HISTORY

In recent decades, significant advances in the U.S. health care system have helped people live longer and better lives.  In fact, both mortality and disability rates have fallen consistently since the 1970s.  This period has also, not coincidentally, seen substantial increases in health care spending.

In 2007, employers faced another year of increases in the cost of providing medical benefits; premiums rose by 6.1 percent in 2007 and are expected to increase again in 2008. According to a 2007 survey by the Kaiser Family Foundation, many employers indicate that they expect to make significant changes to their health plans and benefits in 2008, with 21 percent of firms saying they are “very likely” to raise workers’ premium contribution this year.

A number of factors contribute to high medical costs:  medical liability insurance premiums have risen by more than 500 percent; the number of state coverage mandates has risen exponentially, now numbering more than 1,800; and utilization of medical services and treatments is high, driven by consumers' insulation from overall costs.  Recent studies have also pointed to chronic disease as a cost driver.  Some estimates suggest that health care spending on chronic diseases accounts for up to 75 percent of health spending.

Washington lacks a comprehensive dialogue on health care spending and investment in the United States. However, all too often, health care discussions in Congress and elsewhere center on the substantial increase in per-person spending on health care during this period, with little attention given to the commensurate gains in health and longevity due to increased investments in health care.

A focus on cost as a problem overlooks the value that patients and society in general derive from improved health. While costs are undoubtedly an important part of the health care debate, they should be considered in the context of the benefit achieved.

For example, in the past 20 years, each additional dollar spent on health care services produced health gains valued at $2.40 to $3.00.  Though annual age-adjusted per person health care costs between 1980-2000 increased by $2,254 (102 percent), this was accompanied by significant health gains such as the fact that annual death and disability rates declined, and a key measure of population health, the number of days in the hospital, declined from 129.7 to 56.6 per 100 persons.

Simply put, without the investment in health care that brought about these health care improvements, the U.S. would have experienced 470,000 more deaths, 2.3 million more people with disabilities, and 206 million more days spent in the hospital.
To help educate Congress, the media, and the public regarding the underlying value of medical innovation, HLC and six other leading health care associations, commissioned a study by MEDTAP to investigate the benefits to society that have come as a result of increased health expenditures.

The MEDTAP study, "The Value of Investment in Health Care," suggests that the value of improved health in the U.S. population over the past 20 years significantly outweighs the additional health care expenditures that accompanied the improvements. The study was commissioned by the Value Group, comprised of HLC along with, among others, American Hospital Association, AdvaMed, and PhRMA.  The report asks and answers a question that often goes unaddressed in the debate over health care costs: Is our increased health care spending worth it? The definitive answer is "Yes."

Despite rising health care costs, state legislatures and Congress continue to consider legislation that will add to health care costs.  During the 110th Congress, the House and Senate have begun consideration of mental health parity legislation to provide parity to health insurance coverage of mental health benefits and benefits for medical and surgical services.  In September 2007, the Senate passed the “Mental Health Parity Act,” by unanimous consent. The legislation was supported by a coalition of employer groups and mental health advocates. By contrast, the three House committees of jurisdiction (Education and Labor, Energy and Commerce, and Ways and Means) reported legislation, H.R. 1424, the “Paul Wellstone Mental Health and Addiction Equity Act of 2007,” which was opposed by employers.  The House was unable to complete action on H.R. 1424 before adjourning in December, in part because of the legislation's cost ($3 billion over 10 years).

In the past, Congress has enacted legislation to help curb health care spending on chronic diseases while still increasing quality. The “Medicare Prescription Drug, Improvement, and Modernization Act of 2003” (MMA) established a program aiming to improve quality of care and beneficiary satisfaction through development, testing, evaluation, and implementation of Medicare Health Support Organizations (MHSOs), or chronic care improvement programs.  Initial results reveal high interest in the MHS program and have been positive.  In February 2006, CMS announced that more than 100,000 participants had enrolled in the MHS program.   

However, though increasing health care costs have spurred some positive actions and prevented passage of some harmful measures, the mere fact of cost alone has not been enough to propel Congress to act on some of the factors contributing to rising health care costs, such as the need for medical liability reforms.


THE FUTURE

With popular support for measures such as pharmaceutical importation and price controls, as well as potential budget cuts for providers, Congress demonstrates that the value of health care investment is an ill-understood concept. As measures like these would dramatically affect the nationwide investment in health care, questions about health care costs and the value of investment in health care likely will be included in the dialogue about these proposals.

In addition, congressional consideration of costly health coverage mandate bills may well add to the cost of health coverage.  In evaluating these proposals, Congress must remember the physician's edict, "First do no harm."  When considering legislative proposals, it must first reject any that would result in increasing the health care cost burden.  Mandates on employers and health plans must be rejected. In addition, Congress must do act to decrease costs. Reforms to address the crisis in medical liability costs must be a priority, and chronic care management efforts must continue to be supported.

Health care organizations are certain to be active participants in the continued dialogue about health care costs and value. The future of our nation's health system depends on it.