NCPA - National Center for Policy Analysis

Empowering Patients in the Face of Rising Health Care Costs

January 16, 2012

Health care costs are consuming ever larger portions of the gross domestic product (GDP).  There is broad bipartisan agreement on the need to control these rising costs and to control federal entitlement spending in general, including spending on the giant health care entitlements Medicare and Medicaid.  This broad agreement, which becomes significantly more muddled when specific reforms are debated, stems from recognition that the current path of rising health care costs is unsustainable, says Karen McKeown, a graduate fellow at the Heritage Foundation.

  • In 2000, the United States spent 13.8 percent of GDP on health care, but by 2009, the figure was 17.6 percent.
  • Following current trends, expenditure on health care will consume the entire American economy by 2082 -- approximately when someone born today would likely retire.

To make much-needed progress in controlling health care costs, the top-down government-dictated rationing of medical services must be restructured.  While this form of rationing does control costs, it removes from the decision-making process for patients nationwide who could most effectively select their own health care consumption package.  To accomplish this end, barriers must be removed:

  • Patient Ignorance of True Cost: because so many patients are covered by third-party providers (in 2005, 64.1 percent of Americans with private insurance bought it through their employer), they rarely understand or concern themselves with the true cost of various treatments.
  • Lack of Medical Information: given the complexity of the health care sector, patients must have greater access to physicians so that true dialogue can occur about treatment options; a 1999 analysis of 3,552 decisions showed that only 9 percent met the criteria for informed decisions.
  • Misplaced Priorities by Physicians: in a health care environment in which people are decreasingly dying from acute illnesses and are increasingly suffering from gradual, degenerative illnesses, care ought to respond by incorporating patient preference.

Reforms that target these areas will allow regular consumers to become more involved in the health care process, selecting their own treatments and developing awareness of medical options.  In the long run, this will make consumer-centered decision-making more feasible and effective and limit rising costs, thereby valuing individual liberty and responsibility over restrictive, top-down government regulation.

Source: Karen McKeown, "Empowering Patients as Key Decision Makers in the Face of Rising Health Care Costs," Heritage Foundation, December 27, 2011.

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