HEALTH CARE RESEMBLES AN OVERSIZED TEENAGER who keeps popping the financial seams on his clothing. He’s already the largest kid in the room, and he threatens to grow until there’s no space in it left for anybody else.” — Henry Aaron, Senior Fellow of Economic Studies, Brookings Institution.

Aaron, among a group of health care professionals who convened at the School of Medicine on October 7, 2004, to discuss the state of American health care, is not alone in his assessment. Others on the panel of experts at the conference, Health Care Challenges Facing the Nation, reiterated Aaron’s implication that health care costs are out of control.

In fact, the cost of health care is one of the largest components of the U.S. economy and is rising faster than the rate of inflation.

Increases in health care spending have been attributed in part to an aging population. But some experts have pointed to a period of biomedical research and development that has brought technological innovations that drive up costs.

“The economic costs of medical advances are going to pose enormously difficult financial and political problems,” Aaron says. Yet, the “mortality benefits” of medical advances are significantly greater than the monetary costs, according to David Cutler, professor of economics at Harvard University.

“The average 45-year-old spends about $30,000 more than he or she did 40 years ago to treat cardiovascular disease, adding about three years of life,” says Cutler. When he asked the audience how many of them would be willing to spend $10,000 to obtain those extra years, a sea of hands went up.

Cutler maintains that research and development account for only about 5 percent of all medical spending. “But,” he adds, “research and development do create more spending by leading to new, expensive treatments.”

Aaron believes that Americans will be forced to choose between two unpopular options: “We can ration care in some explicit fashion. If we don’t, that will require unprecedented tax increases by a tax-phobic nation.”

Although some degree of health care rationing has been successful in other countries, most U.S. citizens strongly oppose it. “It is unlikely the United States will use rationing,” says Gail Wilensky, senior fellow at Project Hope, an international health foundation.

Wilensky asserts that the current fragmented and wasteful system can be made less expensive through streamlining. Mark McClellan, president of Medicare and Medicaid, agrees: “Inappropriate, unwanted or unnecessary treatment decreases the quality of care and drives up costs.”

Solutions that could increase efficiency include establishing an independent standard for selecting appropriate care, relating reimbursement to the quality of service, and reducing administrative waste. “The difficulty is,” says Wilensky, “this is going to require an investment of billions and not millions.”

There are other roadblocks as well. Former U.S. Surgeon General David Satcher says, “Politics raises barriers to solving health care problems. It took six years after the surgeon general’s report detailing the health consequences of smoking for Congress to pass the law requiring a warning on packs of cigarettes.”

Satcher acknowledges that a tremendous gap exists between knowledge about health care and action taken based on that knowledge. Still, he and others emphasize the importance of scientific advances.

“Research must continue,” says Satcher, “but we have to be sure that the results of research get transferred to policies and practices and are universally available.”

Disparities in black and white: measuring the cost of unequal access

A less visible problem is the disparity in care provided to well-insured people as compared to the uninsured or underinsured, many of whom belong to racial and ethnic minorities.

“Public health service is underfunded and unevenly distributed. This results in substantial gaps in health status and emerging illness among some groups within the population,” says James Kimmey, president and CEO of the Missouri Foundation for Health.

Disparity arises from segregation, poverty, lack of access and poorer care.

“Financial reform is not the solution,” Kimmey says. “And the political process is not engaging even one of the problems of disparity in an effective fashion.”

Health Care Challenges Facing the Nation was organized by William A. Peck, MD, conference chair and director of the Washington University Center for Health Policy, and Steve S. Smith, PhD, director of the university’s Weidenbaum Center on the Economy, Government and Public Policy. The two centers sponsored the conference in conjunction with the Brookings Institute of Washington, DC.