Our health care system already has enough money to cover all Americans—but millions are still uninsured. That's because the system is extremely inefficient and wasteful. To reduce costs, say public health experts Alan Sager and Deborah Socolar, the best tool is not the risky gamble of raising co-payments and dropping benefits, or the meat-axe of HMO regulations, but the scalpel of careful physician decision-making about what care is appropriate for each patient.
Alan Sager, Ph.D. and Deborah Socolar, M.P.H., direct the Health Reform Program at the Boston University School of Public Health. For their recent report on health costs, see www.healthreformprogram.org.
As health care costs soar unsustainably, many employers, state Medicaid programs and the Bush administration want to force patients to pay more. That’s a cost-control strategy that cannot work, and it is adding to the tens of millions of underinsured Americans going without needed care.
Patients should not have to forgo necessary care. Health spending in the United States is already enough to cover all Americans—if we better use the vast sums now wasted on ineffective care and paperwork. Doctors are key both to cutting unnecessary care and to advancing reform.
Employers are expressing worry about costs. As General Motors CEO Rick Wagoner recently complained, high health spending limits U.S. businesses’ ability to price products competitively in global markets.
Unsustainable costs are forcing employers, government and families to cut coverage. The nation cannot rely on still-higher spending to fill gaps for the uninsured and underinsured. Indeed, all Americans are at risk. Prompt action on health costs is vital to prevent a medical meltdown when our fragile economy stumbles.
The latest evidence is that health spending increases have eaten up one-quarter of the nation’s economic growth from 2000 to 2005. This limits our ability to pay for education, housing, environmental cleanup—or anything else we care about.
Projected health spending of $1.9 trillion will consume 15.5 percent of gross domestic product this year—nearly double spending on education, and about 3.6 times defense spending.
Health care spending per person in the United States in 2002 was more than twice the average in Canada, France, Germany, Italy, Japan and the United Kingdom. Yet those nations have universal coverage, older populations, superior health outcomes and greater patient satisfaction with care.
We can convert our high spending from a burden to an opportunity—because about half of current spending goes to unnecessary services, needless bureaucracy, excessively high prices and other wasteful expenditures. We must contain costs in ways that squeeze out waste, mobilize the savings to finance high-quality care for us all and pay hospitals, doctors and other needed caregivers adequately.
Patients: The Wrong Target
Many employers’ current cost-control strategy consists of requiring higher patient payments—with the goal of spurring patients to use less care and think twice before seeking it. The Bush administration touts “empowering consumers” with high-deductible insurance. Such a strategy is nothing more than emperor’s-new-clothes coverage that leaves patients exposed and vulnerable.
A belief in market ideology persuades some employers, physicians and others that patients should bear more of health care costs. They assume that patients will comparison-shop for tests and treatment as if for toaster ovens. But that’s impossible in emergencies, and hard when people are sick and fearful. Good information on health care’s value and actual cost is often lacking, and the technical choices are often very complex. Isn’t that why we send people to medical school?
Forcing patients to pay more cannot durably contain medical costs—especially because the majority ofhighest costs are incurred by physicians’ complex decisions in treating a relatively small number of seriously ill people. Patients are the wrong target for cost controls. And it is reckless to force sick people to pay more and second-guess their doctors. The resulting underinsurance is unsafe.
Physicians, not patients, must bear the main responsibility for cost control. That’s in part because doctors’ decisions control about 87 percent of personal health care spending. About one-fifth of the personal health care dollar goes to physician incomes, with another two-thirds spent on tests, hospitalizations, drugs and other care that physicians order. They increasingly consult clinical guidelines and patients’ preferences, but doctors’ guidance is generally decisive.
Developing better information on the clinical value and marginal cost of health services is vital, but physicians already know where much money is wasted in providing care. (Doctors often fail to cut wasted care; reasons include financial incentives to over-serve, defensive medicine, and inability to capture and reallocate for better use the money saved by cutting waste.) Improving individual doctors’ decisions offers the most effective and careful way to contain costs.
To eliminate unnecessary care, the best tool is not the risky gamble of raising co-payments and dropping benefits, or the meat-axe of HMO regulations, but the scalpel of careful physician decision-making about what care is appropriate for each patient. Obtaining support from physicians for this cost-control strategy is crucial to its success
Why Single-Payer Hasn’t Passed
Cutting today’s massive administrative waste is also essential. Numerous studies show that paying caregivers from one fund instead of thousands of plans would sharply lower administrative costs, freeing up large sums for expanded coverage.
Using a single-payer plan also would facilitate negotiating lower prices with monopoly drug makers, replacing cost-shifts with genuine cost controls and achieving greater equity for patients and for caregivers. Yet single-payer reforms have not won passage.
One obstacle is opposition from physicians who worry about the effects of reform on their incomes, work lives and ability to care for patients. If most doctors concluded that certain reforms could contain cost while protecting access and quality, the general public’s hesitations would likely dissipate rapidly. Unfortunately, single-payer advocates are not yet able to concretely describe how health care would work after reform.
How would caps on health spending be enforced, for example? How would doctors and other caregivers behave to allocate resources among patients without exceeding the cap? Questions like these haven’t been answered to doctors’—or the public’s—satisfaction. Doctors’ involvement is essential to developing better answers.
Winning Physician Support
It is vital to pursue a variety of decentralized efforts to design and test payment methods, budgeting, patient enrollment policies and other arrangements that encourage, oblige, and help doctors to wisely use inevitably limited resources to serve a population well. Proving their practicality in state, local and other efforts will help build political support for broader reforms.
Perhaps most important, physician-directed controls on patient care costs will require methods of paying doctors that do three things:
-
Reward physician competence, effort and kindness
-
Markedly reduce incentives to overserve or underserve patients
-
Make clear to each patient that care is denied only when ineffective, or if minimally effective and other patients have greater need.
By reallocating money that is now wasted, we can provide the care that works to all Americans who need it. Implementing such reforms will require a political deal that addresses each sector’s concerns. Another important part of the deal to win physician support involves lifting the threat of malpractice litigation by adopting other methods to compensate people harmed and to weed out incompetent doctors—a step that should also reduce wasteful defensive medicine.
If, in return, physicians embrace responsibility for marshaling available resources to serve us all, they can also gain freedom from much wearisome paperwork—and gain the nation’s enduring gratitude.
Physicians’ support will increase when they realize that, without such reforms, they will face slashed fees, hospital closings, soaring numbers of uninsured patients and other fruitless and harmful cost-control efforts. Their support for reform will grow when they recognize that taking on the job of reducing unneeded care—rather than leaving those decisions to insurers—is vital to physicians’ long-term economic well-being, to their professional self-esteem and to making health care durably affordable for all Americans.
