You can't look at a paper without some politician sermonizing on how we spend too much on health care. The Organization for Economic Cooperation and Development (OECD) estimates that the cost of US health care per capita is twice that of major European countries (e.g., UK, FR, DE). Yet, each of these countries and the US have had similar increases (about 35%) in per capita health care costs from 2003 to 2008.
The question is: Can we reduce the cost of getting sick or, better yet, reduce the likelihood of illness?
The current solutions for controlling Medicare and Medicaid are the same as used by most of industry: Participants pay more. The pay-more solution DOES NOT reduce health care costs per capita. The pay-more solution transfers costs from industry and government to workers and the elderly. The pay-more solution is unsustainable. We need government to start spending money to cut the likelihood and cost of illness.
The problem, money aside, is that as Americans we believe it is our Constitutional and god-given right to do whatever we want without government interference. Say what we want. Carry a gun where we want. Ohio just passed a law (waiting for the Governor's signature) that will allow concealed weapons at sporting events. The folks in Ohio have obviously never been to an English soccer match! In all fairness, we seem to have done pretty well taxing cigarettes under the guise they make you sick (e.g., COPD, cancer, heart attack). Yet I see a great many people, usually at the entrance to any building I want to enter, smoking. So smoking aside and perhaps those nasty seat belts, we generally don't like government interfering in what we want to do.
The conundrum is that while we are prepared to fight government controlling our lives, we are lambs to the slaughter when it comes to insurance companies telling us what procedures or medicines they will allow. If Medicare disallows an expense, it's socialism (or the ever-popular death panel). When private insurance companies disallow an expense, it's life. Yet, only government can implement the solutions.
Every year about 6% of the population accounts for about 50% of our national health care costs. This represents 17 million people costing an average $35,000 per year. (About 10 million are under 65 years of age.) Approximately 25% of these individuals fall into the highest level two years in a row. Every one of these people will surpass his insurance deductible. For one-half our national health care costs, deductibles are meaningless.
Yet, we as a nation know very little about this group and even less about the efficacy of their treatments because we don't like BIG government. Yet BIG government is the only chance we have for finding out what procedures and medications are cost-effective. In case you haven't looked, the enormity of out-of-pocket health costs makes filling up a tank of gas look like loose change.
There are some glimmers of hope. If government really coordinates our health care, costs can decrease. The Pennsylvania Health Care Cost Containment Council (PHC4) collects, analyzes, and makes available to the public, hospital and doctor performance data for special procedures. If you want an eye-opening experience, just download the Cardiac Surgery in Pennsylvania 2008-2009 Report which finds doctors and hospitals with statistically higher mortality rates charging 50% more (i.e., $100,000 more) than their peers with positive outcome statistics.
At a recent conference, David M. Cote, Chairman and CEO, Honeywell described a program for employees who require expensive procedures. The company gives the employee $250 to consult with Mayo Clinic on all available care options. Cote said that the company routinely does a two-year follow-up with the employee, and that no one has ever regretted his decision. At the same conference, the Peter G. Peterson Foundation announced the formation of a special task force to find ways to improve medical outcomes for lower costs.
Many in Congress are seeking repeal of the Independent Payment Advisory Board (IPAB) created in the Patient Protection and Affordable Care Act. The sole purpose of the IPAB is to seek efficient medical solutions that maintain or improve quality while reducing costs. The bottom line is that those screaming to reduce Medicare only want to increase our out-of-pocket expenses (i.e., the pay-more option).
The same forces trying to kill the IPAB have no interest in trying to expand the Pennsylvania PHC4 experience or that of Honeywell. From their perspective, the reason is simple. If government told a patient to go to a doctor or a hospital that cost $100,000 less, for a procedure with a higher survival rate -- well, that would be health care rationing -- not improved efficacy.