I shouldn’t have read the Atlantic magazine cover story just before bedtime last night, just like I shouldn’t watch "Saw" before hitting the pillow. It’s a radical and repulsive health care proposal by media executive David Goldhill, who, after a year of pondering health care, is trumpeting his "Eureka!" idea: Make patients pay more–up to $50,000 a year–of the direct cost of care, to drive down prices. It’s like consumer resistance on DVD prices, he says, and look how cheap DVDs are now!

Atlantic, like all magazines in the current economic climate, is suffering. Its editors certainly knew the article would create shock, if not awe, and drive traffic to the Web and the newsstand. But is this a contribution to serious debate? No. It’s the typical product of an autodidact–the obsessively self-taught expert who believes he’s reinvented the wheel. I also wonder why NPR did an uncritical "Gee whiz" interview with Goldhill, who is CEO of what used to be known as the Game Show Network.

Here’s the gist of his new consumer-directed plan.

To fix both healthcare costs and hospital errors, we should:

• Make patients, ultimately including people on Medicare, pay about the first $50,000 of the cost of their yearly "noncatastrophic" health care (unless they’re poor, in which case government will help).

• Require everyone, including those on Medicare, to buy a catastrophic care insurance policy to cover anything over the $50,000 in a year.
• Require everyone (again, except the poor) to put a percentage of income into a tax-free "Health Savings Account" and use that money for most health care. If the cost of care is more than what’s in the account, the care will be financed by deductions on the next several years of the consumers’ payment into the HSA.

• People would save up over a period of years to, for instance, pay for the delivery of a child. Or a hip replacement.

• Once the HSA reaches a certain unspecified size in unspent funds, the consumer can spend the tax-free money as he or she wishes. Or the kids can inherit it. 

This, says Goldhill, will turn patients into savvy shoppers, make people live healthier, force the adoption of cutting-edge medical technology and seriously drive down prices. He uses the DVD example and also certain elective health procedures to support his point. Laser eye surgery, he notes, has gotten more competitive and cheaper because it’s not covered by insurance. What he’s missing is that laser eye surgery is elective and not insurance-covered because it’s so wildly different from a mastectomy. Or even a hip replacement.

The title of the article, "How American Health Care Killed My Father," gets off to a gripping start–how Goldhill’s father died of hospital-acquired infections after walking into the hospital with pneumonia. Goldhill had a right to be furious–these infections and other medical errors are rampant in some hospitals that don’t follow well-proven anti-infection practices and patient-tracking.

But Goldhill’s assertion that if patients had to pay their own bills hospitals would have to fix the problems is wackily off the mark. For one thing, numerous attempts in Congress to strengthen publicly available hospital error reporting have failed under heavy lobbying. State laws vary wildly and depend on self-reporting. Hospitals would certainly not be more forthcoming with the truth if patients were picking and choosing on price.

Goldhill says:

Accidentally, but relentlessly, America has built a health-care system
with incentives that inexorably generate terrible and perverse results.
Incentives that emphasize health care over any other aspect of
health and well-being. That emphasize treatment over prevention. That
disguise true costs. That favor complexity, and discourage transparent
competition based on price or quality. That result in a generational
pyramid scheme rather than sustainable financing. And that—most
important—remove consumers from our irreplaceable role as the ultimate
ensurer of value.

Goldhill sounds sane until the part about consumers as "the ultimate ensurers of value," which is the heart of his proposal–if "ensuring value" means being on the hook for everything short of a week in intensive care.

Yes, something is seriously askew in the vast gap between hospitals’ hugely inflated official bills and what insurance pays. He’s also right in saying that hospitals and doctors should publish their prices for common procedures and that patients should have the right to know the price of a hospitalization before they check in. And that hospitals and doctors have a financial incentive to over-treat.  But in cases of emergency, sudden illness like a heart attack or stroke or a serious accident, patients get taken to the nearest major hospital, no arguing with EMTs over the price/quality quotient. Even for the most voluntary hospitalization, patients want to go where their trusted doctor practices.

Goldhill also asserts that shame would likely prevent a hospital from presenting a big bill to an individual for a stay that involved a serious error or infection. As most of us know, a heartless billing department would still be a heartless billing department, several steps removed from the error. Auto mechanics often have more shame.

Even if self-pay did drive down ridiculous initial hospital bills, the price would not go below current Medicare rates. Goldhill is udoubtedly right that there would be less use of medical care, as families carefully hoard their health savings accounts for "a real emergency." It would go something like this:

• A high school student has sudden flu symptoms–maybe swine flu?–hard for Mom to tell. The kid is having a little trouble breathing, but let’s give it some time and see if she gets better on her own. (Maybe she’ll get better, or maybe she’ll get much worse and end up on a respirator, since swine flu appears to be deadliest among young people and pregnant women.)
• A young wife trips and falls and her quckly swelling wrist hurts like heck. She wraps it up, ices it and pops some painkillers. Why pay for the doctor and x-rays if it’s just a bad sprain? And since the couple is trying to save enough in their HSA to have a baby… (Maybe it’s a sprain. But if delicate wrist bones are broken, days of delay can mean permanent harm or at least a more expensive surgery)
• Junior takes a hard fastball to the head in summer league. He might have been knocked out for a few seconds, but seems OK, if a little woozy, in a few minutes. The coach wants him to go to the hospital, but the family is already saddled with several thousand in medical bills this year. They’ll take him home and watch him closely. (Maybe he’s his chipper self the next day. Maybe he has a light concussion, making him unknowingly more vulnerable to the next head hit. Or maybe he passes out in agonizing pain from brain swelling a few hours later, and spends weeks in intensive care

• Hmm. Grandma’s 76 and needs a hip replacement. Can we talk her out of it? (The incentives of inheritability of the health savings account would be far more effective than supposed government "death panels" in pushing heirs to pull the plug before the HSA is siphoned off.)

I’m sure everyone can see their own scenario in the commoditization of health care. A heart attack dismissed for too long as a muscle pull or indigestion. A small stroke ignored as a passing faintness. Spiking blood pressure self-treated with "extra" medication.

There’s a reason that Goldhill’s singular solution is so singular. No other industrialized nation has tried anything like it, no matter how relatively privatized its health care. Dealing with a medical emergency or frightening illness is very little like buying a DVD, or doing without one.

If we want better public health, we need better public education, better parental and even government controls on junk food, bigger taxes on cigarettes and liquor. How about free exercise classes?

To reduce overconsumption of health care,

• Curb the medical and pharmaceutical advertising that Goldhill points at, but then blames consumers for responding to it.
• Use research to determine best practices and make it all public. Pay primary care doctors more so they can manage common illnesses on their own, instead of dumping time-consuming cases onto specialists, who are vastly more expensive.

• Require payment, as Goldhill himself endorses, to be based on treating a whole illness or surgery, beginning to end, rather than reimbursing every test and visit.

There are lots of other good ideas endorsed by multiple thoughtful experts. Goldhill isn’t one of them. What he’s proposing is far worse for Americans than what Whole Foods CEO John Mackey laid out in the Wall Street Journal OpEd that prompted a boycott of his foodie emporiums. An economic Sophie’s Choice isn’t a solution that helps struggling families.