It has become a trope of American politics and media: the health care crisis. In its form the crisis is simple: several years of double-digit health insurance price increases have ironically made the world’s greatest medical system unavailable to a large number of Americans. The rhetoric and proposed solutions are similarly blunt. Politicians blame greedy pharmaceutical firms, insurance companies, lawyers or under-funded government programs. But its time to look at the American medical system more closely and consider the underlying trade-off that in the last decade has favored innovation and maximum treatment over affordability. This is the pink elephant of the health care debate: making good, sustainable health care affordable to all Americans requires slowing the commercial development of new medicines and lessening the intensive end-of-life procedures that are making health insurance increasingly unaffordable.

When President Clinton proposed his plan for universal health care, Republicans, patients’ advocates, the health care industry and other business groups attacked it for attempting to create a large new bureaucracy that they said would ration health care. In Canada, it was pointed out, this kind of plan resulted in long waits for some procedures and less access to new procedures or medicine. Sometimes, it was said, the government runs out of funds before the end of the year and has to stop non-emergency health care altogether. This argument prevailed regardless of the fact that in the United States a massive (if private) health care bureaucracy already exists and already rations health care. According to the Congressional Budget Office, almost 60 million Americans lacked health insurance for at least part of the year in 1998, a number that has surely risen along with insurance costs and unemployment.

Aside from the fear that a Canadian-style government-funded plan would lead to rationing of coverage or long waits for procedures, the critics had a more accurate, but shortsighted argument against Clinton’s proposal. They said that many popular drugs and procedures would not exist if not for America’s private medical system, which rewards investment in research and development with generous patent protection and a fee structure that hides the true costs from the primary decision makers (doctors and patients). Under the American system, more so than the Canadian or European systems, a drug company can recoup the high costs of developing a new medicine – and make a hefty profit – during the period when patents protect the drug from competition (and this period has been lengthened through savvy use of patent-law loopholes and lawsuits). A successful product can also cover the costs of failed attempts to develop drugs. This system has successfully encouraged large investments in research that have led to innovation and the development of new medicines and technologies that benefit people around the world. But these investments have also led to the ever-rising costs of health care – and prescription pills most of all. They have led to unscrupulous practices among drug firms, including the manipulation of patents, the bribery of doctors and hospital buyers, and even the promotion of ineffective medicines.

A concrete example of how the patients’ rights lobby and the distorted health care market have led to our current problem can be seen in the following situation. On May 5, the FDA gave partial approval for AstraZeneca’s experimental lung cancer medication Iressa. Patients’ groups have been understandably eager for access to the drug, which is meant to replace chemotherapy. But the FDA was hesitant to approve Iressa because studies have shown it helps only a small percentage of patients and can have a fatal side effect. Iressa has been linked to at least 246 deaths in Japan, the only place it had been approved. According to The New York Times, Iressa’s approval in the United States signals a new willingness to allow unproven drugs to do follow-up tests and long-term studies while the drug is available to patients for prescriptions. This makes sense to patients’ groups, who argue that people with cancer who would die anyway should have the chance to try a potentially life-saving drug, even if it has a very low chance of working. Unfortunately, they aren’t the only ones paying for this massive experiment. Iressa will cost $1,900 a month, and AstraZeneca says its sales could reach $1 billion a year. Because of the way health care functions in this country, the cost of new innovations – and underlying this, nearly all health care research investment – gets passed on to Americans in the form of insurance premiums, paid for by American businesses, the government and individuals. Health care expenses rose by almost 9 percent in 2001 and 12 percent in 2002, while inflation was less than 4 percent.

The problem of rising health care costs has become bad enough that non-health care businesses, such as General Electric and the Big Three automakers, are being pressured by the costs and face increased labor unrest when they try to share them with employees. For the first time in a decade, universal health care is a viable political goal for U.S. politicians. The plans – I’m thinking of Representative Gephardt’s, Governor Dean’s and Senator Kerry’s – all cleverly use a hodgepodge of the existing insurance infrastructure with government subsidies, employer-funded plans and tax credits to help everyone pay for it. But while they may win electoral and industry support, they utterly fail to resolve the real issue, which is rapidly rising costs. They fail because they don’t address the popular fear of losing access to new medicines. In fact, they pander to it.

Some of the plans do include much needed patent law reform and tort reform – limits on the malpractice lawsuits against doctors that have apparently gotten bad enough that many doctors now have difficulty affording (or even finding) mandated malpractice insurance – but they mainly just throw money at the problem. Gephardt, for instance, proposes to drop Bush’s tax cuts and spend all the money on his universal health care plan. This is a great way to stimulate the economy, but a poor way to fix the health care system, which would quickly spend that money and begin asking for more.

If the most basic problem with our health care system is it costs too much, the reason for this is that we are spending too much on it. That is, drug companies are investing too much on developing fancy new technologies and drugs in the pursuit of profit. Unless we restrict the amount of money spent on creating new drugs – by limiting the potential for profit, or changing the way health care is paid for – the prices, and spending, will continue to rise. More people will lack health care while as a country we spend more for it. And while those who can afford it will in some cases get better care and life-extending medicines, in other cases we will be sold expensive snake-oil cures with promises of miracles.

Any plan for lowering health care costs and making health care more accessible has to start from the premise that the more money that is spent developing drugs, the more money that will be charged in insurance premiums and other costs. One idea is to begin by deciding how much we think is appropriate to spend on health care as a society. Five percent of GDP? Ten percent? Another idea is to assess the way health care spending is overwhelmingly in the last years of life, when it may merely be prolonging the inevitable slightly without bringing a real quality-of-life benefit.