In 1992, strategist James Carville created the slogan for Bill Clinton’s presidential campaign with the phrase, “It’s the economy, stupid.” For the last two years, those of us in the industry have been paraphrasing Carville: “It’s the costs, stupid.” Health insurance is expensive because health care is expensive.
Some politicians got it but knew addressing costs in the health care “reform” bill would have been suicidal, so there was no price fight.
Richard Kirsch, head of Health Care for America Now, told the Washington Post, “The public hates the insurance industry and trusts doctors and hospitals. But what killed the public option was the hospitals, not the insurance industry.”
Congress and the White House cynically assured Americans overutilization and insurance company profits (which, by the way, average around 3%) were the culprit, rather than pointing to the real driver: the cost of care.
Another issue that is startling in its absence in Patient Protection and Affordable Care Act is the cost and threat of litigation. The direct costs are apparent — and are an integral part of the cost of care. More than one in eight doctors face a malpractice suit each year. The AMA reports 42% of doctors have been sued at least once, and a staggering 20% have been sued twice. Even when a doctor wins a lawsuit, the costs per trial approaches $100,000.
The indirect costs may be more damaging. According to a recent study by Lawrence J. McQuillan, director of business and economic studies at the Pacific Research Institute, defensive medicine adds $191 billion to the cost of health care annually.
The most pernicious effect of the malpractice mess is, according to McQuillan’s research, there is a mass exodus of doctors in high-risk specialties (obstetricians, neurosurgeons, etc.) in Pennsylvania and other over-lawyered states.
The cost of care — including the costs passed on to patients for malpractice insurance and awards — was largely ignored in PPACA. The all-consuming push to get this bill passed reminds us of another old adage: Legislate in haste; repent at leisure. We can’t have any meaningful change until we deal with these two issues. Ultimately, it is and always will be the costs, stupid!
Check out more blog entries from David Saltzman.