When an issue hits the front page above the fold in USAToday, you can be certain it is a crisis. Today’s paper features the looming crisis in health care, noting recent rapid rises in costs have outstripped wage increases.
The article does a good job of presenting the facts and is fairly objective, despite the somewhat alarmist headline. Notably, it does mention that governmental programs will account for just under 50% of total health care spending in 2014 (up from 45% in 2003). This is a scary number, and is the main driver behind the recent activity on Capitol Hill.
USAToday’s source was CMS’ annual report, which was the subject of numerous articles in other papers. According to California HealthLine,, in the report, the CMS analysts said that public health care expenditures in 2014 will represent “a record share that could have important implications for the budget as a whole” (AP/St. Petersburg Times, 2/24). According to CMS analysts, “barring enormous tax increases,” public health care spending in 2014 “would crowd out virtually all other spending except for the military and interest on the national debt,” the Raleigh News & Observer reports (O’Rourke, Raleigh News & Observer, 2/24
Paul Ginsburg, president of the Center for Studying Health System Change, said, “This is going to lead to continued erosion of health insurance coverage,” adding that rather than pay increased health insurance premiums, “low-income workers would just as soon have the money because they can’t afford to spend so much of their income on health care.”
Implications? Several…
In a talk at the Institute for The Future’s annual conference last year, I prognosticated (pessimisticaly) that it would be several years before the US was forced to do something about the uninsured. At the risk of now swinging too far to the “wildly optimistic” side, it appears that the stars may be forcing themselves into an alignment that favors some sort of national debate on the topic of health care costs, access, and coverage. That would be a very good thing.
More pragmatically, it is clear that the government cannot afford, or rather tax payers will not pay, the forecasted amounts. Inevitably this decision will lead to
–more uninsureds,
–slashed provider reimbursements,
–ever higher premiums,
–cost shifting to insureds from providers seeking to recoup lost revenue,
–higher medical costs for those fortunate enough to have private health insurance, and
—much higher costs for others whose care is paid by third parties (workers’ comp, auto, liability, etc.)
Not a pretty picture.

Testifying before Congress, Fed Chair Alan Greenspan (free registration required) noted that while Social Security is indeed at risk, Congress must address “far larger shortfalls in Medicare”.
However, Greenspan also noted that we are not yet ready to take on the task. According to California Healthline;
“However, he emphasized that despite the larger problems in Medicare, lawmakers “probably ought not to address the medical issue quite yet, until we get much further down the road in the advance in information technology in the medical area,” which could help reduce costs. He added, “If we do it now or even next year, I’m fearful we would be restructuring an obsolete model and have to come back and undo it.”
Greenspan’s comments agree with a report just released by the Employee Benefit Research Institute, which stated that Medicare will soon account for a “greater and rapidly growing share of the nation’s gross domestic product, sending Medicare into insolvency 23 years before Social Security,”.
EBRI says that Medicare’s nearly $28 trillion in unfunded liability is more than seven times Social Security’s $3.7 trillion.
The news here is individuals whose pronouncements are widely followed are finally talking about the real issue facing the economy – health care costs.
GM’s health care costs just went up by over a billion dollars. The uninsured population is increasing every year, and is now over 45 million. Medical trend rates in Property and Casualty insurance are the most significant driver of premium inflation. Health care costs for municipalities are now over $7000 per employee, leading to higher property and other taxes.
David Lazarus in the San Francisco Chronicle puts it this way. It is a “big mistake” that “Americans are talking about problems facing the Social Security system” while paying “little attention” to Medicare, San Francisco Chronicle columnist David Lazarus writes in his “Lazarus at Large” column.
Lazarus adds that most experts “believe that Medicare’s issues can’t be adequately addressed without overhauling the nation’s entire health care system.” (thanks to California HealthLine)
Perhaps, just perhaps, we are nearing the tipping point when real health care reform is possible.

HealthAdvocate is a relatively new company that is making a business (and by all accounts a fairly successful one) by helping consumers deal with the increasingly complex, frustrating, convoluted world of health care. I don’t have any personal experience with them, but their approach and business model makes sense.
They sell their services to employers, TPAs, insurers, unions, and other organizations as an add-on to employee benefit programs. The service, which is billed on a per employee per month basis of $1-$4, provides several benefits:
1. assists employees in locating health care providers with specific experience and expertise
2. negotiates with health plans for coverage and payment for specific procedures and treatment
3. facilitates claims handling by working with providers and health plans
As Tom Schell of Paradigm Health puts it, ” this type of service offering will be the norm in several years as companies look to get more bang out of their healthcare dollar — since it enables the users to maximize the coverage they currently have and increase the overall patient satisfaction level.”
I agree. “Consumerism”, patient-directed health care, and all the other “make the patient responsible for their own healthcare” efforts have one major obstacle – people are mystified, overwhelmed, and frustrated by healthcare processes and requirements. And it is not likely to get any better. The worse it gets, the more valuable HealthAdvocate and similar firms will become.