Health Care Cost Inflation

This commentary appeared on Health Affairs Blog on February 27, 2013.

The “fiscal cliff” deal raised taxes on households earning more than $450,000 a year and sheltered everyone else from an automatic income tax increase. Tough decisions about spending were put off until March 1, the new deadline by which Congress must take deficit-cutting action if it is to avoid automatic across-the-board sequestration cuts.

One of the biggest bones of contention is what to do about entitlement spending, particularly Medicare. Many Republicans want to raise the age of Medicare eligibility to 67. President Obama and congressional Democrats do not.

Pressure to reduce the growth of health care spending is at an all-time high as policymakers seek ways to reduce government spending and health care expenses strain household budgets. However, there is a concern that cuts to health care spending will reduce access to high-quality medical treatment.

On the other hand, some have argued that expensive health care is not only not better than less-expensive care, it can even be harmful. According to this argument, cutting back on wasteful, expensive care would both reduce health care spending and improve quality.

This commentary appeared on Health Affairs Blog on January 3, 2013.

In the September, 2011 issue of Health Affairs, we examined the impact of a decade of health care cost growth on the income of a typical, median-income family of four with employer-sponsored health insurance. To recap, between 1999 and 2009, the middle-class family's nominal monthly income increased by $1,910. But after factoring in the rise of consumer prices and a near-doubling of health care spending (due to rising insurance premiums, growth in out-of-pocket health care spending, and taxes to support government spending on health care), the family had little left over.

Their financial position would have been even worse if deficit spending, which did not exist in 1999, had not grown dramatically over the decade. If federal taxes had simply been increased enough to pay for growth of government spending on health care (ignoring all other deficit spending), the family would have ended 2009 with $290 less per month to spend than they had in 1999.

This commentary appeared on the RWJF's Human Capital Blog on January 4, 2013.

For the first month of my medicine internship at the University of Washington, I was assigned to Seattle's VA Hospital. I was stunned to learn that my attending physician would be Paul Beeson, widely regarded at the time as one of the giants of American medicine.[i] At an age when most doctors are enjoying their retirement, Dr. Beeson was still doing what he loved best—caring for patients and teaching.

I have forgotten most of the clinical pearls Dr. Beeson taught that month. But one that still stands out is the way he questioned the need for every lab test, x-ray and treatment my team ordered. “Why do you want that?” he'd ask. “What will you do with the result?” Throughout the month, he urged us to forego interventions that offered little benefit to our patients, but exposed them to potential side effects or complications. His message was clear. Do only what's needed, not more.

For a long time, spending on medical care has been increasing at a rate faster than the gross domestic product. Between 1999 and 2009, health care expenditures for the average family nearly doubled. As a result, controlling health care costs figures prominently in budgetary debates. Programs designed to reduce health care costs typically focus on cuts, such as reductions in payment levels, benefit structures, and eligibility. However, reducing waste in the system could be a less harmful strategy, as such an approach would not threaten value-added care.

According to a recent commentary by Robert H. Brook that received the ABIM Foundation's Professionalism Article Prize, physicians are in an ideal position to identify and eliminate waste by designating all medical services as one of four types of care: inappropriate, equivocal, appropriate, or necessary.

This commentary appeared in Los Angeles Times on March 29, 2012.

The late Sen. Daniel Patrick Moynihan famously observed, "You are entitled to your own opinion, but not your own facts." Here are the facts he ignored:

The U.S. spends far more on healthcare — per capita and as a percentage of GDP — than any other nation on Earth, according to the Organization for Economic Cooperation and Development. In 2010, that amounted to approximately $2.6 trillion. Each year, we Americans not only pay more for private health insurance than the citizens of other OECD countries; we also spend more on out-of-pocket healthcare expenses. And on top of that, we devote more tax dollars, per person, to healthcare than the Swedes, the French, the Germans, the Canadians or the British.

Can our country afford to spend this much? Of course not. Healthcare spending is siphoning federal and state money from other urgent priorities, including deficit reduction, defense, education and law enforcement. High healthcare costs hinder American businesses' ability to compete in the global marketplace. Many U.S. companies are deterred from offering coverage to their employees by the high costs of healthcare.

As researchers and financiers seek to capitalise on obesity innovation, RAND Europe Senior Economist Roland Sturm considers the consequences of not tackling the root cause

Obesity has been in European headlines for several years, attracting substantial resources into research and development. This could be a positive development because obesity is among the biggest public health issues in Europe. But a rapid flow of resources into very narrow areas, together with highly visible and exaggerated media exposure, has led to an outcome that more resembles California's Gold Rush than a route toward effective health policy.