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Health care costs tied to many issues.

Many reasons are mentioned for the high cost of U.S. health care. Hospitals have been accused of being inefficient and doctors of ordering unnecessary tests and of overbilling.(11) However, hospitals have reduced staffing(12) and have taken other measures to reduce costs.13 According to one study, hospital costs have been reduced as much as possible and are likely to rise in the future.(14) Among the measures hospitals have taken are increased outpatient services(15,16) and joint ventures,(17) but many hospitals have closed18 and 17 percent of all hospitals are reported to be financially distressed.(19) In 1990, the United States had 194,000 vacant hospital beds daily,(20) and, in 1989, hospitals lost $13.2 billion in uncompensated care(21) Doctors' fees have been reduced by the Health Care Financing Administration (HCFA), which is seeking ways to cut physician reimbursement even further.(22)

Hospitals have been criticized by patients for being too businesslike,(23) and many patients feel they are not getting value for their money.(24) Doctors are no longer held in high esteem by the public, and many people view them as concentrating more on money than on patient care. The American Medical Association has even mounted a campaign to bolster the public's opinion of doctors.(25)

High health care costs are also the result of defensive medicine practiced by physicians faced with rising malpractice costs.(11) An attempt was made by Rhode Island to reduce the cost of malpractice insurance premiums, only to have a U.S. District Judge throw out the law.(26)Florida placed a cap on malpractice awards, but it was declared unconstitutional by the State Supreme Court.(27) The U.S. Supreme Court has also ruled that caps on malpractice awards are unconstitutional.(28) President Bush and others have recommended tort reform but their recommendations don't seem to be going anywhere.(29,30) Many Florida physicians are insuring themselves to only the amount mandated by law, posting signs in their offices stating that they are not insured above that amount(31) Maine is experimenting with a program to help physicians avoid malpractice lawsuits by following established medical guidelines for treating medical problems.(32)

Another contributor to high health care costs is the number of babies born to unwed teenage mothers. It is estimated that 25 percent of all babies born in the United States are born to unwed mothers.(33) There are not only increased costs associated with pregnancy, delivery, and postpartum and pediatric care for these mothers and their babies but, because many of the mothers drop out of school, also increased welfare costs to support them and their children. According to the Center for Population Option, the federal government spent more than $21.5 billion in 1989 for welfare programs for families started by teenagers.(34) Unfortunately, many girls do not stop at one pregnancy but go on to have several more children. Wisconsin is trying to solve this problem by planning to deny welfare benefits to unwed mothers beyond their first child.(35,36)

AIDS is another condition that has led to very high health care costs, especially as most of HIV-infected patients eventually end up on Medicaid.(37) Laws have been passed protecting patient confidentiality and preventing testing for the AIDS virus without patient consent. However, no real measures have been taken to control AIDS. In July 1991, the U.S. Senate passed a bill providing for prison sentences for health care workers who perform high-risk procedures without informing their patients of their positive state. It passed a second bill requiring health care workers who perform risky procedures to be tested for the AIDS virus and to stop performing those procedures if they test positive.(38) In the House of Representatives, Rep. William E. Dannemeyer (R-Calif.) recently proposed a bill that requires states to provide tests for HIV and hepatitis B to health care professionals. The bill would also bar infected professionals from performing invasive procedures without the patient's informed consent and would allow those who perform invasive procedures to test patients without their consent if they have a reasonable basis for believing their patients may be infected with HIV.(39) Pennsylvania recently mandated the testing of all newborn babies for the AIDS virus to collect data. Several other states are doing the same thing.(40) It is estimated that about 80,000 women of child-beating age are infected with the AIDS virus,(41) and it has been reported that the number of teenagers with full blown AIDS in Florida is doubled every 14 months.(42) The AMA recently endorsed routine reporting to state health authorities of people who test positive for the AIDS virus, but it stopped short of endorsing routine testing of patients without their consent.(43) The Medical Society of New Jersey recently approved a resolution calling for universal AIDS testing of all hospitalized patients and health care personnel.(44) A similar resolution was presented at the July 1991 meeting of the House of Delegates of the American Osteopathic Association, but the House passed a weakened version of that resolution.(45)

Drug and alcohol abuse have also led to increased health care costs. Babies born to addicted mothers may be infected with the AIDS virus, and some will be born prematurely, with serious health problems that consume health care resources. One article reports on a premature baby addicted to crack who spent 18 months at the Henry Ford Hospital receiving intensive care at a cost of more than $1 million dollars.(46) The President's "National Drug Control Strategy" report estimated in 1990 that 100,000 babies exposed to cocaine are born each year and that the cost of treating them could reach $20 billion annually.(47) Children born of alcoholic mothers may develop fetal alcohol syndrome and face a lifetime of serious mental and physical problems. Most of them cannot function independently and require a great deal of care.(48)

Another reason for high health care costs is the failure of the federal government to provide sufficient funding for vaccines for children.(49,50) According to a Pennsylvania legislator, for every dollar we spend on measles, mumps, and German measles vaccinations, we save $14 in treatment costs; for every dollar we spend on polio immunizations, we save $10 in treatment costs.(51) Highcost technology and the tendency for doctors to overuse equipment that they own further increase health care costs.(52) The use of life-support systems for extended periods is very costly. Government shortsightedness in the past also resulted in increased costs. For years, Medicare refused to pay for such preventive procedures as pneumonia and flu immunizations, Pap smears, and mammograms. However, it did pay for the high health care costs resulting from the lack of prevention and/or early detection of disease.53 The fact that people are living longer also adds to health care costs, because the elderly use a disproportionately high share of the health care dollar. It is estimated that one of every three health care dollars is spent on the elderly, although they constitute only about one-eighth of the population.

Numerous measures are being taken to reduce health care costs. Employers, some medical organizations, and others are asking for a national health care system(3,4,54-61) Medicare is recommending larger deductibles for people falling within certain income ranges (62) and Medicaid is covering more classes of people but is not increasing funding.(63) The federal government instituted physician payment reform with resource-based relative value scales (RBRVS).(64) HCFA is encouraging outpatient rather than inpatient care, and outpatient visits increased from 233 million in 1984 to 308 million in 1989. HCFA has proposed a DRG system for outpatient care.(65) Some states, counties, and communities are demanding a certain amount of indigent care from hospitals if they are to retain their tax-exempt status.(66,67) Pennsylvania has passed a law prohibiting nonparticipating physicians from charging Medicare patients more than is allowed for participating physicians.(68) It is considering increasing physician license fees in order to develop a scholarship fund for physicians to practice in rural areas.(69) It also plans to mandate care of indigent patients by all physicians and to create a hospital financial pool for the financing of charity.(69) A bill has been introduced in Pennsylvania that requires medical schools to ensure that 25 percent of their graduates enter general or family practice or lose funding on a prorated basis.(69) Other bills would allow nurses to pronounce people dead(70) and physician assistants to write prescriptions for all but Class IV drugs. Some states are taxing hospitals and physicians a percentage of their Medicaid billings or are placing a charge on Medicaid patients in order to provide health care for a greater number of indigent patients.(71-74) Some states have asked hospitals to voluntarily donate money to state funds that can be used to obtain matching federal funds for Medicaid purposes, but HCFA is opposing this move. Many government and nongovernment agencies are requiring the use of generic drugs. The National Black Caucus of State Legislators and others are opposing this step because they feel Medicaid recipients are receiving inferior care.(75,76) Some states are divesting themselves of their general hospitals and reducing the number of state mental hospitals in order to reduce costs. Unfortunately, many states are not providing sufficient funding for community services for patients discharged from closed state mental hospitals. Hospitals are trying to merge in order to survive but the federal government and some states are challenging these mergers.(77-81) Many hospitals have opened their own outpatient clinics and are offering home care as well. Illinois protects against malpractice suits those doctors who treat charity cases,(82) and Maine is experimenting with practice guidelines that may protect physicians from malpractice suits if they are followed.(33) One St. Louis, Mo., hospital is restricting the number of indigent maternity patients,(83) and two Alabama hospitals have had to discontinue their obstetrical services since physicians in their areas have stopped doing deliveries because of high malpractice insurance premiums.(84)

In addition to diversification into ventures related and unrelated to health care to supplement revenue, hospitals have gone into joint ventures with physicians. These joint ventures may work out well if there is medical staff support, but they can be self-defeating if the medical staff feels that certain doctors are gaining a competitive edge.(17) Employers are less willing to pay for the total package of health care coverage,(85-87) and most employee strikes during the past several years have been over this issue(87-88) However, employees are finding that, more and more, they have to accept certain coverage modifications, such as copayment of insurance premiums, copayment for services rendered, and managed care.

Other measures being taken are rationing of health care in Oregon(89-92); basing of reimbursement on clinical outcomes by Minnesota Blue Cross(93) emphasis on increasing the number of general and family practitioners by both federal and state governments(69) weighing of costs by Medicare as a factor in whether it should pay for new medical procedures, devices, and drugs for the elderly(94) greater emphasis on proper nutrition, exercise, rest, and avoidance of tobacco, alcohol, and drugs; and taxing of health care providers to obtain funds for treating the indigent.(71-74)


Where will today's trends lead? Hospitals may again be considered places where people go to die as greater emphasis is placed on outpatient care and only very sick patients are admitted to hospitals. More existing hospital space will be converted to outpatient use, and hospitals will venture farther from their primary locations in order to attract patients. Hospitals and physicians will become more creative in the services they offer in order to deal with the increasing competition. Marketing will become increasingly more important as psychologists, pharmacists, optometrists, physician assistants, nurse practitioners, midwives, and physician extenders gain more privileges. We may develop a system similar to the feldshers in Russia, and physicians will be called only for complicated conditions in an attempt to keep down health care costs. At the same time, greater emphasis will be placed on producing more general or family practitioners. Increasingly, advanced technology may result in fewer surgical procedures as we know them today, and many problems will be treated by laparoscopy, lithotripsy, medications that dissolve calculi, and lasers. Greater use of genetic therapy will take place, and many considered incurable today may respond to this therapy.(95-103) Embryonic defects will be better diagnosed and treated, both surgically and nonsurgically, while the fetus is still in utero.(104) It is hoped that all of these measures will result in reduced health care costs and in better patient care. However, such advances frozen embryos, surrogate mothers, and extension of child-hearing years may result in greater social and legal problems.(105-108)

If for no other than financial reasons, individuals will he pressured into taking greater responsibility for their own health(109-110) Emphasis will continue to be placed on better lifestyles, including proper rest; proper nutrition; abstinence from alcohol, tobacco, and drugs; and use of seat belts, helmets, and life vests. Just as Wisconsin is refusing to pay benefits to unwed mothers beyond the first child, people may find it hard to get health care coverage for problems they have caused themselves or could have prevented.

Consumers will continue to become more involved and will demand a greater voice in health care policy through various consumer advocacy groups.TM In addition to their membership in Health Systems Agencies and state boards, they will demand representation in hospitals, medical schools, professional organizations, health departments, HMOs, and other health care agencies. The Pennsylvania Bureau of Mental Health has already mandated consumer representation on some committees of state mental hospitals. Greater emphasis will be placed on living wills and on the right of patients to determine what treatment they will receive. Other activists will become more prominent as they demand that attention be paid to their special interests. The Hemlock Society and others will continue to promote euthanasia and other life-ending measures.(112-118) Although most physicians today are reluctant to participate in euthanasia,(119-120) future physicians may be trained under a different code of ethics.(121) Federal law, effective December 1, 1991, mandates all hospitals to inform patients about living wills, emphasizing their right to decline any treatment, including the use of artificial means to prolong life, especially in terminal or hopeless situations.(122) Because health care resources are limited, this measure should help reduce the high costs associated with artificially prolonging life.

There will be greater use of ethics committees, not only in hospitals but also in county medical societies and professional organizations.(123) Medical ethics will be a required course in all medical schools,(124) and there will be changes in medical ethics as the nation moves toward euthanasia and rationing of health care services.

Since the lines between hospitals and medical staffs are becoming less distinct because of the economic reasons for cooperation and because of legal implications, physicians will find themselves becoming more involved in administrative issues and administrators will become more involved in medical issues. More and more schools will offer a combined MD-MBA or DO-MBA program, and more physicians will move toward administrative positions.

Doctors and hospitals will continue to be held accountable, and greater disciplinary action will be taken against them if they don't measure up to standards. Peer review will probably be extended into physicians' offices. State boards will become tougher on physicians as more consumers sit on these bodies, and the Data Bank will gather more information on physicians. Credentialing of physicians will become much more stringent. Quality assurance monitoring and clinical outcomes will continue to be emphasized, taking cost into consideration. Periodic reports will be published on the performance of all health care providers as consumers become more demanding. Attempts will be made to make medicine more of a science than an art as attorneys find new reasons to sue doctors. In order to provide better service and have better life-styles, solo practitioners will move to group practices and salaried positions. Fewer physicians will opt for independence and autonomy, desiring instead greater security and more free time.

Just as Florida has imposed an annual assessment on physicians to pay for the care of neurological]y impaired newborns, Pennsylvania is considering establishing a hospital financial pool to pay for indigent care and is thinking of adding a surcharge to physician licenses to fund a Rural Medical Student Scholarship and Physician Repayment Fund, and several states have imposed levies on hospitals and physicians in order to include more individuals in their Medicaid programs, we can expect more and more health care providers to be forced to subsidize health care in this country while their reimbursement is reduced and their expenses are increased.

The nation will finally come to terms with AIDS as it realizes what a potentially disastrous disease it is. Confidentiality will become less important as personal and national safety take priority. Control measures will be mandated as today's weak movement for mandatory testing gains momentum.

As people live longer and take a bigger bite out of the health care dollar; as greater demand for the care of the indigent, uninsured, and underinsured presents itself; and as demand for health care for people in rural areas becomes greater, more emphasis will be placed on cost containment. The prospective pricing system will be extended into outpatient settings, placing a cap on fees and other charges. However, the practice of ignoring the increasing expenses of health care providers will probably continue as their reimbursement decreases. There will be a greater demand for caps on malpractice insurance premiums and liability awards as more and more classes of health care providers are sued. These demands, of course, will continue to be opposed by insurance companies and lawyers. Rationing will be promoted to a greater degree, but its acceptance will be determined to a large extent by the amount taxes will be increased in order to provide health care.

A national health care system will eventually come into being, but it won't be soon. It probably will not be based on the Canadian system but, instead, will be a conglomeration of compromises. Members of Congress aren't very likely to offend lobbying groups and risk not being reelected. One of the biggest obstacles confronting a Canadian style plan is the political clout of the insurance companies. They stand to lose a great deal of revenue, because there probably will be a single payer system.(125)

The future should be exciting and challenging, but, unfortunately, unhappiness with the health care system will continue. Many old problems will continue, and new ones will emerge.


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Title Annotation:Health Care Policy
Author:Bove, Victor M.
Publication:Physician Executive
Date:Sep 1, 1992
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