Health care spending is a hot topic these days. Americans are worried about the cost of health care to their families and companies, and to local, state and federal government. They are divided over whether the Affordable Care Act will make the situation worse or better, and how reforms that are supposed to bring greater efficiency will affect their care.
But what does all this anxiety about health care spending have to do with health? Alas, not much.
Americans spend a lot on health care, but we are not a healthy nation. We are currently devoting nearly 18 percent of total spending to health care. Other countries with modern health care systems such as France, Germany, Sweden and Canada spend around 12 percent, while their populations score better than ours on many standard measures of health. Some wonder if modeling our health care system on theirs – adopting a single payer system, for example – would make us healthier. But even if such changes were politically feasible, they would not make us much healthier, although they might make care less costly.
The impediments to good health in the United States have little to do with how much we spend for health care or how we organize it. Americans’ poor health is primarily the result of unhealthful food, too little exercise, drug and alcohol abuse, violence, poverty and too many people living in distressed neighborhoods where children suffer permanent damage to their health and healthy choices are nearly impossible to make. Countries with healthier populations than ours deliver and pay for health care in diverse ways. We could benefit from emulating some of these approaches. But they are also healthier because they are leaner, exercise more, murder each other less often, have more nurturing child care and are less tolerant of poverty.
I am not saying we can forget about health care spending. Our system is extremely expensive and almost certainly will get more so as the population ages and medical science invents increasingly effective, but usually more expensive, ways of treating disease. If we can find ways of producing higher quality care for less money, the benefits can be enormous. Not only will patients be better off, but the savings can be devoted to improving education or low-income housing, or other investments that might actually lead to better health.
Our high health care costs have multiple causes. Compared to other countries with modern health systems, for example, we rely more heavily on highly paid specialists and less on primary care physicians and other less well-compensated caregivers, such as physician assistants and nurse practitioners. Our stunningly complex and fragmented system of paying for and delivering care generates high administrative costs. It also leads to waste, duplication, uncoordinated care and costly medical errors. A much-quoted study by the Institute of Medicine estimated that as much as a third of health care spending did not contribute to better health. The trouble is that one person’s waste and duplication is another person’s income, which makes change politically hazardous.
The realization that we could have higher quality health care for lower cost – or at least less rapidly increasing cost – has prompted an explosion of reform initiatives in both the public and private sectors, mostly focused on improving incentives by correcting two perceived defects on the way we pay for health care. One defect is the predominant fee-for-service system, under which doctors, hospitals and other providers receive payments based on the volume of services they produce but not for keeping their patients from getting sick. The Affordable Care Act not only expanded health care coverage to millions of people, but also provided funds to test new methods of payment intended to reward value produced, rather than volume. Private payers are trying similar experiments.
The other defect is that markets do not work well in health care. Consumers have little information about cost or quality of care and few ways of making informed choices among providers or health plans. Big hospital systems and insurers have consolidated their market power, and, especially, in rural areas, consumers may have few alternatives. Hence, reformers have been trying to develop and publicize measures of performance or quality of care and offer consumers choices in an organized way. The Affordable Care Act’s exchanges and Part D, the prescription drug benefit of Medicare, are both attempts to present consumers with more comprehensible choices. The hope is that they will choose the best deal for the money and providers will respond by improving care and cutting unnecessary costs.
If these reforms focus caregivers’ attention on how to prevent illness and reduce costly hospitalizations, they will not only not lead to better care for less money but actually improve patients’ health. These reforms are just getting started, and there is no guarantee all will succeed, but some are likely to work and may already be helping reduce costs. Health care spending, which was growing substantially faster than other spending for decades, has slowed markedly in the last few years. The recession and slow income growth bear significant responsibility, but payment and market reforms may also be a contributing factor. However, upward pressure on health spending will likely accelerate as the economy recovers, the baby boomers hit the high health spending years, and medical innovation continues. So complacency is not in order.
Accelerating health care reform is critical. It may well reduce waste and increase the focus on prevention and high quality care. But will we be appreciably healthier? Probably not, unless individuals, families and communities begin dealing with the multiple impediments to health in our daily lives and change their behavior accordingly. The standard tools of health care policy – passing laws and writing regulations that affect health care delivery and financing – won’t automatically produce better health, although some will help. We won’t have a healthier America, until individuals and communities realize that being healthy is up to us.