Making health care reform add up
By Kay Torrance | Emory Report | Feb. 13, 2012
Our national debt and the cost of health care will increase sharply over the next 10 years if we maintain status quo, says Steven Lipstein, CEO of BJC Healthcare in St. Louis.
Lipstein gave his outlook on the economy and health care reform on Jan. 31 as part of Woodruff Health Sciences Center's Future Makers lecture series. Lipstein, who received his undergraduate degree from Emory in economics in 1978, oversees 13 hospitals, including two teaching hospitals affiliated with Washington University. Lipstein also chairs the board of directors of the St. Louis Federal Reserve Bank and is vice chair of the board of the Patient-Centered Outcomes Research Institute (PCORI), established under the Patient Protection and Affordable Care Act.
Lipstein put the current financial crisis in historical perspective. "We've been in a worse fiscal situation than today," he said. Paying debt from the Civil War took 50 years, and we didn't pay off World War II till about 1970. Paying down the current debt will take a long time as well.
To be sustainable, national debt, currently at 100 percent of gross domestic product (GDP) and rising, needs to be at a constant or declining ratio of no more than 60 percent of GDP, he explained. To achieve this 60 percent ratio in 10 years, cuts of $4 trillion are needed — a consensus figure agreed on by members of both political parties.
Lipstein blamed some of the current financial difficulties not on Republicans or Democrats but on increasing life expectancy, which was only 72 years when Medicare was created in 1965. Medicare currently can afford to provide coverage only about 15 years beyond age 65. Meanwhile, the current 47 million total of Medicare enrollees is expected to grow to 70 million in the coming years.
In terms of how U.S. health care expenditures compare with those of other developed countries, Lipstein also lent an economist's perspective. We spend more, he explained, because our per capita costs are higher. They are higher because a higher percentage of the population lives in poverty (15 percent), compared with the average for developed nations (10 percent). While we deal with the symptoms of high costs, is part of the underlying cause really poverty?
Whatever the symptoms and causes, the fact remains that health care will have to adapt as efforts are implemented to achieve a sustainable debt-to-GDP ratio over the next decade. We will need to reduce hospital readmission rates, said Lipstein, rely more on multi-disciplinary teams to manage chronic disease, increase the number of ambulatory care facilities, and accelerate research on comparative effectiveness for treatments and procedures of diseases and conditions. If we don't do this, he said, insurance companies will do it for us, and they will use claims data rather than patient-centered data to reduce payments and utilization.
Lipstein believes that comparative effectiveness research, which PCORI was created to help fund and implement, has great potential for lowering costs and increasing quality. PCORI has earmarked $3 billion for research grants through 2019 and expects to make its first funding announcements in May. "We hope Emory will be a major applicant for funding," he said.
Editor's note: Researchers in health sciences submitted a total of 10 applications for the first round of PCORI grants.