In the U.S. access to health care depends on having health care insurance. Whether health care is financed via public government-sponsored programs such as Medicare, Medicaid or SCHIP or through private employer-sponsored plans (BTW most individuals in the US have this form of coverage) it still ends up representing a cost to society. The conventional wisdom is that we all share in this cost: government, business, individuals, but, read this provocative article (Who really pays for health care?) by Emmanuel and Fuchs that debunks the shared responsibility myth when it comes to costs of health care1. And ask yourself why is it that health care systems in other countries seem to deliver higher quality, equitable and efficient health care at lower per capita costs compared to the U.S.?
It really was not long after Medicare and Medicaid programs appeared that costs really started to spiral out of control and the federal government looked for ways to control them. Nixon championed HMOs (managed care) and under Reagan in the early 1980’s HCFA (now known as CMS) seized upon DRGs and the prospective payment system as ways to rein in the ballooning costs associated with inpatient hospitalization. As a result, these cost adjustments in inpatient care served to redirect utilization of health care services into the outpatient ambulatory sector. In the 1990s managed care really took off because employers were searching for ways to reduce outlays for employee health insurance. However, since the infamy of HMOs in the 1990s (for example, see Denzel Washington’s John Q.) managed care has seen growth in for profit plans over non-profits, a shift from vertically integrated group /staff models to virtually integrated individual practice associations/network models, industry consolidation through mergers and acquisitions, increased cost sharing and a shift to capitation payment of private physicians. And it is debatable whether all these changes led to improved quality of care or patient satisfaction. One thing is clear: during this same time period health insurance costs continued to climb. Employers are experimenting with new health care plan types, such as consumer-driven health care plans in search of savings.
Keehan, Sisko, Truffler et al point out how the twin engines of economic recovery (post-2009 recession) and the patient protection and affordable care act of 2010 that was fully implemented during 2014 (remember healthcare.gov?), will greatly accelerate national health spending2. The Obama administration was elected on a platform that promised to expand access to care for a greater percentage of the population. The key to making health care available to more people is to make it more affordable by bringing down costs. Thus, the goal of the patient protection and affordable care act (PPACA) is a tall one indeed; to both increase access to affordable health care while also reducing costs of care.
The mainstays of the plan include eliminating private insurers’ pre-existing condition limitations while also reducing Medicare outlays to doctors and hospitals to protect Medicare’s long-term viability. Of course, we will have to see how this all plays out over time. For example, will hospitals and other institutional providers continue to cost shift or will they be forced to find ways to control costs as a result of the ACA’s provision to cut Medicare payments? According to Robinson, this is determined by the type of market hospitals and other institutions operate in3.
Note that we have not even addressed the issue of health care quality and many critics maintain, wrongly, that the ACA is quite anemic in this area. There are numerous provisions in the law that address many aspects of quality, such as, a call for pilot testing accountable care organizations (ACOs) and implementing bundled value-based reimbursement systems in order to replace existing fee for service arrangements, all in an effort to reduce costs while improving quality. Despite these pilot programs, though, while the ACA succeeded in expanding access to health care insurance, it did not do much to reduce the overall costs of medical care.
Fortunately or unfortunately (you decide), the ACA survived the Republican party attempt to repeal it and replace it with, some say, a heavy-handed private market based health plan. When SARSCoV2 exploded into the COVID19 pandemic triggering mass unemployment and loss of health insurance, certain states allowed special COVID19 open enrollment for those needing health insurance and access to health care. Fortunately or unfortunately (you decide), with a change in administration in 2021, the Federal government has extended open enrollment to expand coverage and mitigate the effects of the pandemic as well as give citizens confidence to seek medical care during this trying time. So as with other successive social programs such as Medicare, Pell grant program, FHA home loan program, the ACA survived its formative yet tumultuous beginning to become popular with voters. That is, like the other aforementioned programs, the ACA has become another “hands off” third rail of American politics. As a result, future health related legislation will focus more on finding ways to tweak and improve it rather than eliminate and replace it with something else.
Regardless of who is sponsoring health care (government, private sector) it is ultimately “us” the consumer/taxpayer who really bears its costs. And before we can reform the system, we first need to understand just what things… err… services.. cost. I do not mean prices of individual portions of care and reimbursement information (chargemaster) at the level of individual insurance plans, but, rather, real transparency about the costs associated with treating medical conditions such as heart disease or diabetes etc. We would all accept higher costs if they were accompanied by higher quality. However, we have known for a while that there’s not necessarily a direct relationship between the amount spent (costs) and quality of care (survival)!! Refer to the circular “cloud” in the graph. Go figure??!! Moreover, Uwe Rheinhardt, renowned health economist, lists the following reasons for our expensive health care: a built-in higher administrative fragmentation of our health care system, the lack of meaningful price information for consumers, and, finally, the over-reliance on fee for service payment schema4.
We are just beginning to gather information about what it takes to deliver quality care for treating long-term chronic medical conditions. In chapter 7, “Health Care System Performance” you will learn about measures used to help define and determine the quality, equity and efficiency of the care delivered by our health care system. Getting a handle on understanding what represents quality care should help us to better determine the “true” costs of care.
- Emmanuel E.J. Who really Pays for Health Care? The Myth of “Shared Responsibility”. JAMA. 2008; 299:9: 1057-1059
- Keehan SP, Sisko AM, Truffer J et al. National Health Spending Projections Through 2020:Economic Recovery and Reform Drive Faster Spending Growth. Health Aff. 2011; 30:8:1594-1605
- Robinson J. Hospitals Respond to Medicare Payment Shortfalls By Both Shifting Costs and Cutting Them, Based on Market Concentration. Health Aff. 2011;30:7:1265-1271
- http://economix.blogs.nytimes.com/2012/02/03/health-care-payers-push-back-against-costs/#