Cutting costs is a good way to start fixing our health care system
Can we put the goal of attaining universal health care coverage on hold for just a bit and instead focus on something that should ultimately get us there, cutting and controlling health care costs?
Cutting costs is a practical, politically palatable first step to universal coverage and could improve the quality of care Americans receive when universal coverage is eventually adopted.
According to the New York Times, President Obama’s health care team has only two politically viable options in its struggle to find the $120 billion a year needed to insure the 47 million Americans without health care coverage: raise taxes or cut health costs.
While most Americans support raising taxes in order to provide guaranteed, universal coverage, the best place to do it, by capping the tax deduction on employer-provided health insurance, has strong Congressional opposition and puts Obama in the awkward position of supporting a John McCain idea which he blasted in campaign ads last fall. Policy reversals aren't popular, even when they are the right thing to do.
Controlling costs looks like step one in the guide to a better health care system.
From the New York Times:
Health care reform, like any reform, won’t happen overnight. A serious effort by all stakeholders to lower costs while maintaining or even improving quality will be a giant step toward the ultimate goal of high-quality, universal coverage.
Cutting costs is a practical, politically palatable first step to universal coverage and could improve the quality of care Americans receive when universal coverage is eventually adopted.
According to the New York Times, President Obama’s health care team has only two politically viable options in its struggle to find the $120 billion a year needed to insure the 47 million Americans without health care coverage: raise taxes or cut health costs.
While most Americans support raising taxes in order to provide guaranteed, universal coverage, the best place to do it, by capping the tax deduction on employer-provided health insurance, has strong Congressional opposition and puts Obama in the awkward position of supporting a John McCain idea which he blasted in campaign ads last fall. Policy reversals aren't popular, even when they are the right thing to do.
Controlling costs looks like step one in the guide to a better health care system.
From the New York Times:
During the campaign, Mr. Obama emphasized universal insurance more than costs. Since taking office, he has shifted his focus somewhat. “What we have done,” Rahm Emanuel, the White House chief of staff, told me this week, “is raise cost control to the same level as expanded coverage.”Robert Reich, Clinton’s former secretary of labor, prescribes the same treatment for fixing the looming Medicare trust fund insolvency:
Cost control has the political benefit of appealing to the 85 percent of people with insurance. And it has enormous economic benefits, too. If costs can be reduced, the price of covering the uninsured will come way down. Put differently, the only way to have a sustainable universal health care system is to control costs.
…the problem is not really Medicare; it's quickly rising health-care costs. Look more closely and the real problem isn't even health-care costs; it's a system that pushes up costs by rewarding inefficiency, causing unbelievable waste, pushing over-medication, providing inadequate prevention, over-using emergency rooms because many uninsured people can't afford regular doctor checkups, and spending billions on advertising and marketing seeking to enroll healthy people and avoid sick ones.Since the U.S. spends more on health care than any other nation, but only has mediocre quality care to show for it, we obviously have a spending problem. We are living beyond our means when it comes to health care expenses, yet we are getting very poor value for our money.
Health care reform, like any reform, won’t happen overnight. A serious effort by all stakeholders to lower costs while maintaining or even improving quality will be a giant step toward the ultimate goal of high-quality, universal coverage.
# Posted by Kathleen : 1:03 PM
Comments:
Who among us doesn't believe that the insurance industry's promise to cut cost won't mean cuts to coverage?
It's beginning to look as though we're headed down the same road we've traveled, for decades. A promise and a political smokescreen, while only nibbling around the perimeter of the problem.
Who among us cannot remember the panacea of health maintenance organizations or, more recently, so-called "consumer-oriented health care"? Until we stop quibbling over who's health plan is paying - until we move insureds into the largest risk pool possible - there'll be no true health care reform.
It's called a "single-payer plan." Anything else is just cost-shifting and is no solution, at all. Giving politicians and insurers something to slap themselves on the back about is no step in any meaningful direction.
The only way to cut costs is to cut out for profit insurance, period.
Ways to Reduce the Cost of Health Insurance
Congressional Testimony of April 2009 by Dr. David Himmelstein
Official Transcript: http://edlabor.house.gov/documents/111/pdf/testimony/20090423DavidHimmelsteinTestimony.pdf
Video of testimony: http://www.youtube.com/watch?v=p-mpadKoFB4&feature=channel_page
Mr. Chairman, members of the Committee. My name is David Himmelstein. I am a primary care doctor in Cambridge, Massachusetts and Associate Professor of Medicine at Harvard. I also serve as National Spokesperson for Physicians for a National Health Program. Our 15,000 physician members support non-profit, single payer national health insurance because of overwhelming evidence that lesser reforms will fail.
Health reform must address the cost crisis for insured as well as uninsured Americans. My research group found that illness and medical bills caused about half of all personal bankruptcies in 2001, and even more than that in 2007. Strikingly, three quarters of the medically bankrupt were insured. But their coverage was too skimpy to protect them from financial collapse.
A single payer reform would make care affordable through vast savings on bureaucracy and profits. As my colleagues and I have shown in research published in the New England Journal of Medicine, administration consumes 31% of health spending in the U.S., nearly double what Canada spends. In other words, if we cut our bureaucratic costs to Canadian levels, we’d save nearly $400 billion annually - more than enough to cover the uninsured and to eliminate copayments and deductibles for all Americans. By simplifying its payment system Canada has cut insurance overhead to 1% of premiums—one twentieth of Aetna’s overhead--and eliminated mounds of expensive paperwork for doctors and hospitals. In fact, while cutting insurance overhead could save us $131 billion annually, our insurers waste much more than that because of the useless paperwork they inflict on doctors and hospitals.
A Canadian hospital gets paid like a fire department does in the U.S. It negotiates a global budget with the single insurance plan in its province, and gets one check each month that covers virtually all costs. They don’t have to bill for each bandaid and aspirin tablet. At my hospital, we know our budget on January 1, but we collect it piecemeal in fights with hundreds of insurers over thousands of bills each day. The result is that hundreds of people work for Mass General’s billing department, while Toronto General employs only a handful - mostly to send bills to Americans who wander across the border. Altogether, U.S. hospitals could save about $120 billion annually on bureaucracy under a single payer system.
And doctors in the U.S. waste about $95 billion each year fighting with insurance companies and filling out useless paperwork.
Unfortunately, these massive potential savings on bureaucracy can only be achieved through a single payer reform. A health reform plan that includes a public plan option might realize some savings on insurance overhead. However, as long as multiple private plans coexist with the public plan, hospitals and doctors would have to maintain their costly billing and internal cost tracking apparatus. Indeed, my colleagues and I estimate that even if half of all privately insured Americans switched to a public plan with overhead at Medicare’s level, the administrative savings would amount to only 9% of the savings under single payer.
While administrative savings from a reform that includes a Medicare-like public plan option are modest, at least they’re real. In contrast, other widely touted cost control measures are completely illusory. A raft of studies shows that prevention saves lives, but usually costs money. The recently-completed Medicare demonstration project found no cost savings from chronic disease management programs. And the claim that computers will save money is based on pure conjecture. Indeed, in a study of 3000 U.S. hospitals that my colleagues and I have recently completed, the most computerized hospitals had, if anything, slightly higher costs.
My home state of Massachusetts recent experience with health reform illustrates the dangers of believing overly optimistic cost control claims. Before its passage, the reform’s backers made many of the same claims for savings that we’re hearing today in Washington. Prevention, disease management, computers, and a health insurance exchange were supposed to make reform affordable. Instead, costs have skyrocketed, rising 23% between 2005 and 2007, and the insurance exchange adds 4% for its own administrative costs on top of the already high overhead charged by private insurers. As a result, one in five Massachusetts residents went without care last year because they couldn’t afford it. Hundreds of thousands remain uninsured, and the state has drained money from safety net hospitals and clinics to keep the reform afloat.
In sum, a single payer reform would make universal, comprehensive coverage affordable by diverting hundreds of billions of dollars from bureaucracy to patient care. Lesser reforms—even those that include a public plan option—cannot realize such savings. While reforms that maintain a major role for private insurers may be politically attractive, they are economically and medically nonsensical.
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