Health Care Reform and Cost Control: Two Articles Of Caution

I recommend reading “The Obama Administration's Options for Health Care Cost Control: Hope Versus Reality" in the early April Annals of Internal Medicine.

The authors review the literature on how improving the quality of care often does not lower the cost of care. The authors favor of more emphasis on prevention, wider adoption of HIT, better management of chronic diseases, payment reforms that would pay providers on the basis of outcomes, and research on comparative effectiveness to identify preferred diagnostic and treatment options. But they point out that none of these has been shown unequivocally to lower health care costs. They turn to international examples, noting that concentration of purchasing power, lower prices, and decreasing administrative costs are key to controlling health care costs.

This article represents a trifecta for Jonathan Oberlander, who has published thoughtful pieces on health care reform in Health Affairs, New England Journal, and Annals over the past few months.

The front page of today’s NY Times has an article about growing opposition to the Obama administration’s attempts to save $94 billion from the student loan program over the next decade. Obama’s plan would have the federal government give all loans directly to students, and use the savings to sponsor additional loans and other educational efforts. The banks count on these student loans for billions of profit without much risk, as the loans are federally guaranteed. Obama can’t save the billions without taking it from someone, and the banks aren’t rolling over even though they’ve gotten a federal bailout and bankers have lost substantial public trust .

I read this article and just kept on thinking about health care. Instead of the banks – imagine this article about the angry physicians whose fees would be curtailed as part of health care reform – or the hospitals that face limited bundles for payment -- or the pharmaceutical companies that will face higher price sensitivity – or the health insurers who will face pressure to deliver more value for each administrative dollar.

In health care, as in student loans, if we want to invest, we’ll either spend more or take an uncomfortable chunk out of current spending. And that will leave a trail of angry stakeholders.