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Subject: qotd: Bipartisan report on costs is leading us astray
Date: Fri, 26 Oct 2012 04:48:40 -0700
From: Don McCanne <email@example.com>
To: Quote-of-the-Day <firstname.lastname@example.org>
PBS NewsHour/Kaiser Health News
October 24, 2012
Seven Factors Driving Up Your Health Care Costs
By Julie Appleby
There is no one villain in the battle against rising health care costs.
Currently, the United States spends more on health care services than
any other country, exceeding $2.6 trillion, or about 18 percent of gross
domestic product. Most years, medical spending rises faster than
inflation and the economy as a whole. Many factors -- and nearly
everyone -- contributes to those increases.
Here are seven ways you or your medical providers play a role, based on
a recent report from the Bipartisan Policy Center, a think tank in
1. We pay our doctors, hospitals and other medical providers in ways
that reward doing more, rather than being efficient.
2. We're growing older, sicker and fatter.
3. We want new drugs, technologies, services and procedures.
4. We get tax breaks on buying health insurance -- and the cost to
patients of seeking care is often low.
5. We don't have enough information to make decisions on which medical
care is best for us.
6. Our hospitals and other providers are increasingly gaining market
share and are better able to demand higher prices.
7. We have supply and demand problems, and legal issues that complicate
efforts to slow spending.
The Bipartisan Policy Center report on which this article was based:
What Is Driving U.S. Health Care Spending?
America's Unsustainable Health Care Cost Growth
Comment: Julie Appleby is a highly credible health care reporter who
has done an excellent job of reporting the views expressed in this
report released by the Bipartisan Policy Center, an organization founded
by Bob Dole, George Mitchell, Howard Baker and Tom Daschle. As we shall
see, when we look at these seven health care cost factors, "bipartisan"
has now come to mean a right-wing position between the extreme
conservative views held by most of today's elected Republicans, and a
moderate-right view held by the majority of Democrats. This corruption
of bipartisanship has had a devastating impact on our efforts to achieve
health care justice for all.
Let's look at each of the seven factors supposedly driving up our health
care costs, keeping in mind the fact that other industrialized nations
have much more effective health care financing systems which are able to
deliver care to everyone at an average of half what we spend. The
numbers here refer to each item in the article.
1. It seems that almost everyone in the policy community believes the
meme that our health care costs are too high because we pay for care
based on fee-for-service - a system that rewards doctors and hospitals
for providing a greater volume of more complex health care services and
products. The primary flaw in this explanation is that many other
nations also use fee-for-service yet are still able to control their
total health care costs. The primary defect is not in the way we
determine what health care is worth, but in the fundamental dysfunction
of our health care financing system.
2. We are getting older, obesity is increasing, and more chronic
conditions are diagnosed. However, with minor variations, the same
supposed changes are happening in other nations as well, yet without the
need to drive health care costs up as rapidly as we do. We still fall
short on life expectancy when compared to other nations, so living more
years has not been the problem. Obesity is a problem, as it is in other
nations, but the answers lie more in public health measures encouraging
better nutrition and more exercise, and less on care provided within our
health care delivery system, except for preventive programs. Much of the
reported increase in chronic disease is related to the emphasis on
recording in more detail diagnoses which then permits higher billing for
more complex conditions and also provides a basis for greater rewards
under pay-for-performance and other so-called quality schemes. Refined
diagnoses are possible for example when using much more inclusive
laboratory criteria for the defining diabetes or hypercholesterolemia
(just a touch of disease), or also by including osteoarthritis as a
diagnosis in the elderly - a condition that has always been there but
frequently not reported unless it was the primary presenting complaint.
Our disease epidemic is more in augmented documentation than it is in
3. Almost everyone says that our newer expensive technologies and our
plethora of expensive new drugs are major reasons for our high health
care costs. Guess what. Other nations use the same technology and the
same drugs, yet do not spend nearly as much as we do on health care.
Some of the new technologies replace older technologies, and the actual
costs (not prices) are often not higher. Also the breakthrough drugs of
prior decades become the low-cost generics of today. Yes, advances do
add to medical spending in all nations, but not nearly to the extent
suggested by the policy community and politicians.
4. Many blame the tax benefits provided for employer-sponsored health
plans as an incentive to purchase "Cadillac plans" that provide far more
coverage than most people need. Yet actually our private plans have been
shifting more costs to patients through higher deductibles and other
cost sharing, while paring back on benefits and restricting access
through measures such as limited provider networks and tiering of
products and services. Again, other nations have not adopted these
perverse barriers to care to the same extent that we have, yet they
still provide care at a much lower level of spending. Contrary to
popular lore, patient insensitivity to costs is not the primary reason
why our health care spending is so high.
5. The lack of transparency is often blamed for our high costs. If
patients only understood better all of their options and were better
informed on the potential adverse consequences of their decisions, then
they wouldn't be demanding all of this unnecessary care. Those who make
this claim are ignoring the fact that it now has been decades since we
recognized that patients must provide their informed consent for health
care. Doctors do explain the options and the potential problems of
various diagnostic and therapeutic interventions. Paternalistic medicine
has been largely replaced by the patients' need to know. Better
information is already resulting in greater value in our health care
6. Consolidation amongst hospitals and physician groups has provided
them with greater market leverage that results in higher prices. But
where is this occurring? It is the private insurers that have been far
less effective in negotiating savings with the providers. If you look up
the S&P health care indices, commercial carriers (private insurers) have
continued to increase health care spending at intolerable escalating
rates, while the Medicare index has demonstrated that public agencies
are much more effective than the private sector in keeping the rate
increases down to more tolerable levels (bending the cost curve).
Administrators of public health care financing programs are able to
override the unfair advantage that market consolidation permits.
7. It is often said that our supply-side excesses result in excessive
spending. Actually, as far as hospital beds and health care
professionals, we do not have excesses when compared to other nations,
except perhaps in certain resources such as imaging. We do have a
maldistribution of resources, the worst being a disproportion between
primary care professionals and specialist physicians. We need to
reinforce our primary care infrastructure and reduce the overemphasis on
some, but not all, of the specialized fields. The malpractice problem
does need to be addressed through measures such as alternative dispute
resolution, but the savings expected by reducing CYA medical management
has often been overstated since we will always have low-yield testing,
even if the malpractice threat goes away, since those tests potentially
can result in important beneficial outcomes, even if less frequent. It's
just that the emphasis will be on protecting the patient rather than on
protecting the doctor.
Following is the "Conclusion and Next Steps" from the report of the
Bipartisan Policy Center (link above):
"The drivers of health care cost growth are complex and multi-faceted.
Just as no single driver is responsible for our high and rising health
care costs, no single policy solution will be adequate to meet this
challenge. For this reason, the BPC Health Care Cost Containment
Initiative plans to produce a comprehensive, bipartisan package of
health care cost containment options that, if implemented together,
could reduce system-wide health care costs, slow cost growth and improve
the efficiency and quality of care in the United States."
The Bipartisan Policy Center is politically influential and may well be
a major player as Congress begins to embark on these right-wing
"bipartisan" solutions to health care costs. The primary reason that
this framing of the problems is considered right-wing is that it diverts
our attention away from the real solutions as it attacks these problems
in a way that will perpetuate our perverse, dysfunctional health care
financing system - further reinforcing the private insurance industry
that has been a major source of our problems, while using the
underfunded and therefore inadequate Medicaid program as a safety net.
What we really need is no secret. We need an administratively efficient
financing system that will reduce one of the largest sources of excess
health care costs in the United States - the administrative waste of the
fragmented multi-payer system which is heavily dependent on the
inefficient private insurers, and the waste of the administrative burden
that this system places on our hospitals and health care professionals.
We need a public administration which would improve the allocation of
our health care resources through regional planning, including improving
and expanding our primary care infrastructure. Our public administrators
can also use their power as a beneficent monopsony to get pricing right
- improving cost effectiveness while promoting high quality,
Julie Appleby has done a great job in distilling the contents of this
Bipartisan Policy Center report. Now it's our job to provide the proper
perspective. She reports. We decide.