This country's spending on health and medical care, both public and private, rose 9.1 percent last year. It's the first time the annual rise has been less than 10 percent since 1966, the year that Medicare and Medicaid went into operation. The question is why this long rise in health costs is now slowing down.
The general decline in inflation rates is an obvious part of the answer -- but only part. There are significant disparities among the various parts of the health budget. Doctors' and, especially, dentists' bills rose faster than 9.1 percent. But hospital charges rose much more slowly -- only 6.1 percent, the smallest increase in, again, 19 years. Hospital admissions declined last year. The average length of stay dropped to just under seven days, the shortest since the government began keeping these figures.
In explaining these changes, the Department of Health and Human Services naturally gives a good deal of emphasis to the new and rigid cost controls that it began applying to Medicare in late 1983. No doubt they have been influential; Medicare pays more than one-fourth of all hospital bills. But it is also true that the clamps on Medicare are part of a much broader process of tightening that's been going on in private health benefits as well as the public ones. This process has been encouraged by the emergence in many parts of the country, including the Washington area, of a surplus of hospital beds. That sharpens the competition among hospitals and makes even the strongest more cautious about raising rates.
All of this is to the good, of course -- up to a point. Competition among hospitals is healthy as long as it enforces fiscal caution, but not if it begins to squeeze down salaries and push the ablest people out of, say, nursing. Nobody wants to see the kind of decline in hospital staffs that this country has experienced in elementary and secondary school teaching over the past couple of decades.
There's no evidence that anything like that is happening yet. With a rise of 6.1 percent last year, hospital spending stayed a couple of percentage points ahead of the general inflation rate. But the period of very rapid growth of this country's medical care system has ended, and a wide consensus is now imposing a shift to consolidation. In medical costs, as in most things, the ideal is a balance -- here, between the quality of care for the individual and the cost to society. Controlling costs is half the job of health care management. The other half is not less important.