Leavitt: Economic factors will drive future changes to health care system
9/14/2011

By Brian E. Clark
For WisBusiness.com

The U.S. health care system is ill.

That’s the assessment of former U.S. Health and Human Services Secretary Mike Leavitt, who also served two terms as governor of Utah.

Leavitt, who warned nearly a decade ago that the Medicare is headed for financial disaster, said the American people now accept that this medical insurance program is in serious trouble. Medicare was created in 1965 primarily to cover people over 65, as well as others with disabilities.

“Time will tell if Congress has heard it loud and clear enough,” said Leavitt, who was in Wisconsin this week to speak to the Aurora Health Care board and some employees. Milwaukee-based Aurora runs 13 hospitals, 100 clinics and 80 community pharmacies.

More importantly, Leavitt said, global markets know the effects Medicare is having on the U.S. deficit.

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“As we fail to rein in our system, it makes the U.S. debt substantially less interesting to foreign buyers. And when there are fewer buyers for your debt, it gets more expensive.”

As a result, he said, the cost of American products goes up and makes them less competitive in the world economy.

“That’s the way change will be brought about, not just because Congress got the message,” he said. “Economics will drive it.”

Leavitt said while health care is a necessity, the way it is delivered and paid for in the United States needs to be overhauled.

But he said subsidies required in President Obama’s Patient Protection and Affordable Care Act are too costly. If he could reform it, Leavitt said he would put more controls in the states’ hands.

“Health care is something people need and demand,” he said. “But we have to become more efficient, spending more than 17 percent of our economy on health care, which is nearly double what our competitors spend on average.”

Leavitt said there is no place on the economic “leader board” for a country that would allow that trend to expand.

Recent estimates, he noted, are that by 2020 health care will consume 20 percent of the country's spending and will continue to rise.

Leavitt said he believes that could create a downward economic spiral.

“I’m not saying it will create that spiral, just that we are in economic times that demand we deal with reality and thus far with our medical entitlements, we have not,” he said.

Leavitt said the biggest difference between the health care delivery systems in the United States and other developed countries is that U.S. entitlements have few limits.

“When we say a person is not entitled to care, we have not put a lid on what the national expenditure will be,” he said. “The consequence is that if you look at our ballooning deficit over the course of the next 10 years, a growing percentage of that is Medicare and Medicaid.”

Leavitt said a lack of health care coordination drives up costs.

“Every part of the system is a general contractor and no one coordinates,” he said.

“Secondly, we reward poor quality the same as high quality. And lastly, we suffer from ‘chronic more.’ Everything is about more care, not better care. We reward providers and patients for asking for more.”

Leavitt said the system needs to reward results, not volume. When it comes to limits, Leavitt said it makes sense to set boundaries on convenience.

“We shouldn’t set levels on quality, but we will have a less opulent form of care,” he said. “If people want to have convenience and access at a higher level, they will have to pay a bit more on our own.”

Leavitt acknowledged that some health care systems are working to control costs and should be emulated.

He said these systems will be rewarded for keeping patients well. And he warned that individuals with unhealthy habits – such as smoking, drinking or eating to excess – will face higher costs.

“Health plans will reward those with healthy habits, even more than they do today,” he said. “Insurance plans discriminate against those who smoke. In the future, we will see more of that. Those who keep their body mass index within a certain range will pay less.”

Leavitt said this will result in a new kind of managed care, but providers will be in charge of how it is run, rather than insurance companies.

“Physicians (will be rewarded) for using the most efficient forms of treatment to produce the right results,” he said. “When I say we need to focus on value, not volume, that’s what I’m talking about. We need to change the way doctors and hospitals are paid.”

Leavitt said he does not know if what has come to be known as "ObamaCare" will survive court challenges.

But the former HHS secretary said he is a supporter of health exchanges, which allow individuals and small groups to pool resources to buy affordable insurance. Leavitt said both progressives and conservatives have supported the concept in the past.

With federal reform, Democrats and Republicans compromised and decided to let states set up their own exchange programs.

“This is an old problem,” he said. “We will see it play out in each state. And there will be differences. But that is good and it’s a legitimate, real solution to that problem and I think the exchanges will go forward.”

Even if reform does not survive court challenges, Leavitt said he believes exchanges will be created.

“Health reform has got to happen,” he said. “This is no longer about politics alone or what health care shape ought to be. This is an imperative that the United States has to bring its economic house in order.

“And a big part of that is solving the health care conundrum.”


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