A consistent refrain during the health care reform debate has been the need to make health care affordable for all Americans. But affordability to the person seeking health care and affordability to the country are not necessarily the same thing.
Ideally, the new legislation would provide sufficient government subsidies to make coverage affordable to the individual and to reduce the overall cost of health care to society. The latter (reducing societal costs) would actually make the former (subsidizing coverage to individuals) less expensive for taxpayers.
This is what President Obama has had in mind, but as we have seen, politicians can more easily spend taxpayers' money to make coverage more affordable to individuals than institute policies to reduce overall health care expenses. Regardless of what happens to health care reform, the affordability issue will be with us for years to come.
Affordability by individuals
An August 2009 analysis of federal data by the Commonwealth Fund, a non-partisan research and charitable foundation, found that if premiums for employer-sponsored insurance grow in each state at the projected national rate of increase, then the average premium for family coverage would rise from $12,298 (the 2008 average) to $23,842 by 2020 a 94% increase.
Uwe Reinhardt, a highly respected Princeton economist, estimates that by 2017, an American family that today has a gross wage of $60,000 will see health care expenses alone consume 40% of it, putting health insurance out of reach for many in the middle class.
To make coverage affordable, Congress has been working on legislation to provide sliding-scale tax credits to individuals and families with incomes up to 400% of the Federal Poverty Level if they can't get coverage from their employer and are not eligible for Medicare, Medicaid or SCHIP. Congress has also proposed capping total out-of-pocket expenses, annually and over a lifetime, and requiring insurers to cover essential benefits, including preventive services with no deductible or co-pays. The very poor would be covered under Medicaid.
These steps would help make coverage more affordable to the individual who needs help, but unless they are coupled with measures to “bend the curve” on the overall costs of care, they would actually make health care less affordable for the country.
Affordability for society
By 2017, health spending is projected to double to nearly $4.3 trillion, according to a November 2008 analysis by AARP, the senior advocacy organization.
President Obama's own Council of Economic Advisors projects that by 2040, Medicare and Medicaid expenditures will increase from 6% to 15% of the GDP. As a result, the Medicare Part A trust fund, which pays for hospital care and related services, is projected to go broke by 2017. The number of people enrolled in Medicare is expected to increase from 40 million in 2000 to 79 million by 2030, while the number of taxpayers paying into the program will decrease. In 2000, there were four taxpayers for every one beneficiary. By 2030, there will be only 2.4. Crushing tax increases or huge benefit cuts would then be required to keep Medicare afloat.
Why aren't politicians doing more to anticipate these crises and reduce costs? Because that would require actions unpopular with voters, such as limiting access to medical technologies, reducing the prices paid for services (and the incomes of providers who benefit from high prices), or making people pay more out of pocket for the services they receive.
Should the current health reform effort fail, the affordability crisis, for American families and society as a whole, will only get worse. Even if some legislative success is achieved, the policies included will likely be insufficient to make a big dent in health care spending.
Rather than looking to politicians for the answers, physicians could be the ones to lead. The public will have more confidence in cost-control measures advocated by their own physicians, and it will be harder for politicians to scream “rationing” if doctors are the ones advocating for reducing costs.
To this end, ACP recently published an evidence-based position paper, “Controlling Health Care Costs While Promoting the Best Possible Health Outcomes,” that provides a comprehensive analysis of the major drivers behind escalating costs: overuse of technology, too few primary care physicians, inaccurate pricing of services, too little emphasis on wellness and prevention programs, and a lack of incentives for patients to take responsibility for their own health, among other factors. It also provides several dozen recommendations for policies to address each cost driver. The paper is online.
Many of the College's recommendations will be controversial, even within its own membership. But in the absence of physician leadership, politicians will continue to duck the tough questions on how to control costs until health care is no longer affordable on any level.