• The history and future of health care cost control failure

    To my surprise, my latest Kaiser Health News column appeared this afternoon. (I was expecting it tomorrow.) It begins,

    Let’s be honest. We really don’t know what’s going to control health care costs, long term. Today’s politically winning idea could be tomorrow’s platter of humble pie.

    There are lots of different thoughts about how best to do it. But which of them deserve political and legislative support?

    It goes on to recount the history of public and private sector failures to control health care costs and what that means for the future. Read the whole thing here.

    It does make me sound like a pessimist. I’m not. I’m just a realist, and I know how hard it is to reduce health care cost growth.

    Having said that, I think ACOs, the excise (Cadillac) tax, and the IPAB are very promising ideas. ACOs are not merely a public-sector idea, though they’ll likely be more broadly tested in public programs before they grow in the private market. Nevertheless, ACO-like payment arrangements can, and probably should, be implemented by private insurers and they can be integrated with more market-based insurance concepts. The excise tax is the only provision of the ACA directly aimed at private-side costs. So, it’s critical, but I expect there will be calls to delay it or water it down. The IPAB is purely a way to get around the political challenges of necessary reform of Medicare. It’s a good idea, and I’ve heard no convincing argument against it.

    So, I’m optimistic about these ideas. But, politics being what it is, I would not be shocked if none of these worked or were allowed to work. In particular, I discussed how ACOs could fail in a recent post.

    • Allowed to work will be the problem. I think the IPAB will be a major target.


    • Think of health care as a boat. In Japan, Canada, France, Israel, et al, everyone or most everyone is in the same boat. if the boat springs a leak or is foundering, everyone will sacrifice to save the boat and themselves.

      In the US we have many boats. One big boat is Medicare with a lot of experience sailors. If conservatives or liberals do anything that threatens to sink the boat or steer them from the balmy waters to rough seas, they act together to keep the boat where they want it.

      Employers have their boats. The poor have their Medicaid boats – each State is different. and the uninsured are in the water, some with life vests, some with life rings, others treading water. Those boats have a captain who deals with the problems his small boat is having by throwing people over board, but sometimes the boat is swamped and he’s in the water too.

      As long as the government run big lifeboat is built to carry only the old, it isn’t going to venture in and pick up those in the water. Yeah, they would like to help them, but they aren’t going to sacrifice any of their comfort and safety as a group. And if some boarders attempt to sink their boat, they will be quick to beat the off with clubs.

      Most of our competitor nations have two boats, one that is for everyone, an then a luxury liner. No one gets thrown in the water. Everyone agrees on a minimal level of safety in the everyone boat, but also a maximum level of luxury.

      The only two things thing all the competing nations have in common that is different from the US is universal coverage and lower costs. That can’t be coincidence. It merely points to the common interests of everyone who depends on the same boat.