Experts See A “Cost Explosion” With Health Reform

From D Magazine

Now that the landmark health reform bill has been signed into law, the quality of U.S. care will improve and costs will be brought under control–right? Wrong. According to experts at a Dallas panel discussion today, quality will be unaffected by the reform. And health care costs are about to explode.

“This was an insurance bill, not a health care bill,” said John McCracken, a clinical professor of health care management at the University of Texas at Dallas. “Its real effect will be to transfer a benefit–which health care has been for the last 70 years–into a tax and subsidy program.” The result, according to McCracken? “There’s going to be an explosion in the cost of health care.”

Britt Berrett, president of Texas Health Presbyterian Hospital Dallas, agreed with the professor. Where medical care once accounted for 13 percent of U.S. GDP–a rate that was decried then as unsustainable–”we’re now going to move to 30 percent of GDP, and $3 trillion [today’s expenditures] will be in the rear-view mirror,” Berrett said. “That is the reality of it.”

Jump, if you’re interested in why.


Sixty percent of Americans will be eligible for government subsidies under the reform law, McCracken said, and someone will have to pay for it. Doctors will shoulder some of the burden, as their Medicare reimbursements are slated to be cut. So too will folks earning over $200,000; they’re scheduled to pony up more in taxes and fees.

Meantime medical costs will keep rising, Berrett said, for three main reasons. They are: the high cost of specialized new medical equipment; the high cost of replacement technologies like computerizing medical records; and the high cost of specialized training for health care workers, from hospital housekeepers to nurses and physicians.

What Berrett called “the most significant health care change in our lifetime” will also have a big effect on the way services are paid for. While up ’til now we’ve paid for medical services piecemeal–called “fee-for-service”–there ’s going to be a transition to “episodic” or “bundled” payments for treatment. That’s like the difference between buying a car part-by-part [see the Johnny Cash song, “One Piece at A Time”] and buying the vehicle outright.

Here are some other nuggets from today’s panel discussion, which was presented by the University of Texas at Dallas School of Management and the Haynes and Boone law firm:

–Health care is more expensive in Dallas than in other Texas cities. That’s because Dallas has a “service intensity” rate that is 17 percent higher on average, McCracken said. In other words Dallas has an abundance of medical facilities, which means they’re used more. Said J. Darren Rodgers, president of Blue Cross and Blue Shield of Texas: “Every strip mall has a nail salon and an imaging center.”

–Rodgers also said that just 5 percent of the population drives a whopping 80 percent of healthcare costs. So, who are those 5 percent? People with multiple chronic diseases, McCracken said, and those in the last days of their lives.

–The No. 1 reason for hospital ER visits: asthma.

–The fastest-growing surgical procedure: lap bands.

–That last fact underscored the presentation by Mike Haefner, senior vice president of human resources at Atmos Energy. Haefner said Atmos spends $42 million a year covering its employees, who suffer from a rising rate of obesity. We’re never going to get health care costs under control, the panelists agreed, so long as Americans are in poor shape and generally disinclined to exercise.

–McCracken, the UTD professor, advised everyone to go the Kaiser Foundation web site, where a comprehensive report on the new health care law has been posted. “Take two hours to go over it,” he said. Why two hours? “Because it’s going to affect your life dramatically.”


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