NO ONE KNOWS how to do it, but somehow
ways must be found to control medical costs. Either that, or this country will have to spend an ever-growing proportion of its wealth on health care. The spurs that are driving galloping medical cost increases are technological innovation and government reimbursement. The former means increasingly sophisticated and expensive--but also effective--devices and procedures. And for the large portion of Americans covered by public or private health insurance (which is subsidized by government), the latter makes price no object, insulating providers and patients from the curb of the bottom line: "how much can I afford?".
The controversy over the CT scanner, a powerful diagnostic tool that combines an X-ray machine with a computer, exemplifies the moral and practical dilemmas. CT scanners allow doctors for the first time to take pictures of soft tissue inside the body. Every hospital and specialist that can afford one naturally wants it. A CT scan is safe and painless and can replace an invasive and painful procedure (though too often both are undertaken).
But there are drawbacks. Scanners cost as much as $1 million apiece and several hundred dollars for each use. Many machines are under-used and--partly because it is painless--many are used when not medically necessary. Many of the diagnoses the scanner makes possible are for conditions for which there is no therapy. The technology has improved so rapidly that machines are becoming out of date before they can even be paid for. And still more sophisticated and expensive technologies, which provide a "picture" of how part of the body is functioning (instead of what it looks like), may soon make CT scanners--which were revolutionary eight years ago--obsolete.
The Carter administration tried to control the spread of CT scanners. The regulation, which was a centerpiece of its cost-control efforts, required local health agencies to issue a "certificate of need" before a hospital could purchase a scanner. It will probably never be known how effective the regulation was, because although sales slowed dramatically, its implementation coincided with the natural saturation of the market. But there were some visible cost-controlling effects. Companies developed low-cost scanners that fell just below the price threshold in the regulation, and others marketed mobile scanners that could serve several hospitals, because for a time the regulation did not cover them.
But the regulation was also cumbersome, inflexible and very unpopular--especially among manufacturers. And it had the perverse effect of increasing the number of scanners in specialists' private offices--because they also were not covered--relative to those in hospitals, where the machines would be better used. The Reagan administration has just announced its intention of dropping the regulation altogether.
That may be the right decision for this particular regulation. But it is not enough to fall back on the usual rhetoric of relying on the forces of competition to control medical costs. The reality is that there is no competition in the medical marketplace of the sort that holds down costs. There are none of the strains between supply and demand--just a growing supply and demand that expands to meet it. Who, after all, is going to withhold or choose not to avail himself of a new technology? There are no answers yet, but it is a problem the country cannot afford to walk away from.