THE ECONOMICS OF HEALTHCARE –
CAN THE FREE MARKET SAVE US?
David W Kabel MD
February 19, 2013
During the recent election campaign deficit and reduction and the growing national debt were among the topics that were hotly debated. Entitlement spending, and especially the rising cost of Medicare and Medicaid were identified as major causes for the growing debt. The debate over Medicare and Medicaid that took place during the campaign highlighted two different approaches to the problem. The Romney campaign, in large part adopting the approach put forth by Vice Presidential candidate Paul Ryan, relies heavily upon the private sector. Under the Romney/Ryan plan, Medicare would essentially be ended as we know it and further Medicare recipients would be given premium support or vouchers by the federal government to purchase private policies. To deal with Medicaid a proposal was made to end Medicaid as we know it and to provide block grants from the federal government to the states to subsidize Medicaid, letting each state decide on eligibility and benefits. The goal of this approach was primarily to reduce federal expenditures for Medicare and Medicaid without taking a system wide approach to reduce overall healthcare spending.
The Obama approach, as embodied by the Affordable Care Act of 2009, otherwise known as Obamacare, took a more system-wide approach to healthcare cost. Through a combination of public and private approaches, the purpose of the ACA is to reduce the rate of rise of federal expenditures for healthcare by changing the way heath care is provided and changing the incentives for hospitals and physicians, thus reducing overall healthcare spending. The ACA is a flawed piece of legislation, but is probably the best that could be passed in a bitterly divided congress at the time. In order to get insurance companies, pharmaceutical companies, hospitals and professional societies on board, several compromises had to be made, rendering the bill flawed, but nonetheless an important first step in healthcare reform.
Healthcare costs have in the United States have been rising faster than inflation for many decades. There have been efforts to control costs, most of which have met with mixed success. There has been an ongoing debate as to whether we should rely on private sector mechanisms and the free market to control costs or whether more government involvement is required. I will give a brief history of previous efforts at healthcare cost containment. This will be followed by an explanation of why these efforts have been unsuccessful and why healthcare differs from other sectors of the economy. I will conclude with a look at what other countries are doing and how this might apply to healthcare reform in the United States.
Medicare and Medicaid were passed into law and signed by President Johnson in 1965. It was the greatest expansion of the welfare state since the New Deal. It was bitterly opposed by hospitals and medical societies at the time. Future costs were vastly underestimated. No one in 1965 anticipated the advances in medical technology that would occur over the coming decades as well as the expanding lifespan of Medicare recipients. In 1965, the average lifespan for an adult male in the United States was 70 years of age. Today that lifespan is 78 years. The average person reaching age 65 can anticipate living an average of 20 more years; thus receiving Medicare benefits for far longer than anyone expected back in 1965. That is one of the primary reasons for the high cost that we face today.
Prior to 1987, hospitals and physicians were all paid on a fee-for-service basis. The longer the patient stayed in the hospital the more the hospital got paid. The typical heart attack patient would remain in the hospital for 2 weeks. After gallbladder surgery 7-10 days was common. Compounding this was the fact that Medicare and many private insurance companies would not pay for outpatient diagnostic workups for things such as colonoscopies. However, they would pay for inpatient diagnostic workups at a greater cost. Therefore, many patients would be admitted to the hospital for diagnostic workups that are routinely done on an outpatient basis now. In 1987, Medicare and Medicaid introduced diagnostic related groups or DRGs. In this system, which is still in place, hospitals are paid a set amount for a given diagnosis regardless of length of stay or expenses incurred by the hospital. The predictable result of this is that hospitals and doctors became much more efficient in their delivery of care and lengths of stay for a given problem became shorter. In particularly complicated cases hospitals could apply for outlier status and receive additional money, but it was generally not enough to cover the added expenses.
The first real attempt to bring free market principles and competition into the overall healthcare system was the concept of managed care around 1990. This resulted in the formation of health maintenance organizations. There have been several varieties of health maintenance organizations but they all share certain characteristics. A hospital or group of hospitals and physicians, often employed by the hospitals would contract with insurance companies to provide care for a group of patients for a set fee per patient. This arrangement is known as capitation. There were usually preferred panels of physicians and hospitals as well. The providers were willing to negotiate lower fees in exchange for being exclusive providers for a particular group of patients. If the contracted providers were able to care for the patients in the HMO for less than the capitated amount then there was a profit to be shared by all providers. If, on the other hand, the cost of caring for these individuals exceeded the group’s capitated amount, then the organization would lose money. HMOs were successful in holding down the rate of rise of healthcare costs between 1993 and 1998 when healthcare inflation was at its lowest level in decades. Initially, HMOs and managed care did bring efficiency to the healthcare system but after 1998, healthcare inflation rose back up to double digits. It remained there until 2009, when costs again began to drop. There is ongoing debate as to whether the recent drop is because of the recession or because of actual changes in behavior of physicians and hospitals to lower costs.
Most of you are probably familiar with the scope of the problem with healthcare. We spend 2.6 trillion dollars a year on healthcare in the United States which represents 17% of our gross domestic product. It is estimated that this will rise to 25% of GDP by 2026. The Netherlands spend the next highest amount of GDP on their healthcare which is 12% with Switzerland following at 10.6%. Despite spending more of our GDP on healthcare than any other country we still have 50 million uninsured in the United States. All of the European Union countries, Japan, Taiwan, and Singapore provide universal coverage for much less than it costs in the US.
In addition to higher costs, we also have worse outcomes in the United States. In a recent survey by the Organization of Economic Cooperation and Development, a group of 34 countries in Europe, North and South America, and Eastern Asia, the numbers are striking. The United States spends $8,200.00 a year per person on healthcare while the OECD average is $3,200.00. US public money is 8% of GDP while the OECD is 7%. Despite spending more money on healthcare we have fewer physicians and hospital beds per population, fewer hospitalizations and shorter lengths of stay, but more preventable hospitalizations. The life expectancy in the US is 78.2 years whereas in the rest of the OECD, which includes some countries which are less developed than we are, it is 79.5. Since 1960 the growth in life expectancy in the US has gone up 8.3 years versus and average of 11.2 years in the OECD at large. We have fewer primary care physicians on average but more MRIs, CTs, total knee replacements, tonsillectomies, and cesarean sections take place in the US. An average hospital stay in the United States costs $18,000.00. In the rest of the OECD the cost is $6,200.00. There are a few things where the US comes out on top. It has the best survival rates in breast cancer and colon cancer, probably related to extensive use of screening tests. However, even the breast cancer data has been called into question in that some experts feel that the widespread use of mammography has resulted in detection of small tumors that may never have caused a problem but are still treated with expensive and debilitating chemotherapy and radiation.
So why are costs higher in the US? I will attempt to outline some of the reasons. As I have just alluded to, increased utilization of technology is widespread. Again, using OECD data, we have 2-1/2 times more MRI scanners per million population than the OECD average. Not surprisingly, we have twice as many MRI examinations. Similar numbers apply for CT scans, and many types of surgeries, all without corresponding improvements in outcomes.
Utilization also varies widely by geography. This is true both nationwide and within the state of Iowa. Where there are higher concentrations of physicians, such as the East Coast, Florida, Texas, and California, utilization tends to be higher per population. There was an article published in the Des Moines Register within the past 2 months showing the rate of utilization of prostatectomy within the state of Iowa. In some metropolitan areas within the state, the rate of prostatectomy was 2-1/2 times higher than in others. These differences in utilization have not been shown to result in improvements in outcome.
Physicians and hospitals do charge higher fees for their services than in other countries that have fee for service. Some of this is due to more regulation in some of the other countries. Drug costs are higher in the US than in any other country. Most other countries negotiate directly with pharmaceutical companies for reduced prices. The Medicare Part D act of 2003, in a clause championed by our own Senator Grassley, specifically forbids our federal government from negotiating directly with pharmaceutical companies. As a result, the US subsidizes drug prices in other countries. It should be noted that the VA has negotiated drug prices directly for years.
Another factor that leads to increased cost is mal-distribution of physicians. As noted above the physicians tend to be concentrated in urban areas and “desirable” placed to live. Medicare reimbursement rates in such high density areas as New York, Florida, Texas and California tend to be 1.4 times as high as those in Iowa, which is 49th in Medicare reimbursement rates among the states. Despite low reimbursement, Iowa physicians and hospitals have consistently been in the top 5 in terms of quality of care to Medicare recipients. The other states that rank low in reimbursement rates also rank low in quality. Ironically, Louisiana, which has the highest Medicare costs per recipient ranks 47th in quality.
One reason cited for high medical costs in the United States is medical malpractice. However, the trend in malpractice premiums in most specialties has been downward for a decade. There are some high risk specialties such as obstetrics and neurosurgery that continue to have high premiums, but for primary care providers malpractice premiums are low. My own malpractice premium this year is 1% of total revenues.
The medical legal climate is blamed in another way for high costs. It is impossible to know how much of our healthcare expenditures are devoted to defensive medicine. This is defined as procedures that might not otherwise be indicated but which are ordered because of fear of malpractice. There is no definitive data on how much is spent this way, but some estimates are in the range of 10-20% of healthcare expenditures. Efforts at tort reform in some states have not led to significant drops in premium and many states that have enacted tort reform still have higher premiums than Iowa.. The total number of malpractice suits has been dropping in most states for about 10 years.
Healthcare administrative costs are roughly 3 times higher in the US than in other OECD countries. On average, $900.00 per year is spent on every resident of the United States in health care administration versus $300.00 in the OECD countries. If you take the $600.00 difference between the two figures and multiple it by 315,000,000 Americans, the savings from lowering administrative costs to OECD levels would equal $180 billion a year. Our administrative costs are high because of the complex system that we have for delivering healthcare and private insurers who must spend on marketing and return to investors.
End of life care is often cited as a reason for the accelerating cost of medical care. Six percent of Medicare patients die each year and 27% of Medicare expenditures occur in the last year of life. However, that figure has not changed in decades and hence cannot be blamed for healthcare inflation. One percent of all Americans die each year and in that final year consume 10-12% of healthcare resources, but again that figure is constant.
Another reason for the high cost of healthcare is that most users of healthcare are not purchasing that care directly but through third parties such as Medicare or private insurance companies. There is little incentive for people to avoid consuming care. Also people do not know the price of services that they are purchasing. Insurance plans have introduced high copay and high deductible plans and health savings accounts (HSAs) in an effort to make people more aware of costs. Some experts feel that these changes are one reason for the recent slowing in healthcare inflation.
The final reason for high cost is simply demographics. We have an aging population which consumes more resources as it ages. Part of this is attributable to the fact that we have much better treatment of heart disease and cancer than we did even 10-20 years ago. In the case of heart disease, life style changes and more effective risk factor management have contributed to this. Smaller numbers of smokers have contributed to longer lifespans but that increases costs. It might seem counterintuitive, but smokers actually consume fewer healthcare resources than nonsmokers. While they tend to have more chronic illnesses, they also die 10 years sooner than nonsmokers and therefore have 10 years where they are not utilizing health resources at all.
One of the consequences of aging is the increased numbers of people with dementia. Currently, there are 4.7 million people in the US with dementia. This is estimated to rise to 13.8 million by 2050 if effective treatment is not found for this vexing problem. People with dementia consume a very high proportion of healthcare resources since they can require decades of institutional care.
The debate that is going on now is what we can do to slow the rate of healthcare inflation. Free Marketeers believe that getting government out of healthcare will release the invisible hand to weave its market magic and help us control our healthcare costs. This is despite evidence to the contrary. Despite having the most Free Market Healthcare system in the world we also have the highest cost, and still, 50 million people are without healthcare coverage. In the 2012 World Health Organization rankings of national health systems the United States ranks 37th, just behind Costa Rica and just ahead of Slovenia and Cuba. Number 1 was France and number 2 was Italy with Spain ranked 7th and Austria ranked 9th. Japan was ranked 10th. One other point that should be made is that despite being the most free market healthcare system in the world, 50% of our healthcare expenditures are through federal and state governments through Medicare, Medicaid and the Veterans Administration.
One final argument that should be made regarding private versus public spending on healthcare is that Medicare has been better at controlling the rate of rise of healthcare costs than private insurance for the last 20 years. Over the last decade, Medicare expenditures have risen at a rate of 8% a year, while private insurance expenditures have risen at a rate of 10%. This is despite the fact that the Medicare population is obviously older and sicker. Administrative costs for Medicare are 3%. Administrative cost for private insurance plans can range as high as 20-30% due to marketing and return on investment needs. One of the provisions of Affordable Care Act requires private insurance companies to spend at least 80% of premiums on providing healthcare rather than administrative costs. Private insurers are shareholder owned and must return a dividend to the shareholders. Medicare has no profit motive.
The reason the free market has not been successful in holding down healthcare costs is that healthcare is unlike other sectors of the economy. It is arguably the biggest sector of the economy now but behaves in ways that are different from other sectors.
These differences were first elaborated by Nobel Prize Winning Economist Kenneth Arrow in 1963 in the American Economic Review. The title of his article is “Uncertainty in the Welfare Economics of Medical Care”. In this paper he outlines how healthcare purchases differ from other purchases.
The first difference is the nature of demand for healthcare, which its unpredictability. Illness or accident frequently arrives unexpectedly and is not only unpredictable but very irregular, unlike demands for things such as food, clothing and shelter. Also, medical services afford satisfaction only in the event of an illness, which is the departure from the normal state of affairs. The only other economic transaction which could be said to be undertaken unwillingly at times would be the demand for legal services. Arrow also points out that demand for medical services is associated with an assault on personal integrity, risk of death, and risk of impairment. It is often accompanied by potential for loss or reduction of earning ability. So there are not only financial, but potentially personal costs associated with the purchase of healthcare.
A second difference between healthcare and other economic sectors is the expected behavior of the providers of healthcare. In an acute illness the purchaser of the healthcare often does not have a chance to comparison shop and decide on the cheapest or best physician or hospital. Therefore, the element of trust is extremely important. Arrow points out that healthcare is unique in terms of commodities in that the product and activity of production are identical. He also points out that the ethically understood restrictions on activities of a physician and hospitals are more severe than other licensed professionals. He uses the example of a barber who is also a licensed professional. However, Arrow points out that when a barber gives a consumer a bad haircut, the hair will always grow out again. The expectations of doctors and hospitals are that they will behave ethically with the primary concern being the welfare of the consumer or patient. Another difference that Arrow points out is product uncertainty. While diagnosis and treatment have improved significantly since 1963, there is still an element of uncertainty in any acute illness that does not guarantee a desired outcome. With other commodities it is possible to learn from experience. A good example would be buying a car. A car purchaser may buy a particular brand which proves unsatisfactory. The next time the purchaser buys a car the buyer would be likely to get a different brand, whereas a good experience generally fosters brand loyalty. In the case of severe illness, there is usually no previous experience with this illness and no way to know how it will turn out or to apply previous experience.
In addition to uncertainty there is asymmetrical knowledge. The medical professional knows much more about the situation than the patient and therefore the patient must rely on the physician’s knowledge to guide therapy. Critics of Arrow point out that asymmetrical knowledge occurs in most professional and licensed occupations. A local example of the ultimate in asymmetrical knowledge would be the case of Russell Wassendorf, whose clients were unaware of the fact that he was robbing them blind for 2 decades. Nonetheless, the stakes in healthcare are much higher than in most situations, resulting in reliance upon the physician in situations where the patient may not be as informed as possible.
The fourth area where Arrow points out that healthcare differs is in supply conditions. All professions and many skilled trades require licensure and demonstration of competence, but the supply of physicians is significantly limited by length of training. Obtaining a medical license is among the more difficult professional endeavors, requiring more years of training than virtually any other profession as well as a demonstration of competence at several steps on the way to completion of that training.
The final area where Arrow points out the difference between healthcare and other sectors of the economy is in what he terms idiosyncrasies of payment. There are many. Care is paid for after and not before provision of the service and that service is nonrefundable. Patients are given little or no information on price or costs. The costs are paid by third parties, either the government or insurance. The payers and providers negotiate the payments on behalf of the patients. In acute situations patients do not have the power to say no if the price is too high. Finally, unlike other areas of the economy, competition drives up costs rather than lowering them. One traditional theory of currency inflation is that inflation is caused when there is too much money chasing too few goods. You could say that medical inflation occurs when there are too many doctors chasing too few patients. This is why costs and utilization rates are higher in areas with higher concentrations of physicians. In order to maintain their incomes, physicians in over served areas frequently find creative ways to extract maximum revenue from the insurance companies of their patients.
Some people might say “So what if we spend this much money on healthcare? We have to spend it on something.” But the high costs of healthcare have deleterious effects on other parts of the economy.
The current employer base system is flawed in many respects. Employer based health insurance discourages job mobility. With job changes many people have waiting periods before insurance coverage starts and may be excluded for preexisting conditions. This discourages job mobility and also discourages people from leaving an employer based system to start up their own businesses, thus discouraging entrepreneurship. The employer based system also discourages retirement before age 65. In many professions such as nursing and teaching, this means that new graduates have difficulties finding jobs in their chosen fields because of older workers who continue working only to retain their health insurance until reaching Medicare eligibility. In the last 10 years the number of people covered by employer based insurance has dropped from 69% to 61% and those healthcare plans that remain are generally imposing higher deductibles and copays upon the employees to control premium costs. Also, because of rising healthcare cost employees have often opted to retain health insurance at the expense of raises in salary.
Another problem with the ever rising cost of healthcare is the effects on Medicaid costs for the states. As Medicaid costs rise, state budgets are stressed and cuts come elsewhere. Education and public safety are the usual areas which are cut.
The consequences of being uninsured are well known. By some estimates anywhere from 18 to 40 thousand people die each year from preventable illnesses due to lack of health insurance. Rather than getting needed preventative care the uninsured usually seek care in expensive emergency room settings. They are often treated sub-optimally because of the cost of medications and procedures. The uninsured often end up in the hospital and unable to pay their bills. The hospital costs are then spread to paying customers, resulting in increased charges to everyone else and decreased staffing for the hospitals. The Affordable Care Act attempts to deal with this through its Medicaid Expansion Program. As you are no doubt aware, Governor Brandstad has refused to sign onto the Medicaid Expansion so far. In negotiating the Affordable Care Act with hospital associations, the hospitals took lower rates of pay for Medicare patients in exchange for the expansion of Medicaid that would mean they would have fewer nonpaying patients in the future. Medical societies and hospital associations within the state are attempting to persuade the Governor to change his mind. If he does not, then the hospitals will be forced into staff cutbacks and higher charges for everyone else.
So what does any health care system need? It needs 5 things. The first is finance. The finance can be either private or government supplied or a combination of both, but ultimately it must come from individuals and households through either taxes or payroll deductions. The healthcare system also needs risk pooling to protect individuals from high costs. This is the same as in any insurance plan. The health system needs purchasing of healthcare, namely physician services, hospital services, pharmaceuticals, and medical devices. It also needs production of healthcare from the same physicians, hospitals, pharmaceutical and device companies. Finally, any healthcare system needs some form of regulation to produce socially desirable ends. The question is who should provide financing and regulation?
There are many barriers to controlling costs while providing universal coverage. Some barriers are political and others are cultural. The political barriers are obvious; deficit reduction, free market vs. public financing, and divisive issues such as abortion and contraception. The cultural barriers are equally difficult. Canada, Japan, Taiwan, and the EU countries provide universal coverage based on the principle of social solidarity, which says that healthcare should be financed by individuals on the basis of ability to pay and provided according to need. This concept is widely accepted in these countries. As Princeton economist Uwe Reinhardt points out, a large segment of the US population rejects this idea. You may remember during a Republican presidential debate that Ron Paul, a physician, was asked what to do about a critically ill person who came to an emergency room lacking insurance. While Rep Paul attempted to dodge the question, members of the audience shouted “Let him die!” The individual mandate in the ACA, an idea that originated 20 years ago at the conservative Heritage institution, is widely disparaged now by conservatives who object to the infringement on freedom that they see in the mandate, but who would still undoubtedly expect to be cared for if they should show up in an ER uninsured.
While it may sound like heresy to some, I think it would be useful to look at what is being done in other countries to see what might work for us. There are roughly 200 countries in the world. Forty of them have an established healthcare system. However, there are only 4 basic types of healthcare systems.
The first is the Beveridge Model. This is named after William Beveridge, the social reformer who designed Britain’s National Health System after World War II. In this system healthcare is provided and financed by the government through tax payments. It is just like any other public utility such as the police force or public library. There is a mix of both publically and privately owned hospitals. Many physicians are government employees but there are also private doctors. The costs tend to be low and in fact Britain spends about 8% of its GDP on healthcare. Roughly 10% of Britons have private health insurance, either individually purchased or sometimes provided by employers. Countries other than Britain that have the Beveridge Model include Spain, most of Scandinavia and New Zealand. Hong Kong has a Beveridge Model, which it retained when it was incorporated back into China. The ultimate in the Beveridge style approach is Cuba, where government control is complete.
The next model is the Bismarck Model. This is named after the 19th Century Prussian Chancellor, Otto Von Bismarck, who invented the modern welfare state. Not only did Bismarck create a healthcare system, but he also invented social security and chose the age 65 as the age when social security benefits would be available. In the Bismarck Model, health insurance is financed jointly by employers and employees through payroll deductions. In the current German system, retirees are covered by their retirement funds. Premiums for children are paid out of general government revenues on the theory that children are an important and valuable resource. In Germany today there are over 200 independent nonprofit “sickness funds” from which Germans can choose. However, these companies are highly regulated by the federal government. The premiums that individuals pay for this insurance are based largely upon income and ability to pay. Other countries that follow the Bismark Model include France, Belgium, Netherlands, Japan, Switzerland and some countries in Latin America.
The third model is the National Health Insurance Model, which is a kind of cross between the Beveridge and Bismark Model. It uses private sector hospitals and doctors but payment comes from a government run insurance program, financed by taxes. The classic example of this is Canada. Each Province administers its own program and there are individual variations among provinces. Costs are controlled by limiting the fees charged by doctors and hospitals and also by limiting the expansion of technology. Taiwan and South Korea have adopted a similar approach.
The fourth and final model for health care is the Out of Pocket Model. This is what we see in most third world countries and in rural areas of China and India. The only healthcare that is provided in these countries is what can be paid for out of pocket. The costs tend to be far cheaper than they are in the US, but access is extremely limited for most of the population. There are up to date medical facilities in urban areas, where those who can afford it receive high quality care, but which is denied to the majority of the population.
How do those systems apply to the United States? We have elements of all four systems in this country. The Veterans Administration follows the Beveridge Model. Care is provided by government employed physicians and government owned hospitals through the Veterans Administration. Medicare very much resembles the Canadian system or National Health Insurance Model. For Americans who have employer related insurance, we have the Bismark Model and for the uninsured we have the Out Of Pocket Model. The consequences of this fractured system are higher administrative costs, non-uniformity of care and quality, and 50 million people without health insurance.
It is my belief that we will not get health care costs under control and deliver quality with the current fractured system that we have. Although the models differ from country to country, all those countries who have managed to control their healthcare costs and provided universal coveragehave required increased government involvement in the financing and regulation of the healthcare system.
In moving forward, I think we will probably eventually end up with a two pronged system. The Veterans Administration currently follows the Beveridge Model. Veteran’s Organizations rightly argue that the needs of veterans are unique and I believe that the VA system should remain intact and be adequately funded through general tax revenues. This is the least we can do for our veterans who come back from war bearing the scars of battle.
For the rest of us, we need to decide on one of the other three models. The Beveridge Model is probably unacceptable to Americans. It would require most physicians to become government employees and most hospitals to become government owned. That is not likely to happen. However, I think we can eventually evolve into something more approaching the National Health Insurance Model in Canada utilizing private hospitals and physicians with government financing it. This concept is often called “Medicare for all.” This will obviously require additional sources of revenue, and the political will to do it. I believe we will eventually end up with a system like this, but it will likely take a decade or more.
We have other needs that can be instituted sooner rather than later, and should not fall victim to the deficit reduction mania currently prevalent in Washington. There is a need for increased funding for basic and clinical research. As an example, finding a cure for Alzheimer’s Disease would result in significant savings to the healthcare system but can only happen through increased funding for research. We also need better means of evaluating new and old therapies for their cost effectiveness. The Independent Payment Advisory Board, labeled “The Death Panel” by conservative critics like Senator Grassley, established by the Affordable Care Act needs to be reinforced, not abolished. We need to start paying only for what works. We have to be able to say no to some treatments. As an example,the FDA recently denied approval for a drug for prostate cancer that cost $90,000.00 for a course of treatment and resulted on average in 2 more months of survival. We need to educate the public and the medical community about what works and what does not. The attitude that more is always better needs to be overcome as well. As has been shown in a number of studies recently, aggressive treatment of entities such as prostate cancer and some types of breast cancer often results in more harm than good.
There are three ways to save money in the healthcare system. One, we can do less. Two, we can pay less for what we do, or three, a combination of one and two. How to achieve the twin goals of lower cost and higher quality will be the topic of debate for years to come.