BALANCING LIMITED RESOURCES AND UNLIMITED EXPECTATIONS IN HEALTH CARE Colloquium on Workers Compensation May 2, 2003 Professor James C. Robinson University of California, Berkeley

“Perfect Storm” Imagery is Everywhere in Health Care  Costs, premiums increasing 12% per year  Number of un-insured rising above 40M  Budget deficits at state Medicaid programs  Employers beginning to limit coverage  Federal budget deficit threatens Medicare

Deeper Problems  Below surface of costs and un-insurance:  Under-funded health care providers  Primary care, hospitals, long term care, etc.  Shortage of nurses and other caregivers  Medical malpractice insurance crisis  Under-investment in information technology  Under-investment in quality (“chasm”)

Even Deeper “Problems”  The long term drivers of costs:  New clinical procedures and technologies that improve quality and outcomes but increase cost  We are only at the beginning of the genomics and biotechnology revolution  An ever-broadening social definition of health  Reproductive, behavioral, long term care, wellness  Permanent revolution of rising expectations

The Fallacy of “Perfect Storm” Imagery  The problems in health care are serious  But the perfect storm is not the metaphor  The system will not perish  Nor will it be saved by some upheaval  Too many people seem to believe that, if things get bad enough, there will be a cataclysm and then everything will be different and better  That is magical thinking

Our Problems Stem from Our Success  The ills of the system derive from cost increases, which derive from quality- enhancing new technologies and a broadening social definition of health  These are good, not bad, things  We don’t want to “solve” these “problems”

Reality Check  Would you rather be uninsured in the health care system of 2003 or fully insured in system of 1963? 1983?  What if you were HIV positive?  What if you were at high risk for stroke?  What if you had a low-birthweight baby?  This is not an excuse for un-insurance, but a check: health care is improving for all

No Easy Solutions: Costs  There is lots of waste in health care, but it is hard to cut it out and transfer resources  Administrative waste is serious, but is not increasing (Infotech can moderate these costs)  Unnecessary medical care is serious, but quality measurement, incentive changes are difficult  Profits and surpluses are significant, but the system needs capital for investment

No Easy Solutions: Culture  Americans want unimpeded access to convenient, high quality health care  Backlash against managed care  Americans don’t want to pay for care  Backlash against taxes, premiums, copays  Health care is a right, and a right is something someone else has to pay for  We have met the enemy, and he is us

Balancing Resources and Expectations  Health care is and always will be the balancing of limited economic resources with unlimited social expectations  Limited resources: every society has many needs and wants relative to its means  Unlimited expectations derive from wonderful clinical opportunities and broadening social definition of health

The Economic Facts of Life  The fundamental principle of economics:  Wants and needs always exceed resources, even in the richest of societies (ours)  Some form of “rationing” is inevitable  This is done by making tradeoffs based on budgets and prices, by individuals, organizations, governmental agencies  This is real life

Health Care as an Exception?  Health policy has fostered a different view:  We will pay for all effective (“medically necessary and appropriate”) care for everyone  We can finance this by eliminating profits and administrative waste and unnecessary care  “Rationing” is unethical, politically volatile  Health care is not a commodity but a right

The Virtues of Health Care Exceptionalism  The principle that tradeoffs are not necessary in health is useful, to some extent  It promotes subsidies from the chronically healthy to the chronically ill  It highlights the savings from reducing waste  It channels enormous funds to health care, which finances clinical innovation that improves quality and health status

The Vices of Health Care Exceptionalism  But the principle that priorities are not necessary in health care also is pernicious  It is factually incorrect  It hurts those most in need of care  It undermines rather than sustains community  It is anti-democratic

The Era of Paternalism is Fading  Paternalism has dominated health care  Physician: doctors knows best  Corporate: fringe benefits as 12+% of wages  Government: open-ended entitlement and taxes  Paternalism means security  But it does not leave enough room for individual choices, rights, responsibilities

The Era of Individual Rights and Social Responsibilities is Emerging  The emerging era is one of balancing  Limited resources and unlimited expectations  Individual rights and social responsibilities  These two balancings are connected  We cannot decide how to balance resources and expectations until we decide how to balance rights and responsibilities