Opinion: Daily Journal

Health Care Honesty & Hooey

RALEIGH – Because health care expenditures, after a short plateau in the 1990s, are soaring back into the peaks of double-digit annual growth, medical services industriesare preparing for a major battle over payments and insurance coverage. Their lobbyists and political defenders will make a variety of arguments on their behalf. Some arguments will be honest and serious. Others will be hooey. Good luck figuring out the difference.

I am persuaded, for example, that restrictions on insurance coverage for prescription drugs have a great potential to be counterproductive. That is, if you keep a patient from an admittedly costly new drug therapy, you might save money in your “drugs” line item but only at the cost of higher spending for hospitalization when the patient develops more acute or even life-threatening symptoms.

Similarly, there might be an argument for insurance coverage of services like home health care for the disabled and elderly, though this is a rapidly growing and costly area, because the alternative would be for the patient to end up in the care of nursing home with an annual price tag of $50,000.

There is another side to the story, however. What if you can successfully treat a medical condition with a less expensive generic drug that nevertheless heads off hospitalization? What if it is so easy to qualify for home health care that patients who wouldn’t have otherwise ending up in nursing homes get coverage for nurse visitations and the like? In neither case have you saved money by extending coverage.

Notice that I haven’t mentioned the identity of the payer, yet. That’s because while these debates are occurring in both public programs like Medicare and Medicaid and in private insurance circles, the public ones offer the bigger problem. Private insurers have a profit incentive to offer coverage of preventive care or alternatives to hospitalization only to the extent that these investments “pay off” in the long run. Medicare and Medicaid don’t. They are political animals, subject to manipulation by the interest groups that actually receive their hundreds of billions of dollars in annual payments (hint: seniors and low-income people aren’t the groups I mean).

Unfortunately, with the increasing tendency of state and federal lawmakers to impose benefit mandates on private health plans, the latter’s decisions are becoming politicized, as well.

In North Carolina, these issues are critically important as policymakers search for hundreds of millions of dollars in annual savings in our Health and Human Services budget, primarily in Medicaid. Here are some recent pieces to read if you want to brush up on the debate:

• A May 7 column in The Wall Street Journal by Robert Goldberg that discusses the issue of price controls and restrictions on brand-name drugs.

• A news story in the same edition of the Journal on the issue of certificate-of-need laws, which impose artificial restrictions on the availability of hospital and nursing home beds on the grounds that it controls cost.

• A recent debate over government reimbursements for home health care, which you can read about here.