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Not an Impossible Goal

November 06, 1987

We found ourselves exploring health care in the United States the other day with a group of experts gathered in San Francisco under sponsorship of Kaiser Permanente. The assessment was not flattering. In the words of Alain C. Enthoven of Stanford University, "We Americans have stumbled into an employment-based system of health-care finance that is extremely unfair."

Anyone doubting the unfairness was reminded that no less than 31 million, and perhaps as many as 37 million, are without health insurance even though 75% of the uninsured either are employed or are the dependents of employed persons. Gail R. Wilensky of Project Hope, who did those calculations, prefers the lower estimate. Either figure is outrageous.

The theme of the two-day conference was "Assessing Competition in Health Care," thus directly confronting the current emphasis on deregulation and the influence of markets. But those in attendance, representing most regions of the nation and most areas of health care, found no consensus, either on the merits of competition or on the extent that there is in fact competition. Victor Fuchs, a professor of economics at Stanford, concluded that there has been no great increase in competition in the last decade except among organized health plans.

There were two particularly discouraging moments for us:

--Dr. William L. Roper, administrator of the Health Care Finance Administration, which runs Medicare and Medicaid, was asked what to do about the uninsured. He said it was a problem for state and local governments. That was consistent with Reagan Administration resistance to providing leadership in health care, a vacuum that has contributed to the worsening situation for those without insurance.

--Dr. Kenneth W. Kizer, director of California's Department of Health Services, gave a glowing report of the way his department has put "competition" to work to wring fee concessions from under-utilized hospitals and surplus doctors for Medi-Cal programs. But he neglected to acknowledge that this dollar squeeze has worsened the quality of Medi-Cal, including a drying up of prenatal services because obstetricians simply cannot operate on the fees offered by the state.

One of the more heartening signs at the conference was the commitment of major businesses to address the problem of the uninsured. Willis B. Goldbeck, founder and president of the Washington Business Group on Health, affirmed that "the market can produce morally acceptable health services only when there is universal coverage." Robert F. Seeman of American Airlines endorsed legislation sponsored by Sen. Edward M. Kennedy (D-Mass.) and Rep. Henry A. Waxman (D-Los Angeles) that would mandate health insurance for workers. The only discordant note was sounded by Kirk West, president of the California Chamber of Commerce, clearly at odds with the other business leaders at the conference when he argued that small employers could not compete in today's markets if required to provide health insurance.

The most encouraging development was news that Enthoven is at work modeling a plan for universal health insurance. He comes to the task as an advocate of competition. His work is as a professor of both management and health-care economics. The bare bones of the plan he is developing look promising and pragmatic, with federal incentives to encourage the states to provide affordable coverage for everyone, maintaining competition among managed health-care plans that would be open to enrollment once a year, and providing for subsidies to protect individuals without access to affordable insurance.

"We need statesmanship to provide an enlightened long-range policy, reconciling the market forces and equity," he said. It is not an impossible dream, he noted, calling attention to the quality of Canada's health-care program, provided at 8.5% of gross national product, in contrast with the American system that is no better yet consumes more than 11% of GNP.

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