Speaking Nov. 23 before an audience composed mainly of the health care and medical communities, U.S. Secretary of Health and Human Services
Shalala spoke at a seminar on health care sponsored by Penn’s Leonard Davis Institute of Health Economics. Her discussion took place on the campus of the University of Pennsylvania Health System, which has announced a $198 million deficit for the last fiscal year and is currently in the middle of downsizing its staff by 20%.
Shalala’s message was practical and it started out by addressing the lack of health insurance for millions of people in the U.S. "The estimates say that there are 44 million Americans without health insurance, but that may be a low estimate," said Shalala. "A lot of people have lousy health plans."
While most politicians understand the need for a better system of health insurance and increased access to health care, Shalala said, an inevitable stalemate exists. "What we have identified is the problem," she said. "But it is very difficult to make a giant leap in how a major institution runs without the consensus of what the solution will be."
Her hope, Shalala added, is that people will not concentrate so resolutely on strictly financial aspects of the problem. "We Americans seem resolved to wanting the best health care system on the cheap. What we’ve gotten with managed care is not managed health care, but managed costs. What we need to think about is how to deliver a quality system, one where health care problems are avoided, where people go get care before it is too late. We have got to move our system toward getting quality."
Many of the questions from the audience expressed particular concern with the plight of the academic health centers like the Hospital of the University of Pennsylvania (HUP). Shalala said she realized that the academic centers are all suffering and she hoped they would survive and thrive. But they could no longer continue to shift costs, hoping to get overpaid by Medicare to make up for getting underpaid on certain procedures by managed-care organizations.
"Cost-shifting in managed care has been going on for a long time. Academic centers were okay until Medicare stopped overpaying," she said. "But what should the government response be? Should Medicare continue to overpay?
"You’ve got to see where I stand. We are about to double the number of people in Medicare," Shalala said. "The President gave me the charge to streamline costs. If there is a medical student listening to all this and wondering what the answer is, it isn’t simple. Maybe it would be easier if I did what my predecessors did and just stayed in the job 18 months."
Shalala, who has been the U.S. Secretary of Health and Human Services for six years, said it is extremely important that academic health centers learn to survive. Their research and teaching facilities are vital. They cannot be matched anywhere else.
"We have built an excellent infrastructure, a lot of it with National Institutes of Health (NIH) monies. But we can’t fix every local problem. Each institution is going to have to learn to survive individually," she said.
Shalala also criticized an "elite" set of researchers and bureaucrats, giving one concrete example of how health care policy came out of a quirk in the federal budget. "We found that the elderly would not get flu shots until they were completely free, which was not a big budgetary problem," said Shalala. "But we found that out in a strange way."
Shalala said that the government’s fiscal year starts October 1, which is when the Medicare $100 deductible recycles. October is also the start of the flu-shot season, but many elderly patients didn’t want to use the deductible right away, preferring to save it for something more important.
"Once we made flu shots free, we doubled and tripled participation," she said, noting that decisions on how to manage health care are complicated in many ways. "People of relatively low incomes behave differently with small amounts of dollars than the elite officials. In health care, too many smart people don’t understand what lower income levels do to your choices. Perhaps for those people, taking their child to the movies once a month is more important to their family harmony than purchasing health care, especially if they feel their family is relatively healthy."
Despite this attitude among some, Shalala noted that health concerns are indeed paramount for a great majority of Americans. "It’s estimated that 40% of the hits on the Internet are for health-care information," she said. "People are going to their doctors and then checking the Internet to find out more. New technologies are amazing."
But as amazing as these technologies are, they won’t improve the health-care delivery system by themselves. "Anyone who sees the light at the end of this tunnel probably isn’t being realistic," said Shalala. "I don’t think HMOs can survive in their present form, if all managed care is doing is cutting costs. I want to make sure we are moving to a system that recognizes the importance of science and health. All parts of the system will have to pay their fair share, but it will never work until we worry more about quality than finance."
