James J. Leyden, M.D.: ‘The current food fight in Congress will eventually end, and it is likely to extend coverage to 90 percent of the population.'

Livingood lecturer offers opinions on health care reform

Unless costs are controlled, the U.S. health care system will crumble in on itself.

That was the message from James J. Leyden, M.D., at Saturday's Clarence S. Livingood, M.D., Lecture.

In his presentation, "An Inconvenient Truth: Comprehensive Medical Insurance Is the Problem, not the Solution," Dr. Leyden, emeritus professor of dermatology at the University of Pennsylvania School of Medicine, Philadelphia, said it's no secret that the health care system is broken, but added that the current "reform" taking place in Congress isn't going to fix the problem. Instead, the medical, pharmaceutical and insurance industries must work in conjunction with the government to take responsibility and start controlling costs.

"We are the wealthiest country in the world, and we have to find a way to get coverage for all people," he said. "The current food fight in Congress will eventually end, and it is likely to extend coverage to 90 percent of the population, and that is all terrific and good, but meaningful reform has to attack the costs. Cost control cannot be achieved by the methods we are currently using."

Dr. Leyden said he is advocating for a consumer-driven health care (CDHC) system that allows for cost control without stifling competition.

"We are currently spending 17 percent of our gross national product (GNP) on health care, while 20 percent of government spending goes to Medicare and Medicaid," he said. "This could grow to 50 percent by 2050, which is clearly not sustainable."

Dr. Leyden said much can be learned from the countries that are outperforming the U.S. in terms of life expectancy and cost control. Japan currently reports an average life expectancy of 83 years — in the U.S. it is 78 — but only spends 8 percent of its GNP.

"Our insurance system is complex and costly," he said. "It is set up to fund uncommon events, which makes no sense. According to the data, there's one health insurance employee per every two of us (physicians)."

Dr. Leyden said that while the Medicare premium has been raised seven times to account for inflation, the government continues to decrease reimbursements.

"It is a classic Ponzi scheme," he said. "In every industry other than health care, we're told this is a bad idea."

Hospital costs reportedly account for 50 percent of excess health care spending, while other countries offer high-quality care at a far lower cost-per-patient. Dr. Leyden said that the sheer size and scope of U.S. hospitals and hospital systems lead to inefficiencies and higher costs, with a 2004 report citing that hospital prices grew six times more than growth in utilization in 2003.

Dr. Leyden called for mandatory financial transparency from these institutions and said that health savings accounts, coupled with catastrophic insurance, may be the solution for America's under-performing system.

"Ours is a complicated, costly, wasteful system with distorted incentives and a lack of transparency," he said. "Comprehensive insurance works better in countries like Switzerland, where consumers purchase and governments treat it like a regulated utility. Those without resources are subsidized."

Dr. Leyden said a CDHC spin on the Swiss system would work here if basic economics are allowed to act, meaning supply and demand are not constrained.

"It will encourage the formation of specialty hospitals and groups of integrated specialists and generalists focused on the health of patients, as well as spur the development of insurance policies for the sick that offer protection against financial catastrophe," he said. "As to how you pay for it … people who run out of funds will borrow against future contributions, essentially from the government. The government will also give funds to those who cannot pay for coverage."

Click here to hear Dr. Leyden discuss the importance of cost in health system reform.