Rationing health care: the unnecessary solution.

• Author: Califano, Joseph A.
• Position: The Law and Policy of Health Care Rationing: Models and Accountability

Last year Americans spent over two billion dollars a day on health care.(1) For 1992, the nation's annual health care bill will soar well beyond $800 billion.(2)

Eight hundred billion dollars is more than enough to provide all the health and long-term care Americans need. Yet instead of mounting efforts to do just that, a growing number of politicians and health care experts seem bent on elevating health care rationing to a national policy. We have always rationed care by our wallets: those with the thickest wallets get the best care and many of those with empty wallets get little or none. For the future, many experts propose to distribute care "more intelligently" and "more fairly" by subjecting most of the population to the rationing now reserved for the poor.(3)

Rationing is a macabre dance of despair, choreographed by the failure of half-hearted efforts to rein in health care costs, by extravagant waste, by refusing to provide timely care to the poor, and by self-indulgent lifestyles. The willingness of Americans to spend more than $800 billion on health this year should be an opportunity to release the poor from rationing and give all Americans all the care they need. Instead, the new melody rising to the top of the health policy charts is rationing care--this time, by rules orchestrated by many of the same politicians, bureaucrats and physicians who created the current crisis. Wanting to play God rather than serve Him, they now claim the wisdom to decide who should suffer how much pain how long; who should walk and who should limp; and who will live, who will die, and when.

Pressure to ration is fueled by ever-expanding expenditures for a health care system that still leaves many without access to care. Health care spending is rising two and one-half times faster than GNP.(4) Last year, health care spending was approximately 13% of GNP(5) compared to 11.6% in 1989.(6) This year health care will approach 14% of our GNP,(7) a figure that will rise to more than 16% by the end of the decade.(8)

These increases are not buying better health for Americans, or any care at all for many of them. Since the late 1970s, health care's share of GNP has jumped more than 50%(9) while the proportion of poor people with access to care has dwindled. At its peak, Medicaid covered 75% of the poor; today, less than half of the poor are covered.(10) The number of Americans without health insurance has climbed to some 35.7 million.(11)

But it is an unconscionable cop-out to resort to rationing by any means--the current scheme of wealth, or any new one based on age, a lottery of diseases or computer quantifications of pain--when we can have care for all our people with a little efficiency, prudence, and prevention. Studies indicate that at least 25% of the money we spend on health care is wasted.(12) Which means that more than $200 billion will be wasted this year, including more than $40 billion taxpayer dollars(13)--far more than the cost of the most expensive health reform plans currently under discussion. Instead of restricting care, we can expand access if we shrink overcapacity, streamline the health care bureaucracy, emphasize prevention, rationalize the medical malpractice system, and eliminate perverse incentives for doctors and hospitals.

1. EXCESS CAPACITY

   Hospitals operate at an average of two-thirds of their capacity, with many at less than 50%.(14) We have up to 400,000 excess hospital beds, at an unnecessary cost of up to $12 billion.(15)

   We also suffer from excess technology. There are 10,000 mammography machines in operation, four times the number actually needed.(16) To recover the cost of this excess capacity, owners charge an average of more than $100 for each mammogram.(17) Without excess capacity, that cost would be $50 or less.(18)

   I am no Luddite. Those gangs that smashed machines in English textile mills over a century ago solved nothing in their day; their modern day descendants will solve nothing in our time. New technology with its miraculous diagnoses and cures is necessary. But does every community hospital need a multi-million dollar magnetic resonance imager or a two million dollar lithotripter? Even when new technologies are proven effective and appropriate, they do not always replace the old technologies they were designed to supersede. A study done for Medicare found that new techniques are not replacing established medical procedures.(19) Over a three year period the use of three new procedures -- magnetic resonance imaging, lithotripsy, and coronary angioplasty -- grew steadily, but use of the procedures they were supposed to replace also continued to grow.(20)

2. BUREAUCRACY

   Red tape produces billions of dollars of red ink. Policy makers have created a Dante's Hell of regulation and manipulation. Insurance company medical auditors and government bureaucrats push and shove each other to look over the shoulder of every doctor whose bills they are asked to pay. Their monitoring of every patient, provider, procedure and prescription has forced doctors and nurses to become masters of the universe of regulatory manipulation rather than masters of the universe of medicine.

   The cost to doctors and hospitals to document the eligibility of patients, obtain approval of hospital admissions and other procedures, and bill patients, climbed to $62 billion in 1983.(21) With the proliferation of pre-admission screens and other review mechanisms in the second half of the 1980s, this year will top $100 billion.

3. PERVERSE INCENTIVES

   The insurance coverage system also impacts health care access perversely. A doctor who believes that a patient requires a complete physical exam will often diagnose shortness of breath or some other common complaint to justify payment by the insurance company.(22) Medicare reimbursement leads doctors to commit patients to hospitals because the individual simply cannot afford to pay for outpatient care.

   The absence of insurance coverage for poor patients whom doctors treat for free and the failure to reimburse fairly for Medicaid patients often lead physicians to manipulate charges so

   they are borne by those who have coverage.(23) Insurers say they must set traps for fraudulent and abusive claims, claims which cost them and the government $60 billion in 1989--10% of health care spending that year.(24)

   Blue Cross and Blue Shield of Illinois has installed a computer program designed to detect an estimated $25 million a year in overcharges resulting from unbundling--the practice of breaking a major procedure into smaller components and billing separately for each.(25) Caterpillar, the heavy equipment manufacturer, developed its own software with Boston University to detect overcharges.(26) As a result, consulting companies offer seminars on how to maximize reimbursement for doctors.(27) A newsletter advises physicians on billing strategies.(28) Against this backdrop, the rising number of Americans without health insurance presses doctors and hospitals to scramble for ways to recoup some of the costs of uncompensated care.

4. UNNECESSARY TESTS AND PROCEDURES

   Millions of unnecessary procedures and tests are performed each year. Almost half the coronary bypasses, the majority of Caesarean...