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New Medicare Burden

September 21, 1987

The 38.5% increase in fees for Part B Medicare health insurance next year will impose a real burden on low-income elderly and disabled persons, raising profound questions in Congress as to the need for further controls over health-care inflation.

Despite controls on hospital use, despite an increase in the percentage of doctors accepting Medicare fees as payment in full for services to Medicare patients, and despite growth in cost-controlling health-maintenance organizations, health-care inflation remains "out of control," to use the words of one congressional staff expert.

Medicare remains a bargain--the best buy available in health insurance. It is the national health insurance created in 1965 for those 65 and older and for disabled persons. Congress is wisely moving ahead to make it even better, with the likely adoption later this year of the so-called catastrophic coverage that would pay most of the costs of in-hospital care.

But the escalating costs of physicians' services, and the absence of long-term care except for those poor enough to qualify for Medicaid, pose major problems that remain to be resolved.

The cost of Medicare Part B, covering doctors' services, will increase next year from $17.90 a month to $24.80--an increase of $82.80 for the year and an amount that will use up almost one-third of the average Social Security cost-of-living increase anticipated for 1988.

Congressional hearings have been tentatively scheduled for the end of this month to take a closer look at the inflation that forced up Medicare medical expenditures by 22% in the first 10 months of this year. Some of the factors are already well understood and unavoidable. There is, however, real concern about the fact that at least one-fourth of the inflation appears to be attributable to doctors doing more things--some of which may be defensible, but many of which appear to be questionable. The American Medical Assn. has defended the extraordinary escalation of doctors' services, arguing that Medicare's pressure to shorten hospital stays has increased the burden on doctors to provide additional care in their offices or at home. Some critics insist that this does not begin to explain the spiraling doctor bills.

This year 31% of the doctors doing Medicare work nationally--46% of those in California--signed participation agreements with Medicare, thereby agreeing to accept the fees set by Medicare as compensation in full for the services that they rendered. There is no control, however, to discourage unnecessary medical services, procedures and tests.

Some opponents of the catastrophic-health-care legislation would like to use the new cost figures to block passage of the reforms. One catastrophic-care bill was adopted earlier this year by the House of Representatives, and another is awaiting Senate floor action. Fortunately, congressional leaders remain committed to passing the new legislation this year. So they should.

The problems of spiraling costs in American health care need to be addressed, not by restricting essential services but by devising equitable compensation systems for the health-care providers--compensation systems with realistic limits. It is not an impossible task, as has been demonstrated with the universal health-care systems of such nations as Canada and France.

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