What Price HEALTH CARE QUALITY?

• Author: Nichols, Len M.
• Position: Health care costs

As Medicaid and Medicare adopt the cost-control techniques used by the private sector, including managed care and competitive billing, the uninsured will find it even more difficult to afford medical treatment.

AFTER CONGRESS rejected universal health insurance coverage in 1994, much of the nation's health policy attention turned to quality assurance. The hundreds of specific clinical requirements for health plans introduced by state legislatures and Congress reflect widespread concern that too much access and service quality are being sacrificed for cost containment in the private sector. At the same time, some policymakers are demanding that the largest public programs, Medicare and Medicaid, emulate private-sector cost savings, the very ones that have sparked the current concern over quality. Therefore, two key health policy challenges for the future will be maintaining a high level of quality as costs are contained in public programs and striking the right policy balance in monitoring and regulating the quality of health care in the private sector.

After 10 years of double-digit health insurance premium inflation in the 1980s, the current decade has seen a steady decline in the rate of private premium growth. For example, premiums for employer-sponsored insurance increased by about 0.5% and total national health spending rose at 4.4% in 1996, the smallest rate of growth since 1960. Slower national health care cost growth means that more resources are available for other deskable uses. These cost containment successes widely are attributed to the spread of managed care.

Yet, some consumers and policymakers have come to fear the techniques that managed care health plans use to contain costs, such as limiting access to specific providers and services and creating incentives for providers to curtail access to care. These techniques can cut costs, but risk reducing actual or perceived quality of care. The legislative proposals and the recent presidential commission on quality in health care are responses to this perceived risk.

Governments directly purchase health care for almost 27% of Americans through Medicare (a Federal program for the elderly and disabled) and Medicaid (a joint Federal-state program for the poor). On behalf of these beneficiaries, the public sector directly pays for almost 40% of all health services delivered in this country, and the public share of health care finance is even higher if tax subsidies for private employment-related insurance are counted. These coverage and cost percentages make clear that the elderly...