OUTLOOK ’87 : Some Will Win, Some Will Lose : U.S. Health Care Battles Will Continue Next Year

The health care industry forecast for 1987 is shaping up as a Super Bowl of sorts, with clearly defined sides, game plans, cheerleaders and even bookmakers betting on who will win.

On one side of the field are The Revolutionaries, composed of those who “buy” health care services--primarily federal and local governments and the business sector.

Their game plan is to continue an offensive to further reduce health care costs through devices such as lower hospital payments through DRG’s (per procedure payments) and pressure on physicians to cut hospitalizations, order fewer tests and get more patients out of hospitals faster.

About 75% of all Americans receive their health care through either the federal government’s Medicare program or the business sector’s employee health insurance coverage plans.

Cheerleaders for The Revolutionary teams’ efforts include the powerful 30-million-member American Assn. of Retired Persons, whose primary concern is to keep its members’ Medicare insurance premiums low and their coverage high. They are joined by labor unions, which want health care costs to take up less of their members’ payment packages.

On the other side of the field are The Aristocrats, an increasingly battered team composed of the “sellers” of health care services--largely hospitals and physicians who account for about two-thirds of it all.

Their game plan in 1987, as it has been for several years now, is largely defensive: coping with falling numbers of hospital patients (last year about 45% of all California hospital beds were empty on any given day) and looking around for new market opportunities such as outpatient services, drug and rehabilitation programs, psychiatric and other less mature product areas to make up for the shrinking traditional services such as inpatient surgery and pediatrics. Their biggest problem so far is having far too many hospitals and doctors competing for a shrinking market.

The Aristocrats’ cheerleaders are the high-tech research product firms, pharmaceutical and hospital supply companies, and other vendors whose markets are supported by the budgets of large hospitals and individual physicians. But even they are hedging their bets by moving away from total dependence on the health care industry and toward more balanced product lines and customers.

Making money no matter which side wins because they handle the bets as they pass from one side to the other are the insurance companies, health maintenance organizations and preferred provider organizations.

Their business is “transaction” based and their actuaries usually can figure out how not to lose, given enough financial history. Their favorites in the game are The Revolutionaries, not only because revolutionaries historically batter The Aristocrats, but also because it is The Revolutionaries who, as buyers of health care, control the purse strings and can shift their business to another bookmaker if the return isn’t satisfactory.

As in most businesses, the buyers are the final arbiters.

If this sounds like an uneven playing field favoring the government/business team, it should not escape attention that a large group of fans are concerned about an even greater inequity: They aren’t in the stadium at all. Can’t afford a ticket. Completely left out. There are two of these groups, the 35 million of us who have no health insurance at all and the elderly whose skimpy life savings are wiped out after less than two weeks in a typical nursing home.

The next year is not likely to provide good answers for these two groups, but it is shaping up as the biggest health care industry challenge that the nation has faced since Social Security emerged in the 1930s to answer similar problems.