Last week, Jeff Goldsmith, who enjoys a reputation as one of health care's more thoughtful commentators and advisors, wrote a curious post on this site. He puzzled over Kaiser Family Foundation Chairman Drew Altman's failure to gush that the 2007 health care inflation rate had moderated to 6.1%, down from 13.9% in 2003. While acknowledging that, yes, the drop in inflation is likely a low point in a larger cycle, he noted that, on an $800 billion base, the drop in premium growth freed up some $62 billion in capital for American business, funds that might be applied to better purpose.

 

Jeff theorizes that

 

 

And he points to other influences that might have contributed to cost declines, including

 

 

He chides the health care community's Chicken Littles who, presumably, live in an alternative reality, sit around hand-wringing, repeating "Ain't it awful," but don't get that this drop in explosive cost growth is really a sign of how many improvements there are in the system's function. He says, as though confident that he's dispensing wisdom,

 

    "Sometimes it seems like it’s the only game in town. If you want to see moderating health costs as a problem, and are creative enough, you can think of reasons why this is bad. And how helpful is that?"

 

And he concludes by cheerily reminding us that, placing our problems in a perspective of continuing progress and with a can-do attitude, we can fix our problems.

 

    "The good news is that we are a resource-rich and inventive society that is perfectly capable of finding the answers. But, while we’re at it, it is worth considering that one reason why health cost growth is moderating is that we are doing a bunch of things right.  It might even be that the lower rates of increase in cost reflect slow but measurable progress in our battle against intractable human illnesses such as heart disease and cancer."

 

Its always nice to have Pollyanna over for milk and cookies, but as Steely Dan said, "The things that pass for knowledge I don't understand." One marvels that this nonsense can pass for serious argument.

 

I spend a good deal of my time working with business leaders from non-health care organizations. They are apoplectic over their growing inability to afford health benefits for their employees and their families, and over the health industry's obliviousness to skyrocketing costs. The reality for employers and employees who pay for coverage is that it consumes an increasing share of their resources, and its a terrifying prospect.

 

While its great to see even a momentary decline in cost growth down to only 2.3 times general inflation, Mr. Goldsmith's Big Event was, after all, a single data point in a larger stream of unrelentingly rampant health care inflation. Worse, when understood in the context of cost-per-unit-benefit, the comparison between the premium costs of yesterday and today are not apples-to-apples. Benefit structures are significantly skinnier than they were 5 years ago, and the out-of-pocket costs higher.  In other words, 2007's premium inflation isn't "only" 6.1%, but must be framed against a reduced benefit.

 

And then there are the cost drivers. There is no question that there's been some progress in the health care front. Medicare's finally decided to stop paying for hospital errors. There's activity on the transparency front, including the recent ruling requiring CMS to hand over Medicare physician data to the advocacy organization Consumers' Checkbook. On the science front - and to the financial chagrin of interventional cardiologists and device manufacturers - it's become clear that optimal drug therapy outperforms non-drug eluting stents. Uptake of EMRs and best practice guidelines is accelerating, and a new era of information flow from the Health 2.0 movement promises to move the locus of health care's power increasingly toward patients and away from corporations.

 

But all these steps forward are still congealing. They have not created meaningful efficiencies and savings yet. As a practical matter, most health care processes and outcomes are still opaque to purchasers and patients. Quality management systems remain in their infancy. Fee-for-service reimbursement continues to be the dominant paradigm, rewarding more care rather than the right care. And primary care, the most valuable clinical specialty, remains critically undervalued.

 

And even though health care reform is back on the table, the most important domestic issue in polls and a centerpiece of every Democratic Presidential candidate, there's little reason to believe that meaningful change can occur as long as Congress remains susceptible to the lobbying of this economy's largest business sector. After all, the half of health care cost that is waste is a big portion of health care organizations' bottom lines. Will health care's business leaders willingly agree to lose ground financially?

 

Call me a glass-half-empty kind of guy, but I fail to see that a slight, arguably cyclical moderation in a longstanding and ferocious economic trend is cause for rejoicing, especially when there are so many other signs that the fundamentals remain unchanged. Nor do I see how it is helpful to suggest to non-health industry business leaders - whose understanding of the gravity of the crisis and whose support for serious solutions is critical to its resolution - that we're coming out of the storm when proof of progress demands significant leaps of faith.

 

I've generally been a fan of Mr. Goldsmith's work, but not this piece. I'll be the first to cheer when there are substantive enterprise-wide improvements in health care. But the simple measure and trends he points to aren't enough. Worse is his suggestion that the rest of us are just too dumb and "neurotic" - yes, I think that was the word he used - to appreciate progress. Coming from a guy of Jeff's stature, that sort of pop psychology is pure arrogance. It also conveys to our potential allies, America's business leaders, that we don't grasp what's going on and that the crisis is beginning to resolve.

 

As far as I can tell, we do and it isn't. Which means that one of us must not understand the situation.