Reforming Health Care: The Paradoxes of Cost

Abstract:     
Whatever happens in Washington in the weeks and months ahead, the United States is fated for the indefinite future to conduct a prolonged and difficult national debate on health care. The reason for this protracted and arduous argument can be summarized in a single word: cost. Yet, paradoxically, the rhetoric of unspecified cost reduction is used to avoid the painful choices needed to prune health care outlays, choices which inevitably involve agonizing denials of medical services in a world of finite resources. Medical costs cannot be controlled without denying something to somebody. Yet, paradoxically the term “cost” is used in contemporary political discourse to avoid the difficult choices involved in such denials. It is easier to favor unspecified cost reductions, than to identify particular service denials which would actually reduce medical care expenditures. Elected officials are reluctant to deny medical services to cut costs, but health care costs cannot be meaningfully controlled without such service denials. Our employer-based system of medical care is a major reason we confront this difficult situation. Yet, again paradoxically, the employer-based system, though flawed, is the best tool available to us to control medical care costs since employers must respond to competitive pressures in the marketplace and thus are better positioned than is government to implement the painful service denials necessary to curb health care outlays. However, even under the best of circumstances, medical care costs are not a problem which will be solved but rather are a reality to be permanently and painfully managed and controlled.

Keywords: health care, cost, cost control, managed care, HMOs, employer-financed, Sarah Palin, Obama, Internal Revenue Code Section 79, Internal Revenue Cose section 106, ERISA, ERISA preemption, tax credits

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