The Perpetual Health Care Crisis

There may be no public policy solution to health care.

Brian Doherty from the July 2005 issue

(Page 2 of 2)

One alternative to government rationing is private managed care, which was the hip cost-containment solution of the '80s. By 2000, 92 percent of people insured through their jobs were in some form of managed care. This shift does not seem to have reduced the quality of health care, but it has maximized unhappiness among both patients and doctors by restricting their choices. Lately traditional HMOs have lost market share to the more option-filled PPO (preferred provider organization) model.

Some of the Bush administration's recent health care initiatives move in the direction of more options for providers and consumers. These include an expansion of health savings accounts (HSAs), in which citizens who buy high-deductible catastrophic coverage can save tax-free for future medical needs. With HSAs, money not spent on health care doesn't just line insurers' pockets; it's yours to spend on later medical needs or, after retirement, on whatever you wish (although it would then be taxed upon withdrawal).

HSAs are a step in the right direction, but on their own they will not do much to reduce the government's entanglement with health care. These books' most significant lacuna lies in discussing how the changes they recommend might come to pass. Where is the political constituency for powerful health care change--a constituency concerned and powerful enough to overcome the institutional inertia of the various large forces that have reached a workable and profitable peace with our current jumbled, highly regulated system? One obvious possibility is employers, who are nervous about the cost explosion because they have to obtain and help pay for insurance; 2003 was the third straight year of double-digit insurance premium inflation for families in employer-sponsored plans.

Despite employer unrest over costs, the political chances for a big change in the direction advocated by Pipes, Goodman, and the others seem small right now. The collapse of ClintonCare may have had less to do with Americans' distrust of government control than with resistance to any dramatic change in health care. Since then the only significant move to enhance patient power has been the less-restricted HSAs in the 2003 Medicare Modernization Act--which also contained Bush's prescription drug benefit, the most expensive expansion of government into medicine since the establishment of Medicare itself.

But always remember this when despairing about the prospects of policy reform: Health care systems don't equal health. As Goodman notes, "beyond some basic public health measures, there is not much correlation internationally between health care inputs and the overall health of a population." Our health is far more in our own hands--depending on our own behavior, from exercise to diet to risk taking--than politicians would have us believe. That reality, combined with the fact that we could spend our entire GDP on health care without satisfying all individual demand for it, leads to the conclusion that no policy reforms, even the most market-leaning, will solve all, or even most, of any loosely conceived health care "crisis."

You can always get Americans to complain, when polled, about the system as it stands. For the past two decades, Harris polls have shown between 20�40 percent agreeing that there is so much wrong with our current health care system that it needs to be rebuilt. But support for change in a universal-coverage direction, as high as 62 percent in some polls, evaporates quickly when parameters such as rationing, waiting lists, and restricted choice of doctors are added to the scenario. And no politician has gotten very far campaigning on such a complete overhaul, despite the poll chatter. If there is any efficiency in political markets at all, this should tell us something about how powerfully dissatisfied most Americans really are. (Realizing, as Goodman points out, that 10 percent of the population consumes 72 percent of health care expenditures helps make sense of this--health care is a real crisis for a few, merely an anxiety for the rest of us.)

The economics and politics of medicine can seem both boring and difficult, and neither of these books do much to dispel that notion. That boredom and difficulty help explain why Social Security, and not the far more severe and impending Medicare cost crisis, has become Bush's main political push in his second term.

Social Security already had decades of academics and think tankers, many of them libertarian, working to convince people that Social Security is inevitably doomed, and laying the ideological and political groundwork for segueing out of it. Public awareness and concern over the more complicated Medicare problem hasn't quite reached a tipping point yet. But Medicare's cost spiral also dictates that it can't go on forever, so it's inevitable that attempts to fix it or end it will eventually dominate the policy scene. (It would be very difficult, alas, for a Bush administration to make a crusade out of the inevitable disaster of Medicare in his second term when one of the biggest successes of first term made that disaster far more looming and awful.)

When realization of Medicare's impossibility becomes widespread enough, the entire medical regulatory and financing system will be up for political grabs, and books like these will seem prescient and helpful guides for politicians finally seeing the light of the oncoming train of crushing social costs. Better late than never.�

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