Efforts to control health care costs go back at least to the Nixon administration in the early 1970s. Yet with only an occasional pause costs have steadily risen since then, now standing at an all-time high and escalating at a rate of 6 percent a year, a disastrous pace. Clearly, we do not yet have a political clue about effectively and decisively managing costs, despite many ideas for doing so.
We are now at it once again, and with more intensity than in the past. President Obama has made health care cost control a centerpiece of his administration, Congress is worried about it, state Medicaid programs are suffering, and the number of uninsured continues to grow, often enough because employers are finding health care too expensive to provide as a benefit. Costs are now, many would argue, more important than that of increasing access, if only because a lack of cost control could eventually sink even a universal health care plan.
But there are, we believe, some serious problems in determining how best to talk about and approach cost problems. They have troubled my colleagues and me in thinking how best to organize and edit the blog.
How much hope is it reasonable to have about controlling costs? In a May 15 Wall Street Journal op-ed article Peter Orszag, director of the Office of Management and Budget, set forth the cost problem in a most hopeful way. He mentioned the pledge of a number of industry leaders to cut $2 trillion in costs over the next decade, the potential in reducing regional cost variations, the likely benefits of information technology, comparative effectiveness research, prevention and wellness programs, and changes in financial incentives. He did not pretend it would be easy, and he did note it would take “comprehensive health care reform” to really do the job, to improve “efficiency and increase value.”
That was a welcome agenda. But anyone familiar with recent health policy studies knows that most of those ideas do not have a great cost-cutting potential. A better management of regional variations may be the most promising, but that knowledge has been around for years without a good solution in sight. The industry pledges sounded wonderful on May 11 but then a few days later the industry leaders said that Obama had overstated their promises.
Granting the value of hope, we also think there is an even greater need for candor. In 2004 the Congressional Budget Office (which Orszag previously directed) said of Medicare and Medicaid that “to finance projected increases in spending…would require tax increases of an unprecedented magnitude….Under current policy, future generations will be made worse off by higher taxes or lower benefits.” A 2006 survey by the Kaiser Family Foundation of the full range of proposed cost control strategies concluded that “Although many of these efforts may lead to efficiency and quality gains, none would appear to be of a scale to have any meaningful impact on the overall cost picture.” Nothing has happened since then to change that picture. The former secretary of the Department of Health and Human Services, Michael O. Leavitt, said in 2008 that the growth in health care spending “could potentially drag our country into a financial crisis that would make our major subprime mortgage crisis look like a warm summer rain.”
Now it may well be that those pessimistic assessments are just wrong or overstated. But I do not think it wrong to say that the public has heard little about such judgments. We believe full candor is needed even when it hurts.
A related problem is this: how far should one go in pointing out the pain and even suffering that serious cost control could entail? A common account of the problem has it that, at base, it is just a matter of getting rid of waste and inefficiency. No one can object to that goal and no political or economic interests are threatened by it. It is inherently vague, however – the shallow, warm water that soothes anxieties. But it is hard to find any solid reform strategies whose management will be anything other than painful: raising taxes and cutting benefits (reducing physician fees and hospital reimbursements), saying no to expensive treatments with only marginal benefits (but not necessarily marginal in the eyes of doctors and their patients), cost-benefit studies of new (and old) drugs and medical devices (not just comparative effectiveness studies).
In short, in one form or another, and in one guise or another, we are talking about rationing. I was told that those who played an advisory role in the Clinton reform effort in 1994 were flatly forbidden to use that dread word. I doubt that any legislator will now speak of, much less defend, rationing – they know dangerous territory when they see it. But the rest of us can, and should. Even to talk of ridding the system of waste and inefficiency is not trouble-free. In a variation on an old health care observation: to cut someone’s wasteful job is to deprive him of a salary. But once we begin to talk openly and honestly about cost control, we can then address how to do it ethically.
To be effective, our blog will have to violate some taboos. President Obama showed that he understands that when he said recently of his grandmother’s last days that a decision was made to go forward with a hip replacement despite her terminal condition, but he knew that whether “a hip replacement when they’re terminally ill is a sustainable model is a very difficult question.” That’s the kind of dilemma we will tackle in this blog.
Our last problem is that of talking about improving access and controlling costs without hurting either in the process. An economically sustainable universal health care system will require setting limits; it can not have an open-ended budget – and all the more if those with good coverage now will have to give up something to make possible the inclusion of the presently insured. But to press that point could well scare people off from expanded access, which in itself is certain to cost considerable money.
Massachusetts now has a similar problem. Its goal of universal coverage has not yet been met, though it has been getting there. But the increasing costs of the plan stand in the way of full success, and the worry now is how to find ways of managing costs that will not alienate the various insurers and other interests in the process.
Analogous dangers are imaginable with national reform. We opt, once again, for candor about costs. We think it important to get a reform plan in place that will stand the test of time, one that has built cost control into it from the start, and that the public is fully informed about that necessity.
In principle, this country can control health care costs, and could even learn to say no to patients, doctors, insurers, and the medical industry when necessary. Other countries have done it, and with the enviable result of lower costs, better health outcomes, and higher patient approval rates. Our national dilemma comes to this: what is politically acceptable at present to control costs in the United States will not do so, and what would work to control costs is not politically acceptable. An evasion of the cost problem, or a minimizing and evading of its likely pain, will not help us out of that dilemma. Only by taking on costs directly, honestly, and with not a little nerve, can we hope to do so.
Daniel Callahan is editor of the Health Care Cost Monitor.



4 Comments
An excellent beginning to the blog, and written with expected candor and courage. It will be important to ask federal legislators to comment on this blog and its reasoning, because the politics of this immense subject ultimately will control.
I also think it will be important to consider tort reform in the context of monitoring costs. I am not necessarily talking about some varyingly popular ideas like capping award damages. While caps may discourage some non meritorious suits they may also decrease a sense of justice that is already diminished by reducing justice to a monetary award. Rather, I am concerned that we have no idea how much the medical malpractice system truly costs all of us in terms of the court fees, legal fees, settlement awards of all sizes, including “nuisance value settlements” (moneys paid when it is clear there is no merit and neither side wishes to continue to litigate) physician time spent in depositions, court, etc.–let alone malpractice premiums and the ordering of “defensive” tests”. While statements from some trial bar representatives, like “we spend more on dog food than on malpractice awards in this country” may be accurate comparisons, they use a meaningless number for comparison. Our tort system costs us far more in real $$ than the awards given. If we think a single payer system is a way to control costs, as many do, it is worth noting that countries that provide a single payer system are considerably less tort friendly than the US and that one country (New Zealand) rid itself of the tort system. If we truly put real tort costs on the health care cost table then we can put real reforms on there as well; some states (states regulate the practice of medicine) are doing this in small steps, such as requiring a health panel review or certification before a case moves forward, staying discovery while a motion to dismiss is pending, etc. I agree that the politics of this immense subject will ultimately control, and hope it will be informed politics. There are many areas of health care in which its “consumers” have no idea of the real costs of the current fragmentation.
I applause the organization for addressing the facts clearly concerning the healthcare issue we are facing. It is no doubt we all have to take a serious look at what we are willing and not willing to give up. The consumer, the insurance industry, and the health industry, in order to make healthcare affordable we all must return to the basic fundamental thinking and ask ourselves,
What was Major Medical suppose to cover? If we look back enough we would realize healthcare was to protect for major illnesses. The reason for insurance was to protect the risk associated with those major illnesses. Today the philosophy has changed. The consumers want and expect coverage for everything. The insurance industries have realized there is more profit in the administration of the claims then in covering and insuring the risk. The healthcare industry fines it more profitable in practicing protocol and playing safe then in properly treating the patients, with double standard in billing and bombarded administration, liability concerns and expensive malpractice insurance.
So it no wonder we have a broken healthcare system. The 47 million model addresses these issue and offers a viable solution to return to the basics. The consumer share in liability, the insurance returns to covering major risk, and the health industry returns to basic community quality care without being burden with administration, and can practice without worry.
And perhaps the most important aspect of all is all 47 million uninsured have access to care.
Why must we in order to offer a solution go from one extreme to the other? Why can we have both?
I love the way you write and also the theme in your blog. Did you code this your self or was it carried out by a specialist? I’m quite particularly impressed.