

This is literally like saying let’s build a General Motors administrative structure, then let’s get people to pay for cars in advance, and in 4 years we will try making millions of cars we have never made before.

Google would never do this.

Congress is doing this.

Most fiery debate has centered on health-care content. Very little has focused on the extreme administrative structure being proposed: the all-powerful central commander, the emperor.

The health care content in the bills may be hotly contested, but at least it is based on previous experience.

No one on earth has ever tried to establish the massive administrative structure in HR 3962/3590.

Congress is inadvertently testing human ability to manage collective behavior, by proposing the largest single administrative structure ever attempted by the human species. Literally.

This is not hyperbole. It is written in the bills. For the moment focus only on the administrative structure proposed. Both bills would make everything in the nation effectively illegal, except those plans passed by the emperor and counsel. All public and private plans would have to be ‘qualified’, monitored, and consistently re-approved by one political appointee.

The law of the land will say that one human, advised by about 20 close advisers and some loose “counsel” requirements, would have direct legal control over the actions of more than 300 million other humans. Any manager or management scientist will tell you this is thousands of time more complex than any other human “span of control” and will be creating “cost of complexity” no one has ever seen before.

The administrative structure legally freezes current science in place and can make innovation much harder to implement.

Science works. Each day it tells us what was wrong in what we were doing the previous day. We only cracked the genome 8 years ago and today we have new categories of treatment that would have seemed fantasy in 2001.

How will such a massive administrative structure handle such constant radical innovation? Poorly. Like General Motors did.

By leaving the for-profit malpractice-lawsuit industry intact, Congress will effectively scare most health -care practitioners into following what they think the emperor wants, thus institutionalizing the incentives to over-test in emergency rooms and ration according to central rules averaged to 300 million people, not tailored to individual patients.

Both bills also contain many fixed administrative procedures built on current theories upon which scientists disagree. It’s one thing to try local experiments, and then correct a flawed metric on ‘re-admissions’ in one hospital but it is quite different to centralize R&D under one human and then build current ‘best practice’ into the law of the land.

If the emperor ever actually reads the Bill, she or he may be surprised to see that she/he even has direct influence over such ‘mission critical’ minutiae as the number of language translators in clinics.

The November 2009 USPSTF recommendations on mammograms could be ignored by individual physicians with better context. The proposed laws establish central Emperor-chosen ‘qualifications’ for all public and private plans, based upon new legal definitions of ‘evidence’. For example, Senate-sponsored HR 3590 makes any USPSTF “A” or “B” recommendation de facto law of the land. Will 300 million humans really benefit from ‘evidence’ panels of 20 people?

Like all experiments this administrative proposal will see failure and success, but its sheer size and its rigidity from the start, and the life-death consequences of even small administrative failures, has the potential to delay and prevent affordable care.

So, the administrative structure in the Bills requires much more attention than it has gotten.

Can the emperor’s mistakes be challenged, litigated and then corrected by the Supreme Court? Of course. But what do you do if you are waiting for critical health care, and we made a mistake in this Session of Congress by building the wrong science into the administrative rules of the bill?

If you have a complaint or innovation, you can’t negotiate with your health-insurance company. You must negotiate directly the constitutional power of the U.S.

And this is a political appointee. A person. What if Spiro Agnew or Joe McCarthy were appointed the emperor?

We can have universal coverage without a central commander administration.

Care and control are separable. One can have universal coverage of all citizens without the central commander proposed in HR3962/3590. Both Democrats and Republicans have proposed universal coverage with more flexible administrative structures.

HR 3000, for example proposed a national health service with regional communities no larger than 3 million humans and flexibility to correct inevitable mistakes we all make. Why did the House and Senate ignore this and propose central control over 300 million citizens?

Policy makers keep saying “other nations do this”. No, they don’t. None of the “national health-care systems” anywhere in the world attempts the administrative structure proposed by Congress.

No nation on earth has even considered putting a single human in direct administrative control of 300 million other humans. Japan, Germany, U.K, and others all have smaller populations, and further, their health-care administrative systems have been constantly de-centralizing and getting closer to patients as they learned expensive lessons of the limits of central control over decades. Even Sweden, with 9 million citizens, continues to decentralize its national system to municipalities (Kommun) and it is currently privatizing elements of the system such as pharmacy.

So, we are completely alone in this. Some might say we are being arrogant to attempt such administrative centralization right now.

At a moment when we are seeing the terrible results from collapsing central management structures that were “too big to fail” — the banking system, General Motors, AIG — it might be wise for us to truly think before we attempt to create an even larger administrative structure, using the basic law of the land, without the safety valve of ‘bankruptcy’ to correct any mistakes we mere mortals make during this term of Congress.

We need to apply some management science, not just health science to the care of our own bodies.

So what would constitute a good administrative structure? First, we must get one thing straight. We are starting a massive high-stakes experiment and no one can predict the outcome of a management system larger than any humans have ever attempted. Therefore any option that increases freedom to innovate is better than one that tries to predict how 300 million Americans, 2 billion sick people elsewhere in the world, global viruses, and billions of hospital-borne microorganisms will behave a priori. “Free” does not mean that anyone should feel freely entitled to someone else’s organs at public expense. It means people should be free to innovate towards better care and better administration.

There is good news.

First current proposals are so bad managerially that we risk almost nothing by doing something else. HR 3590 is so complex it defies implementation.

Second, we have plenty of successful patient-centered models we can adapt from national health care systems and successful companies around the world.

Third, we have strategic direction in the ignored Section 107 of HR 3000 (Rep. Lee,D.-Calif.). HR 3000 suggests quickly replacing everything in the U.S. with a new federal health service, which is unlikely to happen.

But, HR 3000 also proposes mandatory national “health rights,” plus health-care delivery regions of 500,000 to 3 million people. This patient-centered construct with local representation, transparency and regional customization, happens to match the most successful national health care systems around the world. It also emulates the most successful, sustainable business models humans have invented. (Often called “keiretsu” or “trading groups.”)

This HR 3000 Section 107 health-care delivery region organization is a management gem. It can be larger or smaller than a state. Like a river watershed it represents diverse people linked to a shared resource. It is tailored to a regional community…a social network formed around the kind of health care suited to that region. Utah, Idaho, northern Arizona have very different needs and belief systems compared to the Bronx. This concept allows both guaranteed “national” health care with a governance system that fits their lives.

Human networks for health care, like employment, do not stop at state borders. People from New Hampshire cross into Massachusetts for care all the time, and one would not characterize those states as “identical cultures.”

State boundaries inhibit cost-effective care. Today, private insurance companies are given a “within state” monopoly on a state-by-state basis. This blocks competition, raises complexity for all involved, excludes patients and slows innovation. Flexible regional coalitions would have more options than state-centered monopolies.

The current abortion debate makes several things clear. One, any system will continue to ration care. Two, some policies may only work with regional adaptation. Beyond abortion, we will probably face the patient-controlled “morphine drip” debate. Or medical marijuana. Regions can get care to people faster than Emperors.

We should immediately shift our debate to this regional administrative concept: national rights, regional patient-centered delivery. It is positively…..Constitutional. It has a legal basis in many of our environmental laws. And it underpins many successful national health-care systems, who have decades of practice.

A not so modest proposal. A challenge to our leaders.

If others can do it, why can’t we? Why freeze a bad system in place? Why not play to our entrepreneurial strengths?

We can separate care from the commander.

What if we established the health-care “content” items as national principles. As we did with civil rights and Social Security…..and the Constitution. These can be lofty and inspirational …and mandatory… without being imperial.

All humans are created equal. Everyone in this country gets care.

Treat the first problem first. Cover everyone now. With existing systems. If we make administrative mistakes, at least we got people covered so we can work together to improve delivery. No emperor to overthrow.

• Universal coverage, no pre-existing condition exclusions, etc

• Minimum care and rights

• For-profit malpractice lawsuits limited to direct cost only. This admits that people do get sick and die, that science is not perfect, and that humans need to innovate to reach universal coverage that we can afford.

• Both public and private insurance are allowed to compete across state lines

Then we separate the administrative structure from the health policy. The most successful companies and societies all share one thing. They do not let structure dictate strategy. Structure-before-strategy creates expensive legacy systems and hobbled innovation.

• No emperor. We create a new Cabinet office, the National Health Service. As in, “we are here to serve, not command.” No fancy brand names like “affordable commissioner of healthy choices”. Move health-care administration away from housing, welfare and such. It is so important that we need total visibility as we conduct this experiment. Read your history, this is how most other national health-care systems started out.

• We limit the service to no more than 1,000 initial employees. We start with 100. We mean it when we say we want visibility. What is the core leadership function? What incremental resources do they really need for delivery at this level?

• We immediately expand the existing public options that cover much of the population (Medicare, Medicaid, Veterans, Government employees, etc.) by opening them to new customers with growth targets that could cover the 40 million uninsured, if they wish. Public can compete with private plans. Both are now allowed to compete across state lines. Polls show that 80 percent of customers are satisfied with their private or public plans, so keeping them intact and expanding them with customer choice should be reasonably easy.

At this point we have at least 80 percent of what is in the current bills in Congress. The cost is much less and the complexity is a million percent less….guaranteed.

We have stopped the bleeding, covered most of the uncovered, and allowed both public and private plans to compete and innovate. Very few babies in the bathwater here.

Then we begin to seed and grow the regional coalitions so successful elsewhere.

These can form immediately, with minimal risk because an Emperor will not be trying to change everything for 300 million people from one East Coast city.

Existing public and private plans know exactly who their customers are, and they can start building the regional delivery areas from patients upward, while they are still caring for both existing and new customers.

Regional coalitions do not have to be perfect right away. The core of the nation is covered. We can innovate.

Then, if we want to get truly innovative….we could allow U.S. citizens to buy their coverage and care from anywhere in the world. Few in Congress have noticed this, but what started as ‘medical tourism’ decades ago is now blossoming into a global health care business with millions of international patients. This is a topic for another discussion, but it would be silly to deny Americans the innovations that are happening among 2 billion patients around the world.

Congress is acting as if they are trying to sell us a used car.

“What would it take to get you to buy this bill today?”

Let them work on the principles and patients rights now.

We can buy the administrative system in installments.

If we appoint an emperor this winter, she or he will fail because Congress will hand them the same unworkable system that got us in this mess, plus new complexity beyond human comprehension.

Stop the coronation. Some citizens are hurting. Cover them. Now.

On the administrative question, we have time. Objectively, we have one of the best health-care systems in human history. It has flaws but it is functioning well enough for 80 percent of the people. If we cover the uncovered right now and make health care a universal right, we have more time to jointly work out the management.

We owe it to ourselves. We can make mistakes in taxes, mortgages, and even the military, and muddle through. But we have to get universal health care right – for the really long term.

There is deep national consensus on the objectives of the current health-care legislation.

There is absolutely no need for a central administrative commander to meet these objectives. Both political parties have already written administrative structures that promote universal care with local community innovation and choice.

We as a nation are ready to adopt and support universal care.

We are also human and we will need freedom to correct the many mistakes we will make together as we do this.

We have done this many times before. But never have we tried to stimulate national innovation, like reaching the Moon or launching Social Security, by establishing the world’s largest single command management, under the rule of a single political appointee.

We have time to correct this. We must correct this.

NB: I am a political independent who voted for President Obama and believes firmly that we need universal health care in the United States. I have also operated and researched management systems in more than 30 nations for more than 30 years. I have seen first-hand regions like Detroit and nations like the Soviet Union collapse. I have seen the power of entrepreneurial human activity in Silicon Valley and on the streets of Africa and Asia. I have seen the inner workings of Congress and administration, again first-hand.

I agree with the principles being set forth by Congress, but I also see an emerging management disaster written into the legislation that will ultimately delay or defeat many of the intended objectives of the legislation. My only agenda is to help focus debate on the flawed administration proposals in the current bills. If we truly were to emulate the successes of other nations, we would allow much greater local control in our national health care policy, while also encouraging nation-wide competition and innovative diversity. If we really wanted innovation, we would allow U.S. citizens to internationalize our health-care system and take advantage of global innovation in health care.