U.S. Health-Care System Getting a Dose of Reality

America finally seems ready to admit that it can’t afford all the health care it wants.

And, ironically, that’s a hopeful sign.

Oregon has a plan to ration publicly funded medical care; other states--other countries too--are studying it.

It’s not the dying of the dream of good health care for all Americans but an attempt to realize that dream within today’s realities. Growing numbers of people are not receiving the benefits of U.S. medical care, despite rising expenditures by federal and state governments and private employers.

Expenditure that doesn’t get the job done properly is inflationary; medical costs are rising three times faster than general inflation in a stalled economy.

In Washington, health care is becoming a budget eater. According to the Congressional Budget Office, expenditure on Medicare, Medicaid, public health and research will go from $190 billion, or 13.5% of the federal budget this year, to $300 billion, or 20% four years from now--supplanting defense as the federal government’s biggest outlay.

State governments are seeing health spending crowd out funds for schooling and other public purposes.

Now Oregon has said “enough.” After four years of discussion among its citizens, the state has introduced the Oregon Health Plan which rations medical care. The plan cuts off payment for treatments found to have limited effectiveness, to save money for useful treatments for all Oregonians, including the 20% who are uninsured.

Specifically, the state drew up a list of 709 illnesses and declared that 17% would not be paid for by Medicaid nor would coverage be required of private insurers. Treatments for colds, or surgery for hemorrhoids, for example would not be reimbursed. Low back pain would not be treated because little can be done for it. Similarly, low birth-weight babies more than three months premature would not receive heroic, and costly, medical care.

“Low birth weight is not a medical problem, but results from social causes such as malnutrition, lack of prenatal care, poor housing,” says Cynthia Griffin, spokeswoman for the Oregon Health Care Commission. “We need to spend more on eliminating the underlying cause than trying to treat the medical result.”

The Oregon plan will be debated in Washington this year because the state needs a waiver of federal Medicaid rules, and some members of Congress have reservations.

The debate will be useful if it recognizes that, unlike Oregon’s open rationing, the U.S. system secretly rations health care every day--with results that look increasingly like a vicious circle.

Some 17% of the U.S. population has little or no health insurance, often for no other reason than economic growth has slowed and employment patterns have changed. Big employers have laid off workers or cut benefits; more people work for small businesses, which don’t offer big benefits.

The health system copes by injustice. Hospitals pass on to fully insured patients the costs of treating the less insured and uninsured.

Or the uninsured receive inadequate treatment. A new study by the Georgetown University Center for Health Policy Studies found that uninsured patients receive fewer treatments and are more likely to die in hospital.

Hospital stays are shorter thanks to efforts by employers to reduce medical bills. But hospitals haven’t consolidated as businesses would. Rather, they are competing for patients in ways that may see bad care drive out good. About 20% of the nation’s 3,700 large hospitals have hired tough negotiators to work out the most profitable deals with health maintenance organizations and others who can deliver groups of patients. The result is skimping on care to compete on price, the way budget airlines skimped on maintenance.

Faced with such subterfuge, medicine needs rationing to assure good care for the greatest number and to preserve a system worth preserving. In a time of cost pressures, it should be remembered that U.S. medical technology has proved to be life-preserving, cost- effective and world-leading. Heart bypass surgery costs a bundle--$50,000 per operation--but saves lives.

Oregon’s rationing says we can have bypasses available for all who need them if we sacrifice funding for less critical procedures. It’s a philosophy of rational choice, one in tune with the less productive economy of the 1990s.

Our medical system, from Medicare through insured treatment on demand, originated in the 1950s and ‘60s when the U.S. economy grew almost 6% a year; productivity gains were constant, the pie got bigger. It was a time when President Lyndon Johnson, signing Medicare into law on July 30, 1965, could see an end to the sadness of “old people afraid to go to the doctor because they couldn’t pay.”

In this decade, by contrast, economic growth will be 2% to 2.5% a year, says economist John Silvia of Kemper Financial Services. Productivity gains have vanished; the pie isn’t growing. It’s a time when President Bush could say at his inauguration on Jan. 20, 1989, “We have more will than wallet.”

Until we figure out how to get the economy growing faster, it will be a decade of hard choices. But facing up to those choices is a sign of health.