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Both presidential candidates have proposed ways of expanding health care coverage and keeping health insurance affordable. The Kerry proposal focuses more on cost containment than the Bush plan does. However, much of the improved affordability in both plans would result from increased government subsidies rather than from any reduction in the rate of growth of underlying costs. For example, Kerry proposes reimbursing employer-sponsored health plans for 75 percent of catastrophic costs of more than $30,000 per person as long as employers pass on the savings to employees by reducing their share of premiums. This proposal for reinsurance would increase affordability not by slowing cost trends but by substituting government payments for employee payments. Bush also emphasizes affordability rather than cost containment in his proposal for a tax credit for the purchase of individual insurance.
In reality, there are four basic options for slowing the trends in health care spending: one can increase the efficiency of health care delivery; increase the financial incentives for patients to limit their use of medical services; increase the administrative controls on the use of these services; or limit the resources available to the health care system. Health care systems throughout the world are pursuing variations on all four options, and the success of their efforts depends in part on how vigorously cost-containment tools are applied. But success does not come easily. For one thing, all health care spending represents someone else's income, and those who are facing a loss of income will work to block efforts to contain costs. In addition, each of these options, with the possible exception of the first, requires some people to get less medical care than they would like. For the most part, our leaders have been unwilling to acknowledge the inherent trade-offs between health care costs and people's access to care.
Government may be able to contribute to the efficiency of the health care system by supporting the development and installation of information technology to improve the coordination of patient care; both candidates have proposed subsidies for this purpose, although neither acknowledges the uncertainty over whether cost reductions would be achieved. Greater adherence to the practice of evidence-based medicine, additional research on the effectiveness of medical treatments, and greater assessment of technology before it is used outside research settings may all lead to gains in efficiency, but neither candidate devotes much attention to these issues. Current efforts to improve system efficiency give priority to improving the quality of care and have an uncertain effect on costs. For example, efforts to increase the rate of conformity to practice guidelines may increase rather than decrease the use of services.4 Many health policy experts have offered vague assurances that increased quality would result in a reduction of costs, seemingly in an effort to avoid acknowledging that there may be a trade-off.
Reform in the realm of professional liability could increase efficiency by reducing incentives to practice defensive medicine and allowing a higher proportion of liability premiums to be used for the compensation of injured patients. The Bush and Kerry plans both seek to limit frivolous suits and the punitive damages that could be awarded, but only Bush favors caps on awards for all noneconomic damages.
Kerry's proposal to set up an insurance purchasing pool that resembles the Federal Employees Health Benefits Program could, if successful, increase the proportion of insurance dollars that goes to benefits by reducing selling costs and creating a more competitive market for health insurance.
In recent years, employers have taken such steps as increasing deductibles in order to shift more costs to employees, giving them a financial incentive to use fewer services. Innovation is under way in this area: new benefit structures have been developed, including consumer-directed health plans, which typically have employer-funded spending accounts tied to insurance policies with a large annual deductible that exceeds the annual contribution to the account. Moreover, attempts are being made to support consumers by supplying better information on provider quality and prices. Having patients share more costs can benefit consumers when it leads them to forgo care that has very limited benefits. But when the tools are used bluntly — as when they are applied equally to care that is deemed essential and care that is considered to be more discretionary — they can pose a barrier to important care or cause financial hardship for patients with low incomes or substantial medical needs. These tools must be refined if substantial cost containment is to be attained through this approach.
Only the Bush plan endorses the increased use of financial incentives for patients, extolling the virtues of high-deductible health plans and proposing tax deductibility for plans that meet the qualifications for health savings accounts. However, Bush describes this proposal as a way of expanding coverage rather than as a cost-containment measure. The use of health savings accounts is likely to decrease spending for services that are typically covered by insurance but to increase spending on other services that qualify for the medical-expense deduction, such as dental care and optical services.
An approach stressing administrative controls, relying on tools such as restrictive provider networks, prior authorization for services, and payment of providers on a capitated or episode basis, was used extensively by managed-care plans but proved highly unpopular. Many restrictions were later relaxed in response to a backlash against managed care. Neither candidate has called for increased administrative controls. Indeed, both have called for a "patients' bill of rights," which would, presumably, make these tools even more difficult to use.
Restricting the resources that go into the medical care system and the prices paid to providers is an approach that has been used extensively in Canada and Western Europe but has never gained much of a foothold in the United States. Attempts to regulate facility expansion and hospital rates were common in the United States during the 1970s but declined with the expansion of managed care and increased competition in medical care. Neither candidate is advocating this approach.
That neither Bush nor Kerry is aggressive about containing costs is not surprising. Presidential campaigns are focused on promising to do things for voters — not on taking things away. We can only hope that whoever is elected president will move beyond campaign-trail rhetoric and provide the leadership needed for a candid national discussion about health care costs. If not, we will find ourselves on a downward spiral, as more and more resources are used to pay for the health care of fewer and fewer Americans — a potentially intolerable situation.
Source Information
From the Center for Studying Health System Change, Washington, D.C.
References
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Related Letters:
Controlling Health Care Costs
Abbo E. D., Coca S. G., Ellis E., Campbell K. N., Ginsburg P. B.
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Full Text |
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N Engl J Med 2005;
352:415-416, Jan 27, 2005.
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