James Tallon
President, United Hospital Fund
Summary of the Keynote Address:
The Purchaser Revolution
Presented at
Envisioning Ethical Atlernatives in Health Care
9 December 1996
Summary:
Over many years, the deal in American health care was that people who ran the system, the physicians
and hospitals, would take all of the sources of financing and aggregate that money in a way so as to
provide services for everyone. The providers had the responsibility to take the money that flows through
the system and produce the services that would be adequate for all.
A safety net did exist—although it was far from perfect. For the better part of 25 years, that system was accepted in America and was accepted as a way of meeting our social obligations across the board to the entire population.
Responding to rising costs, the Clinton gamble was that inefficient cost shifting could be driven out of the market. Care would be provided for everyone through an employer mandate and various subsidies—and that big business would support this.
However, dramatic changes in the American economy affecting business were restructuring how large corporations thought of themselves. They turned the question about health insurance on its head. Rather then asking "how much will my health insurance cost next year?" The question was posed, "for the following amount of money what will I get?"
Thus in the early 1990's we flipped over to the purchaser revolution, It started in big business and was then mimicked by government programs like Medicaid and Medicare that purchase care on behalf of large numbers of Americans. This purchaser revolution seized the dynamic of the American health care system in the early 1990's and literally turns it on it's head.
In the provider driven system a sick person generated revenue to the system; the sicker, the more revenue. In a purchaser driven system a sick person generates costs. The changing dynamic of the way the system assesses the risks associated with persons who are going to place large claims on the health care system is the new challenge with which we're dealing.
This is part of a larger trend in public social policy. We have had systems, essentially, in which the healthy subsidize the sick, the young subsidize the old, and those who are better off economically subsidize those who are less well off economically. Today all these relationships are breaking down The question now is whether there is a uniquely American way of mixing and matching the elements of the system so that we can evolve from where we’ve been over the last 30 years on into a satisfactory future?