The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

The Key to Long Term Health Care Reform: Control Costs

Posted by Alan on May 11, 2007

In March I wrote a post about how controlling health care costs is the key to meaningful health care reform. Seems to me it’s a topic worth revisiting as no one seems to be addressing it.

The facts are simple. When someone needs medical care there’s only four sources to pay for it:

  1. Taxes;
  2. Premiums;
  3. Out-of-Pocket (the patient’s pocket, to be precise); or
  4. Charity (someone else’s pocket, usually the hospital’s or doctor’s).

That’s it — if someone can think of other sources, please let me know. So you can twist the health care coverage system into any shape you like and it doesn’t change the reality that medical costs are increasing faster than general inflation or wage growth. And it’s going to continue to do so as the population gets older, technology changes more quickly, and consumers demands and values evolve. This last point is often overlooked.

It used to be when you a family member drank too much, they were shunted off to the bedroom when company came. The lucky ones got introduced to AA. Now it’s recognized, accurately, as a medical problem and people expect the medical establishment to step in. Similarly, drug problems used to be handled by the criminal justice system. Now it’s a medical problem. These shifts, and others like them, aren’t wrong. They’re a smarter way to deal with serious problems. And they add to the cost of health care.

What all this means is that, unless the current health care reform debate changes soon, when California passes a health care reform package it will fail to address the underlying problem. It won’t quite be “sound and fury, signifying nothing,” but we will be back debating the issue again — sooner than later. That’s because no one is tacking the root cause of the challenge facing our society: how to prevent ever increasing health care consumption — and the cost of that care — from taking over the economy.

Ironically, Senator Sheila Kuehl’s SB 840 has the best chance of raising the issue. By establishing a single payer for care it could lead to a discussion of what happens when the state doesn’t have the money for all the care that’s required. Of course, the bill’s supporters don’t dwell on that question because they know if the debate focuses on rationing they lose.

But Oregon managed to have an honest debate about rationing. Dozens of town hall meetings were held to establish what services would be covered and what wouldn’t. From what I understand, it was a healthy discussion (you’ll pardon the pun) and the resulting public policy has been widely accepted.

I don’t mean to suggest rationing is the only way to control health care costs. I am suggesting that Oregon had political leaders willing to raise tough questions about health care costs. Until California’s leaders show similar courage, we’re going to be spending a lot of time, effort and resources on secondary issues. Those secondary issues (for example, how health care coverage is sold, who pays for it and whether people have to buy it) are important. But by themselves they can’t overcome the challenge we face. And that means we’ll be mired in a health care reform debate again all too soon.

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