Harvard Economist Offers Health Reform Solution: Says change must focus on cost containment

LAS VEGAS—The problem with health reform is cost, said Harvard University Professor Marc Roberts, PhD.

Dr. Roberts used numbers to illustrate his point during a presentation at the Annual Meeting of the American Broncho-Esophagological Association, part of the Combined Otolaryngological Spring Meetings held here April 28-May 2. On a chart blown up on a screen behind him were figures showing the life expectancy in 17 industrialized countries, including the U.S., along with those countries’ per capita spending on health care in the 2006-07 year.

“What you will notice is, except for Portugal, we have the shortest life expectancy of any industrial country. And you will also notice that we spent two and three times per capita what every other industrial country spends,” said Dr. Roberts, a political economy professor at the Harvard School of Public Health in Boston. “Anyone who says to you the U.S. has the best health care system in the world clearly has not been looking at the numbers. We may well have the best health care…for people who are insured and have good access. But it’s not obvious that we have the best health care system when you look at these numbers.”

Where Reform Falls Short

But just as the health care system needs reform, so does the reform itself, Dr. Roberts said. The reform package that was passed this year improves access but does not do enough to control health care costs, he explained.

The reform plan expands Medicaid to cover everyone with income under 133 percent of the federal poverty mark. It requires everyone else to buy insurance or face a penalty, and it provides subsidies to accomplish that goal. It also requires employers to offer insurance and creates state-based “exchanges” to offer regulated policies in the small group and individual markets.

Once implemented, the health reform measures are expected to add 16 million people to the Medicaid rolls and 16 million more to private insurance. The plan includes components, including the Patient-Centered Outcomes Research Institute and an innovation center in the Centers for Medicaid and Medicare Services, created to conduct research and experiments that will explore cost-cutting possibilities.

But Dr. Roberts has his doubts about these measures, wondering what experiments will be conducted and what impact they will have. There is no getting around the need to change the fee-for-service system, he said. Advanced technology has helped to let costs spiral out of control. “We pay for care that makes it extremely profitable to use high technology,” Dr. Roberts said. “High technology is not only costly, it’s profitable. The price-cost margins on high technology tend to be particularly high.”