An unleashed demand for health care services

It slipped by so fast that I almost missed it.  It wasn't, after all, the main point of this news report by NPRs John Ydstie on All Things Considered.  It was on the economy as a whole.  Here's the audio recording.

Listen at minute at 2:57 and hear the story of the one growth area of the economy:

It looks as thought the advent of Obamacare and the provision of insurance to people who previously didn't have it has unleashed demand for health care services that simply wasn't there before.

In fact, spending on health care grew in the first three months of the year at an astonishing annual rate of nearly 10%.

This is no surprise to many of us.  As we saw in Massachusetts when universal access was provided, if you give people health insurance, they will use it.  In fact, at heart, that's why we want to give them insurance.  In the past, people without health insurance would avoid important visits to the doctor, or important visits to the hospital, or important consumption of drugs.

There are some who might argue that the fee-for-service rate design by which many providers get paid accounts for this.  But, no.  There is actually less fee-for-service care than there was in the past, as a number of insurers and providers have moved to more risk-based payment plans.

There are some who might argue that consolidation in the health care industry accounts for upward price pressure.  While that should be a concern over the coming years, I don't believe that it has yet had the full effect that it will.

No, what's happening now is much more simple.  People are going to the doctor sooner when they have symptoms.  Some portion of those people are sick and need more extensive care.  In the past, this group would not have gone to the doctor, and they would not have gotten the extensive care.  Some percentage would have gotten sicker and sicker at home and eventually would have shown up in emergency departments.  Without the full course of treatment they are now getting as insured patients, we would have "saved" a lot of money in treatment. Some, though, would have died prematurely or suffered from extended morbidity.

Others are having regular preventative diagnostic tests, like mammograms.  Early detection of breast cancer results in earlier treatment--radiation, surgery, chemotherapy--adding to the nation's health care bill.  (We saw this in Massachusetts.)  In the past, their disease would not have been noticed until it was too late, again "saving" a lot of money in treatment.

The human cost under the old regime was unconscionable, and we have done the correct thing to give people access to insurance and care.  The dollar cost, though, had to increase.

The problem here is not the result.  The problem was that the Administration, as part of its political strategy to get the legislation passed, glossed over this fact.  In fact, the promise was that access to insurance would be paired with lower costs.  The Administration's plan, all along, was that these costs would be covered by the imposition of a value-added tax.  But the political environment has changed, and the chance of such a tax is very low.  So the tension between access and costs will grow.  Over time, choices will be made.

In the short run, the solution imposed will be to charge consumers directly for a greater portion of their health care costs, with high deductible health plans (HDHPs).  This direction creates important issues and can interfere with our achievement of several of the Institute of Medicine's six aims of care--safe, effective, patient-centered, timely, efficient and equitable.  As the American Academy of Pediatrics notes in this policy statement:

Because HDHPs require out-of-pocket payment in the initial stages of care, primary care and other outpatient services as well as elective procedures are the services most affected, whereas higher-cost services in the health care system, incurred after the deductible is met, are unaffected. HDHPs promote adverse selection because healthier and wealthier patients tend to opt out of conventional plans in favor of HDHPs. Because the ill pay more than the healthy under HDHPs, families with children with special health care needs bear an increased cost burden in this model. HDHPs discourage use of nonpreventive primary care and thus are at odds with most recommendations for improving the organization of health care, which focus on strengthening primary care.