Quadrant IV healthcare

Beginning around 1950 and until the early 1990s, the American healthcare system resided in Quadrant IV of the healthcare universe. Medical decisions were made, for the most part, by individual doctors and their patients, based on what was perceived to be best for the patient (or sometimes, we must admit, for the doctor). But for several reasons healthcare decisions were not driven by high-quality, data-guided reasoning. The decisions were generally of low quality. A system of low-quality decisions made by individual doctors and their patients planted us squarely in Quadrant IV.

Quadrant IV healthcare was ushered into existence by the advent of third-party funding, beginning with Blue Cross and Blue Shield, followed by private employer-provided insurance, and cemented by the introduction of Medicare and Medicaid. Thanks to this new third-party funding mechanism, we in the U.S. evolved a mentality that remains unique when it comes to healthcare. We expect and insist on nothing but the best healthcare available, whenever we want or need it, and the Tooth Fairy picks up the tab. Such a system, where the individuals making the purchasing decisions are spending someone else's money, made Quadrant IV healthcare financially unstable from the beginning and doomed it to failure. (Furthermore, spending someone else's money also encourages profligate spending, and thus inherently produces low-quality decisions.)

The Tooth Fairy financing system yielded many benefits. It was this system, fiscally unstable as it was, that triggered fifty years of industry-driven advances in healthcare (if you build it and it works, someone will pay for it). Countries with saner financing systems contributed relatively few medical innovations during that period. The Tooth Fairy has been the lifeblood of the American pharmaceutical and biotech industries and the patients they serve. And for a few decades it seemed as if we had enough money in the system (if we didn't look too closely) to finance the insanity.

But the Tooth Fairy has been pushed beyond her limits. Providing every kind of useful healthcare to anyone who needs it is a fiscal black hole, the cost to payers is outstripping revenues, and insurance premiums and Medicare costs are growing at many times the rate of overall inflation. The government and insurance carriers are becoming more aggressive in their efforts to curb spending.

A system where individuals can choose whatever healthcare they want and someone else picks up the tab is not sustainable. It might have worked when medical science didn't have much to offer sick people, when doctors were still lancing boils and getting paid in chickens and couldn't spend much money delivering healthcare no matter how hard they tried - a situation that existed not so many decades ago. But the medical advances financed by the Tooth Fairy system have produced an environment in which this system can no longer exist. We had to exit Quadrant IV. And the direction of movement as we did so was resolutely to the left, toward centralized decision-making.