The health care cost conundrum

In recent weeks, warnings that America will soon drive off a “fiscal cliff” sparked renewed calls for entitlement reform. Forging an agreement on a long-term deficit reduction plan will require policymakers to make difficult choices about controlling health care costs. Rising costs for Medicare and Medicaid—coupled with new subsidies for millions of Americans to purchase private health insurance through health exchanges beginning in 2014—will contribute to steadily increasing federal spending on health care over the next decade. Nevertheless, a “fix” for rising health care costs continues to elude policymakers. Indeed, public deliberations about controlling health care costs offer a remarkable sense of déjà vu. Warnings of an impending cost crisis—and a corresponding need for decisive action to rein in health care spending—have shaped each debate over health care reform since the early 1970s.

Advocates for cost control must recognize that the public views health care spending as both a bane and a blessing. For most of the 20th century, spending on health care was defined as a worthwhile investment. Opponents of reform raised concerns about the consequences of cost controls and portrayed additional spending as the price of medical progress. Health providers and patient advocacy groups pointed to the fruits of continued medical innovation that paid dividends in the form of better health, improved quality of life, and longer life expectancy for millions of Americans. From this vantage point, the “side effects” of controlling health care costs were worse than the disease itself. For those who regard additional spending on health care as an investment, high health care costs are a social choice, not a crisis.

Every year, millions of Americans join together in “walks for cures” to raise money for medical research and treatments, and tens of millions of Americans purchase bracelets or don colored ribbons to express their support for continued medical progress. In addition, spending on health care provides jobs and income for millions of Americans who work in an industry that now represents nearly one fifth (18%) of the U.S. economy. Since costs for one group represent income for others, the health care cost crisis is ultimately a matter of perspective. Patients and purchasers of care decry rising expenditures, but these costs represent income for providers, a source of economic growth for many communities, and hope for patients and families struggling with illness.

In crafting a solution to the fiscal cliff, policymakers must recognize that despite decades of crisis talk, consumers continue to press for more generous health insurance coverage and additional services, not less.

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