Published: 2009-06-30 14:10:02
Author: International Business Times | June 12, 2009
As U.S. President Barack Obama refocuses efforts on universal healthcare, the burdensome question of how to fund it all returns. But without a handle on the rising costs in the current healthcare system, the possibility for new coverage seems a pipedream. A recent report from the Board of Trustees of Social Security and Medicare indicates that the trust fund supporting the federal Medicare program will be insolvent in 2019—a full seven years sooner than previously projected.
Additional statistics indicate just how dire the healthcare cost situation is becoming. According to figures from the White House, “the U.S. spent approximately $2.2 trillion on healthcare in 2007, or $7,421 per person—nearly twice the average of other developed nations.” Statistics from the Congressional Budget Office estimate that by 2025, “one out of every four dollars in our national economy will be tied up in the health system.”
With U.S. healthcare expenses and health insurance premiums skyrocketing in response, the current administration and Congress are turning their efforts to tech implementation in the sector as a way to curb expense. President Obama’s $787 billion stimulus plan allots $19 billion for health information technology, in an effort to push common protocols in the space, including interoperable electronic health records that could easily move between clinicians, diagnostic facilities, hospitals, and pharmacies.
A Congressional Budget Office (CBO) cost estimate released in March 2009 detailed that the stimulus plan, officially known as the American Recovery and Reinvestment Act of 2009, provides funding for expanded use of health IT—an effort to “reduce on-budget direct spending for health benefits by Medicare, Medicaid, and Federal Employees Health Benefits (FEHB) programs by $12.4 billion” over the 2009-2019 period. While implementation of the health IT provisions in the stimulus plan would account for increases in the “on-budget deficits by a total of $18.3 billion over the 2009-2019 period,” according to the CBO, “it would increase the unified budget deficit over that period by an estimated $17 billion.” The CBO reports that the offset in spending increases will come from the reductions in Medicare spending in later years, resulting in a savings after 2014. The added benefit, says the CBO, is the accelerated use of cost-saving IT bleeding over into the private insurance sector, resulting in lower health insurance premiums for employers.
Too much of a good thing?
But is technology the saving grace that Congress and the current administration think it is? According to Rick Gilkey, executive director of the Center for Healthcare Leadership and a professor at the Emory University School of Medicine in the department of psychiatry and in the Goizueta Business School department of organization and management, there is a right and a wrong way to go about implementing technology initiatives in the healthcare space. First, he notes, medical practitioners need to delineate between “technology implementation on the clinical vs. the business side of the house.”
Doctors certainly haven’t been shy to employ cutting-edge technology when it aids diagnosis. But there are also drawbacks to the advances these kinds of technologies can provide, admits Gilkey. “Our Social Security and Medicare systems were generally based off of the German model, and financial projections were made given a much shorter lifespan of 65 years or so. Life expectancies are extending out, and while people are living longer, and that is a good thing if the quality of life is high, the extension of life and the additional healthcare costs associated with it are also a big driver of the expenses in the system.”