My Turn: Competition hasn't led to lower medical care costs

Posted: Tuesday, April 18, 2006

In the April 10 edition of the Juneau Empire, Rep. Bob Lynn, R-Anchorage, argued for the repeal of the "Certificate of Need." He has sponsored House Bill 287 and co-sponsored an initiative that would repeal the requirement.

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Lynn makes several broad and erroneous statements and assumptions. I realize that at this point in our history, capitalism and "a competitive marketplace" is the "sanctum sanctorum" of American politics and no one may question the basic premise without being heralded a heretic. Nevertheless, to be generous, Lynn is ignorant of the medical industry facts. Competition in health-delivery systems has not led to lower costs for the consumer of medical care. (Prior to the 1990s, numerous providers of medical services led to an overall increase in the cost of medical care.) There are many historical behaviors on the part of numerous players in the health arena that have contributed to stabilizing and slowing the rate of medical care inflation.

In 1982, the "Peer Review Improvement Act" included legislation that required Quality Improvement Organizations to ensure the quality, efficiency and cost-effectiveness of health care services. The 1983 Public Law 98-21 initiated Prospective Payment Systems. The PPS inpatient system implemented reimbursement for Medicare patients using diagnosis-related groups that mandated reimbursement rates on the patients principal diagnosis regardless of length of the hospital stay.

Since the mid-1980s, numerous private and governmental organizations have been formed to help with rising health care costs in America. Several include the National Commission for Quality Assurance's Health Plan Employer Data Information Set, the National Business Coalition on Health and the Health Insurance Portability and Accountability Act. Although there are some problems with managed care, overall, managed care has provided benefits to the health care delivery system as a whole.

Managed care has provided value through cost-control payment systems throughout the health delivery system. Examples include payment for schedule allowances, prospective payment for inpatient and outpatient services, physician reimbursement and payments for skilled nursing, rehabilitation and home health. Also included are caps on fee increases.

Capital investment in diagnostic imaging is a significant investment in the medical care institutions' budget that does have inherent limitations. Not every clinic and hospital should have or need a computerized tomography scan or magnetic resonance imaging X-ray. High-end diagnostic machines are extremely expensive and require special diagnostic facilities and staff. A million-dollar computerized tomography scanner must be paid for; the service debt must be added to the overall cost of the medical capital equipment; and the cost of using, maintaining and staffing the units must be included in the overall cost projections. (Centers for Medicare and Medicaid Services limits the amount a facility may be reimbursed. Many, if not all insurance companies limit the amount they will pay for any given procedure and/or test. Any additional cost is the responsibility of the patient.)

Lynn is clearly inept in the medical field and apparently has limited knowledge of capital investment strategies that are appropriate for the 21st century. Allowing a "free market place" approach is clearly a silly idea and is not appropriate.

• Thomas Imboden is a Gustavus resident. He has degrees in political science and nursing, and a minor in public administration. He is a registered nurse and has been studying health issues since 1973.



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