President Reagan is perhaps the foremost advocate of voluntarism--the belief that if Americans are left to their own devices, they will find solutions to the ills that afflict society. He recently established a commission to encourage it in the private sector.
In some areas of the society, no doubt, voluntarism packs potential as an agent of change. But in health care, a four-year national experiment with voluntarism as the chief weapon against soaring costs has proven a failure.
The proof was well documented by the principal advocates of voluntarism in the health sector--the American Hospital Association, the American Medical Association and the Federation of American Hospitals--at a recent public hearing. These private interests created the "Voluntary Effort to Contain Health Care Costs" in late 1977 when they faced the prospect that President Carter's hospital cost-containment legislation would impose mandatory controls.
The voluntary effort began with promise. During 1978 and 1979, while Congress debated Carter's legislation, the voluntary effort substantially met or exceeded the major goals that it set in December 1977. These early successes formed the basis for the most persuasive argument used against Carter's hospital-cost bill on the day in November 1979 when the House killed it.
Once the threat of government action died, however, the exhortations of the voluntary effort proved no match for the powerful economic incentives that relentlessly drive the health-cost spiral.
Once before in the 1970s, after the demise of President Nixon's economic stabilization program, a similar phenomenon occurred. Addressing this issue Dec. 15 while testifying before the House Energy and Commerce subcommittee on health and the environment, John Alexander McMahon, president of the American Hospital Association, said: "I think in the short run, very clearly, we got the attention of the hospitals and the physicians to hold the line, and they did. However, they did it more, it looks like, out of some postponement of things than would have otherwise been the case . . . then came this constant hammering . . . the pressures on the demand side were stronger than our preachments."
In 1980, total national health expenditures totaled $247.2 billion-- $1,067 for every man, woman and child in America. In a single year from 1979 to 1980, total health spending rose 15.2 percent, the sharpest increase in any year over the 50-year period for which statistics have been compiled. And the 1981 increase will be greater than 15.2 percent. In other words, at a time when the general economy is slowing, medical-care costs are rising at an unprecedented rate.
The record of the voluntary effort fell shortest in moderating hospital cost increases. In 1979, hospital costs exceeded the industry's goal by 1.8 percent. In 1980, the hospital industry's performance was 5 percentage points above its own voluntarily established goal. In 1981, the voluntary effort set a goal of simply lowering the 16.8 percent increase registered the year before. Through the first nine months of 1981, hospital in-patient expenses climbed at an annual rate of 18.8 percent.
Taking the voluntary effort to task, Karen Davis, a professor of economics at Johns Hopkins University who was a deputy assistant secretary of health and human services in the Carter administration, testified Dec. 15: "In short, the hospital industry has broken promise after promise--failing to meet even modest targets. Instead, hospital costs have skyrocketed since Congress took the voluntary effort at its word and dropped action to impose mandatory controls."
The need for compulsion in some form seems the inevitable conclusion from this failure of voluntarism, unless society suddenly decides that medical care is so valuable that no limits should be placed on its cost. Clearly, there is no consensus on what form compulsion might take. The anti-regulatory mood of the country makes it highly unlikely that Congress would approve anytime soon something similar to Carter's hospital cost-containment legislation.
The Reagan administration seems to favor development of a health-care model based on marketplace principles. But Reps. Richard A. Gephardt (D-Mo.) and Edward R. Madigan (R- Ill.), both advocates of the marketplace model, suggested at the Dec. 15 hearing that short-term regulatory steps would have to be taken first to stem the cost spiral.
In whatever direction the system ultimately moves, it seems time to declare dead as the prime policy choice a reliance on voluntarism to check health costs that are squeezing government budgets and corporate profits.