Is Cost the Central Issue in the Health Debate?

Health care cost now directly consumes approximately 18 percent of the GDP and we spend about $2000 more per capita per year than countries with health care that is arguably as good as or better than that offered in the United States. Economists argue Health care is the engine that drives the US economy in job creation and in the myriad of linkages with all four of the major economic sectors influencing the generation and use of resources within the US. So, is the per capita cost of health care, per se, the central issue of attack for improving the overall health of our economy? As you ponder this question, consider the following as possible attack points for lowering the expenditure of health care services:

1. Approximately 35% of annual health care expenditures are applied to only 1% of the population, many of whom are knowingly or unknowingly in the last couple months of life. Many citizens want everything tried in the hope of a longer and productive life, even when experience and evidence suggests such hopes may not be justified. Does an advanced society such as that offered in the United States offer all citizens this opportunity upon responsible selection, and does society or the individual (or both) provide the financial resources of support?
2. Approximately 70% of annual health care expenditures are applied to 10% of the population, and outpatient costs are rising approximately twice as fast as inpatient costs. High tech imaging costs associated with such procedures as CT and MRI, urgent care and Emergency room visit costs, and the myriad of ambulatory procedures and specialty consultations increase in both frequency and unit cost above normal inflationary rates. The public perception of more is better is well aligned with the provider fee-for-service incentive. How should this uncontrolled growth be contained, and why?
3. Preventive expenditures of health care resources have little immediate value except by pure chance, often only moderate intermediate value over 1-3 years, and unpredictable long term value with notable exceptions. The United States Preventive Services Task Force (USPSTF) has studied the evidence behind many preventive interventions since 1983 and makes periodic recommendations, often with push back for citizens and medical professionals. Many specialty based professional organizations, sometimes in response to USPSTF, offer advice as well which will likely differ simply because the large population studies are complex and outcomes uncertain. How should responsibility for the costs of preventive services be handled, the same or differently than acute and non-acute medical services?
4. Government payers set the price that is paid to providers, usually below the cost of providing the services at today’s market rates, using fee-for-service models of reimbursement. To compensate, providers pass this unfunded cost to employers and private consumers, often resulting in an incremental cost of 25 percent or more. Providers with large Medicaid and uninsured populations of patients often must pass considerably higher costs to the private side in order to cover the overall cost of doing business exagerating the disparity in price from one region to another dramatically. If global competitiveness is being hampered by the cost shifting from government to private businesses, should government be required to pay the cost of government funded care at the true cost of delivering the care? If so, how should this be implemented?

This first posting regarding cost is not meant to suggest that I think cost is or should be the central issue of the health care reform debate. But it is a place to begin. I look forward to your thoughts.