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Book Review : Resolving the Crisis in U.S. Health Care

March 18, 1986|ELI GINZBERG | Ginzberg is a long-term professor of economics at Columbia University and author of many books on health economics, including "American Medicine: The Power Shift," 1985. and

America's Health Care Revolution by Joseph A. Califano (Random House: $17.95)

Rarely do individuals who have held high office in the public and private sectors reflect on their experiences and communicate the findings to the citizenry. Joseph A. Califano, special assistant to President Lyndon B. Johnson, secretary of Health, Education and Welfare in the Jimmy Carter Administration, distinguished member of the bar and chairman of a special committee on health-care costs of the board of directors of the Chrysler Corp., has broken the mold and has written a short, hard-hitting monograph entitled "America's Health Care Revolution."

Califano has condensed his "revolution" into 195 pages. The writing is clear. The coverage is extensive since he deals with all the important sectors--providers, users, payers. The text is studded with informative data, most of which are up-to-date and help to support the points he makes. In short, the book has many positive qualities. I know of no comparable introduction to the problem of our health-care system; it indicates the reasons for our constantly accelerating costs, which, if not controlled, can place the system and our population at mortal risk.

The Principal Charges

I will list next the principal charges that Califano has levied against the major players that, he believes, account for the cost acceleration that must be brought under control: President Johnson, in pushing for the passage of Medicare and Medicaid in 1965, gave the game away to the physicians and the hospitals. In later years, the Administration and the Congress demonstrated equal inability to stand up to these powerful interest groups. Corporate America paid no attention for the better part of two decades to the consequences for their balance sheets of ever more liberal health-care benefits for their employees. The commercial and Blue Cross insurers from whom they bought coverage were more in league with the providers (hospitals and physicians) than with their customers (the corporations) and failed to exercise effective controls over the steadily accelerating costs.

As a consequence of the foregoing, we have too many beds, too many physicians, too little prepayment (HMOs), too many prescription drugs, too many high-tech interventions, and many other failings that are resulting in the waste of about $75 billion annually or about 20% of our total health-care bill.

Califano's remedies: Attack the foregoing problems and add the following desiderata: Use governmental power to restrict the demand for tobacco and alcohol, improve automobile and road safety, put more emphasis on health promotion, keep more of the elderly out of nursing homes, undertake more research on addiction. This is a reasonable catena of objectives although it would not be easy to translate them into effective policies.

My own reactions to Califano's analyses and policy recommendations are that I do not believe that Corporate America will significantly affect the total costs of our health-care system by seeking lower insurance costs and through insisting that its employees pay more out of pocket in seeking health-care services. I see little advantage in the author's suggestion that the federal government pay physicians on a fee-for-illness basis, starting with in-patient care. We know that there are gross variations in the frequency of surgical and other interventions in the same geographic area and among regions just as there are among countries. Since we do not know whether more or fewer procedures are better, we are generally unable to know what to add or what to eliminate. We need more research on addiction (and many other areas) and we need to use our new knowledge to reduce morbidity and mortality.

But Califano stumbles when he states that more health promotion and disease prevention will be cost-saving. We have ample evidence--and he has presented some of the critical data--to prove the opposite. Striving for and achieving better health care are socially beneficial but not necessarily or usually cost-reducing. Califano wants to keep our health-care expenditures at around 10.5% of GNP, a worthy but impractical goal.

President Nixon said in 1970, when we were spending $70 billion for health care, that we were in a health-care crisis. In 1985, we spent $420 billion, and Califano says we are in a crisis. In 1990, we may be spending $650 to $700 billion (depending on inflation), and at that point, I may belatedly join those who believe that we are in a health-care crisis.

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