Harvard Economist Offers Health Reform Solution: Says change must focus on cost containment

LAS VEGAS—The problem with health reform is cost, said Harvard University Professor Marc Roberts, PhD.

Dr. Roberts used numbers to illustrate his point during a presentation at the Annual Meeting of the American Broncho-Esophagological Association, part of the Combined Otolaryngological Spring Meetings held here April 28-May 2. On a chart blown up on a screen behind him were figures showing the life expectancy in 17 industrialized countries, including the U.S., along with those countries’ per capita spending on health care in the 2006-07 year.

“What you will notice is, except for Portugal, we have the shortest life expectancy of any industrial country. And you will also notice that we spent two and three times per capita what every other industrial country spends,” said Dr. Roberts, a political economy professor at the Harvard School of Public Health in Boston. “Anyone who says to you the U.S. has the best health care system in the world clearly has not been looking at the numbers. We may well have the best health care…for people who are insured and have good access. But it’s not obvious that we have the best health care system when you look at these numbers.”

Where Reform Falls Short

But just as the health care system needs reform, so does the reform itself, Dr. Roberts said. The reform package that was passed this year improves access but does not do enough to control health care costs, he explained.

The reform plan expands Medicaid to cover everyone with income under 133 percent of the federal poverty mark. It requires everyone else to buy insurance or face a penalty, and it provides subsidies to accomplish that goal. It also requires employers to offer insurance and creates state-based “exchanges” to offer regulated policies in the small group and individual markets.

Once implemented, the health reform measures are expected to add 16 million people to the Medicaid rolls and 16 million more to private insurance. The plan includes components, including the Patient-Centered Outcomes Research Institute and an innovation center in the Centers for Medicaid and Medicare Services, created to conduct research and experiments that will explore cost-cutting possibilities.

But Dr. Roberts has his doubts about these measures, wondering what experiments will be conducted and what impact they will have. There is no getting around the need to change the fee-for-service system, he said. Advanced technology has helped to let costs spiral out of control. “We pay for care that makes it extremely profitable to use high technology,” Dr. Roberts said. “High technology is not only costly, it’s profitable. The price-cost margins on high technology tend to be particularly high.”

He mentioned a study from Intermountain Healthcare, a nonprofit network of 25 hospitals and 100 clinics, which identified 25 instances in which using evidence-based care at Intermountain could improve outcomes and control costs. But in 23 of those 25 cases, their revenue would decline by more than their costs.

“So doing quality improvement cost-reducing care, they will be punished by the reimbursement system,” Dr. Roberts said, “because they will generate fewer marginally unnecessary tests and procedures and admissions. We have a system that encourages inappropriate and marginal overuse.”

“Anyone who says to you the U.S. has the best health care system in the world clearly has not been looking at the numbers.”

—Marc Roberts, PhD

The “Sagamore Bridge Plan”

“What we need to do is give researchers an incentive to develop cost-reducing technology,” Dr. Roberts said. He added that the much-discussed “public option,” creating a public purchaser that could bargain with providers and drive down costs, would not have helped much.

“We already have a big public option—it’s called Medicare,” he said. “And it already can negotiate and so on and so forth. The brouhaha about the public option, this was entirely misconceived. And its loss does not account for the fact that the bill will not do anything about cost because it would not have done anything about cost.”

He offered what he called the “Sagamore Bridge Plan,” named for a narrow, old, crowded bridge to Cape Cod, a route no one would ever drive on—except it was the only way to Cape Cod. His plan is similarly unpalatable, he said.

In it, the government would issue tax-supported vouchers, which patients would give to a provider in exchange for basic care. The government would pay the provider based on the person’s risk factors. Patients could pay for better care out of pocket if they chose and would be able to use vouchers to shop around, which would give providers an incentive to provide cost-effective care.

“Those of you who think that this is a really horrible idea can rest assured there is absolutely no chance of our doing this politically,” he said. “But we are going to have to move in some way or other in this direction.”

Feedback

Reactions to Dr. Roberts’ remarks were largely favorable.

“I went into medicine to provide care for patients, and the only way we can do that is if we can afford to,” said Carol MacArthur, MD, a pediatric surgeon in the otolaryngology-head and neck surgery department at the Oregon Health and Science University in Portland. “Right now, too many people don’t have any access. They come to us really, really sick, and that’s very expensive, and it’s not ethical.”

G. Paul Digoy, MD, director of pediatric otolaryngology at the University of Oklahoma Health Sciences Center in Oklahoma City, said he’s always been in favor of change. “I feel we’ve got to do something different,” he said. “I know it’s going to hurt me financially, but he’s right.”

Peter Koltai, MD, professor of otolaryngology at Stanford University School of Medicine in Stanford, Calif., and a former president of the American Broncho-Esophagological Association, said it was “sad that our country is so damn polarized that we can’t move ahead in a way that will solve the problems that we truly have.”

Dr. Koltai said reform will have to affect reimbursement policies: “I’ve always thought that we’ve been overworked and overpaid, and we’re going to need to change both.”