Perspective: Cost control myths must be addressed to fix health system

May 10, 2013

From misunderstandings about the role of healthcare inflation to cost controls in the Affordable Care Act (ACA), three economic myths must be addressed for the healthcare system to function properly, says Theodore R. Marmor, PhD, Yale University professor emeritus of public policy and management as well as political science. He recently spoke with Medical Economics Editor-in-Chief Lois A. Bowers, MA.

 

From misunderstandings about the role of healthcare inflation to cost controls in the Affordable Care Act (ACA), three economic myths must be addressed for the healthcare system to function properly, says Theodore R. Marmor, PhD, Yale University professor emeritus of public policy and management as well as political science. He recently spoke with Medical Economics Editor-in-Chief Lois A. Bowers, MA.

Two of your many books are Comparative Studies and the Politics of Modern Medical Care and Fads, Fallacies and Foolishness in Medicare Care Management and Policy. What are the most relevant messages from them for primary care physicians today?

The biggest myth is that a country’s experiences of medical inflation are proportionate to the rise in income of the country because of forces that are uncontrollable.

I’ve published a book on comparative studies, but people don’t use comparative analysis in a very careful way. They’re too cavalier about explaining why things are the way they are. They delude themselves into thinking that somehow, the Medicare program in 1965 meant that the United States could never get to any kind of cost control because Americans have different ideas. There’s no basis for that at all.

The reason we had trouble with costs by comparison with everybody else is that the inflationary forces in medical care are powerful. The question is not what citizens believe; it’s the structure of political power and whether or not the countervailing forces against inflation are well-organized or not institutionally.

If you ask why Canada was different from the United States between 1970 and 2012, it has nothing to do with Canadian beliefs. It has everything to do with the fact that there’s a structure of decision-making. In other words, if inflation in medical care goes up by 10%, then the education or the transportation budget of every province has to fall to compensate for that, or taxes have to rise. There is no such mechanism in the United States.

What is another myth, in your opinion?

That the interplay of consumers shopping around for good deals from insurance companies will stem the rate of medical inflation, and that the evidence for that belief is what’s happened since 1996 in Switzerland and since 2006 in the Netherlands.

That inference has been drawn by actors in the United States who have a theological commitment to the belief that since competition for shirts or automobiles typically takes place over both quality and price, the same will happen in the medical care area. The answer to that is, people don’t treat health insurance that way.

And it didn’t happen in Holland and Switzerland. In fact, they’re probably the two most expensive countries now, even more than Canada, where health insurance is concerned.

Another myth involves the quest for the holy grail in health policy in the United States-that there’s some magic bullet somewhere, from bundled payments to health maintenance organizations to accountable care organizations.

The conception of cost control as built into the ACA is naïve at best and idiotic at worst. It’s difficult to turn private health insurance into a version of regulated social insurance, which is what obviously the ACA is trying to do. Especially  in the United States, when you’ve got determined private health insurers who are not embarrassed by failing to work within the spirit of the law as opposed to the letter of the law.