Posted on: Monday, February 18, 2002
SECOND OPINION
Healthcare soon unaffordable
By Cliff Slater
Hawai'i's current mandatory employer-based medical system is in danger of collapse in the long term because health costs are escalating far faster than payrolls and are becoming unaffordable for employers.
A little history: In 1970, premium HMSA family health coverage was $119 monthly, with an additional $12 for drug benefits (in 2001 dollars allowing for inflation). Today, the same family coverage has increased fourfold to $510, while drug coverage is up 10 times to $122. Soon they will double again.
Long before we get to that point, competitive pressures will force private employers to take other action since they have to at least cover their total labor costs. They will need to either reduce employee working hours below 20 hours a week (thus avoiding healthcare costs altogether) or lay off people and out-source their work offshore.
There have been and continue to be two main causes for these health-cost increases. There is the increasing need for physicians to adopt costly defensive practices to protect themselves from potential lawsuits. In addition, and more significantly, there has been the development and increasing use of newer and more expensive technology and drugs.
In order to keep healthcare costs down, employers have in the past 10 years or so been switching to managed care (HMOs) and turning to other cost-cutting measures. Health plan operators working under this employer-created pressure have been eliminating some high-cost programs, increasing co-payments, squeezing doctors to discount their fees and, in general, shaving, scraping and manipulating wherever they can.
However, much of this squeezing could only be a one-time affair, and now health plan costs are rising again, with double-digit increases annually.
What are the options?
We can squeeze a little more from managed care — but not much. We can call a halt to continually bettering healthcare and settle for today's medical technology at today's prices — but that's hardly likely.
We could institute tort reforms — such as lawsuit losers paying court fees, outlawing contingency fees (as they are in most other countries) and capping liability awards. However, given the vast political contributions made by plaintiffs' attorneys, this is also not likely.
Failing these, we shall have no choice but to further manage (ration) healthcare. From the beginning of health plans in the 1930s and '40s, all plans have formulated some denial of service in order to balance patients' unlimited wants against limited financial resources — for example, limiting hospital stays and the use of expensive medical equipment, such as MRIs, or limiting expensive procedures such as transplants for older patients.
When a lung transplant costs $250,000 with a 50-50 chance of surviving, an HMO manager is entitled to question whether it is a justifiable expenditure.
The nationalized health plans — euphemistically called single-payer plans — favored by Hawai'i U.S. House members Neil Abercrombie and Patsy Mink, have even more extensive denials of service.
Beta interferon for treating multiple sclerosis, Taxol for ovarian cancer patients and Viagra for impotence are denied to United Kingdom nationalized healthcare patients because they are so expensive. And waiting lists for elective surgery in Canada and Britain can be years long.
That many Canadian and British citizens come to the U.S. for treatment testifies to the lower quality of nationalized healthcare in those countries.
With medical technology improving at an escalating rate, with costs rising accordingly, premium healthcare may, in time, no longer be affordable no matter what the delivery system.
It is time that both our elected officials and our medical community address what is, on the face of it, a seemingly insurmountable problem.
Cliff Slater is a regular columnist whose footnoted columns are at www.lava.net/cslater
