The success of President Clinton’s health-care plan rests on the principle that the fat, and nothing but the fat, will be cut when the government begins to pare medical costs.
Hillary Rodham Clinton stressed this theme in congressional testimony last week, suggesting hundreds of billions of dollars in inefficiencies and unnecessary care that could be wiped out by the president’s new “managed competition” system and its controls on insurance premiums.
But the “fat first” assumption is one of the plan’s most controversial features, one many experts believe is overstated and perhaps naive. They fear the cost controls proposed by Clinton also will cause U.S. health-care providers to reduce their level of care in many direct and indirect ways.
In short, they say, muscle is likely to be cut along with fat, leading to some rationing of care as health insurance plans and providers scramble to live within the money allotted to them under the plan.
The possibility of even modest health-care rationing evokes sizable political apprehension. Rationing, a term often tossed around for political effect, has become the worst insult that can be leveled at a health-care plan.
Clinton says correctly that health care is rationed already, as tens of millions of Americans lack access to adequate medical care because they are uninsured or underinsured. But his complex plan raises questions about whether it can deliver on all its promises at once: cover everyone, ensure quality of care and sharply curb rising costs.
Americans tell pollsters they want health-care reform, but many fear quality will suffer when the squeeze is applied. They are anxious about being thrown into cost-conscious health plans, some of which have a financial incentive to minimize care.
The administration is seeking to allay the anxiety by assuring the public and Congress there is so much waste-as much as $200 billion of the $900 billion spent on health care this year-it is inconceivable the real flesh of the system will be cut anytime soon.
In her testimony, the first lady cited one example after another of how the costs of medical procedures vary widely by region and even among hospitals in the same city. In Pennsylvania, she reported, a coronary bypass costs as little as $21,000 at one hospital and $84,000 at another-and the lower-cost hospital offers higher quality care. Despite these examples, skeptics fear the president’s health-care reform plan risks substantially diluting care.
“We have no guarantee that the effect won’t be the cutting of necessary care,” said Gail Shearer, a health-policy analyst for Consumers Union (which publishes Consumer Reports magazine). “There is a lot of discretion (among providers) in what is necessary care and what is unnecessary care . . . We will need intense scrutiny of the system.”
“There is no equivalent of fiscal liposuction where you go into the health-care system and excise only the fat,” added Robert Reischauer, director of the Congressional Budget Office. “The fat is marbled throughout the tissue. To rend that fat might cook the system.”
It’s conceivable many community hospitals might have to close because there is a nationwide surplus of hospital beds, he noted.
“This may seem like fat to you and me,” he said. “To the people living there, it’s muscle.”
The key issue is the effectiveness of Clinton’s techniques for identifying what is fat.
The president would try to cut waste by putting Americans into giant regional purchasing cooperatives and forcing health-care insurance plans to compete for the right to provide a national package of standard benefits. This “managed competition” approach, in theory, would cause insurance plans, physicians, hospitals and consumers to consider the rising costs for the first time.
In addition, the Clinton proposal would impose annual limits on premium income to health-care plans if they fail to cut their costs. This would work like a budget, with a certain amount allotted for each patient served by a provider, whether it is a health maintenance organization (HMO) or an individual doctor.
The fear is these cost-cutting methods won’t work as cleanly, quickly and effectively as the administration promises.
The plan projects that national public and private health-care spending, now rising at 10 percent a year, will increase by only 4 percent annually by 2000. Adjusted for inflation and population growth, this is no growth at all and will be tough to achieve, said Sen. Daniel P. Moynihan (D-N.Y.), chairman of the Senate Finance Committee. Everyone agrees the system is overburdened with administrative costs, with too many forms and too many people checking what others are doing. But administrative waste represents only $70 billion of the estimated $200 billion of fat in the system, said Consumers Union’s Shearer, with the remainder attributable to unnecessary care.
Dr. Gerard Anderson, professor of health policy and management at Johns Hopkins University’s School of Public Health, said: “Every time we’ve tried to eliminate this inefficiency in our system, we have been unsuccessful. It’s elusive. We’ve tried price controls, we’ve tried utilization review, we’ve tried more ways than any other country in the world, and we’ve been ineffective.”
Anderson, director of the school’s hospital finance and administration research center, is equally skeptical about the Clinton plan. “I don’t see any new idea here that will dramatically change the growth in health-care costs.”
One of his fears is some health-care group plans will become highly aggressive in cutting costs if they begin losing money. Physicians who refer too many patients to specialists and hospitals might be thrown out of the plan because they are running up costs, he said.
In a study of HMOs in Southern California, the Medicare Advocacy Project found several horror stories. For example, one HMO enrollee suffering acute headache, numbness and blurred vision had to wait almost a month before obtaining a referral to a neurologist.
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The patient went to an out-of-plan eye doctor for a free exam and was told there was evidence of a possible aneurysm, blood clot or brain tumor. When she finally saw the neurologist, she was told, “You should have seen me three weeks ago.”
Another patient was promised cataract surgery by his HMO. Although he could not see to drive a car, the surgery was never scheduled. After a year he obtained it outside the plan, then sued the HMO to pay the bill.
Although a number of studies have shown the quality of care in HMOs is at least equal to that in traditional fee-for-service medicine, anecdotes such as these leave many consumers profoundly uneasy. Geraldine Dallek, director of the advocacy group, said many HMOs, because of the need to hold down costs, have “financial incentives not to refer (patients).”
But Karen Ignagni, president of the Group Health Association of America, a Washington-based HMO trade group, countered that HMOs have an incentive to treat a problem as early as possible “to prevent a catastrophe.”
The debate over whether cost containment will cause muscle to be cut along with fat demonstrates the need for guidelines to help physicians sort out what care is necessary and what is not, said Dr. Robert Brook, director of health policy research for Rand in Santa Monica, Calif.
“A large part of what we do in medicine is analogous to rationing mink coats,” Brook said. “But there’s a large part of what we do that I think everyone is entitled to. That care ought to be given to everybody. . . . The only way that’s going to happen is with very detailed guidelines.”
Brook said the guidelines would cover as many as 100 medical procedures and deal with the circumstances in which they should be performed or not performed. Until Clinton proposes clinical reform, he will not be able to curb health-care costs, he said.