CHAPTER TWENTY-TWO
The Future of Health Care
PRESIDENT CARTER ANNOUNCED in the fall of 1978 “principles” for major health-care legislation. But the future American health-care system is being built right now, and without benefit of legislation. Mr. Carter’s proposals, whatever they were, were “nonstarters.” There were days of congressional hearings on them with mountains of testimony, studies, and reports. But if these produced anything at all, it was the proverbial ridiculus mus, the ridiculous, tiny mouse.
The reason for this is not even resistance to the costs of new government programs. It is the total absence of grassroots pressure for major health-care changes.
It is simply not true that the American people are dissatisfied with the health-care delivery system. The overwhelming majority in any survey—some 90 percent or so—declare themselves “well satisfied” or “highly satisfied.” It is even less true that Americans feel themselves “suffering under the staggering costs of a feefor-service system,” as I heard one of our distinguished senators orate recently.
Doctors and hospitals are in large part on a fee-for-service basis; patients are not. Nineteen out of twenty of us—around 95 percent of the population—have a prepayment health plan and do not pay for the services we receive. Indeed, that may be one of the reasons why health-care costs are so hard to control.
The majority of us are enrolled in employment-based plans with the rest being on Medicare or Medicaid. And most of us neither know nor care what our individual health-care insurance costs. It is considered to be “free” in most cases; that is, the costs, as in a national health plan, are being paid through a compulsory levy that is pre-take-home pay and pre-income tax.
The only reason, I suspect, that we still hear of a national health service is Senator Edward Kennedy’s—understandable—desire to have his name on one piece of major national legislation. Even the unions who sign their names to the Kennedy proposal and testify for it are at best lukewarm. Every one of the union officers and union staffers with whom I have talked wants health-care benefits to remain a bargainable issue which, of course, it would cease to be if we legislated a national health service that covers everything for everybody.
Indeed, most union leaders—and even more their staff advisers—see health-care benefits as the only area of potential union gains in the years ahead, considering the resistance to wage increases and to higher taxes, and freedom to bargain on health-care benefits as essential to the very survival of the American labor movement.
While the politicians fight sham battles, the future American health-care system—at least for 95 percent of the population—is rapidly emerging and can be predicted with very high probability. It will be different from the present one in three aspects: in the coverage of health-care costs; in its pluralism of health-care deliverers; and in its organized control and self-control of medical standards and health-care costs.
Sooner or later around three quarters of the American people will have catastrophic-illness insurance—fewer than 60 percent have it today. Ten years hence 95 percent will have it. There will be no ceiling, that is, no maximum beyond which the insurance does not pay. There is actually no such ceiling today—except in the contract. As every hospital knows, charges not covered by the catastrophic-illness policy are not collectible.
But while the incidence of above-ceiling costs is quite small, the fear of them is real. We might, however, see a good deal of emphasis on a fairly high deductible—a floor for catastrophic-illness reimbursements—and on some coinsurance feature up to a certain amount or to a certain percentage of the insured’s family income. And perhaps we will see government reinsurance of catastrophic-illness costs for the 5 percent noninsurables—first proposed thirty years ago by President Eisenhower.
Five years hence two fifths of the population—the employees in large companies and governments—will be insured for the costs of prescription drugs, again with a deductible perhaps of $100 a year per family. More important—and more costly—by 1990 or so around half of the families in America will have insurance for dental bills—and by 1995 the great majority will have it. By then also the expenses for the three most common medical appliances—corrective glasses, hearing aids, and dentures—will be insured for the majority.
The vehicle for these extensions of coverage will not be law but contracts between individual employers and their employees. Emotional problems will not, however, be covered by most of these contracts, I believe, except in the case of genuine psychotic ailments requiring hospitalization. The cost of psychotherapy is much too high and impossible to control. Despite assertions by the “experts” that “three out of four” Americans suffer from emotional illness, the belief in the efficacy of psychotherapy has probably crested and may be going down very fast.
Most of the current discussion of health-care delivery poses a choice between the individual physician practicing alone or the Health Maintenance Organization (HMO), a collective of physicians operating out of one central location and controlling their own hospital. But the American health-care system of tomorrow will consist of three parallel and competing channels of delivery: the private physician, the Individual Physicians Association (IPA), and the HMO.
The bulk of health-care delivery ten years hence will still be with the private physician, though more and more will have what are (erroneously) called group practices, that is share offices, office staffs, and labs. Next in importance will be the IPA. Employers in certain areas will get together and set standards and fees for medical services, with the help of a medical director or counselor. Physicians who agree to meet the standards and fee levels will be recommended to employees by the IPA.
This is essentially the system that has been working well in Germany for eighty years. It preserves freedom of choice on the part of the patient, but also provides a means of cost and quality control. Such plans already exist in the United States and are growing fast.
The HMO, on the other hand, will grow only to the extent to which government imposes it. I used to be a fervent advocate of HMOs. But it may well be an idea whose time has passed, despite fervent advocates in Washington. The IPA does everything the HMO does but without the latter’s limitations—that is, the absence of physician choice and a permanent physician-patient relationship. The only cost advantage of the HMO is its ability to concentrate its patients in one centrally managed health-care facility. But in a decentralized country such as the United States, and with more and more women working miles from their husband and children, this isn’t an advantage at all.
The great attraction of an IPA is that policing of standards will stay within the medical fraternity. The IPA director and its medical council will decide which physicians will be admitted to practice for the subscribers.
Peer review of doctors by doctors in hospitals is growing because of malpractice suits and government pressure. Coming even faster is systematic review of hospital costs by Blue Cross and other insurers, as well as by employers and large unions. Ten years hence, large employers, government bodies, IPAs, and hospitals will jointly determine medical standards and costs in typically American fashion—disorderly and decentralized.
It is simply not true that the American health-care system is more expensive than any other—it may actually be among the cheaper ones in terms of gross national income and family income. The figures that are bandied about of the lower costs of other systems are simply phony—the real cost of the British National Health Service, for instance, is not “under 7 percent of GNP”; it is closer to 12 percent, considering that the British have to spend almost as much on making good their shortage of hospital beds as they are spending on current health-care operations and that more and more Britons enroll in private health-insurance plans.
It is simply not true that our health-care costs have risen faster than those of other countries—they have risen much faster in Germany and in Sweden, for instance. It is simply not true that America uses hospitals more than anyone else. In every developed European country, hospital admissions per thousand population are higher than in the United States, hospital stays are longer, and in most of them the per diem cost is higher.
It may not even be true that health-care and especially hospital costs have risen faster than any other major item in America and faster than inflation—that may be true only for those costs, such as Medicaid, that are imposed by government.
In other words, there are good reasons why the great majority of Americans in every survey declares itself as “pretty satisfied” with its health-care system and why there is no grassroots pressure for more than minor changes in it.
(1978)