Mort Zuckerman: How to Rein In Healthcare Costs

Medicare and Medicaid are zombie entitlement programs that threaten the U.S. fiscal future

By + More

Two forces work against that kind of rational approach. The first is the litigation doctors fear if they think about good medicine and the particular patient rather than follow "customary practices." Doctors who avoid unnecessary tests and follow evidence-based guidelines for specific illnesses or conditions put forth by professional associations must have a safe legal harbor.

Second, we should change the fee-for-service payment approach that dominates our system. It doles out separate payments for everything and everyone involved in patient care. It rewards doing more over doing right. It increases paperwork and duplication, and discourages clinicians from working together. In other words, all the wrong incentives.

We should have a payment system that reflects a fee-for-value approach, that drives quality rather than quantity, and that will not serve as an incentive for unnecessary care. Today doctors can order expensive tests because it is profitable and provides a potential defense in a lawsuit. The patient has no role and there is no room to question these decisions. We have to overhaul the entire medical structure.

That can only happen if Congress delegates the responsibility to a group similar to the military base closing commission. It is a legitimate tactic to avoid hysteria and the Balkanization of responsibility implicit in the congressional process. Not to mention the pressure on Congress from the typical cry that "patients will suffer" and the fear that lobbyists will desert them.

Let's face it. What we now have is a zombie social program, unsustainable without giant tax increases, huge cuts in benefits, or cuts in payments to hospitals, nursing homes, outpatient facilities, physicians, and homecare providers. The waste is enormous, estimated at between 30 and 40 percent of the total cost. There cannot be billions of dollars of general waste and no specific waste. The only way to cut healthcare costs is to cut healthcare costs.

Health insurance companies have to be part of the drive. They are basically unregulated de facto monopolies in most states, with one or two companies controlling 80 percent or more of the market. Former president Bill Clinton points to a provision in the new law: For plans from big insurers, 85 percent of the premiums should go to healthcare and not to profits or promotions; if the insurer is small, 80 percent.

[Leslie Marshall: Blame Greed, Not Obama For Rise In Health Insurance Premiums]

The public understands this. All the polls suggest they came to a common-sense conclusion that we could not maintain the quality of healthcare, expand coverage to all, and yet lower the cost. People know that soaring healthcare costs inevitably shift government priorities away from everything else, be it schools, roads, higher education, lower taxes, police and national security, all just to preserve the income of doctors, hospitals, insurers, and other providers.

Some higher taxes may be inevitable, but a doubling or tripling of taxes for working-age families is neither economically sensible nor politically feasible. And yet, if trend lines continue, Medicare and Medicaid alone will absorb every dime of federal revenues at current tax rates by sometime in the 2040s. As healthcare goes, so goes the future solvency of the U.S. government. Most or all of the above reforms I've mentioned are going to have to be considered if we are to return America to the land of opportunity and away from the land of entitlement.

The first three words of the Constitution are "We The People." Ultimately, "we the people" must take responsibility for what happens, and this applies to the fiscal future of the country as well.

  • See a collection of political cartoons on the budget and deficit.