JO: The stimulus package calls for $19 billion to be spent over five years. The industries that make the technology and firms that consult with providers on how to use it will surely benefit.
TL: Won’t patients benefit too? Can you give some specifics?
JO: If electronic medical records improve patient care by reducing errors or other problems, then, yes, patients can benefit too. Health IT does have the potential to improve quality of care. Whether that potential will be realized is, however, a very different issue.
TL: Will all this money thrown at IT really reduce the rate of spending on health care, as some believe?
JO: No. Chances are it’s not going to save huge amounts of money.
TL: What do you mean by huge?
JO: The health care cake is very big. IT spending is not even the icing. We spend about $2.5 trillion on health care every year, and it would cost about $125 to 150 billion annually to pay for subsidies that enable all the uninsured to have health insurance. So $19 billion over five years is, comparatively speaking, not a lot of spending. The savings from this investment are likely to be a very small percentage of total health care bill. Health IT is not likely to substantially slow the growth of spending, though it still is worth doing as part of the effort to improve quality.
TL: Haven’t there been studies that show savings in some systems?
JO: There have been studies that show electronic medical records have saved money in the Kaiser Permanente and VA systems. But most American health insurance does not look like Kaiser or the VA. In fact, American health care is not a system. Promoting health IT here is harder than in countries that have single-payer systems, or in closed arrangements like Kaiser and the VA.
TL: How much would the federal government save in its health programs if IT were widely adopted?
JO: The Congressional Budget Office estimates that the HIT provisions of the stimulus legislation could reduce federal spending on health care benefits by about $13 billion over the next decade. But the program will cost about $32 billion to implement in Medicare and Medicaid, so spending on HIT will increase the deficit by $19 billion or so during that decade.
TL: Do other countries count on health IT to control health care expenditures?
JO: There is no evidence that other countries spend less because they use electronic medical records more than us (and they do). Countries that use electronic records controlled costs better long before there were such records.
TL: Why is this lack of evidence overlooked by politicians and, to some extent, the press?
JO: It’s an attractive solution for policy makers and politicians, so it has been overhyped.
TL: Why is it so attractive?
JO: Health IT sounds like a rational, sensible, and technical solution—and most important, it doesn’t appear to take on vested interests or stakeholders like health insurers. That makes it politically useful as a solution. It also promises to improve the quality of care, and politicians like solutions that both control costs and improve quality.
TL: Can you amplify this dual solution a bit more?
JO: Cost control involves pain. So if you have pleasure—in this case, meaning better quality—that means you can run for reelection on something positive. When you run for reelection, you don’t want to run on pain and lost income for constituents. When you’re doing something that sounds better, it’s a win-win.
TL: What cost control measures would result in greater savings?
JO: We could save money by setting budgetary targets for national health spending. For example, the Clinton administration proposed to cap increases in health insurance premiums. We could also create a system that let private and public insurers coordinate a national payment schedule for medical providers. That would help us restrain prices for medical care.
TL: Will America ever adopt these measures, or is medical inflation destined to relentlessly rise forever?
JO: As the saying goes, forever is a long time. If Congress adopts legislation that substantially increases insurance coverage—and there is a good chance that will happen this year—the incentives for the federal government to restrain spending will become stronger since the government will be spending lots of money to subsidize people to buy insurance.
TL: What will happen down the road when everyone realizes that health IT has not produced the promised savings?
JO: We will eventually discover that we can’t compute our way out of the health care cost problem. So the more important question is: What effect does health IT have on the quality of medical care? So far, the evidence that electronic medical records improve quality and outcomes is quite mixed.