Princeton economist leads discussion on health care policy, criticizes U.S. system’s inefficiencies

Experts met at the St. Paul hotel to ponder the current state of health care.

by Mike Enright

In recent years, Americans have seen advancements in medical technology leading to new treatments galore, but it comes at a price.

These were some of the issues discussed by Princeton University economics professor Uwe Reinhardt at an event on Thursday in St. Paul.

Speaking to a packed house of health care professionals, policymakers and industry insiders in the St. Paul Hotel’s Promenade Ballroom, Reinhardt discussed America’s “medical arms race syndrome” and the debate over whether our preoccupation for technology-based care is at the heart of our country’s extremely high health care costs, which continue to rise.

Current estimates rank U.S. health care spending highest among a group of 11 developed nations at about $6,000 per person, Reinhardt said. Second is Switzerland, with roughly $4,000 per person. Canada comes in third, doling out $3,000 per individual.

Despite paying the most for their care, Americans have a lower life expectancy than the group’s average along with higher infant mortality rates, he said.

“In the U.S. we only think about the effectiveness of new technology, not the cost-effectiveness of it,” Reinhardt said.

And while the many devices, scans and procedures do add up, he said, technology isn’t the sole culprit.

In the United States, 24 percent of health care spending is administrative costs, Reinhardt said. For other developed countries it’s usually about 10 percent.

The bottom line, he said, is America needs to cut its administrative expenses in half.

“If we can’t do that, that’s worse than having too many MRI machines,” Reinhardt said. “We don’t just need evidence-based medicine, but we also need evidence-based administration.”

Using an analogy of people in canoes approaching a waterfall, Reinhardt said there is not enough emphasis on primary care, on treating people early and trying to prevent disease before it either happens or becomes serious.

Instead of thinking ahead and using a rope to pull themselves to shore while they are still some distance from falling over the edge, Americans tend to wait until the last minute and then send in the helicopters, he said.

“That’s in many states how we practice medicine, far too late, far too expensive,” Reinhardt said.

An admirer of Reinhardt’s work, University journalism professor Gary Schwitzer said he agreed with Reinhardt’s analysis.

More Americans need to be willing to talk about the future of health care policy and the ethical issues associated with it, said Schwitzer, a former health journalist.

“We have a perfect storm on the horizon of health care,” he said. “We are simply not having a national discussion on this issue.”

A five-member panel discussion followed Reinhardt’s presentation, with most panelists echoing his comments.

Richard Pettingill, the president and chief executive officer of Allina Hospitals and Clinics, said there is enough inefficiency in the current health care system to provide many opportunities for improvement.

And while he did not explicitly say he supported universal coverage, Pettingill said if economic competition is not the best model for health care, other models might need to be explored.

“We need to find new ways to collaborate at the community level,” he said. “I’m disappointed by our lack of progress, but not discouraged.”

The event was hosted by the National Institute of Health Policy, a non-profit organization made up of Midwest health care leaders, established in 1998 through a partnership between the University of Minnesota and the University of St. Thomas.