Monday, March 26, 2007

The Pending Health Care Disaster

A couple of weeks ago, I was in a meeting at which a congressman spoke of sponsoring legislation that would amend the United States Constitution in order to make access to health care a constitutional right. During the Q&A session that followed his presentation, I posed the following to the congressman:

There are two areas of concern with regard to our current system for providing health care coverage. One is the issue of expanding access to uninsured populations. The second relates to spiraling medical inflation. Your proposed constitutional amendment would address the issue of access to coverage. Do you have any proposals for containing medical costs?

The congressman at first said that he did not understand my question. After I elaborated a bit, he admitted that no one had been able to explain to him the reasons for medical costs rising faster than the general inflation rate and that he had no ideas for how to address it. To his credit, he asked me to call his office and set up an appointment to discuss any ideas I had. I intend to follow up.

This congressman is hardly alone in failing to address the problem of rising medical costs. Most of the proposals, at both the state and federal level as well as those offered by those running for president, focus on the problem of providing access while doing little or nothing related to cost containment. Of course, increasing access, if treated alone, is a much simpler issue, as it can be essentially limited to addressing the mechanism for funding access to coverage. Finding ways to contain costs without rationing care is a much trickier proposition, though it should be a central part of the debate?

Why is that? First, spiraling costs constitute one of the primary reasons that people lack coverage. Individuals and small businesses can't afford it. Second, expanding coverage without reducing costs only amounts to cost shifting, and we will hardly be better off if the only result of new policies is to replace ever increasing payouts to insurers with ever increasing payouts to government. Given the inability of our federal leaders to confront realities related to unfunded entitlement mandates already in existence, a new, unfunded health care mandate without cost controls may simply add to the coming tidal wave of federal debt. And, it is almost certain that expanding access to care will result in more frequent utilization of health care services, thus accelerating the rise in overall costs.

Notably, the problem with health care costs is not related to fees per service. For most health care providers, fees have fallen in real dollars over the last decade, yet overall health care costs have continued to soar.

Some savings can be achieved from the development of health information technology, which is a major priority of the Department of Health and Human Services, as well as other administrative efficiencies. Money can also be saved through medical malpractice reform. However, the major driver of growing health care costs has to do with utilization, and that is not an easy issue for the government to get a handle on. Who wants Uncle Sam to tell their doctor that they don't need to do that MRI?

Anyone who is associated with the health care industry has some awareness of the scandalous variety of treatments provided to patients with identical diagnoses. In an unpublished study I saw some time ago, for a specific injury, patients in California had surgery in 5% of cases; in Tennessee 30% had surgery. The researcher who presented the information said that she had not studied outcomes, so she was not sure which group of patients had better results. However, she said that such variety almost certainly meant that one of the two groups of patients was not receiving optimal care.

Addressing such variations in treatment and developing models for assuring that patients receive appropriate care is crucial for containing costs. It is also probably not a role that can be fulfilled by an arm of government.

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