Reforming Health Care Reform

by | Jan 10, 2011 | Health, In The News, The Economy, Weekly Column | 1 comment

Reforming the health care system isn’t new. Many presidents and Congresses have tried and failed, most recently Bill Clinton. Why, then, did health care reform pass under this administration?

According to Jamie Orlikoff, of Orlikoff and Associates, who addressed a gathering of community leaders in Rapid City, South Dakota, in December and whose consulting firm specializes in health care issues, past attempts may have failed simply because the status quo was still acceptable. This time around, the broad view was that the status quo was unacceptable and the American economy would eventually collapse if nothing were done.

However, the health care bill Congress passed in March 2010 didn’t completely address the unacceptable elements of the status quo. In particular, says Orlikoff, the issue of cost is still largely unaddressed.

The December 2010 report of the bipartisan National Commission on Fiscal Responsibility and Reform, tasked with finding ways to reduce the deficit, said the health care bill didn’t go far enough in cutting costs. The single largest category in the commission’s recommended cuts, four hundred billion dollars, was health care.

Health care, notes Orlikoff, is the largest expenditure of government and of the Pentagon. If we are serious about cutting the debt, we must turn our attention to health care costs.

Health care also represents a large segment of private sector spending. It’s the largest component cost of an American car or tractor, while the largest component cost of a Chinese or Japanese vehicle is steel. No wonder: China spends 4% on health care, India spends 2%, and the U.S. spends 17.5%. Orlikoff suggests this is one reason American retailers can sell imported products so cheaply.

According to the Institute of Medicine, 30% of what we spend on health care adds no clinical value. That’s a whopping 5% of GDP. The Agency for Healthcare Research and Quality, part of the Department of Health and Human Services, reports that 4.4 million hospital admissions, costing thirty billion dollars a year, could be prevented.

Exacerbating the inefficiency of health care is that there are huge geographic disparities, with pockets of efficiency. One commonly cited example is the contrast between two Texas towns. Despite similar demographics, McCallen has one of the country’s highest health care spending rates and El Paso one of the lowest.

When it comes to end-of-life care for patients with terminal illnesses, Orlikoff notes that UCLA/Hopkins spends an average of $90,000 per person and Cleveland Clinic/Mayo an average of $55,000. The difference in spending results in no difference in patient experience or outcome.

Orlikoff is also concerned that our burgeoning health care expenses will eventually spell the end of the US economy. “The dust bin of history is littered with economies that fell apart because one sector consumed the economy.” He cites the USSR and its over-concentration on defense spending.

One of the problems with the bill, says Orlikoff, is that 25-year-old, sleep-deprived kids on Red Bull wrote most of it. Some parts were written by people who could write and understood health care, some by those who couldn’t write. For example, one three-page section of the bill has no verb.

Still, if the bill is repealed, which is highly unlikely prior to 2012, we are left with market reform instead of legislative reform. Orlikoff points out that market reform is much more random; however, my belief is that it’s much more effective.

As experts like Jamie Orlikoff continue to tell us, health care reform is nowhere close to achieving a satisfactory status quo. Clearly, we need to continue discussing what we want and need to make our health care system one of the best in the world.

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