The Non-Achievement of Cost Containment in American Health Care: Explanations, and Lessons for Britain
| Published date | 01 December 1991 |
| DOI | 10.1177/095207679100600303 |
| Date | 01 December 1991 |
| Subject Matter | Articles |
22
The
Non-Achievement
of
Cost
Containment
in
American
Health
Care:
Explanations,
and
Lessons
for
Britain
Bruce
Wood
Department
of
Government
University
of Manchester
Revised
version
of
a
paper
first
given
to
the
EPRU
Conference
on
Cost
Containment
and
Health
Care
Policy,
University
of
Manchester,
17
May
1991
1
1.
Introduction:
Defining
’Cost
Containment’
Everywhere
rising
health
care
costs
have
been
a
cause
for
concern
throughout
the
last
two
decades.
Occasionally
there
have been
radical
responses,
of
which
the
Irish
and
Canadian
experiences
are
particularly
noteworthy
(Ireland
took
a
conscious
decision
to
cut
its
global
health
budget
in
the
1980s;
Canada
switched
its
entire
approach
from
free-market
to
national
insurance
a
decade
earlier).
More
common
have
been
narrower
piecemeal
initiatives
focusing
on
particular
aspects
of
health
care.
Would-be
cost
containers
face
severe
problems.
Public
demand
for
health
care
is,
in
developed
nations
at
any
rate,
both
high
and
inclined
to
rise
steadily
as
new
’illnesses’,
new
treatments
and
new
cures
present
themselves
(illness
is
in
quotes
to
remind
us
that
everyday
life
has
become
increasingly
medicalised -
childbirth,
for
example).
Closely
linked
to -
indeed
sometimes
helping
to
create -
demand
is
the
need
for
health
care,
which
also
continues
to
rise.
Today
I personally
’need’
nicely
crowned
teeth,
a
vasectomy,
antibiotics
for
mild
acne,
cholesterol
tests
and
lifestyle
screening.
Society
needs
whole
body
scanners,
nearby
access
to
24-hour
emergency
units,
expensive
treatments
for
man-made
conditions
such
as
drug
and
alcohol
dependence,
psychiatric
services
to
facilitate
recovery
from
depression,
and
replacement
hearts,
kidneys
and
livers.
My
parents,
and
certainly
my
grandparents,
neither
demanded
nor
needed
any
of
this
deliberately
varied
list
of
health
care
services
which,
of
course,
is
so
far
from
exhaustive
as
to
barely
scratch
the
surface.
23
Cost
containers
cannot
ignore
these
changes
in
demand
and
need.
Costs
can
always
be
reduced
by
cutting
back
services
but
this
is
at
the
’cost’
of
effectiveness.
For
the
purposes
of
this
paper
such
cost
containment
is
considered
unacceptable.
Cost
containment
policies
are
here
defined
as
those
which
are
’conscious
public
policies
to
reduce
costs
without
reducing
quality’.
Hence
economy
and
efficiency
of
provision
are
the
central
themes
of
this
study,
and
the
examples
investigated
are
all
ones
in
which
there
has
been
some
activity
by
government
(there
are
other
examples
which
are
exclusively
private
sector).
2.
Overview:
the
USA
Record
of
Failure?
At
first
sight
there
is
little
to
leam
from
America.
The
’dismal
outcome
of
U.S.
cost
containment
policy’
(Brown
and
McLaughlin,
1990,
6)
is
well
illustrated
by
Table
1.
Indeed,
the
American
record
of
cost
increases
is
second
to
none.
TABLE
1
- USA,
UK
AND
CANADA -
GROWTH
OF
EXPENDITURE
ON
HEALTH
CARE
(Expenditure
as
%
of
GDP)
Source:
Schieber
and
Poullier,
1988.
The
comparison
with
Canada
in
Table
I
is
particularly
apposite.
Until
the
early
1970s
these
neighbours
experienced
a
similar
health
care
system
of
private
provision
and
charges
on
a
’fee-for-service’
principle
of
the
supplier
determining
the
size
of
the
bill.
Health
care
costs
were,
not
surprisingly,
also
fairly
similar.
The
Canadian
decision
to
introduce
a
national
insurance
system
in
the
early
1970s
has
clearly
led
to
a
divergence
of
experience
on
costs,
with
much
greater
apparent
cost
containment
north
of
the
border.
There
are
two
possible
explanations
for
this
Canadian
’success’
story.
One
is
that
services
have
been
cut
back.
The
other
is
that
under
its
national
insurance
system
there
are
now
pre-determined
top-down
global
budgets
for
health
care
and
these
have
reduced
the
ability
of
suppliers
to
raise
prices
and
costs.
While
this
is
not
the
place
in
which
to
examine
these
explanations
in
detail,
it
seems
likely that
both
apply
in
that
on
the
one
hand
administrative
overheads
have
been
much
reduced
without
affecting
quality
in
Canada
but
on
the
other
hand
Canadians
now
have
to
wait
in
line
for
some
inpatient
surgical
procedures
(Evans et
al,
1989).
Hence
only
part
of
this
divergence
of
national
experiences
fits
within
our
strict
definition
of
cost
containment
as
policy
which
does
not
jeopardise
the
effective
provision
of
services.
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