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Health care costs

"Everyone knows" that health care costs in America are out of control. I don't use scare quotes to suggest that this is incorrect, only to emphasize that it's a matter of common knowledge. If there's one thing everyone agrees on, it's that we're spending "too much" on health care.

Our nearly universal agreement that costs are too high provides opportunities for meaningful reform. Unfortunately, it can also tempt us to tolerate conditions that are unjust and harmful, simply because they can can plausibly be spun as cost-control measures.

For example, we continue to tolerate the immunity from state liability suits that HMOs enjoy under ERISA. Our collective concern for overall health care costs has repeatedly scuttled efforts in Congress to ensure that HMOs are held accountable for the decisions they make.

Because of the federal ERISA statute, an HMO that negligently denies care recommended by a patient's physician is often immune from state suits alleging malpractice, breach of good faith, and other claims. Even in cases where patients are able to successfully sue HMOs under ERISA, the remedies available are often woefully inadequate to compensate injured patients. We've encouraged HMO's to "manage care" by involving themselves in treatment decisions, hoping that this will lower costs. This might be a wise thing to do. We've also refused to hold HMOs accountable for the decisions they make, mostly because we fear cost increases. This decision may not be as wise.

Apart from the obvious problem that privilege without responsibility is generally a recipe for abuse, our toleration of HMO immunity under ERISA may burden physicians with lawsuits they would not otherwise have had to face. An injured patient may feel that the HMO bears some or all of the responsibility for a negligent treatment decision, but because of ERISA, most lawsuits against HMOs will go nowhere--especially if the decision results in a lesser quantity of medical care. In these situations, the physician and the hospital are the only viable targets for lawsuits. The docs end up in court, and the HMO gets off the hook. I don't have any empirical data on how often this happens, but it is a plausible scenario.

Our obsession with costs may also lead us to overlook the equally serious problems of lack of access to care and the rising number of uninsured Americans. For example, as we hype HSAs and defined contribution plans primarily because they promise to relieve the burden on employers to pay for their employee's health care coverage, we may not pay enough attention to what effect these cost-control measures will have on access to care.

My point is not that high overall health care costs aren't a problem, only that we ought to make sure that other serious problems that plague our health care system aren't overlooked.