Economist Urges Physicians to Enter Health Care Debate

BOSTON—Health care providers are not generally part of the discussion about the future of health care in the United States—but they need to speak up in the perilous times ahead, Harvard University economist Marc J. Roberts, PhD, challenged physicians at the 42^nd 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 only—or even the most important—issue 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 eventually."

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 technology—primarily new drugs—is 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 pump—he 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).

Choosing From Practice A, B, or C

In his talk at the ASTRO annual meeting, economist Marc J. Roberts, PhD, offered his own health care provider as an example of the "product differentiation" he expects will become more common. "I get my care at the Wellesley Center where there are three internal medicine groups fetchingly differentiated as A, B, and C," Dr. Roberts said. He predicts that the day will come when each will cater to a different type of health care consumer.

Practice A might be a high-tech practice, where patients can make their appointments and get their results on the Internet, he said.

Practice B "would be the crunchy granola, whole earth practice where we do a lot on diet and acupuncture and all that—and the doctors all wear Birkenstocks."

And Practice C would target the young yuppie businessman: "We’re really brusque, and we don’t hold your hand, but you get in and out very quickly."

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.

Coming Crisis

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 insurance.

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 it all."

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 care."

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.