by Tom Robertson
Executive Director, Vizient Research Institute

With a combined area of 94,250 square miles, the Great Lakes represents the largest surface of fresh water in the world. When the wind blows across these massive bodies of water, enormous swells can build, crashing ashore with an almost unimaginable ferocity. The worst storms occur in the autumn when waves as high as 15 feet are not uncommon. Silently attesting to the magnitude of Great Lakes storms are over 6,000 shipwrecks, the most recent and perhaps the most famous being the wreck of the Edmund Fitzgerald on November 10, 1975.

On the southeast shore of Lake Michigan sits a neighborhood perched atop a bluff overlooking the water. There are 50 homes in all and instead of each homeowner owning their lot, the property is jointly owned and maintained by a condominium association. According to the Encyclopedia Britannica, the concept of common ownership of fractional shares of the same property dates back to ancient times, while the condominium as a form of real estate ownership has been present in Europe since the end of the Middle Ages. With such a long time to work the bugs out of the idea, you might think society had it figured out. As it turns out, joint responsibility­­­—especially when money is involved—is a complicated concept.

As a result of severe erosion arising from a series of historically powerful storms, the lakeside condominium association faced a contentious decision—whether to invest several million dollars building a stone retaining wall to stop the erosion or to risk losing most, if not all, of the face of the bluff and the commonly owned amenities that would slide into the lake with it. Homeowners whose houses were located farther away from the lakefront were reluctant to contribute, while those with the most to lose reminded the others of their shared ownership of the common ground and their obligation to act in the best interest of the group and not just themselves. At the center of the matter was the fact that everyone in the group had made commitments to share the financial responsibility for the benefits that came from membership…but when the cost of meeting those obligations got high enough, the motto of Dumas’s Three Musketeers—“all for one, one for all” broke down. And that is where beach erosion meets health care.

Consider the mindset of the typical patient and compare them to renters and owners. Once their rent has been paid, a tenant justifiably considers all major repairs to be the financial responsibility of the landlord. The lease agreement itself may even stipulate such an arrangement. Tenants want their problems fixed, and in their minds, they already paid for the repairs as part of their rent. The cost of the repairs becomes someone else’s problem. In health care, patients think like tenants, not like owners. Their insurance premiums and their maximum out-of-pocket exposure, like rent, are fixed. Once the rent has been paid, the cost of repairs is the landlord’s problem.

The concept of health insurance has been undermined over the past 40 years as the perceived value shifted from protection against catastrophic financial loss to a menu of benefits that people expect to equal or exceed the amount they paid for them. Younger and healthier insurance beneficiaries, like the homeowners whose houses were farthest from the bluff erosion, bristle at the thought of paying for a group benefit unless they can see a personal return commensurate with their financial contribution. The idea of the group funding a common benefit (protection against catastrophic loss) takes a back seat to the expectation that each individual will take out at least as much as they put in. A set of expectations that is completely incompatible with the fundamental principle of insurance.

We’ve done a poor job of explaining to American workers that when it comes to health care, they are owners, not tenants. Virtually all health care spending (both private and public) is paid for by the working population, in the form of insurance premiums, copayments and taxes. There is no landlord. The working population in America, whether they know it or not, is like a medical condominium association. Every dollar spent comes from the condominium members.

We have no consensus in the country as to whether health care is a right or a privilege. From a practical standpoint, with the patchwork quilt of private and public payers, and the inherent disparities that arise from reliance on the market to establish prices, the answer is that health care is part right, part privilege. It’s tempting to think that—if asked—most Americans would say that health care should be a right, not a privilege. If the question was thoroughly understood, however, the answer might be quite different for various categories of medical services and would be heavily influenced by the perspective of the person answering…whether they viewed themselves as a tenant or an owner.

If the cost of the boulders needed for the retaining wall had come from the government and not the condominium owners’ pockets, there would have been no arguing over the merits of the investment. The owners of the houses several blocks away from the erosion would have gladly supported the government’s funding of the cost. But it wasn’t the government’s money—it was their own. So now imagine health care consumers thinking like owners rather than tenants.

It’s very likely that we would all agree to pay for pediatric care or cancer treatment when there was a good prognosis; it’s unlikely that we’d balk at paying for life-saving emergency care but what about injuries sustained by rock climbers who fall from 80-foot cliffs? Or joint replacements when normal daily functions are no longer possible even after the surgery? How about cosmetic surgery? Would the condominium association vote in favor of liver or lung transplants for chronic alcoholics or smokers? When viewed through the lens of an owner rather than a tenant, it’s possible that some health care would be viewed as a right while other services would be seen as a privilege and be paid for by the person receiving the care.

It’s difficult to imagine our political process definitively answering the question of health care being a right or a privilege until we’re forced to. The homeowners’ association would have never tackled the retaining wall project until the ground was literally falling from beneath their feet. When the health care ground begins to shift, however—and eventually it will—we’ll all have to face some difficult decisions and we’ll be making those decisions as owners, not tenants.

In 1976, a year after the wreck of the Edmund Fitzgerald, Gordon Lightfoot had a song of the same name climb the popular music charts. In it, he refers to the perils of being out on the Great Lakes when the gales of November come early. For our industry, it may still feel like summer. But autumn is coming.

About the author: As executive director of the Vizient Research Institute, Tom Robertson and his team have conducted strategic research on clinical enterprise challenges for more than 25 years. The groundbreaking work at the Vizient Research Institute drives exceptional member value using a systematic, integrated approach. The investigations quickly uncover practical, tested results that lead to measurable improvement in clinical and economic performance.

Published: November 30, 2021