The cost-coverage trade-off: "it's health care costs, stupid".

A CCORDING TO RECENT POLLS, MANY AMERICANS CONsider health care reform the No. 1 domestic issue. 1 Presidential candidates, other politicians, health policy experts, labor leaders, business groups, and others have responded with numerous reform proposals. And somehow in the clamoring, health care reform has become equated exclusively with expanding coverage to the 47 million uninsured Americans. This is a mistake. As serious as it is, the problems of the uninsured and lack of coverage are symptoms, not the underlying problem. Focusing on them is like treating a fever without addressing the causal infection. Instead, the diagnosis and treatment need to focus on health care costs. The fundamental problem arises because of a cost-coverage trade-off. Without controlling health care costs, any attempt at universal coverage will be transient. Sustainable expansion of coverage to all Americans requires credible changes in the rate of health care inflation—the slope of the health care cost curve. Fortunately, focusing on controlling costs may actually enhance prospects for health care reform. Those who count in the political process—voters, employers, governors , and others—are concerned about costs in a way they have not been genuinely concerned about the fate of the un-insured. Health Care Cost-Coverage Trade-off The number of uninsured Americans has been increasing, from 38.7 million in 2000 to 47 million in 2006, 2,3 a 21.4% increase. During these years, health care costs in the United States have increased from $1.4 trillion to $2.1 trillion, 4 and in real terms approximately 10%. 5 Similarly, uninsured rates and health care costs differ markedly between states. For instance, in 2004, 9.2% of Iowa's population was unin-sured whereas 19.4% of Florida's population was. 6 Con-comitantly, in 2004 the average Medicare spending per en-rollee was $5767 in Iowa and $8462 in Florida. 7 Similarly, average health insurance premiums for a family totaled $9422 in Iowa and $10 444 in Florida. 8 For the last 30 years, comparisons over time and comparisons between states reveal a strong relationship between health care cost and coverage: higher state health care costs mean worse coverage, and as costs increase, the rate of uninsured individuals also increases (FIGURE). There are several reasons for this relationship. First, higher health costs drive up insurance premiums, which may induce employers and the self-insured to eliminate coverage. Moreover, as workers are forced to assume a higher fraction of their premiums, more of them may not choose health insurance even …