BOSTONHealth care providers are not generally part of
the discussion about the future of health care in the United Statesbut they
need to speak up in the perilous times ahead, Harvard University economist Marc
J. Roberts, PhD, challenged physicians at the 42nd Annual Meeting of the
American Society for Therapeutic Radiology and Oncology (ASTRO).
Politicians are only talking about two issues: Medicare drug
benefits for seniors and a bill of rights for members of health maintenance
organizations (HMOs), Dr.
Roberts told the ASTRO membership in a keynote address on politics and
economics in American health care. "Notice what hasn’t been on the
agenda," he said. "Despite the budget surpluses, almost no one is
talking about giving physicians more money."
This is not an oversight, according to Dr. Roberts. The reason
is that Congress knows that "any increase in health care costs they build
into the system now will come back to haunt them many times over as the baby
boom generation begins to retire."
Money for doctors is not the onlyor even the most importantissue
on which health care providers need to be heard, he said. "I think,
fundamentally, the current financing system, the whole way that we organize the
financing and payment of health care in the United States, is basically
unstable," he said, "and that over the next 10 years we are going to
see a major crisis, maybe not this year, maybe not next year, but
A self-described "recovering economist," Dr. Roberts
is professor of political economy and health policy, Harvard University School
of Public Health, and a co-author of Your Money or Your Life: The Health Care
Crisis Explained (Doubleday, 1993). He has consulted on health care reform for
countries around the world.
While the nation is in the midst of an economic boom, four
market forces are operating in the health care system, according to Dr.
Roberts, who compared them to climate changes that won’t go away. The first
is the aforementioned aging of the baby boomers. "What we know about
old people is they use a lot more health care. Why do they use more health
care? Because they’re old," he explained tersely.
Another is the rise of chronic disease, which Dr. Roberts
attributed to "what health economists call the ‘failures of success.’"
Health costs are rising, he suggested, in part because the health care system
is keeping alive people who would have died in years past of illnesses and
disabilities that can now be treated.
The third force, new technologyprimarily new drugsis
making this possible, and Dr. Roberts predicted a flood of new drugs along with
even higher costs.
These three forces have brought about the fourth"a real
increase in expectations." Doctors are expected to keep people healthy and
physically fit as they get older, Dr. Roberts said.
He described a softball team at a Florida retirement community.
"Every member of that team was a walking medical miracle," he
recalled. "The centerfielder had a new artificial hip. The first
baseman was worried because he had an implantable pumphe hoped there wouldn’t
be too much contact on the first base line. Another player had had four-vessel
bypass graft heart surgery."
This all adds up to "enormous cost pressures on the system
for the foreseeable future," he said.
Managed care companies have cut costs by what he called
"gatekeeping, selective contracting, and incentives to physicians to
lessen care through capitation." As a result, managed care initially was
25% to 30% less expensive than indemnity plans, he said. But prices are
starting to go back up, he said, because these moves only produced a one-time
saving, which has been exhausted.
Looking forward, he predicted more specialization in medical
practices, with attempts to achieve economies of scale and create "more
product differentiation," akin to the numerous choices consumers have when
shopping for athletic shoes (see box).
Dr. Roberts also predicted more experiments with contractual
relationships and information technology, particularly in managing
relationships with chronic disease patients. "At current
reimbursement rates, we can’t see a diabetic or hypertensive patient
often enough to provide the kind of feedback they need ," he
said. "So we are going to have to find ways to do that, and I think
information technology will do it."
Evidence-based practice will also gain ground, he said,
predicting that physicians will access on-line patient records with built-in
treatment guidelines. If a physician orders "something stupid," he
said, the computer will ask whether he really wants to do that.
Attempts to change the organizational forms of the health care
system will bring substantial turmoil, according to Dr. Roberts’ crystal
ball. "So far, what HMOs have done is manage costs; they haven’t
actually managed the care process," he said. "And that’s going to
be one of the major frontiers."
Up to now, academic centers have used money from patient fees
to provide care for the uninsured, conduct research, and teach new doctors.
Neither government nor private insurers are willing to continue
paying the higher costs of academic medicine, Dr. Roberts said. He predicts
that some medical schools and teaching hospitals could be forced to close.
The uninsured will force another crisis. Today, their numbers
are at historic highs, Dr. Roberts said, with 19% of the workforce under age 65
uninsured as companies increasingly rely on part-time workers, contractors,
independent contractors, and non-union shops to escape paying health
benefits. In the next recession, he predicts, companies will cut back
benefits even more, leaving a large portion of the middle class without health
Dr. Roberts painted a brutal picture of the debate that will
follow. "The average American, when it comes to health care, has the
maturity of the average 12 year old," he said. "You tell them that
they can’t have unlimited access to every conceivable service and still limit
the amount of money that they spend for health care, but Americans still want
Adding to the pressure will be what Dr. Roberts called the
"extremely irrational way" America treats the uninsured: covering
them only for acute emergency room care while charging insured people more to
subsidize that care. While insurers are balking at those subsidies, the
poor are more likely to be hospitalized with acute illnesses. "So
ironically with this crazy financing system," he said, "we probably
increase our total costs through our failure to provide effective outpatient
What’s the answer? Dr. Roberts said a workable solution
couldn’t be tied entirely to employment-based insurance because too many
people are in the
secondary labor market and won’t be covered. Instead, Dr. Roberts said, the
country must adopt a broad-based health care tax.
"Every European country uses either a payroll tax or a
general income tax. The same is true in Australia and Canada," he
said. "We ultimately have to go to a tax-supported system."
That would not be a single-payer system, Dr. Roberts said,
since any dismantling of the current health care system would never pass
muster. The American insurance industries are too powerful politically to
accept their own demise, he said, and patients want to have choices.
Tax-Supported Voucher System
Dr. Roberts’ solution: A tax-supported voucher system that
covers "a bare minimum basic benefit package." Everyone would be
covered, all insurance companies would have to accept vouchers, and individuals
could purchase "add-ons" if they want more coverage. Australia
already has a similar system in place, he said, where private insurance
supplements basic care financed by the goverment.