Preying on Patients

DANIEL S. GREENBERG

October 27, 1992|By DANIEL S. GREENBERG

Washington. -- If politicians' promises could tame health-care costs, a day in the hospital wouldn't cost more than a weekend in Bermuda, medical schools would be hungry for applicants, and health insurance wouldn't be the nastiest issue in labor-management relations.

Governor Clinton has made his vows, as has President Bush. They follow in the tradition of a long string of candidates and presidents, dating back to Richard Nixon, who inherited the runaway Medicare and Medicaid programs from Lyndon Johnson. But for 25 years, health-care costs have continued to soar, defying low rates of inflation and stingy government policies for reimbursing hospitals and doctors. Why?

The real answer is that health care is America's last growth industry, except for fast food. And a lot of people -- millions of them -- like the health-care system as it is because it provides them with a good livelihood, and often far more than that.

Doctors, nurses, managers, drug manufacturers, suppliers, entrepreneurs and investors all have a stake in the American health-care economy, which continues to boom while other sectors sag. Over the past two years, according to the Congressional Budget Office, health care added 630,000 jobs while the rest of the economy lost 1.8 million jobs. Health care now accounts for some 10 million jobs -- in hospitals, doctors' offices, manufacturing, supplier services and so forth -- making it the largest industry on the American landscape.

In subtle and direct ways, those with an economic stake in health care have successfully exerted political influence against effective controls, the yelps about government intrusions into medicine notwithstanding. Medicare, for example, is surrounded by supposedly strict regulations to restrain spending. But under pressure from the health-care industry, the rules aren't onerous or difficult to evade, as evidenced by continually rising levels of Medicare expenditures, beyond inflation and government projections.

Hospitals cry that federal reimbursement payments are cruelly inadequate, but the Congressional Budget Office notes that the net income after expenses at community hospitals stood at 5.2 percent last year, ''higher than their 20-year average of 4.2 percent.''

With health-care reform high on the political agenda this year, campaign giving by various sectors of the health industry is at an all-time high, with $13.4 million showered on House races. That's a 24 percent increase over the last election, according to Citizen Action, a consumer group pushing for a national health-insurance system.

The standard explanation for the failings of the American health-care economy says that patients and doctors are unconcerned about costs because insurance picks up the bills. And so, the story goes, price consciousness doesn't enter into their medical decisions.

But, in fact, more and more health costs in recent years have been shifted to the patient. In 1987, according to the Congressional Budget Office, ''out of pocket'' payments by private patients totaled $109 billion while insurance reimbursements for their care totaled $155 billion. Projections for this year put the out-of-pocket figure at $150 billion, with reimbursements by insurers at $254 billion.

The real culprit is a system that has learned to regard patients as economic prey. Hospitals court doctors who can bring in patients, referred to in other businesses as customers. Hospitals have traditionally provided access for physicians on the basis of their professional credentials. Now there's a new factor, ''economic credentialing,'' which refers to the ability to deliver paying patients.

Hospitals covet patients because insurance takes over as soon as a patient is admitted. And despite many restrictions on hospital services and charges, the reality is that almost anything goes when the magic term ''medical necessity'' is invoked. Obviously, genuine medical needs should not be ignored. Congressional hearings, however, have heard disgusted hospital workers tell of orders to meet specified dollar quotas per patient by providing services, needed or not.

The health-care system defends itself on grounds of medical excellence. Indeed that does exist, but out-of-control costs deny that excellence to more and more Americans.

The system desperately needs fixing to hold down costs and increase access. But the health industry is now so big and powerful that reform will be difficult, maybe impossible.

Daniel S. Greenberg is a syndicated columnist specializing in the politics of science and health.

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