Bush’s Plan for Health Care

President Bush has finally advanced his solution to the crisis in health care. Like the “play or pay” plans advocated by some Democrats, it seeks to help the consumer pay for care, while at the same time controlling the cost of that care. What is significant is not so much the details of Bush’s plan and its rivals, but the fact that all of them, without exception, choose to define costs in terms of the utilization of health care services. Not one addresses the price of those services--the fees that physicians and hospitals charge their customers.

The emphasis on the supply of service as opposed to its price could be called ludicrous, but only by the charitable. For in fact, there has been a revolution in American medical care over the last few years. Expensive hospitalization has been replaced by cost-effective outpatient care. Average lengths of stay in hospitals have hit new lows each year. Had the charges for these services remained constant or risen at the rate of inflation, medical costs would actually have gone down. Instead they have skyrocketed.

The fact is, medical care and health insurance are not free market commodities. Both the provider of services and the insurer, who is the actual purchaser, have a vested interest in raising fees while limiting utilization.

The only solution is to create a new kind of purchaser--one with a vested interest in holding fees down. Whether that purchaser is a national health insurance plan, state-provided insurance, or a nexus of governmental and nonprofit payers, the crucial factor is that the payers have a vital interest in lower fees.

CHARLES J. SCHWARTZ, Venice