Your Aches, Your Pains, Your Bills

It’s time to cut George W. Bush and John F. Kerry a break on healthcare costs. We the people are the “flip-floppers.” We’re the ones sending “mixed messages.” And we expect Bush and Kerry to suffer us gladly.

We’ve been telling pollsters that we’re angry about soaring health insurance premiums and out-of-pocket payments -- and afraid that our employers will drop our coverage. But we want our brie, our Big Macs and our Lipitor too. We covet breakthrough drugs and high-resolution scans. We bemoan their cost, but we’re willing to pay.

Candidates watch what we do, not what we say. So it’s no surprise that neither Bush’s nor Kerry’s health plans will lower medical spending below current levels. Both candidates defer to our preferences for pricey technologies that inspire hope.

It’s a myth that medical advances trim healthcare spending. New treatments typically cost more than those they supplant. There are dramatic exceptions: Breakthroughs in research sometimes open the way to elegant, simple therapies that are cheap. The antibiotic revolution of the mid-20th century is an example; penicillin and other germ-killing drugs replaced more costly measures that yielded abysmal results.

We may now be at an equally decisive therapeutic moment. Published studies suggest that wide use of statins, a new class of cholesterol-lowering drugs, could greatly reduce the incidence of cardiovascular disease. And stem-cell research promises large advances on many fronts.

But long term, such developments would raise healthcare spending.

They may keep us alive longer, pushing us toward the fraying edges of our bodies’ ability to cope. As we age, our bodies fail us in ways that doctors can’t cure, and we expect high-tech rescue efforts that cause medical spending to soar.

These last-ditch measures, both technically sophisticated but biologically ill-informed, often fail to yield benefits that justify their costs. But we’re loath to abandon hope for our loved ones or ourselves. Any political push for spending limits that renounce this hope would arouse popular ire.

Neither Bush nor Kerry is pressing for such limits, so neither would stop the growth of medical spending. Yet there are sharp differences between their approaches to medical costs and to the related task of making healthcare affordable.

At the heart of Bush’s plan is personal responsibility. The president would aggressively employ the government to motivate consumers to weigh the costs and benefits of care and coverage options. The administration contends that Americans who do so will forgo low-value services and high-priced coverage.

But making medical care a matter of consumer choice is, for the Bush administration, a goal in itself. To this end, the president would radically reduce the role of medical insurance in healthcare decision-making outside the hospital. He would use tax incentives to encourage employees to set up “healthcare savings accounts” for out-of-pocket purchase of care; insurance would be limited to “catastrophic” coverage for expenses exceeding several thousand dollars a year. This would accelerate the current trend toward greater patient cost-sharing, in the form of higher co-payments and deductibles.

But this strategy has only limited potential to control costs. Making routine care into an out-of-pocket expense discourages people, especially the least well-off, from obtaining services -- close management of diabetes and high blood pressure, for example -- that offer long-term health benefits. That, in turn, could boost inpatient spending, the main factor behind rising healthcare costs.

For Medicare, Bush still urges privatization, despite evidence that private health plans spend no less than Medicare’s fee-for-service program. Indeed, the push for privatization is raising Medicare costs. To attract health plans to Medicare, the government is paying them more than it would cost to cover their subscribers in fee-for-service fashion.

Ending “frivolous lawsuits,” another Bush goal, wouldn’t do much to rein in costs either. The medical liability system has many flaws, but the claim that it drives soaring health costs defies the evidence. The entire malpractice system -- damage awards, legal fees, administrative expenses and insurers’ profits -- costs less than 2% of what Americans spend each year on healthcare. The most optimistic backers of the Bush tort-reform strategy promise a one-time-only drop of 20% to 30% in the malpractice system’s costs, equivalent to about half a percent of annual healthcare spending. That’s less than 1/20 of the double-digit increase in health insurance premiums we’ve seen each year since 2000.

As does Bush, Kerry takes a permissive stance toward the high-tech, rescue-oriented spending that is the main force behind rising costs. To control healthcare spending, the Democratic nominee would use the government to group patients together to enhance their bargaining power in order to get better deals from doctors, hospitals and drug companies.

One way to illustrate the philosophical difference between the two candidates is to revisit the debate over Medicare’s new prescription drug program. Bush and his allies insisted on a provision that forbids the government to use the buying power of Medicare’s 40 million beneficiaries to bargain for lower prices. As a result, private health plans act as middlemen, striking separate deals (which makes for higher prices) with drug makers and sellers.

Kerry would roll back the ban on use of the government’s bargaining power. He’d do something similar for the private sector, by allowing states to use their buying power under Medicaid to obtain lower drug prices for all purchasers. The same vision animates Kerry’s approach to employment-based medical coverage. He would enable businesses, large and small, to buy in to the Federal Employees Health Benefits Program, thereby combining their purchasing power to obtain lower rates. Tax credits would help the smallest employers buy in, extending coverage to uninsured Americans.

Kerry’s plan addresses a separate failing of the employment-based coverage system: its placement of the entire burden of coverage on firms and their employees. To lessen that burden, he would make the federal government responsible for a small number of high-cost cases that consume an outsized share of healthcare resources. By picking up three-quarters of the cost of all episodes of care that exceed $50,000, government could cut premiums by 10% or more.

Whoever prevails Nov. 2, medical spending will keep rising, and we seem to want it that way. Neither Bush nor Kerry is challenging us to live within limits we’re not ready to accept. But they’ve set out starkly different approaches to manage medical costs absent cultural acceptance of the need, sometimes, to say no.