WE LIVE IN AN ERA of exploding medical costs but diminishing medical returns. We are spending huge sums on health care -- now more than 10 percent of our entire gross national product -- but we are getting less for the money than in times past.

Most of the striking increase in the life expectancy of Americans came between 1900 and 1960. This was the period in which vaccination, public health, and hygiene became standardized, and, in the latter part of the period, when antibiotics were introduced. In each 20 years of this period, the life expectancy of the average American increased by seven to eight years.

But in the 20 years since then, 1960 to 1980 -- a period in which the capabilities of medical technology, the use of surgery and the cost of medical care have unprecedentedly skyrocketed -- the increase in life expectancy rose only 3.3 years, to 73.3. These figures suggest that the law of diminishing returns is beginning to operate.

What, then, can we forecast for the cost-effectiveness of medical care in the future?

Advances in Technology. Twenty years ago, if you had a pain in your abdomen, you would have had a physical examination, X-rays of the gastrointestinal tract, blood tests and a urinalysis. Today, in addition to those tests, you would have a CAT (Computerized Axial Tomography) scan (cost: $250- $500) or a scan by a Nuclear Magnetic Resonator (estimated cost: $400). And for what benefits? Perhaps to find an incurable cancer of the pancreas. Also, according to an April article in the New England Journal of Medicine, "over-reliance on these new procedures occasionally contributed directly to missed major diagnoses."

In addition to the scans, you would also be apt to have an examination of the stomach and duodenum with a flexible endoscope that can be passed from the mouth all the way to the large intestine ($150 to $1,000). Then, for only $80 more, there would be an ultrasound examination of the gallbladder and liver in search of gallstones.

CAT scanners are only the beginning. Consider the PET (Positive Emission Tomography) scanners that are already operating in a half-dozen medical centers and are planned for as many more. They may make revolutionary changes in the diagnosis of some types of heart disease and cancers and in most diseases of the brain, including the incurable Alzheimer's disease and various psychoses. They even show what part of the brain is being used when you move or think. They indicates the location and extent of chemical activity.

There is only one problem with the futuristic dreams that the PET scanners evoke, and that is that the scanner must be located next to a cyclotron. A cyclotron costs $2 million to $3 million, plus $1,000 an hour to run. A PET scanner costs $1 million. As a result, we will have a $3 million to $4 million investment in a machine that can perform only three or four scans in a day.

I leave it to you to estimate what the cost of a single PET scan will be. One authority has put it at $8,000. The scan would not be very cost-effective if all it showed was that your loss of memory was due to the incurable Alzheimer's disease.

The Threat of Litigation. One of the major factors in the cost of medical care is the ever-increasing incidence of malpractice suits. I know a plastic surgeon in Los Angeles who pays $85,000 a year in malpractice insurance. If he does 425 operations a year, that means he pays his insurance company $200 for each operation before he even picks up his scalpel.

Who pays this $200? Ultimately, the patients do, through the increased cost of medical insurance.

The threat of litigation also forces physicians to practice defensive medicine, which means ordering every test known, so that if the patient sues, his lawyer cannot accuse the physician of negligence. Moreover, it often results in the performance of unnecessary operations, because somehow, in the eyes of a jury, the surgeon who loses a patient as a result of an unnecessary operation doesn't seem as negligent as one who loses a patient because he did not operate at all.

For example, more than $50 million recently was awarded to the parents of a child who suffered brain damage in a complicated delivery which the lawyers claimed could have been avoided if a Caesarean section had been performed. Small wonder that in many areas nearly a third of our babies now are being born by Caesarean.

Advances in Surgery. The past 30 years have seen the development, almost from scratch, of vascular and cardiac surgery. Now there are three full-time vascular surgeons at the Cleveland Clinic, where I used to head the general surgery department, and there are seven cardiac surgeons plus a host of cardiologists doing cardiac catheterizations and balloon endarterectomies, a substitute for bypass in selected cases.

There have been similar developments in orthopedic surgery. In the 1940s there were never more than two orthopedic surgeons at the Cleveland Clinic. Then came the technological triumphs of building artificial joints. Now there are 11 full-time orthopedic surgeons and four more specialists who do not operate. Two hundred and twenty knee joints and 286 hip joints were replaced in 1982.

What happened to all the people with sore hips and knees before it was possible to replace their joints? And how much today does it cost Blue Cross, Blue Shield, Medicaid and Medicare to have their joints replaced? The total cost, hospital, professional and all, is $10,000 to $12,000 for a new hip.

Artifical Organs. Before the 1950s, kidney failure spelled death. Then came dialysis, initiated in America by Dr. Wilhelm Kolff at the Cleveland Clinic. The cost of this was soon taken over by Medicare and Medicaid. Sixty thousand people are now on dialysis at an annual cost of $1.8 billion, 3.6 percent of all Medicare costs, and the numbers and costs are still rising.

And what of the artificial heart? The cost of supporting Barney Clark for four months of existence was $200,000.

Transplantations. If there is no rejection in the first year or two, most of the people with transplanted kidneys live normal lives. More than half of them are living for five years after the transplant, and some are living and well 15 to 20 years later. The patient who has survived longest with a transplanted heart had his operation 14 years ago.

Eighty per cent of Dr. Norman Shumway's cardiac transplants at Stanford now are living more than a year, and it is predicted that more than 50 per cent will live more than five years. It is estimated that 250 of these operations will be done in 1983. There is also a 14- year survivor of liver transplantation.

Since the advent three years ago of Cyclosporin, the proportion of patients surviving transplantation without rejection has increased enormously. This is probably just a beginning; other promising drugs of the same family are being investigated.

What will happen when transplantation operations, some of them costing $100,000 or more, become routine for anyone with failing heart, liver, lungs or kidneys? The liver and lungs are two of the most common sites of metastasis from cancers. Will everyone who has cancer of the liver or lung be eligible for a transplantation? If not, who will decide who will be given the chance to live? The ethics and economies of medicine pose terrible questions that will have to be confronted.

One thing is certain: We cannot anticipate an average life span of more than 100 years even if all diseases become curable. This is because the life of a brain cell is finite, and the cell can never reproduce itself. Eternal or even a great prolongation of life is a dream that is based on fantasy, not fact. But it looks as if it would be easy enough to spend half of our gross national product on what might be largely futile medical diagnosis and treatment.

As an alternative, would it be better to specessaend a tenth of this sum on research into the cause of disease? Could we eliminate many of the most fatal of all cancers by making it impossible for anyone to smoke cigarettes? Could we reduce the incidence of the next most fatal cancers, those of the colon and rectum, by seeing to it that there was adequate fiber in the diet? Could we reduce the incidence of breast cancer by reducing the fat in the diet?

We are indeed at a crossroads. There is no way that we can continue indefinitely to spend more and more money on developing machines that diagnose diseases that we cannot cure or in designing artificial organs or in perfecting the technique of transplanting organs which, if they were widely employed, would result in an almost incalculable expense.

Hope for lengthening life expectancy lies more in basic research than in clinical trials. We need to find a chemical that can be carried by monoclonal antibodies to the specific cancer cell against which it is directed. And we need to find a chemical whose presence or absence is the cause of arterial disease. Money spent on such projects might be more productive than fostering the proliferation of scanners and artificial organs.