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The real problem is health costs
by Dan K. Thomasson
Scripps Howard News Service


January 25, 2005

Washington - The other day the charge for transporting a friend's mother from a nursing home to a hospital only three miles away was $400. Medicare paid the bill.

The real crisis in the nation's social welfare system is not in Social Security. It is in the adjunct medical programs that unless brought under control will drive the deficit to heights heretofore unimaginable. If left alone, the so-called entitlement programs of Medicare and Medicaid will be just about all this huge country can afford.

So as the debate begins in earnest in Congress about how to reform Social Security through partial privatization (or personalization as the White House prefers), or a half dozen other approaches, lawmakers really need to be talking about how to keep the medical providers from sending us all to the poor house. One need only check the charges for a simple visit to the doctor or the cost of a night in the hospital or the monthly charges for prescriptions or the billing for an MRI or an ambulance to understand that things are way out of bounds with those who take care of our health.

The 12 percent a year increases in medical services as compared to the overall cost of living index for other goods and services is no longer tolerable. When the cost of adding a prescription drug benefit to Medicare becomes fully effective in 2006, the estimated $550 million plus over five years may have soared to $1 trillion. If you doubt this just look at what happened with the original estimates for Medicare and Medicaid when they were enacted in 1965. The $30 billion projected cost for Medicare by itself has been multiplied by more than 12 and when the two programs are put together, the annual price tag is approaching a trillion dollars.

Doctors alone were averaging less than $20,000 annually at the time the government entered the health business in a big way. Within two years, the average pay was in excess of $100,000 with the two programs fueling unheard of inflation that has never let up. Pre- and postnatal obstetric charges including delivery before 1965 ranged from $150 to $200 in major urban areas with hospital stays for the mother and baby for three days costing about the same amount. Only a few short years later those services were thousands of dollars.

Doctors would like to blame the increases on the litigious nature of Americans and the high cost of insurance necessary to protect their practices. The need for dramatic limitations on the ability to sue, the doctors, congressional Republicans and the White House contend, is the only way to end the spiral. While in some cases physicians, particularly obstetricians, are being forced out of business by the insurance costs, the real problem exists in only a few areas with California leading the way. Many states make suing a doctor an unprofitable, tedious venture. In Indiana, for instance, an allegation of malpractice must be reviewed by a panel of experts before a suit can be filed, a process that often takes so long few attorneys bother with any but the most blatant cases.

Expensive new technology over the years is another reason cited for the continuing spiral of medical costs. While there is undoubtedly some validity in this, the blame also lies with over subscription (too many hospitals all acquiring the same equipment) and group syndication where doctors pool resources to set up their own scanners and magnetic imaging machines in separate businesses to which they refer all their patients.

Only a few states somehow seem to be avoiding the ravages of Medicaid. Tennessee's vaunted program for the indigent may survive now only if some 323,000 recipients are stricken from the roles. Florida Gov Jeb Bush, the president's brother, has proposed a program of letting managed care providers dictate what Medicaid services are applicable. Other states are proposing large reductions.

While the current Social Security problems will become full blown somewhere around 2042, the Medicare and Medicaid program costs are a crisis that is already here and only getting worse. How to deal with this, to bring some balance and reason and control back into the health care system should be the number one priority in the White House and in Congress. It is a most difficult dilemma that may have been left unattended too long.

Solving the problem will require the willingness of the medical community, the insurance industry, the pharmaceutical manufacturers and the legal fraternity to do their parts at considerable cost. Barring that cooperation, the only solution could be strict price controls, which, in effect, becomes socialized medicine and few want that.


Dan K. Thomasson is former editor of the Scripps Howard News Service.

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