BALANCING LIMITED RESOURCES AND UNLIMITED EXPECTATIONS

IN HEALTH CARE

Colloquium on Workers CompensationMay 2, 2003

BALANCING LIMITED RESOURCES AND UNLIMITED EXPECTATIONS

IN HEALTH CARE

Colloquium on Workers CompensationMay 2, 2003

Professor James C. RobinsonProfessor James C. Robinson

University of California, BerkeleyUniversity of California, Berkeley

“Perfect Storm” Imagery is Everywhere in Health Care“Perfect Storm” Imagery is Everywhere in Health Care

Costs, premiums increasing 12% per yearCosts, premiums increasing 12% per year Number of un-insured rising above 40MNumber of un-insured rising above 40M Budget deficits at state Medicaid programsBudget deficits at state Medicaid programs Employers beginning to limit coverageEmployers beginning to limit coverage Federal budget deficit threatens MedicareFederal budget deficit threatens Medicare

Deeper Problems Deeper Problems

Below surface of costs and un-insurance:Below surface of costs and un-insurance: Under-funded health care providersUnder-funded health care providers

Primary care, hospitals, long term care, etc.Primary care, hospitals, long term care, etc.

Shortage of nurses and other caregiversShortage of nurses and other caregivers Medical malpractice insurance crisisMedical malpractice insurance crisis Under-investment in information technologyUnder-investment in information technology Under-investment in quality (“chasm”)Under-investment in quality (“chasm”)

Even Deeper “Problems”Even Deeper “Problems”

The long term drivers of costs:The long term drivers of costs: New clinical procedures and technologies that New clinical procedures and technologies that

improve quality and outcomes but increase costimprove quality and outcomes but increase cost We are only at the beginning of the genomics We are only at the beginning of the genomics

and biotechnology revolutionand biotechnology revolution An ever-broadening social definition of healthAn ever-broadening social definition of health

Reproductive, behavioral, long term care, wellnessReproductive, behavioral, long term care, wellness

Permanent revolution of rising expectationsPermanent revolution of rising expectations

The Fallacy of “Perfect Storm” Imagery

The Fallacy of “Perfect Storm” Imagery

The problems in health care are seriousThe problems in health care are serious But the perfect storm is not the metaphorBut the perfect storm is not the metaphor

The system will not perishThe system will not perish Nor will it be saved by some upheavalNor will it be saved by some upheaval Too many people seem to believe that, if things Too many people seem to believe that, if things

get bad enough, there will be a cataclysm and get bad enough, there will be a cataclysm and then everything will be different and betterthen everything will be different and better

That is magical thinkingThat is magical thinking

Our Problems Stem from Our SuccessOur Problems Stem from Our Success

The ills of the system derive from cost The ills of the system derive from cost increases, which derive from quality-increases, which derive from quality-enhancing new technologies and a enhancing new technologies and a broadening social definition of healthbroadening social definition of health

These are good, not bad, thingsThese are good, not bad, things We don’t want to “solve” these “problems”We don’t want to “solve” these “problems”

Reality CheckReality Check

Would you rather be uninsured in the health Would you rather be uninsured in the health care system of 2003 or fully insured in care system of 2003 or fully insured in system of 1963? 1983?system of 1963? 1983? What if you were HIV positive?What if you were HIV positive? What if you were at high risk for stroke?What if you were at high risk for stroke? What if you had a low-birthweight baby?What if you had a low-birthweight baby?

This is not an excuse for un-insurance, but a This is not an excuse for un-insurance, but a check: health care is improving for allcheck: health care is improving for all

No Easy Solutions: CostsNo Easy Solutions: Costs

There is lots of waste in health care, but it is There is lots of waste in health care, but it is hard to cut it out and transfer resourceshard to cut it out and transfer resources Administrative waste is serious, but is not Administrative waste is serious, but is not

increasing (Infotech can moderate these costs)increasing (Infotech can moderate these costs) Unnecessary medical care is serious, but quality Unnecessary medical care is serious, but quality

measurement, incentive changes are difficultmeasurement, incentive changes are difficult Profits and surpluses are significant, but the Profits and surpluses are significant, but the

system needs capital for investmentsystem needs capital for investment

No Easy Solutions: CultureNo Easy Solutions: Culture

Americans want unimpeded access to Americans want unimpeded access to convenient, high quality health careconvenient, high quality health care Backlash against managed careBacklash against managed care

Americans don’t want to pay for careAmericans don’t want to pay for care Backlash against taxes, premiums, copaysBacklash against taxes, premiums, copays

Health care is a right, and a right is Health care is a right, and a right is something someone else has to pay forsomething someone else has to pay for We have met the enemy, and he is usWe have met the enemy, and he is us

Balancing Resources and ExpectationsBalancing Resources and Expectations

Health care is and always will be the Health care is and always will be the balancing of limited economic resources balancing of limited economic resources with unlimited social expectationswith unlimited social expectations

Limited resources: every society has many Limited resources: every society has many needs and wants relative to its meansneeds and wants relative to its means

Unlimited expectations derive from Unlimited expectations derive from wonderful clinical opportunities and wonderful clinical opportunities and broadening social definition of healthbroadening social definition of health

The Economic Facts of LifeThe Economic Facts of Life

The fundamental principle of economics:The fundamental principle of economics: Wants and needs always exceed resources, even Wants and needs always exceed resources, even

in the richest of societies (ours)in the richest of societies (ours) Some form of “rationing” is inevitableSome form of “rationing” is inevitable This is done by making tradeoffs based on This is done by making tradeoffs based on

budgets and prices, by individuals, budgets and prices, by individuals, organizations, governmental agenciesorganizations, governmental agencies

This is real lifeThis is real life

Health Care as an Exception?Health Care as an Exception?

Health policy has fostered a different view:Health policy has fostered a different view: We will pay for all effective (“medically We will pay for all effective (“medically

necessary and appropriate”) care for everyonenecessary and appropriate”) care for everyone We can finance this by eliminating profits and We can finance this by eliminating profits and

administrative waste and unnecessary careadministrative waste and unnecessary care “ “Rationing” is unethical, politically volatileRationing” is unethical, politically volatile Health care is not a commodity but a rightHealth care is not a commodity but a right

The Virtues of Health Care Exceptionalism

The Virtues of Health Care Exceptionalism

The principle that tradeoffs are not The principle that tradeoffs are not necessary in health is useful, to some extentnecessary in health is useful, to some extent It promotes subsidies from the chronically It promotes subsidies from the chronically

healthy to the chronically ill healthy to the chronically ill It highlights the savings from reducing wasteIt highlights the savings from reducing waste It channels enormous funds to health care, It channels enormous funds to health care,

which finances clinical innovation that which finances clinical innovation that improves quality and health statusimproves quality and health status

The Vices of Health Care Exceptionalism

The Vices of Health Care Exceptionalism

But the principle that priorities are not But the principle that priorities are not necessary in health care also is perniciousnecessary in health care also is pernicious It is factually incorrectIt is factually incorrect It hurts those most in need of careIt hurts those most in need of care It undermines rather than sustains communityIt undermines rather than sustains community It is anti-democraticIt is anti-democratic

The Era of Paternalism is FadingThe Era of Paternalism is Fading

Paternalism has dominated health carePaternalism has dominated health care Physician: doctors knows bestPhysician: doctors knows best Corporate: fringe benefits as 12+% of wagesCorporate: fringe benefits as 12+% of wages Government: open-ended entitlement and taxesGovernment: open-ended entitlement and taxes

Paternalism means securityPaternalism means security But it does not leave enough room for But it does not leave enough room for

individual choices, rights, responsibilitiesindividual choices, rights, responsibilities

The Era of Individual Rights and Social Responsibilities is EmergingThe Era of Individual Rights and

Social Responsibilities is Emerging

The emerging era is one of balancingThe emerging era is one of balancing Limited resources and unlimited expectationsLimited resources and unlimited expectations Individual rights and social responsibilitiesIndividual rights and social responsibilities

These two balancings are connectedThese two balancings are connected We cannot decide how to balance resources and We cannot decide how to balance resources and

expectations until we decide how to balance expectations until we decide how to balance rights and responsibilitiesrights and responsibilities