ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, June 3, 1996 TAG: 9606030006
SECTION: EDITORIAL PAGE: A5 EDITION: METRO
SOURCE: NEWELL R. FALKINBURG, M.D.
THE COST of American health care approaches 20 percent of the gross national product. It is second only to national defense as the most expensive item in the budget. Its costs have been runaway, dramatically exceeding overall inflation, in almost every year in recent history.
No one can argue with the fact that American health care is the best in the world. But its high price makes it beyond the reach of many Americans. Paradoxically, this places an upward pressure on prices by encouraging patients to wait until their illness are more severe (therefore, more expensive) before seeking care.
The causes of these high costs have been argued for more than a decade: the cost of technology, fee-for-service reimbursement of physicians that allegedly encourage overutilization, insurance policies with no or low co-payments by patients, fraud and abuse, defensive medicine prompted by malpractice concerns, lifestyle behaviors that predispose people to illness, and a bizarre system of reimbursement of hospitals known as "cost-plus."
Not all of these are equally culpable for our high costs. Understanding these issues will help evaluate any proposed solutions.
Health care is what it is today because of the application of technology. We have sophisticated X-rays in the form of digital subtracting angiography, CAT scanning, magnetic resonance imaging - and is it expensive! A CAT scanner costs more than $1 million. We have mind-boggling laboratory tests allowing physicians to paint a virtual metabolic picture of the human organism, permitting fast and efficient diagnosis and treatments that were impossible only a few short years ago.
At first blush, one might attribute the high cost of health care to this alone. But more effective technology actually reduces costs. For example, laparoscopic cholecystectomy dramatically reduces the length of hospital stays after surgery because the complication rate is much lower than with conventional surgery. Various scanning modalities detect malignancies and many other diseases earlier, making treatment faster, easier and often less expensive. This is not to mention saved lives, with less pain and suffering. Over the long haul, technology is cost-effective.
Defensive medicine and fee-for-service reimbursement of physicians contribute to overuse of medical services. Fraud and abuse are occasional problems. Together, they constitute only a small portion of overall health-care costs.
Lifestyle choices contribute significantly to the cost. At any given time, more than 25 percent of the general medical hospital beds are occupied by patients suffering from diseases resulting from the choices they make. Lung cancer, emphysema, cirrhosis of the liver, complications of hardening of the arteries and AIDS are all consequences of the choices we make, for example, tobacco, alcohol, drug abuse as well as dietary and sexual indiscretions.
The real culprits, though, are a strange method of reimbursement of hospitals by Medicare and insurance companies over the past 50 years, and insurance that requires no or low co-payments.
Many years ago, there was no health insurance. The affluent paid as they went, while the poor and less affluent went to charity hospitals when they became seriously ill. It was In smaller communities, the cost of caring for the medically indigent was absorbed by local hospitals.
Blue Cross/Blue Shield was born in the 1940s to cover the cost of catastrophic illness. When a subscriber required hospitalization, insurance paid the bill. Blue Cross agreed to pay the hospital all "reasonable costs" incurred in caring for a patient - plus a 10 percent differential to help defray the cost of the charity care these institutions gave. How would you like to have a business that generated enough revenue to cover all "reasonable" costs plus 10 percent?
Then Blue Shield began to pay physicians' fees, and reimbursed doctors a "fee for service" for the care they rendered. Physicians' services constitute only an estimated 16 percent of overall health-care costs. Clearly, the major culprit was this bizarre "cost-plus" reimbursement of hospitals.
As one might predict, from 1940 to 1960, health-care costs precipitously escalated, and the term "reasonable" took on new meaning. A bar of soap cost $10 and an aspirin $7. Other insurance companies joined, and we were off! It did not take long for the private sector to notice that there was a big profit to be made in health care, and proprietary hospitals made their debut.
The patients did well. They were insured. Senior citizens fared less well because they generally were less affluent and often unable to afford insurance premiums. To address this inequity, the federal government instituted Medicare in 1963, a federal program offering senior citizens hospital insurance. It was a smashing success!
Now nearly every American was insured against the devastating financial consequences of catastrophic illness. Medicare, however, patterned its reimbursement method after Blue Cross/Blue Shield. Health-care inflation raged, producing the most expensive system in the world.
Insurance paid nearly all the costs of treating an illness. The patient paid very little, and often nothing. This created a sense of entitlement and fostered a tendency to overutilize services, creating an enormous demand for the most expensive options. "The cost be damned; I have insurance." The physician may be held culpable here, too. The doctor does give the orders, and when a patient is "well-insured," cost clearly becomes a subordinate issue.
The lack of "co-pay" has been especially onerous in the arena of medical welfare or Medicaid. In this situation, the patient has virtually nothing invested in his or her care. It's free! And is it ever overused! Patients frequent emergency rooms for care they should easily get in a physician's office. There is no reason for consumers to use the system in a way they would if they were paying the bill themselves.
A system was in place for more 50 years that rewarded and encouraged overuse and abuse.
It's amazing that our free-market machine stood it as long as it did. But finally, health-care premiums became so expensive that the bottom line of companies like General Motors, General Electric and Norfolk Southern was affected dramatically. Managed care is the result, a mechanism that supposedly makes the health-care system responsive to market forces.
There are only a limited number of ways to deliver health care. Each, unfortunately, creates some form of rationing, excluding some patients from the system. Our traditional "fee-for-service" medicine, with "cost-plus" reimbursement of hospitals, is simply too expensive. Fourteen percent of Americans have been excluded from the system.
Socialized medicine as seen in Great Britain rations care in two ways. Patients may wait years for simple procedures such as a hernia repair. More ominously, it restricts access of certain patients to expensive therapeutic modalities. For example, it is rare for the elderly or for the diabetic to receive dialysis treatment. I don't think this would be tolerated in America.
The only other system of health care is some form of managed care that rations by restricting patient choice. You have to see the physicians and use the facilities that participate in your plan. You can't have this test or that test unless it is really needed. You can't see a cardiologist to check out trivial chest pain unless your primary-care physician agrees.
The potential problem with this form of care is that it focuses on the bottom line, and profits are enhanced by the denial of care. Obviously, some form of oversight will be necessary.
A crucial question to be asked of managed care relates to the real problem in this country. Fourteen percent of Americans are excluded from the health-care system. Any major revision should attempt to accommodate these patients. If it does not, then we have enhanced the profits of the insurance industry and made health care more affordable for giant corporations, but failed to properly address one of the most pressing social needs in the United States.
Newell R. Falkinburg, M.D., practices medicine in Roanoke.
LENGTH: Long : 134 lines ILLUSTRATION: GRAPHIC: graphic RICHARD MILHOLLAND L. A. TIMESby CNB