During the past several years, health care costs have stopped rising at the rapid pace that has been the norm for decades. Their rate of growth is now below that of the economy, which, if the trend continues, means that health care spending will come down as a percentage of GDP. This would have a hugely beneficial impact on the national debt. However, before we start building rosy expectations into long-term budget projections, we need to know what is responsible for the current softening of health care costs.
The Obama administration says it’s Obamacare, because the slowdown began soon after it was passed. However, since it still hasn’t gone into effect — its official starting date is Jan. 1, 2014 — it’s a stretch to give it credit for events that preceded its inaugural. A government action that is more likely to have helped produce the change is Medicare Part D, the drug benefits.
Part D has surprised everyone by costing significantly less than was projected when it was passed. (How many government programs do you know of where that has been true?) Those of us who supported it believed that the wider use of drugs, for which Medicare previously did not pay, would help many older patients avoid more expensive treatment in hospitals, for which Medicare has always paid. We predicted that Part D would produce a net cost saving, and there is a significant amount of anecdotal evidence that says we were right.
Economists shrug at both these ideas, saying the slowdown in health care costs is simply a result of the recession. If our economy ever returns to previous levels of robust growth, they say, health care costs will start going up as fast as they always have.
I’m not convinced that that will be the case. A major reason costs have slowed down has nothing to do with the government or the recession. Innovative health care practitioners, through the use of “big data” techniques, are now pulling previously unknowable information out of health databases and becoming significantly more efficient.
For example: A few years ago, Intermountain Health Care wanted to reduce the rate of infection occurring following surgery in its hospitals, even though it was performing at or better than national averages. It used computer analysis to monitor all surgeries, looking for variables that might be causing the infections. It worked; the computers found procedures that prevented infections in every case where they had been used, something that no one doctor could determine from experience in a single practice. Intermountain immediately installed protocols that required that these procedures be followed and infections after surgery dropped by more than 80 percent. This one action alone has saved Intermountain’s patients more than $20 million a year, and there have been many more like it.
The idea that the best method of cost control in health care is quality is not just a theory. President Obama cited Intermountain and the Mayo Clinic as two examples of organizations that have proven it to be the case.
No one can be sure that the economists won’t be proven right, that health care costs won’t start to soar again when the economy picks up steam. However, I believe that innovative leaders in health care, some of whom are right here in our own backyard, can make higher quality and lower costs the new normal. I hope so, because the old normal is unsustainable.
Robert Bennett, former U.S. senator from Utah, is a part-time teacher, researcher and lecturer at the University of Utah's Hinckley Institute of Politics.