On health spending and healthcare costs

Healthcare does not seem to rank high in the forthcoming U.S. Congressional elections, recent studies showing that it ranks way below national security and concerns over the economy as the likeliest determinant of the outcome of the November 7 elections. However, this does not mean that Americans do not value their health. Indeed, polls show that they do, and more so about the increasing costs of health insurance. Besides increasing healthcare costs, other healthcare issues of concern to Americans often cited in recent polls are the costs of prescription drugs, access to health services, the high numbers of the uninsured, and Medicare/Medicaid issues. Thus, Americans worry about their health, and their health system, indeed, about several issues regarding them.

Additionally, that these polls also show a lack of consensus on any healthcare issue points to the complexity of issues associated with healthcare delivery and that of the likely solutions to them. Clearly, the American electorate is not pushing a health reform mandate considering the priority given to healthcare in the imminent Congressional elections. Yet, the need for ongoing health sector reform could not be starker. This is not to say that the health system is crumbling or indeed, extraordinarily problematic. On the other hand, the contention that it does not only have its own problems, some of them in need of urgent attention, would be feeble. Neither could one ignore the fact that as with any health system at that, it requires continuous quality evaluation and improvement.

Here then is why even if the need for such ongoing reform did not stand out among the wishes of the electorate the Congress would unlikely discountenance this crucial fact. In the first place, the country cannot afford to keep spending increasing portions of its wealth on healthcare, without the benefits correspondingly rising, the latter, which would eventually reduce the former. In other words, the health system would need to operate in a manner wherein the costs of healthcare declines hence obviate the need for increased health spending.

The health system therefore would need to seek ways to reduce healthcare costs in order to reduce health spending, chief among which would be improving the health of Americans, with the resultant domino effect reducing hospital stays and rates, and the rates and amounts of prescription medications use, among others. The question then is what it needs to do to improve the health of Americans, the focus of reform, therefore. One example is improving access to care, and reducing the numbers of the uninsured. These major issues would then need decomposing to tease out their elements, additional issues, and processes not only to appreciate the interplay of these forces, but also to maneuver them effectively in achieving the desired objective.

This would mean for example establishing the mechanisms for reducing the transaction costs that weigh down the profoundly intricate processes that result in healthcare delivery. An in-depth analysis of these multifaceted processes would reveal these mechanisms, for example, the appropriate healthcare information and communications technologies required to improve them, hence healthcare delivery. By improving healthcare delivery, the health of Americans in turn would improve ultimately, healthcare costs following suit, health spending too, falling progressively.

With potential crises points in the health system such as the imminent retirement of baby-boomers looming, would investing in these technologies for example, with the potential to reduce health spending not help alleviate the fiscal pressures these crises might cause the health system? Does it not make intuitive sense to invest now on health and reap the profits later, literally, rather than be stuck in an endless cycle of increasing healthcare costs and equally soaring health spending to defray them?

It is for these and other reasons that the incoming Congress would have to mandate itself to continue to reform the country’s health sector. The point is that no health sector is immune to change, imposed from outside or by its inherent instability, which makes no health system perfect, or likely ever to be. What every health system needs to do therefore, including the American health system, is to be at best proactive in anticipating and preparing for change, or at worst respond effectively and efficiently to them. Either way, it would have to pursue a determined continuing healthcare quality improvement policy that would enable it achieve the dual healthcare delivery objectives of providing its peoples with qualitative healthcare delivery simultaneously reducing healthcare costs, hence spending, more so with increasing resources increasingly scarce in many countries, including in the USA.