“Health care resembles an oversized teenager who keeps popping the financial seams on his clothing. He’s already the largest kid in the room and he threatens to grow until there’s no space left in it for anybody else,” said Henry Aaron, senior fellow of economic studies at the Brookings Institution in Washington, D.C.
Aaron was one of a panel of experts speaking at the “Health-Care Challenges Facing the Nation” conference Oct. 7 on the Medical Campus. The conference was chaired by William A. Peck, M.D., the Alan A. and Edith L. Wolff Distinguished Professor of Medicine and director of the Center for Health Policy in the Olin School of Business.
The cost of health care is one of the largest components of the U.S. economy and is rising faster than the rate of inflation.
Increases in health-care spending have been attributed in part to an aging population. But others have pointed to a period of biomedical research and development that has brought technological innovations that drive up costs.
Yet, the “mortality benefits” of medical advances are significantly greater than the monetary costs, according to David Cutler, professor of economics at Harvard University.
“For example, the average 45-year-old spends about $30,000 more than he or she did 40 years ago to treat cardiovascular disease, adding about three years of life,” he said.
“How many would spend $10,000 a year to get three years?” he asked the audience. A sea of hands went up.
Cutler maintained that research and development account for only about 5 percent of all medical spending. “But, research and development do create more spending by leading to new, expensive treatments,” he added. Aaron believes Americans will be forced to choose between two unpopular options:
“We can ration care in some explicit fashion. If we don’t, that will require unprecedented tax increases by a tax-phobic nation.”
Although some degree of health-care rationing has been successful in other countries, most American citizens strongly oppose it. “It is unlikely the U.S. will use rationing,” said Gail Wilensky, senior fellow of Project Hope.
Wilensky asserted the fragmented and wasteful system can be made less expensive through streamlining. Mark McClellan, president of Medicare and Medicaid, agreed.
“Inappropriate, unwanted or unnecessary treatment decreases the quality of care and drives up costs,” he said.
Solutions will need to be implemented to improve the efficiency of care and reduce administrative waste. “The difficulty is that this is going to require an investment of billions and not millions,” Wilensky said.
Beyond the problem of cost, another less visible, but equally thorny problem exists: disparity in the care provided to well-insured people as compared to the uninsured or underinsured, many who are minorities.
“Public health service is underfunded and unevenly distributed,” said James Kimmey, president and chief executive officer of the Missouri Foundation of Health.
“This results in substantial gaps in health status and emerging illness among some groups within the population.”
Disparity arises from several sources of inequity. “The political process is not engaging even one of the problems of disparity in an effective fashion,” Kimmey said.
Politics raises barriers to solving health-care problems, explained former U.S. Surgeon General David Satcher.
“It took six years after the surgeon general’s report detailing the health consequences of smoking for Congress to pass the law requiring a warning on packs of cigarettes,” he said.
The need to repair our health-care system, or “mélange,” as Aaron called it, could be one of the most complex challenges the United States faces.
The conference — sponsored by the Center for Health Policy, the Weidenbaum Center on the Economy, Government, and Public Policy in Arts & Sciences and the Brookings Institute — is one of the ways the University is addressing health-policy issues.