THE BLOG

Cost Curve

10/05/2010 11:31 am ET | Updated May 25, 2011

What are we really going to do about the rising healthcare costs in this country?

In order to understand the challenges facing the healthcare system in the United States, we must first accept two very important principles:

  1. We are all going to die
  2. None of us want to die (and the cost to keep us alive is unsustainable)

Given these two important principles, it may ultimately be impossible for this country to truly reform our healthcare delivery system. A recent study published by the Center for Medicare and Medicaid Services, indicates that by 2019, healthcare will consume approximately 20% of our gross domestic product. That is up from the approximately 16% in 2010. More importantly, the study showed that healthcare reform did not alter the existing rate of growth in overall spending which was already expected to rise to these levels. It is fair to point out healthcare reform will succeed in providing health insurance and access to an estimated 30 million Americans who have been left behind in the existing system but it will do nothing to slow the overall rising costs. With the skyrocketing national debt, deteriorating infrastructure, and high unemployment, unless we get our healthcare costs under control, our country is going to go broke.

Now back to the two basic principles. If our society is truly willing to tackle this growing crisis, we need to have an open dialogue free from politics to discuss the range of options to slow the cost curve. There has been a strange and frustrating silence in the media and Washington on this issue. Here are some important questions we need to discuss and contemplate as they are critical to addressing the problem. There is no one right answer and there will certainly be many points of view. We have to start somewhere so let us all be honest with one another and try to at least understand the problems:

  1. When is it time to say life is over? What is the value of the remaining time we have in our last days and months? Can anyone put a price tag on it? Certainly we know the answer is different for everyone and dependent on individual circumstances but with healthcare consuming 20% of our overall economy by 2019, are we going to be able to ignore the question much longer?
  2. New drugs and technologies continue to be developed every day. Advancement in the diagnosis and treatment of disease comes with an increasingly steep price that is ultimately passed on to all of us. Is there a cost too high to pay for this advancement? What is that cost? How is success measured?
  3. There is a wide variation in how medicine is practiced today. As an example, one physician may treat something one way (with one cost implication) while another may do it differently (with a different cost implication). Variation therefore adds cost and is in fact a form of capitalism. Would we accept standardization, a form of socialism, in the treatment of disease? If so, who decides the standard and will it work?
  4. Should hospitals be allowed to make profits? If so, how much? There are many who believe healthcare, like all other aspects of our economy, needs to be open to the free markets and capitalist principles. There are also those who believe healthcare needs to be completely regulated by the government (socialized). Of course there are those who feel it belongs somewhere in the middle. The problem is we are in the middle now and it is not working well. Can we afford to go in a different direction? Is a free market going to work better than a regulated market? No one really knows and even if someone did, how would success be measured?

These questions and the resulting issues they raise are merely scratching the surface. However, one can see to slow the growth in healthcare spending, we must begin to start the dialogue. Simply reducing doctor and hospital payments as is written in the healthcare reform law is not a viable solution. Healthcare is far too complex to say a new payment methodology is going to slow spending if we do not tackle the broader societal issues. One can only hope we start the discussion as soon as possible.