Why It Costs More

October 19, 1994|By JAMES A. RUNSER

Westminster -- First, some statistics.

From 1972 to 1991, admissions to community hospitals per 1,000 of population declined from 147 to 123, and the average length of stay declined from 7.9 days to 7.2 days. The average cost per stay increased from $605 (1970) to $5,360 (1991). (The Statistical Abstract fails to observe uniform time intervals from one table to another.)

The increase in the cost per admission is attributable, in part, to inflation, and possibly (overdue) improvements in compensation for hospital workers, but undoubtedly more to growth in the number of hospital employees per 100 beds, from 221 in 1972 to 504 in 1991 -- evidently the result of increasing complexity and variety among services, reinforcement in malpractice protections, proliferating regulations, exclusion of all but the severely ill from in-patient care, and multiplying numbers of outpatient services. In fact, outpatient visits to hospitals, 219.2 million in 1972, totaled 387.7 million in 1991, and outpatient surgeries, 3.2 million in 1980, numbered 12.2 million in 1991.

Meanwhile, in 1970, 927 million visits were made to physicians' offices, and 304 million to dentists' offices; the 1990 totals were 1.4 billion and 492 million. Cardiac catheterizations, 348,000 in 00 1980, were an even million in 1991. CAT scans: 306 million in 1980, 1.5 billion in 1991. In 1980, 569,000 angiocardiographies and arteriographies; 1991, 1.7 billion. Ultrasound procedures: 204,000 in 1980, 940,000 in 1991. Sixty-two heart transplants in 1981, 2,125 in 1991. In 1981, 4,883 kidney transplants; 1991, 9,949. In 1981, 15,500 cornea grafts; 1991, 41,393.

The lesson is largely dismissed by most reformers. Whatever the commodity, as the price decreases, consumption increases. The price of health care to the consumer (in real dollars) has declined, as health insurance, once reserved for in-patient care exclusively, has embraced office visits, dental services, ''wellness'' care, etc. Consumption has predictably increased.

Our health-care system is beset by two perturbations. Thirty-five million Americans are without health insurance, commonly equated to 35 million having no health care. And, the nation's total bill for health care is increasing at three times the inflation rate, regularly offered as evidence that doctors and hospitals are gouging the public. That citizens and employers cannot afford the increasing cost of health insurance is an inevitable corollary.

These coins have two sides. If 14 percent of the population have no health insurance, then 86 percent do have it. Among the 14 percent are some who reject health care because of religious belief and others who prefer to wager that care can be avoided. Enrollees in Medicare, Medicaid and military health plans count as insured, but not counted are active members of the uniformed services and their dependents with access to military hospitals; military retirees and veterans, and beneficiaries of care financed by charitable institutions.

The cost problem also requires examination. The cost of a hospital admission has increased by about 11 percent annually, but there are fewer admissions. Growth in the net earnings of family physicians has hardly more than mirrored growth in compensation among all other occupations (among some medical specialists the growth has been greater, but there are fewer of them). The price of medical services and supplies has increased by about 8.5 percent annually since 1970. The rest of the overall 12 percent annual increase in the cost of health care has to be attributable to consumption.

Consumer advocates, however, and some legislators insist that they can extend comprehensive health insurance to the uninsured -- and restrain cost increases by introducing efficiencies and eliminating waste (requiring a federal bureaucracy and 50 state bureaucracies overseeing the trained physician). It cannot happen. To extend comprehensive health insur- ance to millions more can only further accelerate consumption of services and growth in the cost of health care.

Many services are unnecessary, it is argued. But judges and juries who try malpractice cases establish otherwise. Cost controls and utilization controls (rationing) will contain growth, it is argued, but the cost of the Medicare program, even under tenacious regulation, has dwarfed even the ''worst-case'' projections of its sponsors.

Existing proposals are entirely too grandiose. There is an alternative that will provide access to everyone without breaking the bank. The ''first and final dollar'' mentality needs to be replaced with the major-medical formula of 30 years ago: As we buy our groceries, gasoline and entertainment, we should pay directly for routine and discretionary medical care.

Access to a major-medical plan (only) can be guaranteed, incorporating an assigned risk arrangement as to pre-existing conditions, and a waiting period for availability of full benefits to preclude enrollment only when illness arrives. Major medical care for those who still decline to enroll can be provided through a ''patient loan'' program, the patient agreeing, irreversibly, to attachment against his or her wages (or estate) until the loan is repaid.

If financial liability for ''routine'' services is returned to the consumer, will some procrastinate, or do without?

Undoubtedly.

But whose problem is that? Government's?

James A. Runser is retired after a career spent mostly in human-resources management.

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