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The Carrot and the Sick


By George G. Scholomite

NATIONAL HEATH CARE, since back in the '40s, has been an issue that politicians campaign on, moralists moralize on, and legislators sit on. Recent developments bear witness to this, mainly because there have been so few recent developments to speak of.

President Carter is one politican who campaigned on a platform that listed a "comprehensive program of national health insurance" as one of its major concerns. In April 1976 and again in October of that year Carter said: "The coverage, (National Health Insurance coverage) must be universal and mandatory...freedom of choice in the selection of a physician and treatment center...will always be maintained...We must phase in the program as rapidly as revenues permit, helping first those who most need help, and achieving a comprehensive program well-defined in the end."

Despite the President's good intentions, it soon became evident that, although the administration had listed hospital cost containment as one of its five top legislative priorities, it has taken a back seat to the energy issue and the Panama Canal treaty. The President realized that Congress could deal with only so much legislation at a time. So his letters to key congressmen urging them with his blessing to enact health cost control legislation were in vain. It has since become obvious that the administration's hospital cost control bill will not become law this year.

In the meantime, moralists have reason to continue moralizing. Health costs continue to rise and spending on health care continues to increase, with the burden falling on the poor who are not so coincidentally also those most in need of improved health care. The 79 per cent increase in per capita spending on health care from 1965 to 1976, and the 110 per cent increase in spending on hospital care during this same period is continuing.

Only some of the spending actually has worked to improve the quality of health care. The growth of private and public insurance coverage, for example, has brought access to many who previously did not have it; advances in technology that have increased the power of medicine to prolong and enhance life have required additional funds; health care has taken on new assignments, like mental health, drug abuse and alcohol abuse. And the pay of health care workers has finally been brought up to the level of other industries.

If all the money represented by these rising costs was going directly to the cause of improving the health of Americans, everything would be fine. But it hasn't. Instead, because of the nature of our health care system, too much of this spending is simply wasteful. Part of the problem lies in wrong incentives. Hospital administrators are one group which has a disincentive for cost cutting. Instead of being rewarded for making wise decisions that cut costs, administrators receive less revenue the following year and, as a result, face a loss in staff and, eventually, patients. Local regulatory boards also have a disincentive to close down or contain costs in local hospitals because these costs are almost always being covered by money outside the region of the hospital. Closing these hospitals would only serve to create unemployment in the local communities.

MOST IMPORTANTLY, our present health care system has built in wrong incentives for physicians. Most of this problem lies in the "fee for service" concept. This traditional method of reimbursement for physicians has two corruptive elements. First, a physician is able to charge for each discrete service performed, and second, the charge is determined by usual and customary fees in the community. Thus physicians, following incentives, and remembering all those tortuous days (and nights) in med school, head for the most well-to-do communities like so many bloodhounds.

As might be predicted, the people who suffer most from the crunch resulting from increased health costs and increased waste are precisely those who are most in need. Because of the various disincentives inherent in the system, there is an uneven geographic distribution of health care benefits: while wealthy areas are favored, rural and inner city areas are neglected. Public funds, including tax subsidies, do more for the well-to-do than for the poor. Since, in our present system, health benefits are linked to employment, the unemployed are often left unprotected. For those who are employed, programs like Medicare pay more on behalf of people who choose more costly care. People who are forced to accept a lower paying job may even lose their Medicaid eligibility.

And those most in need of improved health care are virtually powerless to initiate change in the current system. They are powerless against an awesome wall of opposition. First, there is the American Medical Association (AMA) which, valuing its autonomy like a tortoise values its shell, is inclined to exert negative pressure on any proposal that would result in the decline of physicians' incomes. Needless to say, the idea of eliminating "fee for service" payment is clobbered with a hammer every time it raises its tiny head. Then there are the insurance lobbies and health industry lobbies which are opposed to cost containment legislation simply in the interest of their own profits. Local groups that see Medicaid consuming larger and larger percentages of their budgets are unfortunately also usually opposed to large, federally-funded projects that aim at comprehensive health care coverage. And the AFLCIO, which supported the Kennedy-Corman bill, unfortunately represents people who are employed and who are already covered by good health plans.

ADD TO THESE PRESSURES subcommittee inertia of the kind seen this fall with intra-member feuding, blocked communication channels, and presidential de-emphasis, and you've got "no developments to speak of." If there is going to be progress, public opinion must be mobilized first. The best way to do that is to have a visible public commitment by a president.

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