SOONER OR LATER the country will have to get serious about ways to keep health costs from consuming an unacceptable portion of national income while still maintaining the generally high quality care that most Americans now enjoy. Providing incentives for doctors and hospitals to operate more efficiently is surely a more desirable way to curb health costs than heavy-handed controls on either prices or services--if good quality care is still assured.
None but the most ardent advocates of medical competition, however, claims that it will produce large and immediate budget savings. Partly this is because it may take years to rekindle the spirit of competition in a health-care industry in which, thanks to almost universal health insurance coverage, cost is rarely an object for either patients or doctors. But people of the kind that the government insures are also the least likely candidates to spark a competitive revolution.
The great bulk of Medicaid and Medicare costs is accounted for by a relatively small number of very sick or severely disabled people who have little choice about their medical care. As for the poor, many have no coverage at all, and those who have Medicaid benefits are frequently driven to high-cost hospital outpatient clinics--or to low-quality and sometimes fraudulent Medicaid specialists--because regular physicians are not interested in serving them even at current costs.
To control these costs quickly, the administration is proposing a variety of short-term budget measures, most of which have little to do with improving health care efficiency. The big cost-savers come either from shifting Medicaid costs to states--in seeming contradiction to the administration's new federalism proise to assume all Medicaid costs-- or from simply refusing to pay part of hospital costs, whether reasonable or not, thus leaving them to be shifted to other patients.
In the meantime, Health and Human Services planners have been hard at work on health financing reforms to spur competition. While these proposals have yet to be unveiled, the administration is already counting on the new plans to produce $4 billion in annual savings by 1985. This is a promise that the reforms are unlikely to fulfill. That fact, however, should not distract Congress from a needed discussion of the basic issue that the proposals will raise. How much does the country want to pay for health care and how does it prefer to pay it?