An Even Harder Healthcare Question

By upholding the Affordable Care Act the Supreme Court settled one of the hard questions that faced our country – we have an obligation to make sure that every U.S. citizen has access to medical care. And eventually the Affordable Care Act will force us to confront an even harder question – how much should we spend to keep any one person alive?

Healthcare costs have skyrocketed in the United States, going from about 12% of our economy in 1990 to almost 18%, about $2.3 trillion a year. Insurance company profits and administration costs contribute but the primary cause of the increase is medical technology. Every year doctors come up with new procedures to fix maladies we used to have to live with and new technologies to save people that once would have died. Ninety years ago people died from diabetes. In the 1960’s most children born with hemophilia didn’t make it to adulthood; now the average life expectancy for a hemophiliac is almost sixty years. In the 1970s if your knee gave out you spent the rest of your life walking with a cane. Now the knee can be replaced.

The miracles of medical technology have increased life expectancies and improved quality of life. But miracles come with a price tag. Managing a severe case of hemophilia can cost over $400,000 a year. Keeping a premature baby alive often costs over a million dollars just in the first year of the baby’s life and several million before the child is out of diapers. The extreme cost of these procedures is reflected in our healthcare spending – 1% of our population consumes about 22% of our spending; the top 5% consume about half of the $2.3 trillion we spend. And the lifesaving potential, and cost, of medical technology is still accelerating.

It’s nice to think that as a wealthy nation we can afford to pay any amount to keep our citizens alive, but we can’t. Already we spend almost twice as much on healthcare as other nations and if costs keep increasing eventually it will bankrupt our country. At some point we as a society will have to decide how much money we will spend to save any one person.

Needless to say, this is a challenging question. No politician wants to stand up and say we can’t afford to save every premature baby or that sometimes we have to let people die because we can’t afford to keep them alive. The Affordable Care Act reflects this ambivalence. It promotes something called Accountable Care Organizations that essentially make caregivers financially responsible for excessive healthcare costs. This makes for an appealing narrative – “Take profit out of the equation and let doctors make decisions based on medicine”. But you can’t pretend away cost as a factor in healthcare decisions. Doctors will face the same pressure to avoid expensive treatments or risk bankrupting their medical practices.

The Affordable Care Act also significantly reduces insurance companies’ ability to control healthcare spending. Many insurance plans had implemented a lifetime cap on payments for any one person, typically two to five million dollars. The Affordable Care Act eliminates these caps. While great news for patients that had reached their cap it will lead to higher healthcare costs for our country. By some estimates as many at 300,000 people would have reached their caps over the next ten years.

For all of the misinformation spread by Republicans about the Affordable Care Act, they did get one thing right – it will increase healthcare costs. The individual mandate generated quite a bit of fury but its financial impact will be minimal – at best it will bring in about $20 billion in additional funding, about 1% of what we spend. Conversely, we have extended coverage by about 10% and have removed insurance companies’ most effective tool for cost control. Is there any reason to think costs won’t go up?

The Affordable Care Act was an important step for our country. But it is the start of the conversation we need to have, not the conclusion. At some point we will have no choice but to have an honest debate about how much we can afford to spend to save any one person.

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