With the crisis in the financial markets reaching what many call historic proportions, another crisis long brewing is threatening to surface that, if some experts are correct, could have even greater consequences than the financial crisis for the US health care system.
Explore this issue:November 2008
In the keynote address that opened the 2008 annual meeting of the American Academy of Otolaryngology-Head and Neck Surgery Foundation (AAO-HNS/F), Nancy M. Kane, DBA, Professor and Associate Dean for Educational Programs in the Department of Health Policy and Management at Harvard School of Public Health, said that the financial crisis should serve as a wake-up call for a pending similar crisis in the health care industry.
And she laid out the numbers. Of the $53 trillion in liabilities and unfunded entitlement promises that make up the current federal deficit, $41 trillion is due to Medicare and Social Security-promises already made to today’s workers and retirees. At the same time, the cost burden on elderly beneficiaries is taking a substantial bite out of their Social Security checks, on which many depend for their primary source of retirement income. The average cost of Medicare premiums and cost sharing absorbs 26% of the average Social Security benefits, and costs are growing faster than benefits.
Beyond the burden on the government and the elderly in the Medicare program is the rising tide of uninsured nonelderly people that reached 45 million in 2005, and is, according to Dr. Kane, yet another sign that our system has become unaffordable to too many Americans.
What do these numbers reveal? For policymakers like Dr. Kane, who is a member of the committee that advises Congress on payment reform for Medicare, these numbers send an urgent message that we need to change how we finance and practice medicine in this country.
According to Dr. Kane, everything needs to be on the health care reform table, including government leadership in determining supply of facilities and professionals, fundamental changes in medical education, greater transparency of prices and clinical outcomes, public disclosure of physician and other provider conflicts of interest, and payment redesign.
Spending much of her time on issues of payment redesign, Dr. Kane emphasized the need to reform fee-for-service payment, which, she said, doesn’t reward quality of care but instead encourages volume of services. Fee-for-service payment may actually reward poor quality of care-because the sicker a patient is, the more the system pays the providers.