Three Key Health Care Messages for President Obama to Deliver

On Thursday President Obama will convene a health care summit in Washington. Here's my view of the key steps he must take in public leadership for us to take control of runaway health care costs.

1. The first key first step is to reinforce our understanding that as important as health care is, it is one of many important social goods. Medicare and Medicaid are crippling federal and state capacity to address other priorities and pushing us into a deeper economic decline. Employer insurance is crippling businesses and constraining wages. It is fiscally and morally irresponsible not to hold health care to a budget, rather than passively letting the sector determine its own level of expenditure.

The President is already saying this, most recently today: “If we are going to help families, save businesses and improve the long-term economic health of our nation, we must realize that fixing what’s wrong with our health care system is no longer just a moral imperative, but a fiscal imperative. Health care reform that reduces costs while expanding coverage is no longer just a dream we hope to achieve — it’s a necessity we have to achieve.”

2. Having raised a sense of urgency, the second step is for the President to provide hope that we can actually get a grip on cost. Here he can draw on "Slowing the Growth of Health Care Costs — Lessons from Regional Variation" from last week's New England Journal of Medicine. The article reports that in 1992 Boston, San Francisco and Eastern Long Island all had nearly identical per capita spending. But expenditures in the three regions grew at markedly different annual rates: 2.4% in San Francisco, 3.0% in Boston, and 4.0% in East Long Island. By 2006, per capita spending in East Long Island was $2,500 more than in San Francisco — which translates into about $1 billion in additional annual Medicare spending from this region alone. And by every indication patients are doing at least as well in San Francisco as in the pricier areas.

The President could take this piece of his script from the New England Journal article - "Using data from the 2008 Medicare trustees' report on projected revenues and total Part A and B spending, we estimate that Medicare will be $660 billion in the hole by 2023. But if we reduce annual growth in per capita spending from 3.5% (the national average) to 2.4% (the rate in San Francisco) Medicare would end up with $758 billion in the black. By practicing medicine the way we've learned to do it in San Francisco we can save $1.42 trillion in the next 14 years."

3. Point # 1 raises our anxiety - health care is creating a fiscal crisis. Point # 2 gives us hope - we have areas in the country that have learned to practice medicine in an economically viable manner. But how do we get from here to there?

This is the toughest point for the President to make. We can't make the needed changes without active management. Current policy discussions pose two main alternatives:

A. The Federal Government could take the lead, through Medicare or through a singe payer system. But Rush Limbaugh and the Republican troops are lined up to attack "big government" and the spectre of "government sponsored rationing." Sadly, we now have an almost 30 year history of reinforcement of Reagan view that "government is not the solution to our problem - it is the problem." As appealing as the single payer concept is to many, the reflexive scorn for government that our political process has cultivated since 1980 would make selling the public on an expanded government role a significant challenge even for President Obama's communication skills.

B. Or, we could look to the array of public and private insurers to take the lead. In the 1990s insurers showed that they could move the health system onto a more cost constrained trajectory. But physicians and the public revolted against the demon of "managed care." Insurers could take on this job again. Vast improvements in information technology would strengthen their ability to provide management. And physicians may be readier to move in the direction of collaborative management as pioneered by Kaiser Permanente than they were 20 years ago. But the legacy of public distrust of insurance companies is very strong, and corporate scandals in other sectors only reinforce distrust of insurer-directed managed care.

I think we will probably see a spell of wishful thinking about the potential for electronic medical records, comparative effectiveness research, medical homes, and other innovations, to bend the cost trend on their own, without impinging on "patient choice" and "physician autonomy." It won't happen. We'll need active management of the health care system to get there. Whether we'll have to slide further into health care driven economic decline before we learn that lesson will depend in great measure on President Obama's courage and leadership skills.