THE COST CONUNDRUM
By Atul Gawande/ The New Yorker
Monday, June 1, 2009
It is spring in McAllen, Texas. The morning sun is warm. The streets are lined with palm trees and pickup trucks. McAllen is in Hidalgo County, which has the lowest household income in the country, but it’s a border town, and a thriving foreign-trade zone has kept the unemployment rate below ten per cent. McAllen calls itself the Square Dance Capital of the World. “Lonesome Dove” was set around here.
McAllen has another distinction, too: it is one of the most expensive health-care markets in the country. Only Miami-which has much higher labor and living costs-spends more per person on health care. In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average. The income per capita is twelve thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average person earns.
The explosive trend in American medical costs seems to have occurred here in an especially intense form. Our country’s health care is by far the most expensive in the world. In Washington, the aim of health-care reform is not just to extend medical coverage to everybody but also to bring costs under control. Spending on doctors, hospitals, drugs, and the like now consumes more than one of every six dollars we earn. The financial burden has damaged the global competitiveness of American businesses and bankrupted millions of families, even those with insurance. It’s also devouring our government. “The greatest threat to America’s fiscal health is not Social Security,” President Barack Obama said in a March speech at the White House. “It’s not the investments that we’ve made to rescue our economy during this crisis. By a wide margin, the biggest threat to our nation’s balance sheet is the skyrocketing cost of health care. It’s not even close.”
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Coordinated Care Facts
In 2007, Medicare Advantage saved seniors nearly $90 per month or $1000 per year in out of pocket costs. An estimated savings of approximately $7 billion annually. Additionally, compared to traditional Medicare, Medicare Advantage plans can reduce out-of-pocket costs by up to $4,000 annually for patients with the highest healthcare needs.
- Comprehensive Care: Patients receive integrated treatment plans, and expert case management and disease prevention strategies for the chronically ill.
- Cost-Effective Care: Integrated medical groups are able to support investments in advanced healthcare information technology, tracking patient follow-through on treatment plans and patient outcomes, and helping to uncover health problems before they become catastrophic.
- Accessible Care: Efficiencies within the coordinated care delivery model mean better healthcare for more seniors, including:
• lower out-of-pocket costs
• increased health services such as dental care, vision care and preventive care
• reduced hospitalizations
• increased prescription coverage
• higher overall satisfaction rates
• greater value for the premium dollar than any other healthcare delivery system
What’s At Risk
If Medicare reforms dismantle incentives for coordinated care, seniors will experience significant increases in out of pocket costs - at a time when many seniors have seen their retirement account’s decline by over 40 percent in value — and decreased quality of healthcare.
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