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Alan M. Garber [*] In a body of work, Laurence C. Baker thus asks how managed care can bring about widespread effects on health care markets and health care delivery. In two papers on health care spending, [1] Baker finds that areas with high levels of HMO market share spent less on fee-for-service Medicare beneficiaries. Since prices for Medicare-covered services largely are fixed by regulation under Medicares Prospective Payment System and physician fee schedule, the lower expenditures probably reflect reductions in the intensity of services that Medicare patients receive in areas with heavy penetration of managed care. Furthermore, because the patients studied were covered by the traditional fee-for-service Medicare program, the fact that their care appears to be influenced by the presence of managed care plans suggests that the managed care system can have important effects on the performance of the entire health care system. Changes in health care spending lead to questions about the mechanisms by which managed care may affect expenditures on and outcomes of care. In more recent work, Baker and Martin L. Brown of the National Cancer Institute report [2] that areas with high HMO market shares saw consolidation in mammography facilities through the early 1990s. In other words, higher market share areas had fewer mammography providers, each doing higher volumes. Because there are significant economies of scale in providing mammography, consolidation is associated with reductions in the cost and often the price of mammograms. But consolidation also could harm patients if it made it more difficult to obtain the procedure. To determine whether this occurred, Baker and Brown study cancer diagnoses and mortality rates. Although they find that waiting times for appointments were sometimes longer in markets with greater consolidation, they also find no evidence that cancers were diagnosed at later (and more severe) stages, or that mortali ty rates were higher, in such markets.
What We Must Do: America is facing a health care crisis caused by a combination of skyrocketing costs and an insurance system that leaves 47 million of us without any coverage. We must make quality, affordable health care available to all U.S. residents. All Americans should have access to a basic level of care that includes the prevention of disease, health promotion and education, primary care (including prenatal and reproductive health), acute care, long-term care and mental health care. At the same time, the federal government needs to take action to reduce the costs of health care for individuals, businesses and communities. As a nation, we are spending $1 out of every $6 we earn on health care. Over the last three decades, increases in the amount we spend on health care have consistently risen faster than wages and inflation. If nothing is done to control costs, we could be spending $3 trillion for health care by 2011 and $4.2 trillion by 2016. Thats 20 percent of U.S. gross domestic product (GDP).