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REHABILITATING HEALTHCARE

Diagnosing the problem

There is fundamental agreement about what needs to be fixed: rising costs, questionable quality of care, and holes in coverage.

June 22, 2009

Even within the United States, there seems to be only a tenuous relationship between the amount of money spent on patients and the quality of care. Researchers at Dartmouth Medical School have looked at Medicare spending across the country, finding wide variation in the cost -- and, frequently, better results in regions where spending was lower. Nor have U.S. healthcare providers coordinated care for individual patients or helped them manage chronic diseases as well as their counterparts in other industrialized nations. Part of the problem is the slow, haphazard adoption of information technology, including digitized medical records, to guide patient care and prevent errors. Studies by the Rand Corp. in 2003 and 2006 found that U.S. patients receive the right care only about 55% of the time, and that the problem affects rich and poor, insured and uninsured alike.

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Incomplete coverage

The rising cost of care also affects access to healthcare. The percentage of U.S. employers providing health insurance has dropped sharply this decade, from 69% in 2000 to 63% in 2008. Meanwhile, the number of Medicaid recipients swelled from 43 million in 2000 to 58 million in 2006, while the ranks of the uninsured have grown to more than 46 million.

There is a moral dimension to this problem: People incapable of obtaining health insurance are less likely to get care when they need it, and more likely to die from a preventable illness. A 2002 study by the Institute of Medicine found that the uninsured had a 25% higher "mortality risk" than the insured, leading to about 18,000 more deaths in 2000 than would have been expected had everyone been covered. The Urban Institute updated that research last year, raising the toll to 22,000 in 2006.

Even some who have insurance coverage find that it's no guarantee that they'll be able to find care or afford it. Health insurers have been scandalized by revelations about patients losing coverage retroactively after they filed claims for expensive care. More systemically, as Congress has held down Medicare and Medicaid reimbursement rates, the number of healthcare providers willing to treat those patients has dwindled. As a consequence, many of those covered by Medicare and Medicaid have to travel farther or wait longer for care.

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The need for reform

The cost, quality and coverage problems are intertwined. Healthcare providers pass along the expense of caring for the uninsured and underinsured, raising costs for those who have insurance. Insurers respond by raising prices, which leads more employers and individuals to drop coverage. The low reimbursement rates prompt physicians to move into more lucrative careers as specialists, reducing the supply of the primary-care doctors who are vital to timely, high-quality care. And the perverse financial incentives in the system deter doctors and hospitals from aligning their interests with those of their patients. After all, the healthcare industry profits more from treating ailments than from preventing them.

These interrelationships complicate the task facing reformers in Congress, who are developing bills in five separate House and Senate committees. Lawmakers from across the political spectrum are eager to tackle the cost problem, but it's difficult and possibly futile to do so without addressing the uninsured and government-insured patients who shift costs onto the rest of the market. Nor are there proven methods of controlling costs, researchers recently argued in the Annals of Internal Medicine, short of setting rigid spending caps, which the public has been loath to accept. It's easier politically to expand insurance coverage, as Congress did earlier this year for children from low- and moderate- income families, but that's expensive and doesn't slow the rate of healthcare inflation.

The U.S. healthcare system isn't a failure. It's extraordinarily good at some things, such as developing new treatments. But its inefficiencies and gaps have created flaws so deep, the system cannot be sustained for long. Not enough people are receiving the care they need when they need it, and those who are pay too much for it. The problems are getting bigger and more complex. The longer we wait to solve them, the more intractable they will become.

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