Monday, October 8, 2012

Fwd: qotd: Donald Light on the Iron Triangle myth

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Subject: qotd: Donald Light on the Iron Triangle myth
Date: Mon, 8 Oct 2012 11:55:46 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

Response to the October 4, 2012 Quote of the Day on the meme of access,
cost and quality

October 5, 2012
Universal health care and the Iron Triangle myth of U.S. policy makers
By Donald Light

In my comparative studies of universal health care systems, I find their
cost/quality profiles vary quite a bit between each other, and over time
for the following reasons. The more such systems pay by fee, the more
providers drive up costs in the name of "quality" from which they
profit, such as Germany from after World War II up to the 1980s. The
Canadian system has been suffering from this seeming trade-off for
decades. Access stays universal but there seems to be "an iron
trade-off" between cost and quality, until systems start moving towards
bundled payments and then population-based capitation or salary within a
national health service and an ethos of shared responsibility to improve
quality within a fixed budget. (Notice the so-called "iron triangle" has
faded from view.)

Thus it's holding costs constant while maintaining universal access that
is key to improving quality, not only by eliminating care that is
detrimental but also unnecessary or avoidable care, by rethinking
clinical strategies. Ironically, some of the models of shared access and
budgets increasing quality are in the United States. Few, if any
national systems, can match the steady improvements in quality and value
of Kaiser Permanente, Intermountain, Marshfield, or the reformed VHA
(Veterans Health Administration). For example, the English NHS has been
learning from them for years.

The transformation of the VHA from a single-payer, fee-based,
poor-quality set of hospital-centered services, to a single-payer system
based on area population budgets centered on primary care, with
coordinated, community-based specialty back-up and hospitals as a last
resort offers inspiring lessons. Quality improved and costs sharply
dropped, so that 30 percent more veterans could be treated within the
same, fixed budget.

Reforms in Germany in the 1990s through today have also improved quality
while lowering relative costs and expanding access from about 94 percent
to 99 percent. Germany's multi-insurer base has been made single
payer-like by the government creating a single channel where all
insurers' premiums are risk-adjusted so all insurers operate on the same
risk-adjusted budgetary basis. The Dutch reforms since 2006 operate in a
similar way, with some distinct differences.

In sum, I would say the key is not single-payer per se but
population-based budgeting together with universal access, and a shared
ethos to improve quality within budgetary frames that give the lie to
the so-called iron triangle.

The Iron Triangle is an American myth for lazy and unobservant policy

Donald W. Light, Ph.D.
Professor, UMDNJ-SOM
Visiting Researcher, Center for Migration & Development, Princeton
Resident Fellow, Edmond J. Safra Center for Ethics, Harvard University
Senior Fellow, Center for Bioethics, University of Pennsylvania

Comment: As Professor Light shows us, with controlled budgets you can
still improve quality in a system that ensures appropriate access for
everyone. Although he states that the key is not single payer per se, it
is clear that the Iron Triangle (interdependency of cost, quality and
access) still applies to our fragmented, dysfunctional financing system
in the United States - a system that has only been perpetuated with the
Affordable Care Act. However, social insurance programs, including
single payer and health service models, have shown that the
inevitability of the Iron Triangle is a myth. An improved Medicare for
all would provide us with "population-based budgeting together with
universal access, and a shared ethos to improve quality within budgetary

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