Health care costs are out of control due to several factors, but a panel of speakers said yesterday that government subsidized and imposed universal health care in the United States would make a troubled system worse.
Representatives of physicians and hospitals in North Carolina, and executives from pharmaceutical company GlaxoSmithKline and health insurer Blue Cross/Blue Shield of North Carolina, agreed costs would spiral further out of control and limit access to medical services for many in need.
“I wouldn’t wish a government-sponsored health care system on anybody,” said Bill Pully, president of the North Carolina Hospital Association, citing his years of difficulties dealing with Medicare and Medicaid.
“There is no free lunch,” said Dr. Lawrence Cutchin, the immediate past-president of the North Carolina Medical Society.
The discussion was part of a conference held at Raleigh’s Brownstone Hotel on rising costs in health care. The forum was sponsored by the nonprofit Center for Citizenship, Enterprise, and Government.
Dr. Michael Walden, an economics professor at North Carolina State University, attributed the high cost problem to both increased usage of the health care system and higher prices, which he said were about equally culpable. He said that technological advancements in medicine have not produced consumer savings, which is atypical to what is seen in other industries, where efficiencies lead to lower costs.
“That doesn’t seem to be happening in medical care,” he said.
Walden said that some industry observers and economists believe that in real numbers, medical costs are not going up because the vast improvements in care over such a short period of time.
“What we’re buying in medical care is giving us so much better health,” he said.
But Walden also said consumers pay for health care in a different way than they pay for everything else. Because most Americans pay for their doctor visits and pharmaceuticals through employer- or government-sponsored health plans, they pay a very small portion of the real costs for services and products. That nearly eliminates the incentive to shop for lower prices or negotiate for care.
“Any time you indirectly subsidize something, you cause people to want more of it,” Walden said.
He said that problems could be addressed by reducing demand and by increasing supplies of services. On the demand side, Walden said increasing consumers’ direct payments for medical care and ending government mandates for insurance coverage of services could help. Supply could be boosted by creating more mass-market, minimal-care treatment centers; reconsidering regulations such as certificates of need for medical facilities; and by allowing physicians’ assistants to treat patients for more of their needs.
Walden’s arguments were echoed by Bob Ingram, vice president for pharmaceuticals at GlaxoSmithKline, who said increased usage of health care services was good.
“We have more Americans living longer and longer lives,” he said. “We’re using a lot more medicines today. It’s no wonder we focus a lot more on the costs of medicine.”
Ingram said that only 11 percent of annual health care cost go to pharmaceuticals, but within a few years could go as high as 25 percent. “My reaction is, that’s good,” he said.
He noted the improvements in treatment of several diseases, especially AIDS and cancer, as justification for the massive research and development costs that drug companies invest. He said that attempts to impose price controls on the industry, as is done in Canada and many European countries, would be a mistake.
“Investment capital will come out of our industry,” Ingram said, adding that research would diminish as a result.
The forum was held on the same day that the John Locke Foundation released a policy paper on North Carolina’s rapid growth in Medicaid costs. The study found that “the state’s costs are noticeably out-of-line with its neighbors and economic competitors.”
The foundation said the state has a variety of options for cutting costs, including reductions in eligibility, services, and reimbursements to providers, as well as privatization of some coverage.
Also, yesterday state Sen. Robert Pittenger, a Charlotte Republican, introduced in the General Assembly a bill that would place limits on awards in medical malpractice lawsuits. The legislation provides for a $250,000 cap on non-economic damages and limitations for attorney’s fees in such cases. The entire Republican Senate caucus co-sponsored the bill, as did Democrat Sens. David Weinstein and Larry Shaw.
“It is imperative that North Carolina act now with meaningful reforms to insure that we have access to physicians and they are able to continue their practice,” Pittenger said.
He said the bill was modeled after legislation passed in Texas two years ago, which has reduced litigation in that state by 60 percent and produced a 17 percent reduction in insurance premiums paid by physicians, based on Congressional Budget Office figures.
Paul Chesser is associate editor of Carolina Journal. Contact him at [email protected]. Contributing editor Joe Coletti assisted with this report.