Taming the Beloved Beast: How Medical Technology Costs Are Destroying Our Health Care Systemby Daniel Callahan
Technological innovation is deeply woven into the fabric of American culture, and is no less a basic feature of American health care. Medical technology saves lives and relieves suffering, and is enormously popular with the public, profitable for doctors, and a source of great wealth for industry. Yet its costs are rising at a dangerously unsustainable rate. The
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Technological innovation is deeply woven into the fabric of American culture, and is no less a basic feature of American health care. Medical technology saves lives and relieves suffering, and is enormously popular with the public, profitable for doctors, and a source of great wealth for industry. Yet its costs are rising at a dangerously unsustainable rate. The control of technology costs poses a terrible ethical and policy dilemma. How can we deny people what they may need to live and flourish? Yet is it not also harmful to let rising costs strangle our health care system, eventually harming everyone?
In Taming the Beloved Beast, esteemed medical ethicist Daniel Callahan confronts this dilemma head-on. He argues that we can't escape it by organizational changes alone. Nothing less than a fundamental transformation of our thinking about health care is needed to achieve lasting and economically sustainable reform. The technology bubble, he contends, is beginning to burst.
Callahan weighs the ethical arguments for and against limiting the use of medical technologies, and he argues that reining in health care costs requires us to change entrenched values about progress and technological innovation. Taming the Beloved Beast shows that the cost crisis is as great as that of the uninsured. Only a government-regulated universal health care system can offer the hope of managing technology and making it affordable for all.
Beryl Lieff Benderly
Leslie R. Pyenson
Recommended Reading, 2011 James A. Hamilton Award, American College of Healthcare Executives
"No one who comes to Taming the Beloved Beast with an open mind can deny the intellectual and ethical power of the questions he poses. He probes issues central to resolving the enormous problems and inequitiesnot to mention the looming financial threatsthat bedevil American medical care."Beryl Lieff Benderly, Science
"While bringing insightful ethical, social, political and economic perspectives to this timely, well-documented discourse of the ballooning costs of American health care and Medicare, Callahan concentrates on the growing costs of medical technology, which, along with uncontrolled governmental healthcare spending, threaten to drag this country into financial crisis. . . . This excellent overview of reaching the goal of universal health care is a good resource for anyone concerned with the future of health care and its economics."Library Journal
"The rising cost of health care has preoccupied policy makers and the public for decades. Callahan contends that the principal cause of rising costs lies in Americans' infatuation with new medical technologies. . . . Callahan argues that the U.S. must rethink the goals of medical technologies and accept new limits on the availability and appropriate use of expensive medical treatments."Choice
"This book reflects the author's expertise not only as a researcher but also as a philosopher. He presents his arguments, discusses alternatives, and anticipates counterarguments, all with ample citations. . . . [T]his book will engage readers seeking to gain insight on health care reform and cost control from the perspective of a pragmatic philosopher."Leslie R. Pyenson, Psychiatric Services
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Taming the Beloved BeastHow Medical Technology Costs are Destroying our Health Care System
By Daniel Callahan
Princeton University PressCopyright © 2009 Princeton University Press
All right reserved.
Chapter OneMEDICARE ON THE ROPES
Few government programs have been as popular as Medicare. Its reputation is a triumph in a country prone to think poorly of government and of the regulations, waste, and bureaucracy widely believed to be its bastard child. It is hardly a perfect program, yet it has endured for over 45 years, and, save for some strong market advocates, only a few propose that it should be significantly changed, much less abolished.
Yet along with American health care more generally, Medicare is coming into increasingly difficult, even threatening, times. The health care system, of which Medicare is a key part, is beset by an excessive rate of cost escalation (now about 7% a year). Although it has controlled costs better than the private sector (a 1%-2% annual advantage), Medicare's costs are rising as well. And to create a twin threat, those costs are rising just as millions of the baby boom generation are moving into their retirement years. Medicare's budget is projected to climb from its present $427 billion in 2007 to $884 billion in 2017. A Fidelity Investments study concluded that a 65-year-old couple retiring in 2008 would need $225,000 in savings to cover medical costs in retirement, encompassing co-payments and deductibles, Medicare-premiums, and out-of-pocket prescription costs.
Although Medicare is my point of departure, its vitality (not necessarily its mere survival) is heavily dependent upon the fate of American health care more generally. The future of both will depend upon their mutual capacity to control costs. An important element in managing the cost escalation problem will depend upon the American willingness to rein in its long-stranding commitment to unlimited medical progress and technological innovation as its cherished outcome. I use the word "willingness" to indicate the importance of a change of both will and outlook, requiring a concerted moral and social drive in a fresh direction. The word "ability" is meant to underscore the difficulty, in the face of many competing interests, economic and cultural, to effect what even the most concerted drive for reform seeks. As Marilyn Moon, a longtime analyst of Medicare, put it: "the patterns of spending growth are very similar to and often below those of private insurance ... [But] Medicare (and Medicaid) cannot be successful in holding down costs over the long run if healthcare spending in general is escalating.... Medicare's size also increases the responsibility to the overall financial health of the healthcare system."
MEDICARE'S DILEMMA: MORE MONEY OR LESS?
For all of its popularity, Medicare has always had problems and critics. Its benefit structure rewards the use of technologies and those physicians who deploy them. It is heavily focused on acute care medicine, which it generously covers. It does not provide anywhere near decent coverage for prevention, talking with patients, and good primary care. As the geriatrician Christine K. Cassel has emphasized, it fails to provide coordinated treatment management and to address "the growing importance of self-care, chronic care, and low tech approaches to support quality of care and to reduce suffering." Another important geriatrician, Muriel Gillick, has pointed out that "if Medicare is a good program for robust elders, it is profoundly inadequate for people who are frail or nearing the end of life." If care of the chronically ill is a weak point, there is also persistent underfunding of Medicare's administrative structure. Attempts to move Medicare as an agency from one that pays the bills to an active manager of improved health have been thwarted by its skimpy staff and various other limitations built into the program.
Medicare has always faced an obvious dilemma: to fulfill its original promise, it needs more money to improve administratively as a federal agency and to strengthen the quality and scope of its coverage, all the while trying to hold spending down. Higher quality and lower costs, that win/win combination, are not inconceivable, but at times look like the health care version of squaring the circle.
If Medicare faces a range of problems now, it is remarkable that it came into existence at all. In the years prior to its 1965 passage, it faced considerable resistance in Congress, lobbied against by the American Medical Association and many business groups. As the political scientist Jonathan Oberlander succinctly summed up the situation: "During the 1950s and early 1960s, Medicare emerged as a polarizing issue in American politics. Its legislative history bore the markings of a deeply ideological and partisan debate that reflected persistent divisions over the failed national health insurance proposals of the Truman administration." All that changed rapidly with the 1964 elections and the advent of liberal democratic majorities in the House and Senate. When Medicare was launched by Congress, it was met by great public acclaim. If for many it was seen as prelude to universal health care, which did not happen, the program was itself a remarkable piece of legislation, overcoming deeply entrenched political opposition.
Once underway, Medicare enjoyed a long era, from 1965 to 1994, of bipartisan support and consensus, encouraged in great part by its popularity. From time to time the program had to cope with budgetary pressures to limit expenditures, on one hand, and political pressures to improve its benefits, on the other. The latter pressures were particularly strong because of gaps in the program (e.g., an absence of drug coverage) but also because of public opinion that pressed for benefit expansion, especially with the political force of elderly interest groups behind it.
A 1986 poll showed that 80% of the public supported Medicare expansion, even wanting more long-term care (covered by Medicaid). Nor was that just an expression of hope. The polls also overwhelmingly showed that the public was willing to accept a tax increase to bring the improvements about. Even so, program benefits remained more or less unchanged over the years. Yet from the start, Congress was worried about the cost of Medicare, which soon came to seem out of control to many of its members. Unable to stop the cost increases of the program, cost containment as a priority triumphed over program improvement. One result was the development of private Medigap insurance, most of it limited to coverage of co-payments and deductibles, an initiative that relieved Congress of some of the pressure to improve benefits.
Over time, however, out-of-pocket per annum payments by the elderly for their health care increased and are now over $5000 on average and as high as $9000-10,000 for some. By 2003, the median Medicare beneficiary was spending 15.5% of income on health care, up from 11.9% in 1997. The government's share of Medicare beneficiary costs is about 60% coverage, although 75-80% is the rough standard of adequacy for private sector coverage. Even so, Medicare has remained remarkably popular. It may well be that the security it offers more than makes up for its many shortcomings.
By the mid-1990s, the era of consensus was over. The earlier era was based on acceptance of the idea that Medicare would be a single-payer program resting on liberal principles, notably the conviction that it should be a social insurance program applicable to all the elderly, rich or poor, and highly resistant to means testing. The 1994 elections, with Republicans capturing both houses of Congress, reintroduced many of the partisan and ideological battles that had marked the era just before the introduction of Medicare. The drive to privatize the program took its first strong steps in the late 1990s, and it was combined with efforts to cut taxes and to reduce Medicare expenditures.
As it turned out, Medicare survived those years more or less intact. If liberal Democrats over the years could not improve Medicare benefits, a single-minded Republican and conservative assault could not seriously cut them. Why not? The best answer seems to be a potent combination of the popularity of the program, a wide range of financial and other interests favoring the status quo, and a pervasive nervousness about tampering with the program. "Both Democrats and Republicans know," David A. Hyman has written, "they are unelectable if they speak candidly about the economic problems facing Medicare. Republicans accordingly package their reform proposals as attempts to 'modernize' the Medicare benefit package and offer beneficiaries more options. Democrats focus their efforts on price caps and prayer." That is a colorful exaggeration but on target. Christine Cassel makes a related, but no less frustrated, point: "Reformers are looking more toward incrementally adjusting benefits and deductibles, like a commercial insurer, than toward organizing to fulfill a vital public mandate."
IS THERE A MEDICARE CRISIS?
As the global warming debate constantly reminds us, there is hardly any alleged social, political, or environmental threat that does not have its contrarians. However strong the general consensus of coming dangers, there are those who either question them, downplay them, or deny them altogether. The future of Medicare is no exception. Alternatively, the threat may be conceded, but pessimism rejected: with a little ingenuity and a strong will, solutions can be found. Pious hope can replace overwrought pessimism.
It is not at all difficult to be a contrarian. Long-term financial and demographic projections are always uncertain. Who foresaw the baby boom generation coming in the 1930s? Medical cures and breakthroughs, of great importance in charting future costs, cannot be predicted: think of the discoveries of penicillin as well as other antibiotics and antivirals, radically reducing deaths from infectious disease. Or, for that matter, recall that just as infectious disease seemed by the 1970s to be conquered, antibiotic resistance and AIDS emerged, now threatening to overturn the earlier medical victories. And of course, Medicare itself has over its history faced many alleged budgetary "crises" but has managed to muddle through, sometimes stronger, sometimes weaker.
There are a number of reasons now to take the problem of credibility with particular seriousness. There is the clearly visible 7% annual cost increase with no end in sight. And the baby boom generation is, so to speak, already in the pipeline, waiting to retire, and to start flowing at a rapid and increasing rate after 2010, with horrendous projections by 2020 and even worse ones by 2030. Michael Leavitt, Secretary of the Department of Health and Human Services at the end of the Bush administration, was no contrarian. In an address in April 2008 he bluntly said that "Medicare is drifting toward disaster." "It troubles me," he added, "that this matter is not receiving more attention in the presidential candidates' discussion."
If Medicare faces a dire situation in the next 10 years or so, then steps must be taken now to drastically reform the program. It will be too late then-or too late to put in place anything but last-minute draconian stop gaps. But hardly anything is harder in politics and social policy than to take present steps to avert future dangers, and all the more if the needed reforms themselves will be demanding, even painful. Not much contrarian skepticism or opposition, even if it is a tiny minority voice, is needed to make the solution of present problems, not future ones, the default option. "Delay," the economist Peter Heller has written, "exposes societies to far greater risks than if the inevitable adjustment has been anticipated and implemented much earlier.... so governments ... need to take much more explicit account in the near term of the potential fiscal consequences of long-term developments, despite the uncertainties that surround them."
Moreover, if the argument of this book is plausible-that nothing less than a rethinking of some fundamental values is needed-then a strong consensus indeed will be necessary to deflect attention away from the organizational and management schemes that presently dominate mainline American reform efforts: just make the system work better. That kind of approach is a dead end, but a pursuit of such efforts can be likened to one of the endemic problems of end-of-life care, that of embracing hope and unlikely treatments and of refusing to grant the obvious fact that the patient is dying. Do not give up: provide one more round of chemotherapy. Do not give up: provide one more effort toward improving the efficiency and cutting waste in the health care system.
THE PESSIMISM OF THE MEDICARE TRUSTEES
The most pessimistic judgments on Medicare's financial problems have always come from the Trustees of its Trust Fund. Because the program still exists over 40 years later, it is not hard to become wary of, even jaded by, the traditional hand-wringing of its Trustees. For much of its history, the Medicare Trust Fund has projected a long-term deficit. At some future point, the Trustees have repeatedly said, its expenses will outrun its income (from payroll taxes in the case of hospital care, part A). But it has presented a peculiar kind of problem: the projected date of bankruptcy has fluctuated over the years, always pushed back to a later date. In 1966, the estimated date of exhaustion was 1990, or 24 years. In 1986, the exhaustion date was 1997, 11 years to go. By 2006 the date moved to 2024, or 18 years. Now it is down to ten years. The source of the fluctuation has been a mixture of higher and lower government revenue, changing medical costs, and a regular dose of anxiety "crisis" politics designed to avert fiscal threats. The fact that Medicare has continued despite the dire forecasts is at least one reason why some commentators expect that it will continue doing so: whatever its problems, Congress will not allow Medicare to go under.
Once again the language of crisis is being used, but this time with greater urgency than in the past and repeating other recent warnings. The 2008 report of the Board of Trustees of the Federal Hospital Insurance Fund (Part A) said that "HI [hospital insurance] tax income began falling short of HI expenditures in 2004 and is projected to do so in all future years ... and fund assets are projected to be exhausted in 2019. ... Consideration of ... reforms should occur in the relatively near future ... We believe that prompt, effective, and decisive action is necessary to address these challenges." Medicare expenditures represented 2.7% of GDP in 2005, grew to 3.2% in 2006, and are projected to rise to 7.3% in 2035.
Echoing the Trustee anxieties, the Congressional Budget Office (CBO) has noted that, along with an increase in the proportion of GDP spent on Medicare, the number of beneficiaries has increased from 20 million in 1970 to 41 million by 2003, with an increase as well in their average age. Most notably, costs per enrollee grew at a rate 3% faster than per capita GDP. Another federal agency, the Congressional Research Office (CRS), combining Medicare and Medicaid projections, forecasts a rise from 4% of GDP today to 12% of GDP in 2030 to a staggering 21% in 2050. It notes that "relatively small tax increases or benefit reductions could return Social Security to long-run solvency." But it could offer no silver lining for Medicare and Medicaid: "to finance projected increases in spending ... would require tax increases of an unprecedented magnitude.... Under current policy, future generations will be made worse off by higher taxes or lower benefits."
To highlight this point further, the CRS notes that, short of serious reform, health care deficits will grow from 6.1% to 12.3% of the GDP by 2030 and from 14.3% to 35% in 2050-and adds that the United States has never had a peacetime deficit greater than 6%. The economic effects of even lower projections would do severe economic damage to the country, pushing it far beyond its borrowing and financing capacities. Moreover, with current policies unchanged, the Medicare Trust Fund will lack necessary resources well before the Fund is exhausted. Tax revenue is neither projected to rise nor costs projected to fall in any way sufficient to keep up with program spending.
Excerpted from Taming the Beloved Beast by Daniel Callahan Copyright © 2009 by Princeton University Press. Excerpted by permission.
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Leonard M. Fleck, Michigan State University
Alan B. Cohen, Boston University Health Policy Institute
David Cutler, Harvard University
Meet the Author
Daniel Callahan is senior researcher and president emeritus at the Hastings Center, which he cofounded, and an elected member of the Institute of Medicine of the National Academy of Sciences. His many books include "Medicine and the Market".
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