PrintPresident Obama has an audacious idea to enact major health care reform in the middle of the worst economic crisis since the Great Depression. He wants to ensure that every American has health insurance and, at the same time, lower system costs and increase efficiency.
The administration believes that efficiencies of tens of billions of dollars or more can be wrung from a delivery system that has never shown the capacity to do things more efficiently or lower its spending when expanding services. Obama is betting that "innovations" such as electronic medical records or population-based care management can significantly reduce the costs of care, or that hospitals and health insurers will learn how to perform better with fewer Medicare dollars.
Instead, there is every reason to believe that adding 50 million people and likely more to health insurance rolls (based on projections reflecting the growing number of unemployed) will produce significant inflationary growth in what remains an important industry for producing jobs and bolstering local communities.
I don't doubt that hospitals and health insurers, if denied a portion of what remain generous Medicare payouts and add-ons, as the administration proposes, would re-examine their business models. My fear is two-fold.
The first is that the actual Medicare payment cuts, resulting from what will be a contentious political process, will be too insignificant to generate an industry-wide focus on more efficient health care delivery. Medicare (for seniors), along with Medicaid (for those with low incomes), accounts for half of every health care dollar spent in the United States. It is the primary inflationary driver of high-cost hospital and specialty services.
The second is that both the Medicare cuts and the massive amounts of financial investment made for health information technology will foster self-interested business decisions benefiting individual companies but not strengthening the system's ability to get millions of newly insured timely access to appropriate care.
For example, Medicare payment cuts in the administration's plan are likely to encourage easier kinds of strategic decisions, such as further industry consolidation (driving up prices over time because of reduced competition), continued reduction of health services in rural and inner-city areas (where the profit margins are slim or non-existent), a private insurance market that shies away from participating in public programs (because of fears about mandates and being forced to insure everyone without adequate reward for taking that risk), and providers and insurers that increasingly cherry-pick the healthiest customers to earn the most dollars with the least risk.
The administration's vision also appears to have little of the political stomach needed to face the hard facts that drive the really big inflation in our health care system. First, the health care system rewards innovation around high-priced technologies that serve specialty care and, when implemented, are overused and require large reimbursements by insurers and patients. There is no sign this particular innovation focus will stop anytime soon.
Second, the country ages by the day and gets unhealthier by the day. These demographic facts produce increased utilization of high-priced services, a runaway chronic disease burden in the general population and a hospital-physician community eager to earn the dollars that go with providing such care.
Addressing this reality involves changing how our society thinks about health and illness. That means, in particular, getting people to become more accountable for living a healthy life. It also means making serious service-rationing decisions around the most expensive part of health care delivery: end of life care.
Real policy advances must be made in these areas right now to prevent health insurance expansion of the kind proposed from running up huge budget deficits that will fall on our children to try to pay down.
When Medicare and Medicaid were created in the mid-1960s, our government was close to balancing the budget every year -- not already faced with the largest deficit in our nation's history. These programs have given more of us health care coverage and improved millions of lives. But they have come with tremendous costs: runaway inflation that imperils the system; health care delivery that pushes high-tech, high cost care on us and ignores low-cost, effective primary care; a Medicare program headed for bankruptcy; and federal, state and local governments choked with the burden of funding programs like Medicaid.
To propose something now as big as Obama has and expect that things will fall into place without significant focus on cost control and the supply side of health care is a gigantic reach at best, and fiscally irresponsible at worst.
I understand the political and moral reasons for going after the elusive and necessary societal goal of health insurance for all. But we must do it in a fiscally sound way that corrects the flawed profit motives now driving industry stakeholders.
Given where we are as a country, and where we likely are headed, these two things are also moral and political imperatives, and equally important to consider.
Timothy Hoff, Ph.D. is an associate professor of health policy and management at the University at Albany School of Public Health. He has just completed a book on the U.S. primary care system.