The cost of health

A COUPLE of weeks ago, I opened my newspaper and read that the President's blue-ribbon panel on Social Security had issued its final report: Sure enough, the social security trust fund is going to run out of money 30 years from now. Somehow, the news seemed even less urgent than usual; maybe because I was reading it in a 12th-floor room at Swedish Medical Center.

Fortunately, my medical problem wasn't terribly serious, and the accompanying amenities were downright luxurious: private room, good food, attentive service—apart from the IV tube dribbling hardcore antibiotics into my forearm, I might have been experiencing a weekend rest-cure at a superior health spa; pretty damn superior, considering that the tab was somewhere near $2,000 a day.

I wasn't paying that much, of course. Nobody does. Medical bills these days are mere wishful thinking, a species of suggested retail price posted by hospitals, doctors, and drug companies in the knowledge that by the time managed-care providers and insurance companies are through negotiating, they'll be lucky to get half of what they think they deserve for their services.

Still, $1,000 a day is not chump change. And there's abundant evidence that medical costs are about to explode again, just when the government and population alike are least able to afford them. While a presidential panel has been agonizing over how to pay for baby-boomer retirement in 2030, a far more immediate crisis has sneaked up on us, one we're even less prepared to deal with.

Over the last decade or so, the cost of providing medical care has faded from the foreground of public concern. Private and public medical expenditure has continued to rise, but no faster than the overall economy has expanded. The single biggest reason for this is the enormous growth of managed-care health coverage. Like it or not—and anybody who has to deal with the consequent bureaucracy and paperwork doesn't—managed care in its widest sense has done what it was meant to do: put unrelenting market pressure on a previously uncompetitive economic sector.

What we didn't realize at the time is that managed care was a one-time treatment for what ailed us. After 10 years, most of the savings that can be made through sheer cost control—economies of scale in purchasing supplies and drugs, forcing physicians to treat ever higher numbers of patients per hour and hospitals to spread staff ever thinner per patient, using co-payments to "encourage" patients to avoid unnecessary office visits and prescription requests—have already been made.

The collapse of the U.S. economy has brought this fact into cruel focus. People are losing jobs and health coverage; state budgets are strapped, just as the number in need of health and welfare services is shooting up. But the cost of providing care continues its inexorable increase, at a rate that looked manageable last year and looks unsustainable now.

There are literally hundreds of studies filled with statistics demonstrating the catastrophic course we're on; let one suffice as bellwether of all. According to a study in the March/April 2000 issue of the journal Health Affairs, national health expenditure stayed virtually constant from 1993 to 1999 at around 13 percent of gross domestic product.

Even before the collapse of the economy, this figure was projected to rise to 14 percent by 2002, 16 percent by 2010. What difference does a point or two make? A hell of a lot, when it comes at the expense of other segments of the economy. These projections—almost certainly too conservative—mean that the U.S. will be spending (in constant dollars) $230 billion more this year than last on health care alone; $1.325 trillion more by 2010.

Almost overnight, we find ourselves right back where we were in 1992, when the Clintons and Congress fought each other to a standstill over universal health care. The agreed-upon villain of the piece that time was runaway medical costs in general. This time around, it looks like the drug companies are in the crosshairs.

The drug companies do make awfully tempting targets. They are, on average, twice as profitable as the American corporate norm, and their senior executives are even more obscenely overpaid. They spend, on the average, twice or three times as much annually on marketing and advertising as on research and development, and the disproportion is rising all the time.

Demonizing the drug companies, though, is as shortsighted as demonizing the coca growers of Colombia or the poppy farmers of Afghanistan. In our disapproval of the suppliers, we mustn't forget that somebody is buying, and buying for a reason. For every prescription doctors write because a patient has seen it advertised on TV, they write half a dozen or a dozen that prolong and improve the users' lives. There is such a thing as progress; those happy seniors playing horseshoes in the pharmaceutical commercials are not pure fiction.

The problem is that we, as individuals and as a society, continue to refuse to recognize that progress has a price tag and that there's just so much of every good to go around. A rational society would set to work on a mutually acceptable way of sharing; ours prefers to insist on having it all and finding someone else to blame when we can't.

For the issue of Health Affairs summing up the appalling future facing the American health-care delivery system, see:

Roger Downey's science column appears every other week.

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