High Cost of High-Tech Health Care

In medical circles, the nuclear magnetic resonance machine is considered something of a marvel. A cylindrical device the size of a small room, it uses magnetic and radio-frequency waves to take intricate “pictures” of the body in diagnosing disease.

But these snapshots don’t come cheaply. The machine itself costs $1 million to $2 million. It takes upwards of another $1 million to enclose it in a ray-proof room. Result: a $700 to $800 charge every time the machine is turned on.

This is one small example of a vast set of issues facing health-care professionals, lawmakers and the general public today. At the core of the debate:

--Can the nation afford all the costly medical innovations emerging from the lab?

--Will new medical technologies undermine efforts to reduce overall health-care costs?

--And, ultimately, how much is society willing to pay, or forgo, to maintain a health-care system?

Golden Age for Technology The last two decades have been a “golden age” for medical know-how and technology, partly as a result of large investments in medical research and development in the postwar era. At the same time, however, health-care costs have been skyrocketing, although there has been a recent slowdown in their rate of growth. Last year Americans spent about 10.5% of the gross national product ($360 billion) on health care--twice the amount in 1960.

Inflation has been a major culprit. But medical technology has been a factor, too. As much as 30% to 40% of the annual increase in personal health-care spending and hospital outlays in the 1970s has been attributed to new technology (new drugs, equipment, procedures, and the systems in which they are used). Moreover, Congress’ Office of Technology Assessment (OTA) noted in a recent report that Medicare expenses rose an average of 19% per year between 1977 and 1982. Nearly one-third of that was pegged to technology, or “intensity” of services.

“It’s the problem of success,” says Arthur Caplan of the Hastings Center, a New York State research institute dealing with ethical problems in health care. “You discover all this wonderful stuff, and you have to decide what to do with it.”

Rationing Possible What concerns many experts is that, if left unchecked, the new tools and techniques will either add substantially to the nation’s health tab or lead to a “rationing” of health services. Others argue that the nation can cut costs by eliminating hospital inefficiencies and duplication of service, without limiting use of medical advances. They point out, too, that new tools will reduce costs in some areas by replacing outmoded methods.

Yet the trend is toward more costly and complex tools. “There are indications that we are on the threshold of a major medical technology explosion,” says Dr. Seymour Perry, deputy director of Georgetown University’s Institute for Health Policy Analysis. “We have got to look at the costs and national implications of these technologies.”

The price tags of many of these innovations can be high. One rapidly emerging area, for example, is organ transplants. Last year about $300 million was spent in the United States for transplants. If more organs were to become available--and federal legislation is being pushed to make this possible--that could jump to $3 billion annually within a few years. Heart transplants, now a $50-million-to-$110-million-a-year business, is shortly expected to jump to $1.5 billion. A year’s prescription for cyclosporin, an immunity-suppressing drug used in connection with transplants, runs about $5,600.

Changing Nature of Tools The problem isn’t always cost. It is also, in some cases, the changing nature of these new tools--and their potential for wasteful use. Dr. William B. Schwartz, a medical professor at Tufts University and senior physician at the New England Medical Center, notes that many new diagnostic tools are riskless and painless to use. Because no medical risk is involved, some doctors may be inclined to use them despite the cost, even when it may not be medically necessary.

Experts also point to other pressures tending to add to the cost--or, in some cases, to an overreliance on new technologies:

--A payment system--particularly the federal Medicare program--that, until recently, reimbursed hospitals and physicians on the basis of cost and gave little incentive for limiting expenditures on machines or medicines.

--A public clamor to use a technology, regardless of its cost-effectiveness, simply because it is available. This could affect the development of something like the artificial heart, for instance.