Why are health care costs so high?
In part because of a growth in technology and hospital beds—perhaps 100,000 in the U.S. are unnecessary—and the simple fact that people want more and are apparently willing to pay for more.
Why is technology a problem?
Too much of it is redundant and therefore costly. Computerized Axial Tomography—the CAT scanner—is a good example. It takes pictures of the body that are clearer and more accurate than X-rays. The CAT costs between $400,000 and $650,000, and as much as $750,000 a year to operate. But we don't need a CAT in every village. It is not necessary for every patient, and it may soon be obsolete. We asked the Institute of Medicine to set guidelines for the use of such equipment.
Why is it difficult to control hospital costs?
The health industry is not severely disciplined by competition and people have no choice but to get care when they are sick.
What can be done?
In cities like Baltimore, Washington, Cincinnati, Kansas City, Minneapolis and Los Angeles, there is an overabundance of hospital beds, and patients pay for the unused capacity. Though in some other areas there aren't enough, Blue Cross has called for a moratorium on hospital construction until it can be clearly demonstrated that the unit is needed by a community. One of the most poignant pleas is "We need a hospital." What politician has the guts to say no?
If the beds were decreased, what would happen with existing hospital space?
One possible use would be hospices for the terminally ill, where compassionate care could be given at low cost. There also could be clinics for obesity, alcoholism and hypertension.
Is part of the problem that pay for hospital workers is suddenly catching up?
Yes, in some places, but pay is only now catching up in others.
Are hospital admissions increasing?
Among Blue Cross-Blue Shield subscribers under 65, hospital admissions have dropped dramatically. The average hospital is getting tougher about who goes in, how long they stay and what services they get. At the same time, Blue Cross outpatient claims have risen 155 percent. We pay for preadmission tests, for a certain percentage of doctor bills, for home care for the elderly. We are taking the heat off the hospitals, instead of encouraging people to go in.
Are there other reasons fewer people are going into hospitals?
Of the 15 leading causes of death, all but three—cancer, suicide and homicide—seem to be going down. There has been a general improvement in the health of the population—less heart, circulatory and respiratory illness.
Is this because people are paying more attention to their health?
Exercise and diet awareness probably are having an impact. In my circle less hard liquor is being drunk. I stick to white wine 85 percent of the time. People are a lot saner when it comes to their own health.
Aren't doctors' fees a large part of the problem?
The physician's charges do not have a major impact on spiraling costs. Right now the doctors' share of health care revenues is 19 percent (down from 22.4 in 1950)—$26.4 billion of the total $139 billion spent. The major factor is not so much the physician as what he orders—costly tests, a hospital stay, surgery and so on.
Do you think that in the future, more patients will be treated in Health Maintenance Organizations (HMOs) or group practices than by private physicians?
About 10 years ago people said any day now doctors will aggregate into groups of HMOs. It hasn't happened that quickly. I don't expect a precipitous change in the next five years. If you talk about 10 or 20 years out, you'll have maybe 30 or 40 percent of the practice under doctor alliances. They won't be all HMOs. Some will be independent practice associations and some related to consortiums of hospitals. But you will still have private practitioners.
Don't drugs account for a large part of the cost?
About eight percent, but certainly not to the extent people think. Too many drugs are consumed in this country. With computers we are studying the drugs prescribed in hospitals, identifying those used excessively and raising questions about them. But in terms of medical care costs, drugs are a small part of the problem.
How could the existing health system be improved?
Eighty-four percent of Americans have some type of surgical coverage, but between 10 million and 20 million people in this country can't afford adequate coverage in the private sector and aren't eligible for government programs like Medicare and Medicaid. The bulk of these are just beyond the reach of Medicaid but not within reach of good employment: transients, household workers, students over 21, high school graduates who can't find a job, divorced women. For many of these people the government has to improve Medicaid—operating a better-administered program with more consistent eligibility. For those who don't qualify in any way, Washington should encourage the private sector to set up pooling arrangements, as is done with car insurance. These are two practical short-term steps.
Aren't there times in just about everyone's life when they go without insurance protection?
One of my sons had Blue Cross when he was a student at Stanford University, and then he got a job. He had a two-week gap in his insurance coverage. During that period his wife discovered she was pregnant. That is what I call dumb on his part. So he had to pay for everything. It cost him $1,500. He should have arranged to bridge that gap.
What special advice would you give middle-aged people?
As you approach 45 it makes sense to add catastrophic benefits to your basic coverage so that you are covered for things like drugs, nursing homes and home care. The diseases of middle age tend to be expensive, less acute, more chronic.
What coverage is best for the elderly?
I would strongly advise any person eligible for Medicare to get supplemental insurance. It is extremely useful because Medicare only covers 44 percent.
What kind of coverage can one get for catastrophic illness?
At Blue Cross we pay up to 365 hospital days. But a person who has a policy covering only 80 percent of his expenses with a $300 deductible would be shot right out of the ball game.
Do you think the federal government should step in to provide better coverage in case of catastrophic illness?
I think we are better at stepping in. Under one of our supplemental major medical plans, after the basic policy stops and some $2,000 is paid out of the individual's pocket, the policy becomes 100 percent effective and can pay up to $1 million. Thank God, those cases are rare.
Is Blue Cross-Blue Shield sometimes inefficient?
My wife, Shirley, had a small operation in Boston's Eye and Ear Infirmary and she used her Blue Cross card. We got a letter from the Boston plan saying, "Sorry, your claim has been rejected because you are no longer a member." It turned out someone had transposed a number. So yes, we do have difficulties. We are working our tails off to overcome them.
Do you think the kind of total national health care proposed by Sen. Edward Kennedy has a chance?
I don't believe people in this country are in a revolutionary state of mind. They are frustrated but I don't think the solution is to turn everything over to government. National health insurance will come in phases. The lack of government money dictates that the problems be addressed one at a time. In the process the private sector will not be replaced—it will be an important part of any national plan.
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