Joseph Califano, Secretary of Health, Education and Welfare, has cast himself as the Red Adair of hospital costs, proposing, in his own word, to put an antiinflationary 9 per cent "cap" on their annual increase. The hospitals, speaking through their trade associations, don't think it's a good idea. They want to be free to raise prices like everyone else, though the argument they offer is, of course, quality of patient care. Since they feel that way, the "cap," if applied, will be porous, but more likely it won't be applied. The reason is that the U.S. health-care enterprise --ranging from your neighborhood pharmacy to heart-swapping high-technology university medical centers --government intrusion.
One way to understand the politics of medicine is to imagine a restaurant in which gourmet counselors order your meal from a packed menu that lists no prices. The check is taken care of by a faraway paymaster, who sees to it that the counselors get a generous share. Imagine such bizarre culinary economics and you've got a good grip on the relationship that exists between physicians, hospitals, patients, and the so-called third-party payers: health-insurance companies and the federal government's Medicare and Medicaid programs. The doctors order, the hospital provide, the patients receive, and the insurers pay -- all of which helps explain why hospital costs have been climbing by more than 15 per cent a year while the nation's total medical bill, up from $42 billion in 1966 to $140 billion in 1976, is still gaining altitude. Inflation, "catch-up" wage increases for traditionally lowpaid employees, and expensive new machinery account for a lot of that increase. But perhaps the biggest portion originates in unrestrained ordering from the medical "menu."
If these zooming expenditures were buying better health for the American people, the critics of costs would go unheeded. But a long series of expert inquiries -- conducted by congressional committees, the National Institute of Medicine, and various government, academic, and medical organizations -- almost unanimously agree that paying more hasn't made us feel better or live longer. Other industrialized nations spend less and do just as well or better. And though longevity has indeed increased, the computers have yet to establish a firm link between that fact and the additional $100 billion in health-care spending in just one decade. Rather, the analysts point to a number of life-extending, non-medical phenomena of recent years, such as reduced highway mortality from the 55-miles-an-hour speed limit, anti-smoking campaigns, the jogging craze, improvements in occupational safety and more sensible diets. As HEW noted last year in its annual blueprint for health strategy, the Forward Plan for Health, "Aside from the possibility of some major research breakthrough, only marginal improvement in longevity . . . can be expected from further expansion of our medical-care system."
Though spending on health care hasn't visibly spawned better health, it has spawned a vast health-care industry that is peculiarly notable for its ability to create demand for its services. Among its most prominent features is surgery, needed and otherwise. American surgeons are on a hysterectomy and tonsillectomy spree that astonishes their foreign colleagues. Furthermore, American hospitals are on an equipment-buying spree that defies rational need. Thus, computerized scanners, marvelous machines that add a new dimension to x-ray examination, are being snapped up by every crossroads hospital, though their superior performance -- provided at a cost of $300,000 to $500,000 per machine -- is not often required for diagnostic purposes. They are unquestionably better than the previous generation of x-ray apparatus, but in the same way that a jumbo jet is better than a pickup truck. One machine could serve a group of hospitals, but try to tell that to proud hospital trustees or doctors who prefer the convenience of a scanner on the premises -- and damn the costs.
The boom in medical expenditures was long ago characterized as one of those things that can't go on like this; nevertheless, it does, which raises the question of why.
Setting aside the matter of how often health care is really good for your health, the fact is that easy access to modern medicine is a non-negotiable demand among educated Americans -- from whom are drawn the people who make things happen or not happen in American politics. (Federal employees, for example, have helped themselves to what is generally regarded to be the most generous health-insurance scheme in the nation.) And, by and large, the system, whatever its therapeutic value may actually be, does look after this influential segment of the population. Criticism of the medicine mostly emanates from the salaried thinking class, but even the most piercing critics will quietly acknowledge that they and their families have a satisfactory relationship with modern medicine. Thus, there is no influential ground swell of opposition to fee for service, doctor sovereignty or gold-plated hospitals.
The doctors aren't exactly suffering with the present system. And though hospitals say they're in a pinch and are forced to close down a substantial number of beds, they've always got the insurance companies to bail them out. Premiums, of course, have sky-rocketed to the point where some industries and labor unions are searching for medical economies, but the link between insurance payments and extravagant medical care is fairly remote for the ordinary citizen. The key questions in most minds are whether medical care will be available on demand and will insurance pay the big bills.
The big losers in this process are people who are outside the insurance network. However, with Medicare and Medicaid covering most of the elderly and poor, there is no constituency for reform in those categories. Those who slip through that safety net evoke charitable concern in many of those who are well protected, but the medically isolated pose no political threat to the system.
The system is economically draft, not infrequently dangerous for the very people who crave its services, and often inadequate for those who need its services. But for those who matter politically, it either works or seems to work -- and that's why Califano's proposed "cap" on hospital costs faces serious difficulties in Congress.
George Bernard Shaw saw the matter clearly in 1911 when, in the preface to The Doctor's Dilemma, he wrote:
"That any sane nation, having observed that you could provide for the supply of bread by giving bakers a pecuniary interest in baking for you, should go on to give a surgeon a pecuniary interest in cutting off your leg, is enough to make one despair of political humanity."