U.S.'s Ailing Public Health System

Robert Lekachman is a professor of economics at Lehman College of the City University of New York and author of "Visions and Nightmares: America after Reagan."

In 1986, Americans spent nearly 11% of our gross national product on health care, substantially more than neighboring Canada and nearly twice the British share of a much smaller per-capita GNP. Both countries offer health protection to every resident. Last year, health costs in our land rose nearly 8%, about 7 times the increase in other consumer prices.

Yet few would argue that our unique combination of Medicare, Medicaid, health maintenance organizations, Blue Cross and Blue Shield, physicians in private practice, preferred provider plans and profit-seeking, voluntary and municipal hospitals satisfies patients, health-care professionals and taxpayers. About 30 million to 35 million Americans have no medical insurance of any kind.

When illness strikes, their recourse is to go to the nearest overcrowded hospital emergency room where overworked junior residents--advanced students rather than fully qualified physicians--provide what help they can, usually after hours of waiting. The specter of nursing homes stalks the elderly; Medicare fails to cover extended stays. After savings are exhausted and homes are sold, elderly residents qualify for Medicaid, universally perceived as welfare.

Even middle-class families adequately covered by employer-provided health insurance are frustrated by the intricacies of reimbursement and the incomprehensibility of hospital bills. Ours has become a society in which the most important question asked at the hospital admissions office is not about what ails you but how you expect to pay the bill.

Peculiar phenomena abound. Although there is alleged to be a surplus of doctors, doctors' fees rose in 1986. Diagnostic Related Groups, the Reagan Administration's nostrum for escalating hospital charges for rooms, tests and medicines, have spawned a huge bureaucracy of discharge planners, medical accountants and peer reviewers. Hospitals make money when they eject patients quickly and lose when they harbor too many "outliers," folks who linger in hospital beds more days than their DRG classification entitles them. Inevitably, some patients are sent home too soon and some are readmitted with expensive complications.

Creep to Trot

A caring physician will do his or her best to qualify a patient for a DRG that offers more days of unpenalized hospital care. DRG creep requires still more bureaucrats to prevent acceleration from creep to trot.

Some of the incentives to save money act perversely in the long run.

Employer plans that offer cash bonuses to employees who incur no more than minor medical costs encourage their workers to neglect problems that cost more to treat later on. Carole Horn, a Washington, D.C., internist, told in the Washington Post the poignant story of a young patient she suspected might be suffering from cervical cancer. A free-lance writer, the young woman would not allow Horn to take a Pap smear because, if malignancy were diagnosed, she would not be able to get medical insurance. Without it, she had no hope of paying for expensive treatment. Her distressed but helpless physician sent her away with a prescription for an antibiotic. How many others are in her unfortunate situation?

No wonder that by international comparisons, American public health is, or at least should be, an embarrassment to Congress and the White House.

The British Health Service, though financially starved during the Thatcher years, still manages to deliver the sort of pediatric care that results in a lower incidence of infant mortality than we have.

Just to make matters worse, British life expectancy exceeds our own. As long ago as 1970, Business Week, no enemy of market capitalism, judged that "most of U.S. medical care, particularly the everyday business of preventing and treating routine illnesses, is inferior in quality, wastefully dispensed and inequitably financed. Whether poor or not, most Americans are badly served by the obsolete, overstrained medical system that has grown up around them helter-skelter. The time has come for radical change." Since 1970, those problems have been exacerbated.

The explanation of unsatisfactory health industry performance is glaringly obvious. It is the American obsession, never more pervasive than during the Reagan era, with competition as the magical solution for all economic difficulties. That obsession resulted in the breakup of AT&T;, an almost universally beloved monopoly, and a sequel of deteriorating service, higher local charges and damage to Bell Labs, once one of our finest research facilities.

Competition's Limitations

The frantic disorganization of airline competition in the wake of deregulation has made travel more uncomfortable and sparked a series of mergers and acquisitions likely soon to restore oligopoly to the industry.

In health care, the cry for competition has led to wasteful hospital investment in high-tech equipment, huge marketing and advertising expenditures, temptation to neglect one's health on the part of consumers and to discharge patients sooner and sicker on the part of hospitals as well as multitier care--the best for the rich, adequate for the middle class, minimal for the poor.

One day, the sooner the better, the public and the politicians will begin to recognize competition's limitations, especially in the provision of so basic a right in civilized communities as decent medical care.

When enlightenment arrives, America at last will design a system of universal health care that, dare it be said, almost surely will turn out to be more cost-effective than our current non-system. It will also be a great deal more equitable.

One hopes that as the Reagan era draws to its demoralized conclusion that even economists will begin to define equity as a value as important as narrowly defined efficiency.

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