HEALTH-CARE WATCH : Cutting the Costs

Medical costs for California businesses are actually going down--or at least not going up as fast as they were. That’s good news, of course, but it’s too early to be sure that the downward trend will hold. Certainly the hold-down in no way negates the need for national health-care reform.

California firms are doing some of what needs to be done: becoming tougher bargainers with insurers, hospitals and doctors to make sure that companies and employees get their money’s worth. Firms throughout the state have pushed costs downward mainly through increased use of “managed care” networks, including health-maintenance organizations, or HMOs. The city of Sacramento, for example, managed to get a 22% rollback on rates for its 4,000 employees. That’s good.

But there are limits to how much fat one can squeeze out of the system; most Californians certainly don’t want lower rates to translate into bargain-basement medical care. And, no matter how well California does in better managing its health-care costs, it’s just one of 50 states. It must compete in a national market in recruiting doctors, purchasing equipment and buying prescription drugs. So there’s no getting around the fact that California’s reforms need national support if we want to make sure that the state’s reforms stick.

Washington should take note that California’s medical prices in the consumer price index are rising at a slower pace than the nation as a whole. Then Capitol Hill must find ways to build on this success and encourage what works, not reinvent the wheel.