The Obama Administration’s Options for Health Care Cost Control: Hope Versus Reality
By Theodore Marmor, PhD; Jonathan Oberlander, PhD; and Joseph White, PhD
Annals of Internal Medicine
April 7, 2009
In short, if medical costs are to be controlled, no substitute exists for constraining prices and capping expenditures. Frank talk about these cost-control realities, however, is politically difficult. It immediately elicits alarms from the medical care and insurance industries about “rationing” (ignoring the fact that the United States could realize significant savings from lower prices and administrative costs). Others, particularly the pharmaceutical industry, raise alarms about the effect that cost control would have on the pace of medical innovation. In addition, spending targets constrain medical providers’ income and thereby prompt intense political struggles. The Obama team’s limited treatment of cost-control realities — including the absence of global budgets and spending targets or caps — seems to reflect a desire to avoid such political controversies.
We write this essay, then, as a cautionary tale. Claims of savings from health information technology, prevention, P4P, and comparative effectiveness research are politically attractive. Their political appeal lies largely in the embrace of widely supported goals, including better health and improved quality of medical care. In theory, these reforms — more research, more preventive screenings, and better organized patient data — sound like benign devices to moderate medical spending. For many purposes, such reforms are substantively very desirable. But these reforms are ineffective as cost-control measures. If the United States is to control health care costs, it will have to follow the lead of other industrialized nations and embrace price restraint, spending targets, and insurance regulation. Such credible cost controls are, in the language of politics, a tough sell because they threaten the medical industry’s income. The illusion of painless savings, however, confuses our national debate on health reform and makes the acceptance of cost control’s realities all the more difficult.
http://www.annals.org/cgi/content/full/150/7/485
High health care costs are the primary driving force behind the renewed effort for reform. Everyone agrees that high costs are straining personal, business and government budgets, and something must be done to make health care affordable for all of us.
Some of us are also concerned about health care justice. We want to see that everyone has affordable access to high quality care. It is more than fortuitous that the most effective methods of reducing excess health system spending also achieve the social justice goal of health care for everyone.
Much has been written on what does work and what doesn’t work in controlling spending. This paper provides an excellent, brief summary of the concepts being floated, and is well worth downloading. We should be very concerned that the leading mechanisms proposed, as summarized in this article, would not have a significant impact on slowing spending, and would likely actually increase our costs. Nor would they be effective in achieving health care justice for all.
If we are going to address costs seriously, there is no other option than to fundamentally restructure our health care financing system. As the authors state, “no substitute exists for constraining prices and capping expenditures.” We can never achieve that by relying on our wasteful, fragmented multi-payer system of financing health care. As all other nations have shown us, there is no other option than central, public control.
It is true that some nations do use private insurers. But private insurers in their countries organized into social insurance programs serving the public good have almost nothing in common with private insurers in the United States that shun organization in order to serve their own business interests. Adding a few regulations to our current fragmented system will increase costs but cannot transform a self-serving business model into a public-serving social insurance model.
We really have only two effective choices that would achieve both of our goals. We can dismiss our current private insurers and bring in new private insurers with a mission of serving the public good, but that is the most expensive model of reform, and it compromises equity and efficiency. Our other choice would be to eliminate our fragmented financing system and replace it with a single payer national health program. That would allow us to constrain prices and cap expenditures while achieving our other goal of providing all necessary care for everyone.
We can do it, but the people, through our elected representatives, are going to have to tell the special interests that we’ve had enough.