Center for Studying Health System Change
Issue Brief No. 63
May 2003
Health Care Cost and Access Problems Intensify
Initial Findings From HSC’s Recent Site Visits
By Cara S. Lesser and Paul B. Ginsburg
Continued high-cost trends are threatening the affordability of health insurance and many consumers’ access to care. Early findings from the Center for Studying Health System Change’s (HSC) 2002-03 site visits to 12 nationally representative communities show the retreat from tightly managed care continues to shape local health care markets. Employers are aggressively shifting higher health costs to workers, and absent tight managed care controls to limit the use of care and slow payment rate increases, hospitals and physicians in many markets are competing fiercely for profitable specialty services. These developments have sparked growing skepticism about the potential for market-led solutions to the cost, quality and access problems facing the health care system today.
Few Bright Spots Ahead
Safety net improvements have been a bright spot in an otherwise grim picture of the health system. Although the economic downturn and state budget shortfalls have focused attention on cost control again, there appear to be few strategies developing in local markets that promise significant relief. Premium increases have helped plans to restore profitability, but they continue to grapple with limited influence over utilization and provider payment rates. Largely unchecked by countervailing pressure from plans, purchasers or policy makers, competition among providers for key specialty services has intensified, driving investment in specialized facilities and equipment that threatens to increase costs and aggravate the broader system capacity constraints already posing access problems.
Employers are generally at a loss about how to respond, other than by passing on more costs to employees. As a result, consumers are paying more out of pocket for health care at a time when many workers face stagnant or declining wages. Although higher cost sharing may help to reduce the use of inappropriate care, it also may cause people to delay needed care. And there are limits to the levels of cost sharing employers can impose on workers. While increasing cost sharing will depress trends in spending for a few years, many observers are skeptical about its potential to lower trends substantially over the long term. But if trends in health care spending are not reduced, the cost of health insurance will rise out of more people’s reach, threatening to increase the ranks of the uninsured.
Reflecting on changes in local health care markets today, health care executives, employers and state and local policy makers interviewed for this study have become increasingly skeptical about the ability of market-led solutions to rein in rapidly rising health care costs. Although there is not a strong sense of the alternatives, many stakeholders in local health systems have concluded that there are serious limits to the effects of competition and market-led efforts to constrain health care spending, especially given the poor experience in the 1990s with managed care.
Some remain committed to realizing the vision of managed care and integrated delivery systems, building on the lessons learned in the 1990s. Many more, however, see health care organizations as responding to the immediate pressures in their environment-to generate return for investors or to generate revenue to support a mission to provide health care, for example-in ways that are often at odds with the goals of controlling overall health care spending and protecting access to high-quality care.
http://www.hschange.com/CONTENT/559/
Comment: “Bleak” is an inadequate descriptive of the future of health care, unless, of course, we enact comprehensive reform. Continued mere tweaking of our system can only magnify the bleakness we face.
