The nation is in an economic boom. So why does it feel like a recession in the health care industry? That was the question Jeff Goldsmith, president of Health Futures Inc., a Virginia based health-care policy forecasting firm, tackled at a recent health care symposium held at Brown University.
For Goldsmith, it starts with a look at health care spending. The percentage of the country’s Gross Domestic Product devoted to health care has been flat since 1993. The nation had entered the decade with double-digit inflation in health care spending, and the industry had been accustomed to streams of new revenue pouring in each year. Given the marginal growth since 1993, it feels like a recession now, he said.
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The situation worsened in 1997, when Congress passed the Balanced Budget Act, which slashed Medicare reimbursements. The problem is that lawmakers mistakenly cut Medicare spending by far more than they had intended, Goldsmith said. By 2002, there will be a $60 billion difference between what Congress projected to spend on Medicare and what it will actually spend, he said.
Goldsmith also pointed to a trend that has been developing for several years: the movement of consumers away from traditional, fee-for-service indemnity health insurance – where he said all the profit in medicine is – to managed care health insurance. As late as 1993, half of all people who had health insurance had indemnity health insurance, he said.
That movement toward managed care and away from indemnity health insurance contributed to the decline in the rate of health care cost growth, Goldsmith indicated.
The movement toward managed care came at a time, 1993, in which President Clinton was seeking to provide health insurance to people who are uninsured with his 1,364-page “Health Security Act.” But his plan failed to attract support. The public, Goldsmith said, did not trust the government to manage health care benefits. But while some may have taken the rejection as an endorsement of the market-driven system, Goldsmith suggested that it was more a vote in support of the status quo.
Today, people are less satisfied with the status quo. Many doctors and nurses who work in hospitals today do not feel a sense of ownership in the institutions in which they work – an essential element to providing quality care, he said. Health care professionals must have that ownership, not in a “crass equity sense,” but in an emotional sense, he said.
Until that happens, “it’s going to be very difficult to get these institutions moving again.” He added that, when we get sick, we want the professionals who work at hospitals to be “like one great big happy family,” Goldsmith said.
Today, consumers are responding to crisis in the health care system by taking action. More and more consumers are educating themselves about health care, Goldsmith said. They flock to the Internet for information. Patients, through the World Wide Web, are now conversing with other people who have the same illnesses to learn more about their ailments, he suggested. But Goldsmith also noted that large populations of people still do not have access to the Internet, and therefore do not have the same access to medical information as those who have computers in their homes.
