Controlling Health Care Costs through Public, Transparent Processes: The Conflict between the Morally Right and the Socially Feasible

By Orentlicher, David | Journal of Corporation Law, Summer 2011 | Go to article overview

Controlling Health Care Costs through Public, Transparent Processes: The Conflict between the Morally Right and the Socially Feasible


Orentlicher, David, Journal of Corporation Law


I.   INTRODUCTION
II.  THE HEALTH CARE COST PROBLEM
III. INADEQUATE STEPS TO CONTAIN COSTS IN THE AFFORDABLE CARE ACT
IV.  PUBLIC, TRANSPARENT PROCESSES TO CONTAIN COSTS
V.   PAST FAILURES OF PUBLIC, TRANSPARENT PROCESSES
VI.  COST CONTAINMENT THAT CAN WORK
VII. CONCLUSION

I. INTRODUCTION

Assessments of the Patient Protection and Affordable Care Act (Affordable Care Act) (1) echo a common theme: the legislation does much to provide health care coverage for the uninsured, but it does far less to contain health care spending. According to projections by the Congressional Budget Office, the Affordable Care Act will ensure that 94% of Americans are insured by 2019. (2) On the other hand, the inflation rate for health care costs will change very little. Instead of increasing by 6.8% per year between 2015 and 2019 without the Affordable Care Act, health care costs are expected to increase by 6.7% per year during the same time period under the Act. (3)

To be sure, the emphasis on increasing access over cutting costs is not unique to the Affordable Care Act. President Lyndon Baines Johnson and Congress employed the same strategy when they enacted Medicare in 1965, (4) and Massachusetts followed suit when it passed its health care reform in 2006. (5) As a political matter, it is much easier to provide new entitlements than to curtail benefits.

The option of kicking the cost problem down the road cannot continue indefinitely, and policy experts have given much thought to options for containing health care spending. (6) As I will argue in this Article, a key element of leading proposals for cost containment is morally important but socially infeasible. Specifically, scholars regularly--and rightly--recommend a public, transparent process for deciding when health care will not be covered by public or private insurance. (7) If people will be denied medical tests or treatments that might preserve their life or maintain their health, we ought to ensure that all members of society have a voice in the decision making process.

However, while broad public participation serves important principles of justice, it also breeds intolerable public conflict. (8) When Americans try to make choices about access to life-preserving medical care, public, transparent processes fail. (9) Either those using the process never make the difficult choices that are needed, the difficult decisions that are made unravel and are abandoned, or the decision making process itself is discarded. (10) This is the lesson of Medicare funding for dialysis, (11) the Oregon Health Plan, (12) managed care, (13) certificate of need legislation, (14) the effort in 2009 to revise guidelines for breast cancer screening, (15) and the National Institute for Health and Clinical Excellence (NICE) in the United Kingdom. Accordingly, we need to identify alternative strategies for cost-containment that can succeed and that can satisfy, as nearly as possible, the principles of justice. In other words, we need to pay greater attention to social constraints on rationing in deciding which rationing policies to adopt.

II. THE HEALTH CARE COST PROBLEM

Inexorably increasing spending on health care has captured the attention of policy experts and policy makers for decades. (16) Sharply rising health care costs led Congress to promote managed care via the Health Maintenance Organization Act of 1973, (17) and President Jimmy Carter made cost containment the center of his unsuccessful efforts to reform the U.S. health care system in the late 1970s. (18) Managed care appeared to make important inroads into health care cost inflation during the 1990s, when health insurance premiums experienced annual increases as low as 0.8%. (19) Public rejection of managed care's cost-saving strategies, however, was followed by the more typical pattern of substantial premium increases, with double-digit percentage increases by 2001. (20)

Health care spending now consumes more than 17% of U. …

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