Getting Real With Health Care

Medical care is better than ever. Give technology the credit. Medical care is more expensive than ever. Hand technology the blame.

The presidential candidates are beginning to trumpet their solutions to the health care crisis, and all of them talk about cutting costs. None are willing to admit (assuming they know in the first place) that even if all their cost-cut plans are achieved, medical inflation won't be slowed enough to solve the health care crisis. Not by a long shot.

The reason is all the fantastic medical technology continually pumped out by the American capital system, which matches money with entrepreneurism better than anywhere else on the planet. It's wonderful stuff. Most of it works, and works great -- pharmaceuticals, biotech drugs, scans, limb replacements, defibrillators, genetic testing - it just keeps getting better. And that's the main reason medical inflation runs three times the general rate year after year, with no end in sight.

Why doesn't Moore's Law apply to medical technology? Because computer chips are only a small part of the equation. More important, there's no brake on pricing, because someone else is paying. If a $25,000 drug cures only 5 percent of a population with life-threatening disease, who cares, I want it, I might be one of the lucky few. Apply that attitude to the 77 million baby boomers moving into old age - and planning to stick around a lot longer than their parents ever did - and it's no wonder medical costs are moving toward the impossible: the 7 percent of total wages that go to employee benefits today will hit 60 percent in 20 years, if current trends continue. The supply of technology is not going to stop. The demand, absent better price mechanisms, won't stop either.

What to do? Those who want universal health care would put the government in charge of putting on the brakes. Good luck.

The free-marketers want health care consumers to begin making better choices about buying health care. They're thinking in the right direction, but most are pretty crude about it. James Robinson, a corporate health policy expert at the University of California-Berkeley, says anyone who thinks the average patient is in a position to decide what kind of scan to get or what drugs they should take based on a balance of price and efficacy is smoking crack. He didn't say the smoking crack part, but that's what he meant. "When we buy a car, we buy a car. We're not expected to choose the spark plugs," he says. "The manufacturer does that."

What we need, he says, is a real menu of health care packages, so people can choose from a variety of programs matching their needs with their ability to pay, from basic Mazda to luxury Mercedes. Employees (and the government, for the uninsured) can decide what packages they'll provide for how much. This puts economic choice in the hands of consumers, without forcing them to make specific medical choices they are ill equipped to make. And it would allow everyone to be covered by the basics.

Only consumers have the "social legitimacy" to make such decisions, says Robinson. But his realistic approach means that people with a lot of money will be able to afford better health care than people with only a little money. It means hard choices. No wonder the candidates aren't talking about it.

--Russ Mitchell