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Viewpoint: Health care reform and the price of ignoring reality

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opinion Woodbury,Minnesota 55125 http://www.woodburybulletin.com/sites/all/themes/woodburybulletin_theme/images/social_default_image.png
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Viewpoint: Health care reform and the price of ignoring reality
Woodbury Minnesota 8420 City Centre Drive 55125

Any physician failing to diagnose a patient's underlying disease, treating symptoms only, would be guilty of malpractice. Too bad, then, that politicians who want to "reform" health care, making it "affordable" cannot be sued for malpractice.

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Like a negligent physician, our esteemed leaders do not seem to understand (or do not want to understand) the reasons for rising health care costs: they tell us, rather, that medical care has become "unsustainably" expensive, suggesting that the federal government must curb rising costs, imposing price controls of one sort or other. Unfortunately, price controls, like our errant physician, treat symptoms while ignoring underlying economic and social realities. The price of ignoring reality? Rising demand, falling supply (whether in quality or quantity, or both). And the prospect of bureaucratically imposed rationing of health care.

So, then, what is it that drives increases in health care costs? Some answers to this question are obvious: fraud; malpractice insurance (coupled with "over treatment" as a safeguard against malpractice suits); burdensome administrative and regulatory requirements; etc. To the extent that they contribute to the rising costs of medical care, these aspects of the system, although they cannot be eliminated (e.g. some degree of fraud is unavoidable) can, with judicious reform (tort reform?), be contained, even reduced, thereby helping to control health care costs, both individually and generally.

Yet, I think these items are peripheral: any savings achieved, however impressive, would probably not substantially reduce the overall cost of American health care. Why? Because rising costs of health care are attributable to pivotal, inescapable trends and forces which, it should be obvious, cannot be restrained, much less thwarted by tinkering with marginal costs alone.

We must, rather, face up to the disturbing but challenging fact that the American population is aging, creating an ever increasing need for high cost, specialized health care.

This reality is complicated by demographic imbalance, specifically the unpleasant fact that the American demographic bell curve is skewed somewhat to the left, indicating that there are fewer young people to support a growing elderly population.

To make matters worse, the increasing health demands of an aging population is pressing against a limited supply of health care providers, a predicament which many policy makers propose to "solve" by encouraging preventative, primary care and cutting government payments to specialists (e.g. cardiologists). Any such solution would, of course, restrict care for those who need it the most.

Demographics alone do not, however, fully explain why health care costs (and the prices paid by health care consumers) are rising and rising faster than costs in other sectors of the economy.

First, the demand for health care is, in economic terms, highly inelastic (i.e. demand does not readily respond to changes in price). Or, to put it differently, people with health problems - serious health issues especially - do not usually shop around, seeking medical "bargains."

Rather, they readily accept what the physician recommends, the price tag notwithstanding. It follows, of course, that health care providers and insurers are somewhat insulated from the competitive pressures which tend to control costs/prices in other sectors of the economy. This, in turn, encourages the simplistic, ideological view that patients are victimized by "greedy" doctors and profiteering insurers, a situation which, it is argued, can be "cured" by government manipulation, keeping costs/prices lower than they otherwise would be.

Second, health care, unlike the "hard" sectors of the economy, is notably labor intensive. Among other things, the health care system requires a large number of highly trained, highly skilled people whose work is both demanding and highly technical. Such people, for obvious reasons, must be relatively well paid. In short, quality care requires a well paid quality staff. Moreover, the health care system does not benefit from cost-reducing productivity gains to the extent that other industries can (e.g. through automation of assembly lines). Or, in other words, medicine is not an assembly line enterprise. Unlike many other service industries, health care then is, in many respects, inherently "inefficient".

The physician-patient relationship often requires time consuming, individualistic consultation and treatment. Regrettably, however, this fact, like so many others is often ignored.

After all, "inefficient" Hippocratic medicine must kneel in the presence of the great cost control king.

Thomas St. Martin is a Woodbury resident.

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