If health spending continues to rise, Massachusetts’ health reform has no hope of long term success.
Every year, costs rise far faster than inflation, making health insurance less affordable for individuals, and tempting employers to stop offering coverage altogether. For city and town governments in the Commonwealth, health spending for public workers’ benefits rose 85% between 2001 and 2006, eating up most new tax revenues. And state government spending for Medicaid and other state health programs continues to skyrocket.
With unemployment low and tax revenues high, the state – as well as cities and towns - can scrape by and meet their healthcare obligations. But when the economy turns sour, tax revenues will drop and business will lay off workers and cut benefits for those who remain. The number of people needing free or subsidized coverage under Chapter 58 will balloon, just when the Commonwealth’s coffers are empty. Predictably, the subsidies and coverage will be slashed. Meanwhile, the costs of unsubsidized coverage will continue to rise, leaving fewer and fewer able to afford even the meager offerings under the Commonwealth Choice program.
Unfortunately, the cost control provisions included in Chapter 58 are laughable. No serious observer thinks the toothless “Quality and Cost Control Council” will be able to rein in costs. The computerized health records touted in the bill may improve quality – even that has yet to be proven – but there’s not an iota of evidence that they will save money. And while improved quality and increased prevention – the other pillars of cost containment in the law - are great ideas, they generally raise costs, not lower them. Americans currently receive only about 55% of recommended care, so improved quality frequently means more, not less care. Prevention often keeps people alive (and needing expensive medical care) for years, rather than allowing them to die a quick and cheap death. Indeed, when Louise Russell analyzed the cost implications of prevention some years ago, she could find few things beside immunizations that are likely to save money.
That’s the bad news.
The good news is that there is enormous fat in the current health care system that could be trimmed. By moving to a simple, single payer system we could save about half of the $5 billion we’ll spend on hospital bureaucracy in Massachusetts this year. $2 billion or more could be saved by simplifying doctors’ paperwork, eliminating the need for a huge office staff to do billing, costly billing software etc. And more than a billion could be saved on insurance overhead if we replaced our wasteful private insurance firms with a single public plan.
Additional savings could be realized by having a single payer for prescription drugs, which could bargain with drug companies and bring prices down to the levels that Canadians pay. And limiting the profusion of expensive - and often useless and even harmful – high tech care could save billions more. Doctors and hospitals may make a bundle by offering whole body CT scans to the worried well, but patients get mainly unnecessary radiation.
In sum, single payer reform could save enough to make health care affordable – for everyone. Without such reform, we’ll soon again see a rising tide of the uninsured.
David Himmelstein is an associate professor of medicine at Harvard Medical School and co-founder of Physicians for a National Health Program
This program aired on May 26, 2007. The audio for this program is not available.