New Health Care System Called for to Lower Escalating Costs

A significant restructuring of the government's role in the health care system is the most promising plan for containing rapidly escalating health costs, the head of the federal Health Cost and Financing Administration said Thursday at the Kennedy School of Government.

Speaking as a panelist in the symposium "Medicare: Coming of Age," William L. Roper claimed that the federal program had removed the incentive for cost control. "By making the government responsible for paying the bills, this program opened the doors to overcharging," he said.

Allowing federal aid recepients choice in their options of health payment plans could reduce costs, he said. One procedure would allow individual enrollment in the private health plans such as Health Maintenance Organizations (HMOs), he said.

The "prospective payment" system of such plans requires enrollees to pay a lump sum in advance. Since the HMOs are going to make no more than this fixed amount, "there is strong incentive to keep the patient healthy, to prevent sickness, and to keep the period of care short," he said.

Other panelists supported the idea of integrating HMOs and other plans into Medicare. Prospective payment plans have shortened hospital stays and reduced the number of admissions, said Joseph P. Newhouse '63, a senior fellow of the Rand Corporation.

Though this cost efficiency offered by HMOs is desirable, the reduced access is not, said panelist David Blumenthal, co-chairman of the Harvard Medicare Project.

"Choice, and wide choice, has problems in its application to the elderly sector of the population," he said. "I wonder what choice means to people of this age when they are faced with many programs with little help to choose among them."

Some of the elderly, notably those over the age of 85, "even have trouble with very routine activities," he said. "Choice has to be approached very carefully and safeguards must be added for this vulnerable group."