Getting healthcare inflation under control has been almost impossible because of a lack of understanding about the intractability of the medical cost spiral.
What is becoming obvious is that the deeply embedded incentives in healthcare financing and delivery have worked against efforts to keep costs down. When you get paid to do more, as in fee-for-service medicine, you'd be a fool to do less. That's why it's crucial to formulate a system that more rationally manages care.
Policymakers, however, can't simply say, "Just eliminate new technology-or cut off heroic end-of-life efforts." Even keeping people out of hospitals by focusing on prevention is not a clear-cut cost-saver, though it will probably improve quality of life for many people.
The high-level attention surrounding the healthcare debate conducted in Washington last year yielded no easy answers. As Republicans seek a solution to soaring costs, they are being tripped up by many of the same obstacles that stymied the Clinton administration.
A recent study performed for the Henry J. Kaiser Family Foundation found that even after touching off a major healthcare reform debate, the problem of escalating health costs hasn't disappeared. The study projects that per-capita health spending will grow nationally at a 36% clip between 1996 and 2000.
Such arresting numbers show that policymakers must be persistent but also realistic in assessing what government can achieve. Healthcare is an emotional and highly personal subject, and it's extremely difficult to decree new ways to proceed, especially when every American feels entitled to the best the medical-care delivery system can offer.
Directing patients to networks of discounted care clearly pays dividends, as a recent Foster Higgins analysis of per-employee healthcare costs for 1994 shows. One way employers saved was by using PPOs to shift more of their costs to enrollees, but such savings are unlikely to continue over time.
As our cover story (p. 30) illustrates, the real payoff probably will come from disease management or the re-engineering of clinical care by standardizing treatment plans for a wide range of conditions and diagnoses. But this path-while full of promise-also includes many obstacles.
No data repositories exist for the kind of information necessary to truly manage treatment. Who suffers what diseases? What really is the best medicine? As Lisa Scott reports, too often, healthcare professionals just don't know.
Managing disease will require improving outcomes data, revamping the way physicians and nurses operate, cutting inpatient admissions, shortening hospital stays, and eliminating unnecessary diagnostic tests and medical procedures. No quick or easy solutions here. But only fundamental systemic change holds the promise of truly reforming medical-care delivery-and, in the end, reducing costs.