Getting to the root

June 9, 2011

There are two ways to reduce the federal budget deficit: cut spending and increase revenue. Most of the debate in Washington has focused on cuts; more recently the two parties have been in a standoff over whether to raise money as well—by reducing tax breaks. Serious progress on the balanced-budget front will require both approaches. But neither can solve the larger problem behind the nation's budget woes: the dramatic rise in health-care costs.

American health care is staggeringly expensive. This is true whether care is purchased by an individual, an insurance company or the government. Medicare—the largest federal health-care program—eats up a huge chunk of the budget, but not because government-run insurance is especially costly. Health care costs too much in general.

At present, Medicare covers seniors directly. The budget that House Republicans passed in April would change it to a voucher program that helps seniors buy coverage themselves. This new program would be allowed to grow just 1 percent faster than inflation. But health-care costs are going up much faster than that—and the Republican plan does nothing to address this problem. It simply caps the amount the government will pay, leaving seniors to pick up the increasingly larger difference.

Tax increases might sound like an appealing alternative. But whatever their merits, higher income taxes aren't a sustainable way to preserve Medicare either. Wage growth can't come close to keeping up with health-care costs. Raising taxes would certainly help in the short term, but it would just have to be done again—and again.

The fundamental problem isn't that Medicare pays too large a share of seniors' health care, and it isn't that taxes are too low to fund it. It's that health care costs too much and is rapidly costing more and more.

Reversing this situation is no simple task. But the health-care reform bill enacted last spring is a major step forward. Several of the Affordable Care Act's cost controls rely on incentives for Medicare providers, with the goal of using Medicare to lead the way to more efficient and cost-effective care systemwide.

Among other things, the law includes a system in which a single doctor coordinates a patient's overall care, with the aim of keeping the patient healthy—as opposed to the current system, in which each doctor's incentive is to provide as much care as possible. To this same end, a bundled-payment system will move providers toward collecting once for successfully treating a condition rather than billing for each individual treatment. The law expands research into the effectiveness of different treatments and drugs. And it sets up processes for testing and implementing future cost controls.

The reform bill's cost controls move in the right direction and pave the way for further reforms—unless the bill's opponents succeed in preventing key elements from being implemented. Supporters of the Republican effort to privatize Medicare like to claim that Democrats haven't offered a credible alternative. In reality, they've done much more: they passed a landmark bill that begins to seriously address health-care costs. Our future financial stability will depend on the success of these reforms and others to follow.


Some useful comments here, but....

As a doctor I can agree with many of the comments here. But you are looking at the health care reform legislation through rose-colored glasses.

This health care bill was constructed and passed in the most hyper-partisan fashion ever for legislation of this magnitude. It did not factor in the costs of implementation (which push it into the red), did NOT address needed legal reforms, and cut about 500 billion from Medicare under the ruse that it will be made up in increased efficiency. It provides for another 15 million or so to be covered by Medicaid, and doctors are already dropping Medicaid because they lose money on it. Ergo, patients will not find the doctors and care they need under this proposal. The Obama administration has already exempted many companies, unions, etc. from the provisions of this bill on a year-by-year basis, and these exemptions have gone disproportionately to political cronies.

A major point to keep in mind is this: you can't fix a problem with an even bigger problem.

I agree that we must do

I agree that we must do something about health care to balance the budget and that health care cost to much. Part of the problems is the system itself, we maybe need to do a complete overhaul of the system.

We need to look at everything such as malpractice and the delivery system. In studies done several years ago, the amount of procedures done on patients due to "defensive medicine" is beyond belief. Most of this isdone to prevent litigation. Some radiological procedures were cut by 75%. If I go to a emergency room for a sprain, I am going to have at least one x-ray done, to make sure no broken bones have been incurred. Do we feel that our physicians can not tell a break from a sprain? In the studiy it looked for standards to be established and the risks for malpractice lawsuites were reduced. In response to the study done, there were comments made such as "cookbook" medicine. It seems though that we can not afford this change.

The current system of payment by governmental entities is atrocious. Medicare does not pay charges but based upon cost. Unfortunately they do not even pay the full cost of services. It is estimated that it is about. 70% of what it cost. The Medicaid system is worse. When inpatient services were put on a perspective payment system in the 1980s, Hospitals were told it would keep up with inflation, but that has never really been done.

Somebody has to pick up the cost that Medicare/Medicaid do not pay. It has been passed on to those who have other insurances, but due to that, premiums have reason tremendously. Everytime that Medicare/Medicaid funding is cut, then more is transferred to tose with other insurance. The number of people not able to afford health insurance is rising, therefore self defeating for some of the new health care reform. Currently the budget is trying to be cut again by reducing Medicare and Medicaid funding.

Other items that we need to change also increase our overall health care expenditures. There is the need to have less ativity in the Emergency Room. Before an individual is admitted to the emergency room in Mexico, the patient is determined if they meet the need for emergency services. If they do not meet the need they are sent home. In the US, the patient can not be refused under federal guidelines. The emergency room is the most expensive way to treat patients.

I am not sure if the single physician coordination is the answer to all our problems. It can help, if operated properly and we have learned from other HMO systems. Current legistlation seems to get rid of the one used by Medicare. This legistlation is still unfolding and needs to go through the administrative process and review to see how the current reform act is interpetated.