Many folks believe that universal health insurance coverage is a panacea to the fractured U.S. health care finance system. But take a few minutes to read this masterful Robin Fields/Atlantic article on the unexpected consequences of the nearly universal coverage provided for kidney dialysis patients:

IN OCTOBER 1972, after a month of deliberation, Congress launched the nation’s most ambitious experiment in universal health care: a change to the Social Security Act that granted comprehensive coverage under Medicare to virtually anyone diagnosed with kidney failure, regardless of age or income.

It was a supremely hopeful moment. Although the technology to keep kidney patients alive through dialysis had arrived, it was still unattainable for all but a lucky few. At one hospital, a death panel-or “God committee” in the parlance of the time-was deciding who got it and who didn’t. The new program would help about 11,000 Americans for starters, and for a modest initial price tag of $135 million, would cover not only their dialysis and transplants, but all of their medical needs. Some consider it the closest that the United States has come to socialized medicine.

Now, almost four decades later, a program once envisioned as a model for a national health-care system has evolved into a hulking monster. Taxpayers spend more than $20 billion a year to care for those on dialysis-about $77,000 per patient, more, by some accounts, than any other nation. Yet the United States continues to have one of the industrialized world’s highest mortality rates for dialysis care. Even taking into account differences in patient characteristics, studies suggest that if our system performed as well as Italy’s, or France’s, or Japan’s, thousands fewer kidney patients would die each year.

In a country that regularly boasts about its superior medical system, such results might be cause for outrage. But although dialysis is a lifeline for almost 400,000 Americans, few outside this insular world have probed why a program with such compassionate aims produces such troubling outcomes. Even during a fervid national debate over health care, the state of dialysis garnered little public attention.

Yet another example of what  Arnold Kling has observed about U.S. health care — why do we think that that we cannot possibly afford high-quality health care if we have to pay for it individually, but we can afford it if we pay for it collectively?

A frequent topic on this blog has been the demise of primary care under our third-party payor-dominated health care finance system.  Richard M. Hannon, a Blue Cross-Blue Shield executive, provides a particularly lucid explanation in this recent WSJ op-ed on how one of the unintended consequences of Medicare was the negative impact it had on the delivery of primary care to patients:

Medicare introduced a whole new dynamic in the delivery of health care. Gone were the days when physicians were paid based on the value of their services. With payment coming directly from Medicare and the federal government, patients who used to pay the bill themselves no longer cared about the cost of services.

Eventually, that disconnect (and subsequent program expansions) resulted in significant strain on the federal budget. In 1966, the House Ways and Means Committee estimated that by 1990 the Medicare budget would quadruple to $12 billion from $3 billion. In fact, by 1990 it was $107 billion.

To fix the cost problem, Medicare in 1992 began using the "resource based relative value system" (RBRVS), a way of evaluating doctors based on factors such as education, effort and specialized training. But the system didn’t consider factors such as outcomes, quality of service, severity or demand.

Today most insurance companies use the Medicare RBRVS because it is perceived as objective. As a result of RBRVS, specialists-especially those who perform a lot of procedures-do extremely well. Primary-care doctors do not.

The primary-care doctor has become a piece-rate worker focused on the volume of patients seen every day. As Medicare and insurers focused on trimming the costs of the most common procedures, the income and job satisfaction of primary-care doctors eroded.

So these doctors left, sold or changed their practices. New health-care service models, such as the concierge practice and the Patient-Centered Medical Home, drew doctors away from the standard service models that most patients rely on for coverage.

All of these factors have contributed to a fragmented, expensive health system with most of the remaining doctors focused on reactive instead of preventive care.

The solution to the problem is making primary-care physicians the captains of the ship. They must have the time and financial resources necessary to take care of their patients, tailoring care to patients’ specific conditions and needs. And they need the data to track their patients’ results, so they can guide patient progress. They will then be able to slow (and sometimes reverse) their patients’ illnesses, keeping them out of hospital emergency rooms and specialists’ offices. The end result: reduced costs and improved quality of care.

So who really killed primary care? The idea that a centrally planned system with the right formulas and lots of data could replace the art of practicing medicine; that the human dynamics of market demand and the patient-physician relationship could be ignored. Politicians and mathematicians in ivory towers have placed primary care last in line for respect, resources and prestige-and we all paid an enormous price.

The pervasive effect of the now engrained third-party payor system of health care finance is that many patients do not feel any responsibility for their health care expenses.  As Arnold Kling has observed, why do we think that that we cannot possibly afford high-quality health care if we have to pay for it individually, but we can afford it if we pay for it collectively?