Publication Date: Wednesday, March 16, 2005
Guest Opinion: As costs explode and Boomers get old, hard questions loom in health care, locally and nationally
Guest Opinion: As costs explode and Boomers get old, hard questions loom in health care, locally and nationally
(March 16, 2005) by David Druker, M.D.
There was a time, not many decades ago, when the American health care system seemed simple.
If you were sick, your family doctor made a house call. If you were hospitalized, your insurance company paid -- without question. In the absence of advanced technology and prescription drugs, costs were controllable. And nobody had heard of "managed care" or "universal coverage."
Fast forward. As new procedures and medications emerge, our health care is in many ways better. But these advances, coupled with demographic and economic trends, have led our health care system to the brink of crisis. Consider these statistics:
1) Per capita health care costs grew 7.5 percent in the first half of 2004, outstripping growth in the U.S. economy, according to the nonpartisan Center for Studying Health System Change. Numerous factors drive this, including ever-growing demand for expensive medical technology and a higher incidence of chronic diseases such as diabetes.
2) There has been a surge in the incidence of obesity, as well as an increase in drug and alcohol abuse, which escalate costs of health care due to related long-term health problems.
3) Approximately 80 percent of health care dollars are spent to care for 10 to 15 percent of our population, much of it for end-of-life care. New technologies and medications, while extending life, drive up costs for everyone.
4) About 43 million Americans lack health insurance, according to the Centers for Disease Control and Prevention (CDC). That number is likely to grow as employers, faced with rising costs, drop health benefits. The uninsured generate higher costs because they usually wait until health problems need emergency care -- the most expensive kind. Many young, healthy people could get insurance but choose not to, further skewing the numbers toward less-healthy, higher-cost people.
Above all looms the impending retirement of the Baby Boom generation -- those born in the post-World War II decade. The population over 65 is expected to double by 2030, and the Palo Alto area is at the forefront of this aging trend. Seniors access hospital, physician and long-term care services at far higher rates than do younger people.
Unless preparations are made now, this demographic tidal wave threatens to swamp the Medicare program and overwhelm already strapped medical providers.
Addressing these problems is complicated, not only because of the large numbers involved but also because solutions require sacrifice. As a society, we would like to give everyone access to the most sophisticated care in the world -- at bargain-basement prices. We cannot do both. In preparing our health care system for the future, policymakers, medical providers and the public face difficult questions.
The first hard question is simple: Who pays?
Should patients share more of the costs, or should government play a larger role? Faced with double-digit increases in health-insurance premiums, many employers are asking workers to pay more of the premiums or higher deductibles and copayments.
Health savings accounts (HSAs) are an option for patient cost-sharing. Pushed by President Bush during the recent campaign, HSAs allow individuals to invest their own money into tax-free accounts for health expenses while also purchasing lower-cost, higher-deductible insurance tor catastrophic medical needs. HSAs can be offered by employers or purchased by an individual, and are portable between jobs.
Increased cost-sharing can help control spending: Patients may be more likely to choose cost-effective options and exercise better preventive care. It can also give patients more control over care they receive. But such measures place a heavy burden on people with chronic illness or low incomes. And making informed decisions can be difficult -- cost and quality data are often confusing and hard to find.
On the other extreme, "universal coverage" solutions envision a much larger role for government. For example, lawmakers could create a package of "essential benefits" for all citizens, either through employers, individual purchase or the government. A more drastic proposal would create a single-payer system, with everyone enrolled in a government-run plan.
The advantage of single-payer coverage is obvious: Everyone gets basic care. But there are many disadvantages. In Canada, which has a government-run system, long waits for medical services are customary. Bureaucratic requirements restrict access to expensive -- but often necessary -- specialty care, and decrease the incentive to develop new technologies and medications.
The current federal programs -- Medicare and Medicaid -- are already tremendously underfunded and result in significant cost-shifting to the private sector. As we have seen with Medicare, the systems are subject to political whims. Contrary to what advocates claim, there will be enormous administrative costs and red tape in implementing a single-payer system.
Many, myself included, believe costs outweigh the benefits. Almost every health care provider I know would be bankrupt under an all-government solution. We must continue to include the private sector.
A second huge question is: How can we provide for the elderly?
Current estimates show Medicare will become insolvent around 2019, just as the full force of the Baby Boom wave hits the system. Extending Medicare likely will mean both higher taxes and reduced benefits -- politically unattractive ideas. The new prescription drug benefit -- though much needed -- increases Medicare costs still further.
There are numerous proposals to "fix" Medicare, including raising eligibility above 65. Experts say such a move is the only way to address the reality that people live longer than in the 1960s when Medicare was created.
Beyond Medicare is the question of whether medical providers are prepared to care for a large elderly population, the "age wave" that some call a tsunami. We have in recent years eliminated hospital beds in a shift to outpatient care. But seniors use hospital services at nearly four times the rate of younger people. Will we have enough capacity? Enough physicians, nurses and other caregivers?
These questions need to be confronted now, while we have time to prepare. At the Palo Alto Medical Foundation, we have been expanding our facilities and making plans for a new medical campus in San Carlos to provide the area with more doctors and hospital beds by the end of this decade -- just as the first Baby Boomers begin retiring in 2011. Stanford also is expanding its facilities, as is Sequoia Hospital. These combined efforts will help the Midpeninsula meet its long-term needs for medical care, but there's the rest of America ....
I have two particular concerns: Where will non-profit providers fit? How will physicians maintain their voice in health care policy?
Major health care reform will have to come from both the federal government and the private sector, and physicians must take a leadership role. Physicians and hospitals already play an important role in addressing problems such as the local impacts of the uninsured crisis. This is particularly true of not-for-profit organizations, which provide many millions of dollars in community-benefit activities in exchange for their tax-exempt status.
Community-benefit activities will become increasingly important in the years ahead. Two things must happen to ensure our continued ability to serve local residents in this way:
First, we must protect the tax-exempt status of not-for-profit organizations -- which makes it financially feasible for us to offer uncompensated care to needy patients and to supplement our income with philanthropic gifts.
Second, policymakers and private payers must help offset the growing costs to physicians and hospitals of caring for the underinsured. This may include rethinking where and how such care is provided, in addition to expanding insurance coverage and revising Medicare.
The American health care system is facing potential crisis, but it is not in free-fall, yet. We understand its problems. Though we may differ on how to solve them, we recognize the need for creativity and continued debate.
What will help us meet these challenges is that ultimately we share a common goal: offering the best care possible to as many people as possible, giving us all the opportunity to live healthy, productive lives.
David Druker, M.D., is president and CEO of the Palo Alto Medical Foundation and a longtime Palo Alto area physician. He can be e-mailed at drukerd@pamf.org.
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