Fifteen years ago, insurers were trying to put a brake on healthcare costs by “managing care”—which often meant saying “no” to patients. Too often, insurers denied coverage for care that patients needed. Then came the backlash against managed care, and insurers relented. They began to say “yes” to more treatments, and passed the cost along to customers in the form of higher premiums, co-pays and deductibles.
More recently, insurers have begun trying to save money by shifting their focus from patients to doctors. Increasingly, insurers have been delaying payments to physicians, and, doctors say, insurers are underpaying for many services. Physicians are now fighting back, bringing lawsuits against insurers. Doctors often complain that we live in a terribly litigious society. Now, they are hiring the lawyers. Are the suits justified?
When for-profit health maintenance organizations (HMOs) came on the scene in the 1990’s, consumers balked at some of the cost-containment measures these companies imposed on services. Reports began circulating about cancer patients being refused coverage for potentially life-saving treatments, about mothers being kicked out of the hospital less than 24-hours after giving birth, and doctors not performing medical tests on patients whose plans used capitation (paying a lump sum for each patient rather than paying fees for each service).
The public outcry—and in a lesser sense, legislation—led the managed care industry to back away from many of their more draconian cost-containment strategies. The managed care companies (MCOs) that remained after the 1990s decided to concentrate on “disease management” and preferred provider networks to try and keep costs down. They offered consumers more choice and flexibility in their plans; removing barriers like gatekeepers and capitation agreements.
This “loosening up” has had the predictable effect of driving health care costs up for both employers and consumers. According to the Kaiser Family Foundation, the cumulative growth in health insurance premiums between 1999 and 2008 was 119%. Employers have passed some of that increase along to workers who now face ever-higher out-of-pocket expenses: the average employee contribution to employer-provided health insurance has increased more than 120% since 2000.
In response to these runaway costs, insurers have been resorting to a second-round of cost-containment measures that may be less obvious to consumers. For a good take on this see; “Managed Care Rebound? Recent Changes in Health Plans’ Cost Containment Strategies” .
Squeezing Providers
Insurers have focused on business practices that include delaying payments to providers, “bundling” several procedures and then reimbursing at a lower rate, and underpayment of services provided outside the network. These newer cost-containment measures have now raised the ire of providers. According to an article written by Maureen Glabman in the February 2009 issue of Managed Care, class-action lawsuits filed by providers against all of the major health plans have nearly tripled from the late nineties to the first five years of this century.
According to Glabman, these suits already have resulted in combined, multi-billion dollar settlements– and there are many similar cases still working their way through the court system. Angry providers, backed up by the American Medical Association (AMA) and state medical societies, are “empowered as nearly anonymous members of class action lawsuits,” observes Glabman, to try and fight carrier business practices they feel are depriving them of income.
Why are doctors banning together in class action suits? Robert Seligson, president of the Physicians Advocacy Institute, a group representing state medical societies that is charged with enforcing the national class-action lawsuit settlement agreements between physicians and health plans, explains:
“Individual doctors are afraid [to get in a dispute] with a managed care company for fear of retribution—getting kicked out of a plan, coming under intense review, or being subjected to retaliatory tactics. They have more support with organized medicine behind them.”
The provider-instigated lawsuits fall into three areas:
1) Charges of racketeering around business practices that include “bundling, downcoding, recoding,” and other fraudulent practices. The largest lawsuit in this area involved over 950,000 physicians, physician groups and physician organizations who submitted claims to any of the 12 for-profit insurers—including Humana, Aetna, CIGNA, Prudential, UnitedHealth and WellPoint) between 1990-2003.
Similar racketeering charges were filed in a class-action suit by the same group against over 60 Blue Cross companies. Some of the publicized settlements include: Aetna, $470 million, Cigna, $440 million; and WellPoint, $498 million.
2) Charges that managed care companies have been using artificially low figures to calculate “usual and customary rates” (UCR) in order to force consumers to shoulder more of the bill for their out-of-network charges. It turns out that these rates have been determined by just one company, Ingenix—a subsidiary of UnitedHealth Group.
The American Medical Association filed the first suit in this case against UnitedHealth and its subsidiaries in 2000, but litigation has really heated up this year after New York Attorney General Andrew Cuomo completed an investigation of Ingenix and found that the company regularly understated usual and customary charges by 10-28%. The company relied on “fraudulent” and in some cases, decade-old, data submitted by insurers to make its determinations.
You can access the Attorney General’s report, “Health Care Report: The Consumer Reimbursement System is Code Blue” here.
In March, the Senate Committee on Commerce, Science, and Transportation held hearings on “Deceptive Health Insurance Industry Practices – Are Consumers Getting What They Paid For?” and invited representatives from provider groups, insurers and Cuomo’s office to testify. In her testimony, Linda A. Lacewell, head of the Healthcare Industry Taskforce for New York State’s Office of the Attorney General had this to say:
“For ten years, the ‘usual and customary’ rate for the entire industry has been decided by one company: Ingenix. As we learned, the largest health insurers throughout the country use Ingenix to determine ‘usual and customary’ rates. Who is Ingenix? Early on in our investigation we discovered that Ingenix is a wholly-owned subsidiary of the nation’s second largest health insurer, UnitedHealth Group. As both a user of and contributor to the Ingenix database, UnitedHealth clearly had an interest in depressing reimbursement rates, causing consumers to pay more. Shortly thereafter, we learned that many other national health insurers also contributed their billing data to this database and then used the database as a benchmark for reimbursement rates.”
“Reasonable and customary rates are supposed to fairly reflect market rates, but our investigation revealed that Ingenix is nothing more than a conduit for rigged information that is defrauding consumers of their right to fair reimbursements for their out-of-network health care costs.”
3) Provider lawsuits have also been filed against MCOs that use “tiering;” a process in which insurers rank physicians and offer lower copayments to patients who see top-rated doctors. In their lawsuits, providers are charging that the rankings, based on claims data, are defamatory and harmful.
One example: last May the Massachusetts Medical Society and five physicians sued the state Group Insurance Commission (which oversees health plans for some 300,000 municipal and state employees and their families) as well as Tufts Health Plans and Unicare over tiering, charging that the insurers rank individual physicians using inaccurate, unreliable and invalid tools and data. The Medical Society also claims that “physicians have been attributed to patients they did not see, and assigned procedures they did not conduct.”
In addition, physicians have received reports that are unintelligible, and they have been given little time to appeal an
y evaluations.”
The Problem With Tiering
The physicians have a clear case. It turns out that tiering doesn’t work very well in reducing costs or increasing quality. A wide range of variables—patient compliance, population served, severity of illness, etc.—can effect the “quality” or “effectiveness” rating an individual provider receives. From anecdotes associated with some of the class-action suits filed against insurers by providers, these ratings often seem to be mostly about cost, not quality. In other words, insurers downgrade a physician if he is spending too much time with patients, or providing more services —whether or not that extra time leads to better care. Most experts believe that tiering at the provider level will never offer real benefits for health care consumers because of the inaccuracies associated with relying strictly on claims data to make assessments. For a take on this, the Center for Health System Change has published an issue paper called : “Consumer Tolerance for Inaccuracy in Physician Performance Ratings: One Size Fits None” .
Today, physician tiering is being used less and less by insurers—mainly because provider and subscriber opposition to the scheme has been overwhelming.
In the end, these suits verify some of the seemingly paranoid notions most of us have had about what goes on behind the scenes in the for-profit health insurance industry.Yes, they were denying claims just to see if they could get away with it; yes, they were paying below the usual-and-customary charges for out-of-network care and assuming we wouldn’t know enough to challenge it; and yes, they were giving higher rankings to providers who provided the cheapest, but not necessarily the highest quality, care.
Together these issues highlight the great need for more transparency in the health care system. While politicians and policy wonks debate the details of reform, it is clear that much of the recent experience for both consumers and providers with managed care has been tarnished by the fact that insurers put business priorities first when making decisions about care.
“Usual and Customary Rates”
There is little question that reformers will be taking a closer look at “usual and customary rates” as part of the cost-containment efforts that will be an integral part of health care reform. Studies using Medicare data find that prices that individual physicians charge for visits or procedures vary by general region (they are often higher in the Northeast), city or even between zip codes. These variations can sometimes be explained by higher overhead costs associated with neighborhoods—like Manhattan’s Upper East Side, for example—that include rent, salaries, and malpractice insurance. On the other hand, variation in what is considered “usual and customary” can reflect a provider’s attempts to recoup from private insurers and, increasingly, consumers, the income losses from lower Medicare reimbursement. This is especially true with certain specialists who participate in few health plans yet whose services are highly sought out by consumers. How many of us know beforehand what a doctor will charge to treat us? If that information were available—along with measures of quality—might we not be inclined to “shop around?”
Consumers Need Transparent Pricing
It’s clear that any cost controls will need to be based on meaningful data, not some half-baked, out-dated numbers that insurers use to discourage their subscribers from using doctors outside of their network. Consumers should be able to get good data on prices
As Lacewell testified in last month’s Senate hearing:
In January 2009, the New York Attorney General announced that it had reached a deal with UnitedHealth in which the company would pay $50 million to help set up a new database for determining reimbursement for out-of-network providers. The database is to be owned and operated by a non-profit organization in order to eliminate insurance company conflicts of interest. Cigna, Aetna and Wellpoint have recently also reached agreements with the Attorney General. In addition to ending their use of the Ingenix database, WellPoint and Cigna agreed to pay $10 million each toward creation of the new database. Aetna also recently agreed to end its relationship with Ingenix and contribute $20 million to the new database.
This new, independent, database ultimately could offer benefits for the industry too—even if they haven’t realized it yet.
Stephen J. Hemsley, President and Chief Executive Officer of UnitedHealth Group testified in the Senate hearings on March 31:
“This Committee knows better than most that physician reimbursement based on nothing but the doctor’s bill is simply not economically tenable for consumers nor our health care system. The [Ingenix] databases were created with the goals of appropriately managing costs and ensuring that consumers are protected from exorbitant medical bills.”
In the end, the two major efforts by managed care companies to curb rising costs have both led to public outcry—measured here by the increasing number of large-scale lawsuits waged against them. In the 1990s, the focus was on gatekeepers, limited provider networks, capitation and aggressive utilization review—strategies that provoked a strong consumer backlash. The current methods of cost containment—delaying or reducing reimbursement, penalizing out-of-network providers and setting up tiers of preferred providers—struck close to the hearts of doctors and the professional groups like the AMA that represent them.
Everyone agrees that health care costs must go down. Most of us agree that charges for doctor visits, procedures and hospitalization as well as utilization have to be controlled in some way. But these methods have to be transparent—backed by evidence-based research and increasingly, studies in cost-effectiveness too. As the dozen or so Ingenix-based class-action lawsuits and other recent settlements with providers have shown, the public has little taste for the murky cost-containment efforts imposed by a for-profit insurance industry.
I’ve had practice managers tell me a not insignificant portion of insurance company income derives from the “float” — the length of time that elapses between premium money coming in and claims being paid out. If that money is invested, the longer the delay in payment the more income for the insurance companies. So they have a substantial interest in delaying payment.
IMHO, overutilization is the greatest factor contr. to cost explosion.
Many doctors “indulge” patients with clearly unnecessary tests (or feel forced to order them for reasons of patient satisfaction and/or fear of litigation). I wonder whether, in these times, a plan that curbs the most obvious cases of overutilization would work: No MRI for episodic migraines, no MRI for axial back pain, no inappropriate aneurysm screening (guidelines do exist for all these examples). If that plan was 10-20% cheaper than its competitors enabling diagnostic/therapeutic overkill, maybe it would be accepted.
It’s a little galling for either side to be making moralistic judgments about the other. Providers play the game just like insurers do and this article sounds like “working the refs” to me. How about an article tomorrow written by an insurer about all the ridiculous cases of fraud they’ve seen from providers?
were anyone unconvinced about the lack of price transparency and the need for it, check out the story in today’s WSJ by a reporter who attempted to decode her maternity bill and was chronically misled and denied an answer that was, ultimately, quite simple. rhetoric notwithstanding, neither providers or insurers are interested in sharing and it is hard to imagine a situation where they’ll do so voluntarily.
Jim,
Thanks for passing along this WSJ srticle (http://online.wsj.com/article/SB124165279035493687.html#mod=article-outset-box) it’s a great example of how confusing and opaque medical pricing can be. If there is going to be an emphasis on “consumer-driven medicine,” than the consumer needs to have tons more information about pricing, quality and effectiveness of their providers.
Mike C —
Ask and it shall be given unto you.
The villain in the WSJ piece is clearly Cedars, which is charging over five times the national average for what sounds like a routine, if a little long, delivery. It also is engaging in an amazing exploitation of uninsured and self-insured patients, who are having to pay over twice what the insurance company pays, which is still about 2 1/2 times the national average.
Aetna is the “hero” here, reducing the patient’s cost of a normal delivery to “just” $2118.90. Aetna may be doing, as they had the grace to admit, a poor job of letting patients know how much they would have to pay out of pocket, but did reduce the cost to an amount that would be within the range that a middle class couple probably will be able to pay, if one or both hasn’t lost their job and insurance in the downturn.
God help the low income woman, however.
Right now we have more information and do more cost comape for car insurance and ironically we also keep better records of car maintainence. Both consumers and providers face the same opaque state and it will not change unless they have some skin in the payments.
Chris,
Yes, insurers definitely “play the float”–holding onto the money as long as they can before reimbursing. The insurance business is based , in part on the idea that by investing premiums until they need to make payouts, insurers can make profits. But many go well over the 30-60 days that should elapse between billing and payment.
Doctors often remark that Meidcare is much better about paying promptly.
Rbaer– Yes, in many cases there are guidelines.If more doctors followed the Preventive Services Task Force guidelines more often, we would see less waste. (Note, again, these are “guidelines” not hard and fast rules. One would expect doctors to make exceptions in individual cases.)
Mike C–
The fact is that both in insurers and providers are guilty of abuses. We need to regulate insurers and move away from fee-for-service for providers. As for hopsital billing–it’s a mess, and needs to be redesigned with an emphasis on paying for value and efficiency-better outcomes at a lower cost.
Medicare is trying to do that by refusing to pay for an excessive number of re-admssions, and by running pilot projects which will involve measuring value and efficiency against excellent “benchmark” hospitals treating similar patients.
Jim–
I second Naomi– story in WSJ is a great example.
See my comment to Pat below about the hospital.
Pat S.–
I agree, in this story,
Cedars is the villain, Aetna the hero.
When I was writing the book, I interviewed the CEO of Cedars and a couple of other docs there. It was clear that there was something very wrong at the hospital.
The CEO (one very angry man) was trying to stonewall me, and the hospital had made a mess of installing a very expensive health IT system that it then had to ditch because doctors refused to use it.
Note: they may have a diffferent CEO today. I don’t remember his name and dont’ want to slander the wrong person.
But at the time, I knew there was a great investigative story to be done about Cedars–too many docs more interested in profits than patients, and something very wrong with management . . . Since I was writing a book, and I’m on the East Coast, I didn’t have time to look into it . . To do the story right, you’d have to be there, and it would take a couple of months.
As it happens, Aetna is my insurer, and while there have been bureaucratic mix-ups that cost me time, I have found that they are very willing to look into a bill, call me back in a day or two, acknowledge, “we made a mistake” and send me a check.
It’s time-consuming, but they’re suprising co-operative– I don’t have to yell or scream, just get someone on the phone who uderstands what I’m talking about. (It’s like caling the airlines to make a reservation; if the first person isn’t helpful,I say “thank you very much,” hang up, and call again, hoping to get someone who is willing to help me find the lowet fare.)
Ray–
we do keep better records on auto maintenace.
But auto maintenance is a lot less complicated than
managing a patient with 4 chronic diseases.
Autos are less complicated than the human body, and autos don’t fib about whether or not they got an oil change (took their medications) got into an accident (drank too much), etc.
What Naomi was saying is that we need more transparency about what various procedures cost.
But when it comes to rating and “grading” doctors to say who is better, and then encouraging patinets to go to the more efficient doctor, it turns out that a) it’s pretty impossible to grade individual doctors. (The pool of patients is too small. A handful of non-compliant patients can skew the results) and b) the more “efficient” doctor who spends less time with patients may be the “better” doctor from the insurer’s point of view, but he may well be skimping on spending the time needed to accurately diagnose and treat the patient.
IF patients had “mire skin in the game” –i.e. had to pay more if the doctor spent more time with them outof their own pocket, this wouldn’t solve the problem if figuring out who the “best” docotrs are.
All that would happen is that upper-middle-class and upper-class people who could afford to pay extra would go to the doctors that spent more time with them. (80% of our healthcare dollars are spent when people are ve ry sick. When you’re very sick, you’ll happily pay more for a doctor who will spend time on your case–if you can afford it.
Meanwhile, poor, working-class and many middle-class patiets who truly can’t afford the extra out-of-pocket charge will wind up going to the doctors the insurance companies favor–who spend less time with patients.
Once again, you will be rationing care by ability to pay–and you still won’t know who the best doctors are. Sometimes the ones who spend less time are truly more efficent, make the diagnosis more quickly, etc. Other times, they’re just running patients through their office as quickly as possible to keep their income high.
A lot of good points being made here. What is often lost in conversations like this is the fact that another stakeholder group, patients, is as much or more to blame for our rising costs as insurers and providers. In other words, all stakeholders are going to have to give a lot to reform efforts. The problem is, calling out patients doesn’t make as good a soundbite as calling out United HC and it’s a LOT more difficult politically too.
There is no better way to lower costs than to lower the demand for services. Unfortunately, demand is going up because of unhealthy lifestyles.
Unhealthy lifestyles has little to do with aggregate demand. We have talked about this often, but people with healthy lifestyles have larger net aggregate demand because of longer lives — longitudinal studies done in national health systems and based on hard data over entire patient lifetimes has proven that.
Demand is a factor, however. The demand that causes problems is demand for costly high tech management, diagnositic tests, and procedures that do not result in more effective care and sometimes actually are less effective or even harmful.
Doctors are the main drivers of this demand, since they order the tests/procedures/management. Payers, both government and private, have failed to bring this under control, although Medicare keeps trying. Private insurers are creeping back into this after being burned badly in the managed care debacle of the 90’s.
Patients are a driver in this as well, with demands for exciting and dramatic interventions and for medications and procedures they have seen advertised or heard about in media. Drug and equipment manufacturers and many researchers help drive this demand by advertising and media releases trying to stoke demand for their products regardless of efficacy.
This has to be brought under control before we end up unable to provide good health care for most Americans.
The bottom line is, 75% of our healthcare $$ is spent on chronic conditions. Most of those were preventable. If you eliminate most of that, I have to believe that it will have a significant effect on aggregate demand, and therefore costs.
I agree that when people live longer, they have more time to incur costs. However, that also assumes that “conditions of the aged” as they are often called are inevitable. If we say that, I feel we are setting the bar too low. There are 70 yr olds out there with NO chronic conditions. That proves that it’s possible to incur more reasonable levels of cost in old age.
Also, if we lead longer lives, we should have more time to contribute productively to society.
“If you eliminate most of that, I have to believe that it will have a significant effect on aggregate demand, and therefore costs.”
Turns out not.
The chronic conditions you talk about that cost so much — congestive failure, coronary artery disease, asthma, diabetes, and depression — are only partly preventable. For example, over 40% of people with heart disease have no known risk factors.
It is more accurate to say that the diseases can be delayed. Many people without lifestyle risk factors will develop these conditions if they live long enough. In addition, they will develop other diseases related to aging: dementias, cataracts, joint disease, cancers related to aging, benign prostate disease, age related kidney failure, etc.
Good health habits save private insurers and HMO’s money because they delay onset of high health costs, deferring expenses until they are being paid by Medicare. Studies that gather data from patients of private insurers and HMO’s – employment age people — show that costs are saved in those groups.
However, in the words of Bruce Springsteen, “Everyone dies and that’s a fact.” We all like to imagine we will live in good health to be 95 and then be shot to death by a jealous husband. Unfortunately, for most people that fantasy will not come true. People with good health habits will get sick in their late 70’s, 80’s, and 90’s, and their management will be as expensive as the fat, alcoholic smokers who get sick in their 50’s and die. The difference is that in between the healthy people will have had cataract surgery, hip replacement, prostate resections, surgery for spinal stenosis, hysterectomy, episodes of diverticulitis, hearing loss, skin cancers, etc. etc. The high risk people are dead, and don’t require any health care.
The people you cite who are in good health at 70 are going to eventually undergo loss of health, and will be as expensive to manage as anyone else who undergoes health collapse. The data about this is absolutely clear.
The idea that good health habits will save society money is an unfortunate fantasy that distracts from discussion of the real issues confronting us in health care.
“Also, if we lead longer lives, we should have more time to contribute productively to society.”
Productivity of individuals is another false card.
Aggregate productivity is important. However, in a large society like ours, any person who becomes unproductive is immediately replaced by another person able and eager to do their job. When Ezra Klein leaves The American Prospect for the swamp at the Washington Post, TAP will find another qualified person, perhaps even better than Ezra, to replace him.
The fantasy that people have roles in society that cannot be replaced, promulgated especially by the disciples of Ayn Rand, turns out to be another thing that isn’t true on closer examination. Unfortunately for our egos, almost all of us can be replaced, and if we have good jobs, there are a ton of people eager to do that.
The boomers’ babies are all hoping that the baby boomers hurry up an leave the labor market to make room for them.
Obesity costs the system in excess of $100 billion annually. It’s completely preventable in nearly all cases. It is linked to diabetes, heart disease, osteoarthritis, etc. Healthy lifestyles do not delay obesity, they prevent it.
“The idea that good health habits will save society money is an unfortunate fantasy that distracts from discussion of the real issues confronting us in health care.”
What are the real issues? Bad insurance companies and bad providers? That makes for better soundbites and political agendas, but we will be very disappointed if we go after only those stakeholder groups. Real reform involves all stakeholders giving up something. Anything less will be failure in my view.
By the way, isn’t a healthy population the goal of healthcare??
Obesity costs the system money, but also saves the system money because of premature deaths. The net effect of obesity, smoking, and lack of exercise is lower net costs for the entire system. This was proven by studies of health care costs over patients’ whole lifetime done by the Dutch National Health system.
The reason people should have good health habits is to lead better quality and longer lives. We should encourage good health habits, even if it is not a way to save money for the system overall.
As far as the real problems in US health care: 1.) lack of access to health care by millions of Americans due to lack of insurance or insurance with high co-pays and deductibles that block its use for many people. 2.) Extremely high cost and rapidly rising cost for health care that threatens to make health care unavailable even for middle class people and too expensive for government and employers to pay. 3.) Lower effectiveness of American health care compared with other countries.
We have already discussed the financial details of how health habits effect costs. Poor health habits also effect some measurements of health care effectiveness that come from gross population statistics. However the US also lags in measures of effectiveness of health care for patients diagnosed and admitted to the system.
Pat – I think this is a great discussion and you make a lot of great points. I would just argue that the first two problems that you listed are not problems, but rather they are symptoms.
We need to dig deep to find underlying cost drivers that lead to the high costs. Things like unhealthy lifestyles, administrative complexity, greed, and social and personal irresponsibility are on my short list of problems. They are actually problems of society as a whole that have spilled over into healthcare. If they were easy to fix, we wouldn’t be having this discussion right now. With that said, we all need to put our heads together and get reform right this time around.
The Obama administration cannot solve this for us because they are only a small group of people. We as a society have to decide that we are ready to change. In my mind, not pledging support would be un-American at this point. If 100+ million people decide that they’re ready to start with themselves and then work outward, we will see real change take place. I’m just not sure how to get that ball rolling.
The interesting thing is that the problems you see as so complex — or as symptoms of a deeper national malaise — have been fixed by every other developed country, and not by getting the small value meal instead of supersizing.
Universal health coverage is the rule, not the exception, in the world. We are the exception. Europeans are puzzled and shocked that we seem to have such a hard time with this concept.
Control of health care costs is also common elsewhere. We pay 17% of GDP, $8000 per person, and $2.2 trillion each year. The next closest countries pay 30% less, the average European country 40% less, and the average developed country 50% less.
We spend a lot of that money on high cost, high tech crisis intervention that is at best not cost effective and at worst ineffective or harmful. Most other countries have systems to evaluate the effectiveness of health care management to improve health care and to decrease costs and cost growth.
We could do that here. It is, in fact, a political problem, one that we have failed to address because of ideological traditions and because of the power of institutions and people who benefit from the current situation.
One of the things that people who have a vested interest in the current mess, or an ideologic orientation that calls for “every man for himself, and God against all,” like to do is confuse the issue in the minds of the general public. One of the favorite concepts for causing that confusion right now is the idea that the reason we have such a dysfunctional system is because of all the fat, smoking, alcoholic Americans.
Unfortunately, as has been already pointed out, high risk health behaviors do not add to the net problem of cost in our system; they actually save money, albeit at the expense of the personal health and early demise of a lot of people.
The common expression for what is going on is “blaming the victim.”
“We spend a lot of that money on high cost, high tech crisis intervention that is at best not cost effective and at worst ineffective or harmful. Most other countries have systems to evaluate the effectiveness of health care management to improve health care and to decrease costs and cost growth.”
Pat,
Aside from greater and more systematic reliance on primary care in other countries that you’ve discussed several times before, to what extent are the differences in spending on high tech intervention due to the following factors:
1. Greater use of deliberate restrictions on supply of high tech equipment and facilities such as requiring certificates of need elsewhere vs. here.
2. Differences in the litigation environment. That is, doctors here may think they must offer any high tech intervention or expensive specialty drug that might be available out of fear of being sued if they don’t.
3. Differences in how good, sound medical practice is defined and applied.
4. Differences in patient expectations, especially the desire to “do everything” in end of life situations even when it’s likely to be of little benefit but at high cost to the system and discomfort to the patient.
It seems that each of these four issues would require very different strategies to effectively address. Are there other issues at work as well?
If those are the choices, the answer is three.
The main difference is the rules of practice, set up by organizations designed to evaluate and suggest methods of management,enshrined in the medical culture, and coupled with doctors trained in those environments. That does not always mean that higher tech choices are forbidden — they can be used if the doctors can justify the need to use them — or that high tech approaches are not recommended when appropriate — the British board recently recommmended more use of head CT in trauma situations.
I don’t think it has to do with litigation issues — that is far overemphasized even in the US — but rather that doctors are following the appropriate standards. Doctors in the US are doing what they think they should to meet practice standards as well — it’s just that here there is a perception that the standard always includes maximum use of high tech.
I don’t think it is CON’s. Most other countries don’t use CON’s, although they do use budget and reimbursement processes that do discourage inappropriate proliferation of equipment: without the possibility of making money there is much less incentive to install a new MRI. Of course, in some countries the medical centers are owned by the government at some level or another, so then there is government evaluation of whether costs of equipment are warrented or funds available. The same thing holds true here in institutions owned by the government, from county hospitals to research and training units in state universities to the VA.
Patient expectations always have some impact. In most other countries, there is less use of advertising, promotions, and poorly thought out news stories to interfere with the doctor patient relationship, so I think that patients are more likely to listen to doctors’ advice. There is also no tradition of companies hiring former beauty queens to sell drugs and technology to doctors, either.
End of life is a complicated situation, but in the US there is no real incentive for doctors and hospitals to try to intervene to encourage less aggressive end of life management. No one will pay for time for complicated discussions that consume large amounts of time, so inertia pushes in the direction of more rather than less. Also, as was said in the thread about medical education there is no tradition within the medical community of intervening to discourage management that would likely be futile. We are also dealing with some religious issues here that are uncommon elsewhere, where people tend to be either less religious or to belong to religious traditions that encourage more of what some might call acceptance and others fatalism. I happened to talk with some doctors from other countries during the Terry Schiavo debacle. The idea that politicians,or anyone else, would try to contravene decisions made jointly by the patient’s doctors and her husband was seen to be just plain psychotic — just one more example of those crazy Americans.
Pat – The way I see it, a participatory democracy means more than just voting and calling it a day. If you’re waiting for politicians to “fix” healthcare, you’re going to be waiting awhile. There is no magic wand to wave to just become France, particularly because France doesn’t enjoy our obesity rate, our teen pregnancy rate, our gun violence rate, etc. But you’re right, it’s a political problem. Let them figure it out. They’ve done a bang up job with it over the last 30 years or so.
I have been confused about what you have been saying, since you seemed to be clinging to something that was manifestly wrong. Now I think I understand: you are a person who is anti-government.
Democracy doesn’t mean voting and going away, and it doesn’t mean deciding that government can’t do anything and is therefore absolved of any responsibility. It means holding the government responsible for doing what it should, and not doing what it shouldn’t. We have taken a 30 year siesta from that responsibility, but we have just gotten a very loud wake-up call.
We are coming out of a period when political forces conspired to try to destroy the government, believing we would be better off without it. A short look around shows where that got us.
We are now heading into a new period, one in which the people, through their representatives, are demanding more. They want government to take responsibility, as it once did here and still does in most developed countries, for the common good. There are still a lot of people who oppose that approach, but for now they are in the minority.
There is no doubt that government since the 80’s has failed miserably, so I understand the concern that government is impotent at best and malignant at worst. We need to return to a place where government is responsive to the needs of common people. Health care reform is one of the most important parts of that responsiveness, since problems with the health care system are one of the top concerns for most people.
BTW — France has its own problems. It has a higher rate of smoking than we do, and a much higher rate of alcoholism. Alcoholic liver disease has been the leading cause of death in France, and is just now being overtaken by smoking related health problems. France has a huge African immigrant population that is highly marginalized and has been a source of a lot of social problems.
However, France continues to have less problems with health care and other similar issues than we do. It may not be absolutely proven that the presence of a model social insurance health program, along with other social insurance programs, is the cause of this. But it is a really good guess.
Obesity is the flavor of the month for people trying to short circuit health care reform, but analysis of the data does not support the notion that our problems are due to obesity. They are due to a malfunction in the health care system itself.
I truly am not anti-government. In fact, I am trying to cut them some slack. We as citizens have failed our government. The government didn’t screw up the financial and healthcare sectors. The people did. Each time, the government has to step in like the parent of a misbehaving child and fix things. What is the next sector to go? Supermarkets? There’s no disputing the fact that our government has gotten exponentially bigger since its inception. I think we need to ask why that is.
Where our views probably differ is the fact that I think it’s all of us that screwed up and you seem to think that it’s only a select few. Patients are as much to blame for our healthcare mess as providers, and providers are as much to blame as insurance cos. We need more social responsibility and less selfishness throughout the entire span of society. These are deeper issues that no one wants to discuss, probably because they can’t be fixed with IT and cost controls. (i.e. The smart people and policy makers do not have the answers)
I don’t know how old you are, but ask your parents or older relatives how things are today vs. when they were younger. I’m still relatively young, but I can appreciate what my parents are saying when they express frustration about where society has gone over the last several decades. With that said, I am also an optimist and I think we can get back on track. We need to find a source of awareness that comes from stepping back and seeing how changing our individual lives can change the collective whole. If we don’t address the deeper issues, we will be battling our crises forever, sector by sector.
My suspicion is that the final solution is going to be a variation on an accross the board cut which will trim the profligate along with the frugal. This benefits the extravagant.
Newsflash: medicare has rewarded hospitals with COLAs for decades while cutting physician fees to the bone. This is why we see hospitals buying practices, and not the reverse. There is a lot more waste hidden in the typical towering hospital or university bureaucracy. The real explosion in costs has been on the hospital side, though you would never know it if you read the paper.
I favor rationing, but I wish we would call it by its real name. “Outcome based” is sort of a fig leaf for any sort of rationing; almost all interventions have only very slight or even negative effects on survival. One can justify eliminating most everything we do, if you set the financial set point and/or the clinical outcome improvement high enough. (Though, for air bags we have set the bar at $1.6B per life saved; can we afford than in cancer screening?)
Outlaw smoking, obesity, drinking and promiscuity and we could completely dismantle our entire medical system. We could do that and get improved health metrics(now there is real savings!).
I would second rbar, but allow the patient and the doctor to choose the guideline, from bare bones to comprehensive, (Maggie will make me eliminate those that “don’t work at all”, but that will leave us with just the bare bones! (I am kidding.)) based on risk and anxiety, and charge accordingly.
Medical treatment is mostly on the ragged edge of the law of diminishing return. Very expensive for little return.(Primary care not excepted; an office visit perhaps with an antibiotic for a cold that would have gone away anyway may feel good, but it is a waste of money which when multiplied by millions of encounters per year adds up to real money. ) If Ralph Nader saw the survival results from bone marrow transplantation, he would run out and buy a Corvair. The problem is, for some conditions, there is nothing better. Society has to decide in which cases we will opt for no treatment rather than the the best available (likely marginally effective and expensive) treatment.
It is going to be a bumpy ride.
Christopher –
I couldn’t agree with you more when you say that across the board cuts in health care are a bad idea. Some things are well worth what we spend. There are some we should probably spend more on.
That is why comparative effectiveness research is so important. Since it is absolutely clear that we are going to have to figure out ways to cut health care costs in general and the growth of health care costs in particular, it is very important that we do that in an appropriate way, cutting unnecessary spending while preserving beneficial spending. Effectiveness research is absolutely necessary so we can tell the difference. Otherwise we will harm everyone’s health care.
Meanwhile, I am sure that your statement “Outlaw smoking, obesity, drinking and promiscuity and we could completely dismantle our entire medical system” is a deliberate oversimplification to try to make a point. We all know that no one is going to live forever, and unless we require that everyone commit suicide at age 75, we are going to continue to spend a lot of money on health care for the elderly. If people have better health habits, research shows they will actually cost more money before they die than people with poor habits, many of whom die young. Cataracts, prostate disease, uterine dysfunctional bleeding and pelvic problems, Parkinson’s, dementia, diverticulitis, and most cancers of aging are unrelated to those risk factors. Many people who exercise vigorously actually increase their risk of spinal stenosis and joint disease in old age. Once people reach advanced old age, diseases like coronary artery disease, congestive failure, diabetes, and many other chronic diseases stop being closely related to behavior and are more closely related to age and genetics. Research is definite that long lived people cost more, not less, to manage, and require more, not less, care.
As I am sure you know, even among younger people 40% of patients with heart disease have no identifiable risk factors.
Unless you are prescribing euthanasia or are entertaining the idea that if you behave well you can live forever in good health, good health habits are not going to prevent the need for a health care system that is engaged in expensive care.
In an interview this morning, Secretary Sebelius said that one of the keys to lowering healthcare costs was to work toward getting people healthier. Should we conclude that she was using bad data?
Let’s not use Fox News as a source for scientific information. Sebelius has referred to people getting healthy and getting preventative care several times in other interviews, talking about getting people who are uninsured and underinsured access to the health system. The words “healthy” and “preventative” are used in a wide variety of contexts in health care.
Obesity costs money in any age cohort, but obese people are less expensive over their whole lifetimes because of premature death. The same is true of smokers, and to a lesser extent of sedentary people.
All of these problems should be addressed for reasons of quality of life, but WILL NOT SAVE MONEY for the system in net.
Here, read these articles. They sum up everything you need to know.
http://www.plosmedicine.org/article/info%3Adoi%2F10.1371%2Fjournal.pmed.0050029;jsessionid=90184EAC7A47AE3F1B98A31B6E7943C9
and
http://www.plosmedicine.org/article/info%3Adoi%2F10.1371%2Fjournal.pmed.0050037
“Examine an obese population and a lean population of the same age and sex distribution, and the former will incur far greater health-care costs throughout the life course. Much more diabetes, and more cardiovascular disease and cancer will occur amongst the obese—even amongst the older obese [3]. Compare health-care costs now with those thirty years ago, and—holding everything but obesity constant—the current population costs much more to the health sector than it did then [4]. Moreover, quite apart from health-care costs, the other costs to society from obesity are also greater because of absences from work due to illness and employment difficulties; these costs amount to considerably more than health-care costs [5]. It is not clear that these extra costs are intrinsically related to health-care costs, but they are currently estimated to be around four times as great in obese than in lean people”
That is directly from the second link that you provided.
The study you referenced was interesting, but not completely compelling. It didn’t take into account all of the costs associated with obesity. It used BMI as a measure which can be unreliable. The study was done in the Netherlands. The societies of the U.S. and the Netherlands are far different, and it is widely documented that environmental/societal factors affect health considerably.
Most importantly, it looks at obesity and smoking in a vacuum. The point I’m trying to make is that an overall healthy lifestyle, not just one that focuses on maintaining one’s weight, will save the system money. The “costs of old age” used in the study would be far less if all other unhealthy behaviors (inadequate sleep, work-related stress, unbalanced diet) were reduced or eliminated. We can’t look at this myopically and key in on small points. Reducing current demand by reducing unhealthy lifestyles will have a ripple effect across the system (ex. reducing demand for expensive procedures thereby reducing the spread of MRI machines, etc).
And by the way, the Sebelius interview was on NBC. The last thing I would call that network is conservative, which is what you seem to be implying. Another problem with politicizing healthcare is that you polarize it and you tend to find arguments that support your ideology. At best, that is delaying real reform.
You need to re-read the quote you gave. What it says is that for any given year that obese people are alive, they cost more in health care and related costs. However, as the author states elsewhere, the longer lives of the non-obese cancel out and exceed that difference over their whole lifetimes.
This, in fact, is the source of so many people’s confusion over this issue. If you look at any individual slice of bread, the obese people cost more. But if you look at the whole loaf, obese people cost less, because for them the loaf is significantly smaller.
It is true that health care cannot be defined simply by cost — health care should aim at people being more healthy and having better quality of life. But when you talk about cost issues, healthy habits do not have a role. That is what the second author — a British public health expert who is obvously shocked and dismayed by the evidence — is saying. I remember having a similar reaction when I first saw the companion study on smoking.
I don’t argue that lifestyes, particularly including the impact of poverty in the US, don’t have a big effect on health. Some issues, for example failure of management of asthma among low income people, failure of low income women to get pre-natal care, and so on, do add a lot of costs. That is exactly what Sebelius is talking about. I do argue that the evidence shows that elective lifestyle issues having to do with smoking, weight, and exercise are not a way to save money.
BTW — I wasn’t intending to insult Fox only, it was just that that was the only online interview with Sebelius that had that quote. I would argue that all TV news is a terrible source of information. This case is a good example. Based on other interviews, it is clear that when Sebelius talks about health and prevention, she is talking about access to care and about issues like vaccination, pre-natal care, and so on. She is specifically talking about the impact she expects the Obama reforms to have. It is easy to get confused about this based on TV news, which is usually short and without context or depth and handicapped by the poor level of information of many of the reporters, which prevents them from asking good questions.
It is, indeed, time to move on with the job of health care reform and to stop arguing about distractions like this. You can say that an overall healthy lifestyle will save money, but you cannot show evidence that that is true, since the evidence shows the opposite. It is clear that we are never going to agree, so there is not any point in discussion.
Deron–
Pat is correct.The numbers are very clear:
Smokers and the obese
save us money because they die earlier.
The uninsured also save us money, for the same reason.
Do we want people to be uninsured or smoke or be obese? No. But the fact is that it will cost society more if we solve these problems and more people live into their 80s.
I just don’t think that comparing lifetime costs to lifetime costs achieves anything because it ignores quality of life and productivity issues. It also assumes that “conditions of the aged” as we know them today are inevitable, which as I said before, is setting the reform bar too low in my view. When it comes down to it, you are essentially saying that patients, as a stakeholder group, bear no responsibility for our high per capita costs. That is a dangerous message to send.
With that said, I agree that this conversation will not get us anywhere and we need to get back to tackling reform.
I’m not sure if anyone is still following this thread, but I am wondering about those studies Pat S linked to that show higher overall lifetime costs for non-obese or non-smoking people. They quite clearly state (as Pat S also stated) that the annual costs of the obese or smokers are higher. If you use a metric of costs per person per year, rather than lifetime costs, then doesn’t this mean that the lifetime-averaged cost/person/year is less for the non-obese or non-smoking person than the obese/smoking person? Cost/person/year seems to be the appropriate measure to me, since once the obese/smoking person dies, then the overall population will go down, and usually we are concerned with the annual per capita spending — and the “savings” from no longer having any medical costs for the deceased person don’t affect annual per capita spending.
Is this reasoning correct, or am I missing something? Maybe I am making a mistake — I genuinely want to know what is wrong with this line or thinking.
Or, discounting the value of just having an alive person (which I do not agree with), is the reason the study uses the cost/lifetime metric that those non-obese, non-smoking people who survive longer are past the age when they contribute to aggregate productivity? That is, smoking and obesity happen to kill people off sooner after their productivity goes down and so is a net “benefit”?
Henry – Very important questions. Comparing lifetime costs of unhealthy people to lifetime costs of healthy people does not achieve much. It ignores productivity and quality of life issues. I would hope that, as we increase life expectancy through prevention/wellness, we also increase the number of productive years. That should be a key point of any reform effort.
We are greatly underestimating the effects of unhealthy lifestyles because we do not yet have complete data. When we do, it will become crystal clear. I’m just not interested in waiting for the data, because by that time the cost profile could be real ugly. The policy wonks and academics seem to feel differently.
I know that this is a hard idea for a lot of people to understand, partly because it seems counterintuitive.
To understand how this works, imagine that the health care system pays $100 per year for an obese person’s care, and $90 per year for a fit person’s care. The obese person lives 70 years, costing a total of $7000. The fit person lives 80 years, costing a total of $7200. The fit person costs more, even though the obese person costs more per year. Getting everyone to stop being obese and become fit would raise, not lower, the cost of their care over their lifetime.
It is also important to understand that we are talking about health care reform issues. The fact that obese people cost less means that we cannot expect that increased fitness will save the system money. If all other things stay constant we will have to find more money, not less, to run the health care system.
Productivity changes due to death or total disability do not effect overall productivity of the economic system, because of replacements. Productivity changes due to temporary disabilty are another issue. They will effect productivity per employee, and force employers to hire more people to get the same output. Again, this will not effect the overall productivity of the system, since there are large numbers of people looking for work who can be shifted into the system. It will effect company profits. Consequently it would be to companies’ advantage to make efforts to insure employee health. They would need to work out the math in each case, but steps like providing low cost healthy meals and snacks, time off and other subsidies for exercise programs, free immunizations at work, and, of course, good health insurance that provides inexpensive access to needed early care might save money. Most companies appear to not think this is true, since few engage in this type of behavior, and during periods of financial stress, elimination of these kinds of benefits is a frequent first step.
There are two things that are clear about good health habits: everyone should engage in them because of quality of life and longevity, but if everyone did, it would cost the health care system more. Obviously, we should not measure health care only by cost, and should consider quality of life and so on. But equally obviously, we should not delude ourselves about cost issues, since that would lead in the long run to failure of the system and to loss of health benefits for large numbers of people.
Pat,
We are in agreement on the issue of healthier people having higher healthcare costs over their lifetimes because they live longer than the unhealthy. At the same time, the larger, more sophisticated employers have a keen interest in wellness, prevention and disease management because they think those programs can reduce their own healthcare costs over both the short and intermediate term.
A couple of years ago, a Canadian told me that Canada spends approximately 44% of its healthcare dollars on the 65 and older population and another 3% on infants between zero and one year old. I don’t know what the comparable figures for the U.S. and other developed countries are. In theory, however, the better job that we do on wellness, prevention, disease management and mitigating poverty, the greater percentage of our healthcare costs should be attributable to the 65 and older population as they develop diseases related to aging and genetic factors. In a perfect world, the only healthcare costs that would be spent on the under 65 population would for routine labor and delivery, childhood immunizations and checkups, routine dental checkups, and appropriate screening tests for older children and the adult population. As we make progress on all this, the distribution of our healthcare costs, both annually and over a lifetime, will shift even more toward the elderly. While more years of healthy good quality life (healthspan) is good for everyone, I’m not sure how the U.S. and other societies would react if healthcare spending on the elderly became much more disproportionate than it is now, especially if it crowds out other worthwhile public and private priorities.
First, I have written at length about the need for the US to bring health care costs under control,reducing them to the range typical of other developed nations with successful health systems, and suggested several ideas and a general approach toward doing that. That still applies.
Second, we are going to need a sense of community if we are ever going to accomplish anything — not just health care reform but anything. If we attain the results you envision (and you left out trauma and infectious disease as well as disease conditions not related to health habits in your considerations,) then everyone will eventually need the health benefits in their own old age.
It is that perception of common interest that drove the US through the Depression, WWII, and the boom years of the late forties, fifties, and early sixties. If people come to understand the value of common interest and to reject the notion of “every man for himself and God against all” that has characterized recent US politics, we will be well on our way to dealing with our most severe problems.
Thanks, Pat S, Barry Carol, and Deron S for replying to my comment. First, I’d like to say that I agree that whether or not healthy habits lead to lower costs, healthy habits are desirable in themselves.
Pat S, I appreciate your answer, but I don’t feel that it explicitly addresses the issue I was raising. I am quite happy to believe that the lifetime costs are higher for healthy people relative to obese or smoking people, and I don’t think it is hard to understand. I just wonder whether lifetime cost is indeed the usual way we think about healthcare costs, or whether annual costs are how we usually think about them. Maybe I can give an example to demonstrate my thinking: Suppose you have a society that has 1 million people born every year. To simplify, suppose there are equal numbers of men and women and at age 25 each couple gives birth to twins (one boy and one girl!), and have no further children. Now consider what happens if that society has healthy habits, and everyone lives to age 80, at which point they die. There will be 80 million people living in this society. If (as in Pat S’s example) the healthy person has healthcare costs of $90/year, and lifetime costs of $7200, the annual healthcare expenditures of this country are $7,200 million (=$7.2 billion). Now suppose that instead the society are all obese, and like Pat S’s hypothetical obese person all have costs of $100/year, and die at age 70, giving lower lifetime costs of $7000. The obese society will have only 70 million people, and annual healthcare expenditures of $7 billion. Indeed, the obese society has lower annual healthcare expenditures, but if you ask which society has lower per capita annual healthcare expenditures, it is still the healthy society ($90, vs $100).
Now, I would submit that we usually think of healthcare costs in terms of an annual money spent per capita — imagine when we compare costs between countries with different populations. Furthermore, when we think about how wealthy a country is, we measure that in GDP per capita, which again is an amount of money per person per year. So if you assume that both of my hypothetical healthy and obese societies have the same GDP per capita (say, $1000/person/year), then the percent of GDP devoted to healthcare is smaller for the healthy population. Isn’t this what we mean when we say “lower healthcare costs?” That is, if the population increases, we allow total expenditures to go up proportionally without calling it increased costs.
I guess what I asked in my previous post, about whether unhealthy habits only kill those who are already unproductive on average, when translated into my example would be saying that overall productivity is not enhanced by those in the healthy society who are between 70-80 years old, and so the GDP of the healthy society should actually be the same as the GDP of the obese society, leading to a larger percentage of GDP spent on healthcare in the healthy society. This argument seems to make sense to me, but I would appreciate if somebody knowledgeable (Pat S maybe?) confirmed that this is implicitly what people thinking about healthcare costs are arguing when they discuss the effect of reducing smoking and obesity.
As a last point, I just want to note that it really isn’t the lifetime costs alone that make this last argument work — you also need to know how productivity is affected by the unhealthy habits. Pat S addressed this by saying early death doesn’t affect productivity, which may be true in the case of smoking/obesity, but I don’t see how this could be true generally. For example, if in my healthy/unhealthy societies scenario the people in the unhealthy society all died at age 35 instead of 70 due to unhealthy habits, I think it would be safe to say that the healthy society would have a higher GDP and lower percentage of GDP spent on healthcare. Plainly this is an extreme example. But I think maybe this is just a demonstration of what Pat S means when he says that for any particular behavior, the potential savings from encouraging healthier behavior must be analyzed on a case by case basis, taking into account changes in productivity, rather than just using either costs/year or costs/lifetime blindly to tell us if those changes reduce healthcare spending (as a fraction of GDP). Deron S also made some of the same points in his last post.
So for myself, if those more expert confirm the soundness in reasoning of what I wrote above, I feel that I understand better how lifestyle habits can affect healthcare spending, and how to think about what the results of those studies imply for healthcare costs. And perhaps I have convinced myself that when discussing healthcare costs, “healthcare costs as a fraction of GDP” is the appropriate quantity to think about — and likely what the wonks have in mind and shorten to “healthcare spending” in nontechnical discussions. This might have all been obvious to everyone else, so thanks to everyone for helping me with this — I hope I haven’t wasted everyone’s time with my questions.
Henry —
I see what you are saying. I also think that your comments about health and impact on GDP are pretty much correct, allowing for some wobble, if you assume an available labor pool that exceeds demand for labor across all levels of qualifications — a situation which, allowing for immigration, exists in the US for the foreseeable future.
One point you are not emphasizing is that the society with good health habits would actually have a larger number of unproductive citizens. The added life span of the healthy people occurs almost exclusively after they have stopped contributing to GDP, and the lost years of life of unhealthy people also occur after retirement, on average. Holding all other factors even, the society with a larger number of healthy and active 80 year olds actually will have a lower, not higher, per capita GDP.
The best way to think about health care expenses is not in raw total costs or in per capita costs, it is as a percentage of total GDP, since that is the way that the costs effect the rest of the economy and is the best measure of the ability of the society to sustain its health care system.
For example, although Norway has the second highest per capita costs in the world, Norway has a relatively large GDP for its population, so that its costs as a percentage of GDP are lower than several other European countries. The ability of Norway to sustain those expenses is better than other countries that actually spend less per person than Norway. Norway has more money left for other things, ranging from cross country ski trails to housing,education, and research.
As has been noted, poor health habits have a minimal effect on GDP because of reserve labor supply. They do have a mild effect on GDP per capita because of lost work hours, but that is more than offset by the negative effect of longevity after retirement in healthy people.
All of this is somewhat theoretical. As has been pointed out, the ideal health care system from a purely economic viewpoint would be one that keeps its people in excellent health and at a high level of productivity right up to the day they retire, then grinds them up for cattle feed.
Obviously, this misses the most important value of health care, which is to improve quality of life and high quality longevity. Equally obviously, it IS important to encourage good health habits regardless of economic considerations, since that contributes to quality of life and longevity.
The point of all this discussion is that if we are going to sustain a health care system that not only provides for the level of effectiveness of care we get now but expands that care to large numbers of people who are excluded from health care now, we need to devise ways to keep costs from growing in a way that ends up destroying either the health care system or the economy, or both. There are some people who have been offering the notion that good health habits will be a solution to that problem. Some opponents of reform are also offering the flip side of that, suggesting that the real problem of our health care system is people with poor health habits, and that we can fix those problems just by improving health habits.
Those ideas are not true, therefore we need to seek other ideas.
BTW — for everyone interested, The Center for American Progress has just published a very nice article summing up available approaches for reducing the cost of the health care system while expanding access, all without decreasing quality and effectiveness. If you are interested, the link is here, although regular readers of HealthBeat will find a lot of it very familiar.
http://www.americanprogressaction.org/issues/2009/05/pdf/health_modernization.pdf