Managing Health Care Costs: A Pessimistic Historical View

Today’s Managing Health Care Costs Indicator is 7.5%

That’s what portion of the GDP health care was in 1971 when Steven Schroeder, MD, began work in the trenches to control the costs of health care.  He writes personal reflections on what hasn’t worked over the last four decades, as he progressed from a medical director in a start-up provider-sponsored HMO to an academic at UCSF and on to the presidency of the Robert Wood Johnson Foundation and back to UCSF.  
He writes in the April 25, Archives of Internal Medicine    Harvard Link  

During my professional lifetime I have witnessed a succession of individual cost containment strategies, each theoretically legitimate but each doomed to failure because they were either insufficient as a single intervention or ran up against political opposition to vigorous implementation.

Schroeder recounts efforts to decrease variation in test ordering among physicians in a group practice.  Differences were 17-fold!   Efforts to lower test cost were successful – but no more so among the high utilizers than among the low utilizers.  He notes that in practice, adding more technology can triple a physician’s income.  He observes that new technologies often replace older, more invasive and dangerous technologies – but they are used more and more widely, and no savings are attained. 

It’s a sign of the times that Schroeder remembers when “catastrophic” hospitalizations were those with total costs of over $5000.   At this point, catastrophic cases are over $50,000 or more.  Most of us don’t remember the last time we saw an inpatient hospital bill of less than $5000!

I'll let Schroeder have the last word:

In the long run, reining in costs will require mobilizing political forces that can withstand the inevitable claims of rationing sure to come from the industries currently benefiting from the 17% of the economy spent on health care, and from consumers who have come to expect unlimited access to what they feel they need. Until there exist sufficient countervailing forces so that a comprehensive, multipronged strategy could be implemented, politicians and health policy experts will continue to embrace tepid and ultimately ineffective solutions that may sound good in theory but will fall short in practice.