SETTING LIMITS Medical Goals in an Aging Society By Daniel Callahan Simon and Schuster. 256 pp.

HOME," Robert Frost wrote in "Death of a Hired Man," "is the place where, when you have to go there,/ They have to take you in." One of the great tragedies of aging in America is that, even by Frost's unsentimental definition, millions of frail, solitary, elderly Americans have only one true home: the health care system and its maze of hospitals and nursing facilities. And increasingly, under the pressure to contain health care costs, even these institutions are proving less and less reliable: checking more carefully to see if elderly patrons can pay, treating and discharging them faster, leaving them to fend for themselves.

Daniel Callahan, an eminent medical ethicist, thinks that this and many other difficulties facing the elderly in our society are avoidable. In his preoccupation with the health and social problems of our swelling elderly population, he has much company among social commentators. What distinguishes Callahan, however, and what sets this very fine book apart, is his willingness to raise questions that most of us would rather avoid, and to formulate answers that are tough, unflinching, closely reasoned and humane.

On a superficial level, Callahan's analysis follows a fairly standard formulation. The advance of medical science has prolonged the life span of human beings to a point where most developed nations face a "demographic, economic, and medical avalanche." The ranks of the elderly are growing faster than any other age group, and the very old, those over 85, are increasing fastest of all.

Providing food, shelter and medical care for this exploding elderly population will increasingly stress the resources of our society, and increasingly burden a working-age population that is growing less rapidly in numbers than the elderly. Singling out medical care as a special problem, Callahan notes that health-care expenditures on the elderly will grow from $80 billion in 1981 to $200 billion in 2000, using 1980 inflation-adjusted dollars.

Thus the inevitable pressure to "set limits," to find some fair and compassionate way to staunch what some fear will be an unsustainable hemorrhage of societal resources into our medical-care system. Callahan notes that government has already moved in a number of ways to limit Medicare expenditures: increasing the amounts Medicare recipients must pay out-of -- pocket; reducing expenditures to providers; avoiding a commitment to paying for home care and nursing home expenditures. But he finds these measures unsatisfying and unlikely to succeed. "All this is happening," he correctly notes, "without any kind of coordinated plan or alternative vision of a good life for the elderly. The cuts are being made . . . piecemeal and opportunistically, flowing and floating with the political tides."

At this point his analysis enters new and controversial territory. We are committed, he continues, to extending the life of elderly patients through whatever medical means are required. Made possible by our new technological powers, this orientation also reflects a new, "modernized" perspective on growing old in America. The purpose of life for the elderly has become indistinguishable from that of younger generations. It is to live as long, as happily and as productively as possible. The elderly strive to be as youthful as they can for as long as possible.

WHAT COULD be wrong with this? Nothing, Callahan continues, except its true consequences for the elderly and for younger generations. The fact is, he reminds us, that death is inevitable, and that the pursuit of ever longer lives leaves the elderly unprepared to make sense of their advancing age. ". . . life is still finite and time-limited, bounded as ever by death and usually still preceded by a decline of many vital capacities. It {old age} is still a stage of life shot through with loss and desperately requiring that sense be made of it, that its mysteries and terrors be confronted." Beyond this, longer life leaves many elderly in a state of physical misery: feeble, chronically ill, and a burden to themselves, their families and society.

The elderly, Callahan argues, must seek meaning and significance in something other than extension of their biological lives. The alternative he proposes is complex, subtle and appealing, and it is impossible to do justice to it here. The aged, he says, should be "moral conservators." They should help the young understand the past and prepare for the future. They should find "an identity for the self with the serving of a critical function in the lives of others -- that of linking the past, present and future." Above all, he argues for more communal spirit, an ethic of service and less self-absorption among the aged. "I want to argue . . . that it is only through toughly and energetically embracing old age as a time of both service to the future and decline and withdrawal that its value as a stage in life can be redeemed. It is grace under adversity that can impress the young, not the ability of the old to pretend they are still young."

If this psychological transformation were to occur, then it might be possible for the elderly to accept, even advocate, a medical-care system that invested less in research and care designed to extend life, and more in interventions to improve the quality of a limited life span. Such a medical-care system, Callahan believes, would be less wasteful and more humane. To achieve it, however, he recognizes that the goals of medicine must also change.

Medicine, he notes, strives to stamp out disease and illness wherever they are found. In this, the biomedical establishment is "notably age-egalitarian," an orientation that protects individuals against age discrimination, but also has the effect of focusing more and more resources on the elderly as they come to be the health-care system's major clients. The new frontiers of medicine become, willy-nilly, abolishing the diseases of the elderly -- heart disease, cancer and stroke -- and extending their lives.

If we are to set limits on the resources devoted to the health care of the aged, Callahan continues, the medical profession must find a new agenda with respect to the elderly. With the support of the elderly and society at large, medicine "should be used not for the further extension of the life of the aged, but only for the full achievement of a natural and fitting life span and thereafter for the relief of suffering" (italics added). Callahan spends considerable time defining his notion of a "natural life span," but the details are less important than the fundamental fact that he endorses age as a criterion for rationing medical care. He makes the case with considerable eloquence and elaborate sensitivity, but he is the first to admit that "while there are some good reasons to see age as possibly among the criteria for allowing an elderly person to die, it will remain a delicate and difficult task to accomplish well and with moral safety."

Advocates of the elderly will undoubtedly agree. They are likely to see Callahan's argument as a justification for discrimination against the aged, an attempt to demean the individual worth of the elderly as a pretext for denying them care they deserve.

To allay these fears, Callahan cautions that age-based rationing should be instituted only after a "reformulation of the ends of medicine and aging," and "only within a context that accords meaning and significance to the lives of the individual aged and recognizes the positive virtues of the passing of the generations" (italics in original).

HOW IS this to be accomplished? The task staggers the imagination. Neither our current values nor our political and social institutions promote public discourse on topics of this sensitivity. Fundamental changes in our political culture as well as our public institutions would have to occur before Callahan would feel comfortable beginning the implementation of his recommendations.

For this reason, Callahan's analysis offers no true short-term or even middle-term solution to the demographic avalanche and its health-care consequences. For the foreseeable future, we are left, as always, to muddle through.

This realization should not diminish, however, either the importance of this book, or the motivated reader's enjoyment of it. As Callahan pushes his main argument toward its conclusion, he pauses to consider any number of side-issues that are both important and fascinating. What are the obligations of the young to the old, of children to parents? How should we think about intergenerational conflict and equity? Under what circumstances can we withhold nutrition and hydration from dying elderly? Do euthanasia and assisted suicide have a special legitimacy in the care of the dying aged? (Interestingly, Callahan opppses them.)

Even those who find Callahan's central message unsatisfying or distasteful will gain much from his examination of these special topics.He explores as thoroughly and compassionately as I can imagine both the strengths and the weaknesses of an approach to containing health-care resources that many of us, in our innermost thoughts, will repeatedly consider, as health-care expenditures for the elderly escalate. Finding a warm hearth for the nation's elders will not be easy, but certainly, silence on the tough issues will not in the end make their homecoming any easier.

David Blumenthal is senior vice president at Brigham and Women's Hospital in Boston and co-chairman of the Harvard Medicare Project.