AMES, Iowa -- Within the debate over President Obama's health care reform plan, everyone can agree on this: health care is big business -- 15 percent of the nation's Gross Domestic Product big. And that huge price tag, coupled with everyone's desire to get medical treatment when they encounter health problems, has turned up the heat on the nation's public debate.
"We don't typically go out to shop for health care," said Dave Swenson, an Iowa State University economist who has done past research related to health care public policy. "In general, as consumers of health care we're irrational because we're not well and we just want to be treated."
Maybe that irrational nature may account for why town hall meetings about the reform plan have turned increasingly contentious. But it may also be the format that's hurting the President's message.
"On health care reform, town meetings are nice, but if this is really a national crisis President Obama should actually give a formal address to the nation on health care and health insurance reform," said Steffen Schmidt, a University Professor of political science at Iowa State. "He should make a clear and forceful explanation of what people will retain as individual health insurance plan opportunities; that this is not nationalized government-delivered health care; and that unless the U.S. addresses the out-of-control costs of insurance and health services, even those with insurance will not be able to afford it in a few years."
The complexity of health care costs
Those high costs add to the complexity of the health care discussion. Mark Imerman -- an ISU economist who has conducted research on such health care topics as nursing labor markets and patient hospital choices -- reports that there are a couple of things that drive health care costs.
"First, insured individuals pay very little in the way of marginal costs for health care and rarely see the money spent for insurance," said Imerman, who continues to sit on a statewide nursing labor supply task force and is now director of recruitment services for ISU's College of Liberal Arts and Sciences. "We treat health care as a free good and over-utilize it if we pay no, or only marginal, per-visit costs. It is magnified by the fact that the flat fee we pay for coverage is generally invisible to us as it is either paid as employment benefits or government benefits."
Imerman says third-party payers are the only entities that have a direct interest in controlling health care costs on a visit-by-visit basis.
"The biggest of these is the federal government," he said. "Collectively, the states are the second largest. Insurance companies, on the face of it, are third, but a large proportion of the employed insured are actually insured under employer group plans that are governed by employer rules and only managed by the insurer."
The federal government is very good at imposing cost control on a procedural basis, according to Imerman. He says it's always sought to expand coverage and minimize payment.
But of course, not everyone is covered. Liesl Eathington, director of Iowa State's Regional Capacity Analysis Program (ReCAP) and an associate scientist in economics, authored a report that summarizes estimates about people without health insurance in Iowa (http://www.econ.iastate.edu/research/publications/viewabstract.asp?pid=13100).
Iowa fifth best in low rates of uninsured
Based on the U.S. Census data from 2006, Eathington reports that Iowa ranked fifth among the states with the lowest rates of uninsured residents -- with neighboring Minnesota being first. But she points out the health care really isn't about the states.
"Absent health care reform at the federal level, I don't think that individual states' efforts are going to be adequate for addressing all of the issues related to access to health care," Eathington said. "Successful federal efforts to reform and standardize access to health insurance should take some of the burden off of individual states. In that respect, even Iowa and other states with relatively low uninsured rates stand to gain from the federal efforts.
"Most importantly, Iowa's performance relative to other states is probably irrelevant to the individuals in Iowa who don't have health insurance," she continued. "There are probably a lot more of those people in Iowa today compared to 2006 (the year of the data in her report), because we've lost a large number of manufacturing and other wage and salary jobs during this recession."
Those who are uninsured have to consider not only if they can afford a doctor visit, but also the resulting prescription drugs. And according to an IMS Health report, prescription sales amounted to $291 billion in 2008 and pharmaceutical companies also spent $7 billion that year to actively promote the use of their brands.
Those marketing efforts primarily come in the form of sales calls to doctors known as detailing. Critics insist that detailing unnecessarily increases drug costs while encouraging sub-optimal brand choices by doctors. But Doug Walker, an assistant professor of marketing at Iowa State, found in a study of 8,000 physicians nationwide that detailing provides educational value to some physicians in making the proper prescription choice for their patients.
However, he also found that physicians become more non-responsive to detailing once they have already learned the optimal choice for a patient's condition.
"Therefore, heavy prescribers are less responsive because they have had more opportunity to learn the best medication for a particular patient's condition," said Walker, who presented his research findings earlier this summer at the Marketing Science Conference in Ann Arbor, Mich.
For that reason, Walker says drug companies could modestly decrease some prescription costs if they can be more targeted in their marketing approaches.
That's just something else to consider as the great health
care reform debate rages on.
