Unaffordable Care Is the Elephant in the Room

December 10, 2010
Jeffrey Kaplan, MD

Meaningful health care reform will never happen until we face some uncomfortable truths.

The central purpose of health systems should be to optimize care and then make best use of it to improve the health of the population they serve.

Consider hospital readmissions, for example. They may be an avoidable, expensive outcome and the canary in the mine for the quality of care we deliver, telling the irrevocable truth that there have been multiple missed opportunities and consequentially, adverse events. Consider, also the inefficiency of our health care system. A provocative article in the November issue of Health Affairs suggests that our poor performance in living long, nationally speaking, can be blamed on that inefficiency. Moreover, our dismal longevity is not because of our obesity, smoking, homicide, or traffic accident rates.

It is important to note that this was a cross-national, 15-year survival study of men and women at 45 and 65 years of age; these observations “may represent a better vantage point to observe public health because they measure a country’s success in preventing and treating the most common causes of death -- cardiovascular disease, stroke, and diabetes -- which are more likely to occur at [those] ages.”

These two poignant examples of inefficiency in both ends of the spectrum of prevention are telling of why our country pales in comparison to others in some health measures. One end of the spectrum is failure in tertiary prevention -- not preventing readmissions (as in “the barn door has already closed”); the second exemplifies our failure in primary (avoiding diseases from ever showing themselves) and secondary prevention (as in the “barn door is closing.")

Why we're inefficient in terms of our health policies

Victor Fuchs of Stanford University explains that "The most obvious, easily quantifiable difference between the United States and countries that have national health insurance is that those countries spend much less on health care, whether measured per capita or as a share of the gross domestic product. Not only is the United States the highest spender, but the gap between it and the other countries is unnaturally large.” We spend 50% more than the next-highest spender and twice as much as the average country in the Organization for Economic Cooperation and Development. One explanation that is frequently offered is the role of “special interests” in the United States, but it goes beyond that -- lower spending goes along with greater redistribution -- a more egalitarian ethos, as it were, elsewhere.

So, in this context, how does one constrain spending? One must be empowered to control the specialty mix of practitioners, limit expensive technologies, negotiate prices levied by suppliers such as drug companies, and restrain physicians' incomes by encouraging more primary or first-venue care and paying reasonably for subspecialty referrals through the concept of the "Medical Home." How? According to Fuchs, the answer lies in the fact that other governments "pay for most medical care -- usually 70-90% of total expenditures -- they are in a good position to apply these cost-restraining measures. They have what economists call ‘monopsony power.’ The US government, although it pays for almost 50% of health care, makes very little use of its power to restrain costs. Thus, in one sense, Americans wind up in the worst of all worlds, with government bearing a big part of the burden of paying for health care, with the concomitant large burden of taxes, but exercising very little control over the cost of care.”