BRIAN KLEPPER and DAVID C. KIBBE
As we begin this forum, we see American health care edging closer to a cliff and dragging the larger American economy with it. The health care cost bubble, inflated by duplication and waste, is poised to pop. At the same time, the industry’s bloat has encouraged innovation, driving improvements in quality, safety and cost throughout health care.
Consider this: Credible sources now estimate that half or more of all health care expenditures are unnecessary or provide no benefit to care. (This amounts to at least $1.3 trillion in 2010. Or, annually, it’s just short of double the stimulus package cost over the next ten years.) For a decade, health care – which represents one dollar in six and one job in eleven in the US economy – has absorbed most of the nation’s economic growth. During that period, health care premium inflation grew four times faster than the US economy, and per capita costs were double those of every other developed nation. It is an industry wildly out-of-control.
Against the backdrop of these skyrocketing costs, both public and private purchasers may finally be reaching the limits of their capacity or willingness to pay. In 2010, employers, whose health plan sponsorships pay for nearly half of all care, appeared to draw a line in the sand, passing along, as a group, all health plan cost increases to employees. Nearly a third reduced benefits or increased employee out-of-pocket expenses, and, compared to recent years, the erosion in health plan enrollment tripled.
Similarly, Medicare and Medicaid have become our national budget’s fastest growing cost component, with the potential to stifle expenditures for other mission-critical national needs, like education and infrastructure.
Meanwhile, the vast health care industry and it’s allied interests have become our largest and most influential lobbying group, with campaign contributions of $1.2 billion during the 2009 reform proceedings. Worried that the Affordable Care Act’s (ACA) provisions – e.g., Cadillac tax, Accountable Care Organizations, reimbursement pilots – would reduce reimbursement from payment for every product and service to payment only for what’s appropriate, they have continued to campaign against it’s survival.
The politicized firestorm surrounding ACA’s provisions – Medicare cuts, the impending Sustainable Growth Rate (SGR) physician payment reductions, comparative effectiveness research and other efforts to control costs – vilifies the reform law’s intent but does not acknowledge the most obvious and straightforward fact behind the need for reform: we simply can’t afford health care in the future the way we’ve bought it in the past.
The result is a clash between an irresistible force, overwhelming cost, and an immovable object, an entrenched industry making historically high profits. At stake is the stability and sustainability of both the current health system and our national common economic interest.
It isn’t all bad news, though. Even as the system strains, every part of health care is experiencing an explosion in innovation. Supercharged by tremendous advances in health IT, bio-tech, analytics, clinical decision support, surgical procedures, and many other areas, new ventures are promising to significantly drive down cost while improving quality. There can be no vibrant market for this innovation until our payment system changes, however.
America cannot be great again until we get health care costs under control. That will not happen until we have national policy, combined with individual, business, and community action, that focuses on restoring the health of our people, rather than on the excessive enrichment of an industry. Unless, of course, that industry, greedy and blind to the public good, brings about its own crash.
Care and Cost (C&C) will be a forum that unblinkingly asks the questions: How, specifically, can we make health care stable and sustainable again? How can we lower costs, but avoid bankrupting the industry? How can we broaden access to medical care, so we get a healthier populace? How can we improve the quality and safety of that care? And how can we take back our lawmakers from lobbyists, and return to policy that is, first and foremost, in the common, rather than the special interest.
We believe America is capable of understanding that there ARE answers that make sense, that we can work our way out of the health care crisis. Recovering will require leadership, commitment and hard choices, yes, but inaction, the alternative, can only lead to the status quo.