The cost of health care is rising faster than American earnings, taking a bigger percentage of national incomes every year. Coupled with entitlement programs, it can lead to a national fiscal disaster, forcing Americans to choose between doctor visits and other essentials services, said Alice Rivlin, a visiting professor at Georgetown University and Fellow at the Brookings Institute.
Rivlin delivered the annual Getzen Lecture on Government Responsibility, sponsored by the School of Public and International Affairs and the public administration and policy department. During her talk, entitled “Facing Up to the Fiscal Challenge of Health care Spending,” Rivlin laid blame on Medicare and Medicaid as the two biggest spending crises facing the nation.
“Medicare and Medicaid costs are dominated by the elderly and disabled simply because they are expensive to treat,” she said. “If the situation is not fixed, we will have to make some very painful choices—we can raise taxes a lot or close down the rest of the government or break promises made primarily to our senior citizens,” she said.
Rivlin, who co-authored the upcoming Restoring Fiscal Sanity in 2007: The Health Care Spending Challenge, said the solution lies in reforming the current health care system to cut down on inefficiencies and building a public-private partnership program.
“The government needs to use its market power to renegotiate for better deals, use a bidding system to get prices down,” she said. “It needs to mandate improvements in technology, including portable medical records that patients can take from one doctor to another. We need to improve the health care delivery system by adding incentives to perform lower-cost treatments and utilize better environments, like hospices. . . and devise better ways to treat high-cost patients.
“The government could collect and provide better clinical information,” she added. “Medicare itself is a huge database, which could be used to fine-tune treatments for broad populations and cut down on ineffective prescriptions. We have some data that suggests that if all hospitals were doing what the best ones are doing, we could cut spending a lot.”
Rivlin also punched holes in other theories, explaining why popular ideas of tort reform and curbing drug company profits won’t provide much lift on health care prices.
“Malpractice insurance is expensive . . . but it accounts for only 2 percent of doctors’ expenditures throughout the year . . . Promoting healthy lifestyles? Yes, it would help, but it’s very difficult to get people to stop smoking and lose weight,” she said. “Another point is that we healthy seniors tend to live longer, which draws out payments over longer periods.
“If you think there are easy answers to this problem, then I invite you to leave now, because there really aren’t,” she said. “Unlike some other problems, you can’t just solve this once and for all.”