Editorial for Monday — February 21, 2005

• Health care: A rational approach

Health care: A rational approach

St. Louis Post-Dispatch Saturday, February 19, 2005

When care, too. shopping for a new car or a roof repair, Americans insist on good quality at a reasonable price. It’s time we started doing that with health

UnitedHealth has started rating doctors on both their cost efficiency and quality of care. The insurers’ big client, General Motors, now is steering its St. Louis workers to doctors on UnitedHealth’s preferred list.

The quality measures are imperfect, of course, and there will be howls both from doctors and patients. But this sort of rational approach is necessary to control the soaring cost of health insurance.

That cost rose between 7.5 percent and 12 percent last year. The higher it rises, the fewer companies will cover their workers. The number of uninsured Americans rose by 1.4 million in 2003 to 45 million. It’s probably higher today.

It’s better to limit patients’ choice of doctors, using fair measures, than to see more people lose coverage completely.

Most Americans pick their doctors in the dark. Smart patients will check to see if a doctor is certified or if he has been disciplined by state medical boards. But patients have no real way of telling if their doctor is better at medicine than the doctor down the street.

Health insurance companies are better at that. They collect lots of data while paying doctors’ bills. As reported by Judith VandeWater in Sunday’s Post-Dispatch, United-Health is judging surgeons by how many patients develop complications. Other doctors are being rated by their adherence to medical guidelines for treating diseases.

So far, so good. But patients will raise their eyebrows over United’s other criteria: “efficiency.” That means “cost.” To make UnitedHealth’s preferred list, a doctor’s cost for treating disease must be in line with the market.

Of course, workers will wonder whether UnitedHealth is rating price higher than quality. At General Motors, the United Auto Workers union had better look closely over the insurer’s shoulder.

In effect, UnitedHealth is trying to inject some quality and price competition into a health care market that lacks both. To make the preferred list, many doctors have to get quality up and the price down. If other insurers adopt the same tactic, the pressure on doctors will increase.

General Motors is America’s biggest buyer of health care, spending $7 billion a year on its workers and retirees. It’s trying the program in St. Louis, where it insures about 2,800 people. GM workers covered by the preferred-provider option will pay much less from their own pockets if they stick to doctors on UnitedHealth’s preferred list.

UnitedHealth says 4,232 Illinois doctors and 2,141 Missouri doctors made the cut for its preferred list. So GM workers should have plenty to choose from.

GM has good reason to worry about costs. Health care contributes $1,500 to the cost of a GM car, much more than its foreign rivals. GM’s profits are weak, and health costs are partly to blame.

Much of the soaring price of health care stems from the fact that health care doesn’t work like a free market. Patients can’t judge quality, and they ignore many costs because insurance pays the bill. The market discipline that holds down the price of GM’s cars doesn’t exist in health care.

So we have a bloated, bureaucratic system with no restraint on prices. America pays double what other advanced nations pay for health care per person, while our medical outcomes are no better.

UnitedHealth and GM are taking a small step in the right direction. But, as large as those companies are, they account for a small part of our overall health finance system.

As we’ve said before, the most rational solution would be a tax-funded, single-payer health plan that would cover everyone while enforcing both quality of care and efficiency. That system also would give patients broader freedom to choose physicians than most of us enjoy today.