Reform Needs to Target What Health Care Costs, Not What We Pay for It

MEDecision, Inc.
David St.Clair
October 22, 2009

One of the things that struck me after taking a quick look at Senator Baucus's health reform bill is that it doesn't seem to contain a lot of detail around health cost control. Obviously one of the most discussed issues in the entire reform debate is that of containing costs.

For many people, the "cost of health care" simply means the amount of money consumers pay to acquire insurance. They believe the best way to control these prices is to implement a government-run insurer or, at the extreme, make us all part of a single-payer system. While this theory might appear logical, it's not very plausible. Simply by virtue of the fact that a single insurer could set rates and fees at whatever levels it chooses, insurance rates would in fact go down in the short term. That is, if the single payer wishes to lower them. But this would be little more than a short-term, quick-fix solution that exposes us to long-term catastrophes.

The real issue isn't what we pay for health care. It's what health care costs and what we demand it do for us. And that's where we need to focus our attention if we want to make care more affordable.

Simply put, when it comes to consuming health care, Americans have a voracious appetite. We demand access to the newest medications to control or cure virtually anything that ails us (whether or not the new, expensive drugs are any better than the older, less expensive generics), which, of course, would have been diagnosed by the latest technically advanced test performed in a state-of-the-art facility. Maybe it's a byproduct of living in a country that leads the world in health care innovation (as opposed to performance) that we just expect there will be some sort of treatment, no matter what the ailment. Maybe it's a good problem to have; certainly one that millions of people in underdeveloped nations would die for - literally. Regardless, our infinite demand for tests, medications, hospitalization, procedures, devices, etc., is expensive. It's the primary driver of our country's astronomical health care price tag.