Feed the beast, starve the patient:
Too much money in the health-care system isn’t going to health care
Pittsburgh Post-Gazette
Sunday, June 04, 2006
I write this as a cancer survivor who has benefited from excellent medical care in Pittsburgh, all of it covered by employer-provided health insurance. Without these, I would likely be very sick, dying or dead, and my family might be bankrupt or close to it.
My continued existence makes me a tiny contributor to Allegheny County’s lowest mortality rate in 15 years. The drop, mirroring national trends, is attributed by experts to healthier living habits and improved therapies.
Of course I am grateful to be part of this good-news statistic, and for the coverage that paid for it. And yet, I still blow a gasket when I see what hospital and health insurance executives are being paid, even as premium hikes are bleeding the nation. And I do mean bleeding.
Since 2000, employer-based health premiums have increased a staggering 73 percent, far outstripping increases in wages (15 percent) and inflation (14 percent). In 2004, this country spent $1.9 trillion on health costs, or 16 percent of the gross national product.
If the rise in health costs correlated to the nation’s actual health, our death rate wouldn’t just be the lowest in 15 years, it would be zero. And I wouldn’t just be a survivor, I’d be immortal.
Administrative costs, accounting for about 20 percent of each health-care dollar, aren’t the cause of this cost spiral, they’re a symptom. But they cannot be ignored. Let’s connect the dots of some recent reports in this newspaper.
Item: The 10 highest-paid executives of Highmark, the region’s biggest health insurer, received 41 percent pay increases last year. That includes Kenneth Melani, the CEO, whose compensation went from $1.7 million to $2.5 million. Combined, the executives’ pay went from $8 million to $11.3 million — a $3.3 million hike in a single year.
Item: Meanwhile, Highmark was moving to raise its average premium by 6.6 to 7.6 percent for small businesses that can least afford it. This was less than its double-digit hike the previous year, but added on top of previous increases, it looks and quacks like price gouging — especially considering that the company is sitting atop a surplus of $2.8 billion.
Item: Hospital CEOs in this region are doing even better than their counterparts elsewhere. The University of Pittsburgh Medical Center’s Jeffrey Romoff was paid $2.88 million last year — $480,000 more than the year before. Elizabeth Concordia at UPMC Presbyterian Shadyside went from $649,500 to $927,800; Jerry Fedele at West Penn Allegheny Health System from $534,400 to $834,400; and James Collins at West Penn Hospital from $360,400 to $542,300.
These figures demonstrate the system’s central dysfunction: It is awash in money that is not going to health care. That might be just great for the executives, but it translates into unconscionable inequities for consumers and health-care workers, even as costs are killing American business, driving outsourcing and layoffs, gutting retiree benefits.
Here’s one example of how too much money in the wrong places affects the system. Hospitals don’t hire enough nurses even when they can afford to because they’d rather put the money elsewhere. So overtaxed nurses who are holding down the fort wind up laboring under terrible stress, which drives more members of the profession into non-hospital jobs and makes nursing unattractive to young people in search of a career, which contributes to the nursing shortage.
Clearly, we are treating health care as a commodity in a system geared as much or more to a profit (or, in the case of “nonprofits” like Highmark and UPMC, a “margin”) as it is to providing service. And as with any product that prices itself out of the market, its customer base is falling away — or, more accurately, being squeezed out. Some 50 million Americans are currently uninsured; many of them are working, and increasingly they are members of the middle class.
The problem with this commodity approach is self-evident. Health care is not the automobile market, where you can buy a cheaper model or take a bus. It’s life and death.
“All this talk about medical consumerism is a red herring,” said Pat Schoeni, executive director of the National Coalition on Health Care, a nonpartisan organization in Washington, whose 80 members represent a broad spectrum of interests.
“When you call 911 in a medical emergency, you aren’t researching which hospital is the cheapest. And God help you if you go to the hospital without health insurance and have any type of resources, because they’re going to eat you alive.”
The great paradox of this picture is that the health care “system” is acting like a cancer on health care. Excessive administrative expense, combined with inefficiencies, inflated prices, poor management, inappropriate care, waste and fraud are eating up the resources that the body needs elsewhere in order to survive.
“That’s a fair analogy,” said Ms. Schoeni. “There’s certainly enough money, but how is it being spent?”
An excellent question for American businesses and consumers to put front and center this election season. We have allowed our elected officials to recoil from reform for far too long. It has to happen, and I, for one, would like to be employed, insured and alive to see it.
(Sally Kalson is a Post-Gazette columnist (skalson@post-gazette.com, 412-263-1610). )
