October 4, 2001
Managed care is dead, says Assembly keynote speaker
BY DENNIS CONNAUGHTON
Managed care is dead -- killed not by lawyers, politicians or the insurance industry, but by the booming economy of the 1990s, economist Uwe Reinhardt, Ph.D., said in his Assembly keynote address yesterday.
"Every one of you knows and research shows that primary care can avoid unnecessary hospitalization of patients and save costs," said Uwe Reinhardt, Ph.D. "Why Congress doesn't get this, I don't know."Reinhardt described a vision of the future with a multi-tiered system of care, in which the uninsured have to beg for health care and the super-rich can afford to have their own physicians on call 24 hours a day.
"The Congress of the United States likes this tiered system now," he said. "If you don't like this system, you should tell Congress in unvarnished language, 'That's not the American way.'"
A RECESSION TOOL
Reinhardt, the James Madison Professor of Political Economy and professor of economics and public affairs at Princeton University in Princeton, N.J., said the era of managed care ran from 1992 to 1997. "The economic boom time of the '90s did it in," he said. "Managed care is basically a recession tool. Health insurance is part of the labor contract. As long as health insurance is part of a contract employers use in the labor market, employers will fight cost increases." However, in boom times, employers are not as aggressive at fighting costs.
From 1998 to the present, health care economics has shifted into a new paradigm that presents a number of challenges, he said. The number one challenge is the renewal of an explosion in health care costs in an economy that is moving toward or in a recession.
CASE FOR PRIMARY CARE
In response to this challenge, Reinhardt urged those in the audience to make a business case for primary care: "Every one of you knows and research shows that primary care can avoid unnecessary hospitalization of patients and save costs. Why Congress doesn't get this, I don't know."
Another challenge facing health care today is a growing shortage of nonphysician health workers and a possible shortage of physicians. Under the laws of supply and demand, with shortages, health care costs will go up, he said. The aging of the U.S. population is another factor driving up the cost of health care.
The problem of 40 million or more uninsured Americans is another challenge facing health care economics today. It would cost about $100 billion a year to solve this problem, Reinhardt said.
He noted that after the terrorist attacks of Sept. 11, Americans have rediscovered nationhood and the responsibility of all citizens to help one another. "Insurance coverage for the uninsured must be mandatory," he proclaimed to the applause of attendees. He proposed a combination of public and private in-surance to meet the challenge.
FP Report is published by the AAFP News Department.
Copyright © 2001 by American Academy of Family Physicians.
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