When Cure Is Worse Than Disease

Health care costs are soaring – again. In his latest Against the Grain commentary, CBSNews.com's Dick Meyer says that the last time this happened, the cure was worse than the disease.

"Health-Care Spending Rises 8.7%, Fastest Expansion in 10 Years," ran the headline in The Wall Street Journal. I quake -- and not because I'm a deeply informed health policy wonk and really understand what this stuff means.

I worry because I remember reading the same headlines in the late 1980's and early 1990's. And I remember what happened next. The Hillary Commission. Managed care. HMOs. PPOs. PDOs. Before then, the only O I had ever heard of was in UFO.

So I wonder what's going to happen this time. The government report on 2001 health spending said something is bound to happen, "Historically, increases of this size have been closely followed by government policy changes or private sector initiatives to put the brakes on health care spending growth." Uh-oh.

The Republicans know exactly what they want to do to control the growth of health care spending; they want to make Medicare and other public programs more like private, market systems. More like managed care. That's what scares me most.

But this latest report seems to weaken the case for privatizing public programs.

Managed care may have reined in health costs for a few years in the 1990s, but it was a one-shot deal. The idea that adding a layer of "management" to "care" could make the system more efficient permanently failed. "Managed care's influence has waned in the last few years, contributing to acceleration in hospital and overall health spending," according to the report, which was published in the journal Health Affairs.

Get this: in 2001, spending by Medicare increased by 7.8 percent, less than the measures of private health care spending. Health insurance premiums went up 10.5 percent and benefits were up 10.1 percent in 2001.

So why would putting more "managed care" in Medicare help control costs when it doesn't work in the private sector. And cost containment is the Republicans primary goal.

What managed care did bring us medical consumers in the real world was less choice, less personal attention, more bureaucracy and more confusion.

I also confess that I'm not entirely sure why growing health care costs are a problem by themselves, apart from the lousy policy changes they can precipitate.

In 2001, health care spending accounted for 14.1 percent of the gross domestic product, up from 13.3 percent in 2000. That's the largest increase in the record books.

Other countries spend significantly smaller slices of their economic pies on health care. In 2000, 10.7 percent of the Swiss GDP went to health care, 9.5 percent in France and 9.1 percent in Canada.

I would have thought, naively I guess, that spending a lot of money on health care is a sign of success and wealth, a worthy priority. Where better to blow some money?

Last year, Drew Altman and Larry Levitt of the Henry J. Kaiser Family Foundation published a short paper that showed that no policies to contain health care costs have ever worked. From the initiation of Medicare and Medicaid in the 1960s, to wage and price controls in the mid-1970s, to Jimmy Carter's "Voluntary Effort" in the late-1970s, to managed care and the threat of drastic, Clintonesque reform in the 1990's, nothing has held down health care costs.

Altman and Levitt suggest "that the apparent failure of all approaches reflects the American people's uncontainable desire for the latest and best health care, and that what we will do in the future is try small things that will work at the margin, complain a lot, but ultimately pay the bill."

And that's okay. Unreasonable expectations and complaining are the American way.

Dick Meyer, a veteran political and investigative producer for CBS News, is Editorial Director of CBSNews.com based in Washington.

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