August 2020


Chris Ohman has spent the bulk of his career seeking to advance population-based health care. He was an executive with Kaiser Permanente, CEO of the California Association of Health Plans, an executive with Blue Shield of California, and CFO for a medical group. He holds an economics degree from Lewis and Clark College and an M.P.A. from Princeton. 

photo of chris ohmanWho benefits the most from our current system?

The answer is everybody except for the patient. That's what the course is going to focus on. Health care in the US costs twice what it does in other countries, and yet we live shorter lives and the lives we lead are marked by more disease.

In short, it’s a bad deal for patients. There are a lot of reasons for why that is, and access to care, social determinants of care, the environment and how it's financed are only a few of them. But running through it all, is the fact that we pay double what other countries pay for the same services and products. All the other issues lurk behind that fact. So that's why we’re going to focus on cost, and explore the ugly underbelly of the business. Right now, the people who win at this are the people who have power. We’ll look at the business of insurance companies, pharmaceutical companies, medical device makers, physicians, hospitals and even charitable organizations whose charitable purpose and mission have been twisted to help drive higher cost solutions that may or may not provide any clinical benefit.

Is there a system out there that we should try to emulate?

There are insights that we might draw on that we could apply here. When we look elsewhere we won't find that there's a silver bullet, or one place we can look to and say, “Oh, boy, they've got it nailed.” There are places where they're doing a lot better job on cost in particular. For instance, if you look at Japan, Germany, the UK — they have somebody who has the authority to manage costs and negotiate and determine prices. That’s why they have lower costs of drugs, lower cost of hospital services, lower cost of physician services and so forth. And also there's just a lot less administrative overhead, which burdens the US health care system. Now, it's not like our health care system can just become some other country's health care system, which is part of the wishful thinking we can engage in when we look elsewhere. But we certainly can draw insights and lessons from others.

What cultural and societal factors have allowed our current system to exist for so long?

The economics behind health care and the reason why normal economic forces don't apply stem from World War Two, with the widespread adoption of employer-based health insurance. In doing so, we separated who pays for health care, and who gets the health care. That not only disconnected people from understanding the cost, it allowed suppliers of care to build up real economic and political power, whether it's pharmaceutical companies using the patent system to protect their products and then control their own pricing, to hospitals gaining market share and being able to leverage that into rates that are well beyond what you see in other countries or even in nearby communities in the US. There's a disconnect between the folks who are getting the care and the folks who are providing it, and over several generations, it’s created a set of deep seated issues that are going to be challenging and difficult to undo.

Employers have a role and a purpose – they make a product or perform a service — and it’s not health care benefits, even though it's very often the single largest check they write every month. And they are put in this position of having to provide health care as a benefit in order to attract and retain talent, because that's what the market for talent requires and calls for. It puts employers in a weak position to contain health care costs. Many are well intended and want to do the right thing, others just want to pay as little time to and money for health benefits. But at the end of the day, health benefits are not the raison d’etre for an employer.

The current system certainly disadvantages the already disadvantaged.

Absolutely. The inequities in this system are profound and, frankly, disgusting. You can see the disparities in many ways — care and cost in public hospitals compared to private hospitals, for example. Or, consider the spread of COVID in nursing homes, where some of our most vulnerable live. We have very low-wage workers in nursing homes who are not in a financial position to be able to take time off or the funds to get tests or care. And yet, in the course of just trying to make ends meet, they are also putting at risk the very people they’re looking to take care of.

What would you like members to take away from your course?

The first thing I’d like folks to take away is why the cost of health care in the US is such a critical issue. Second, I hope to offer an analytical framework for examining the cost control measures of various health care proposals. Third, I hope folks will realize that the solutions don’t fit onto bumper stickers. It’s not that simple. Finally, the cost of health care is crowding out our ability to advance other areas, critically important areas, that deal with the health inequities in our society and other areas that have been underfunded for far too long. We need a system that people can afford and can access — a system sustainable over time.