COSTS, COSTS, COSTS: HOW TO CUT THEM?

The health care system is inherently uncompetitive. If you want a new car or refrigerator you shop for the best bargain. Patients dont shop price-wise for health care.

When the health care debate got under way months ago, the Clintons and other supporters advanced two co-equal arguments for a new approach.

First, there was universal coverage. Every American, it was asserted, had the right to adequate medical treatment.

Second was the cost argument. If the health care system didnt change, costs would continue to skyrocket at rates far exceeding the pace of inflation. Ten years ago, health care consumed 10 percent of our GDP. Today it is 14 percent. In the next century, it will 20 percent. Absent price constraints, health care will break the bank in the next century. What bank? Federal and state treasuries, employers balance sheets and the budgets of individual citizens.

As the health care debate progressed, universal coverage became the singular focus. Should universal mean what it says or would 95 percent or 92 percent sort of universal be satisfactory.

If universal meant what the dictionary states, could we pay for it by taxing cigarettes more and perhaps by taxing some super generous insurance premiums? Only with smoke and mirrors could this work. If you want universal coverage, you had to have an employers-employee payroll deduction like Social Security and Medicare. Anything short of that would be short of money.

Now that Congress is down to the final decision-making process, the legislators are beginning to get back to the question of costs and cost control.

The bigger employers of this country have been rapidly shifting to managed care health plans where they have some input in cost controls. No longer can the millions of employees of the Fortune 500 companies pick any doctor or hospital out of the Yellow Pages. Managed care means there is a list of doctors and a list of cooperating hospitals that will provide medical services at reduced rates. The individual must choose from the lists or pay a stiff extra charge.

Automobile manufacturers, for example, are spending more for health care than for the steel used to build the cars. Ford Motor Co. spend $1.4 billion a years 21 percent of its payroll to provide health care to its employees. Big firms have made it clear to their workers than medical costs have to be held in check and to the extent costs escalate, the companies will constrain wage increases.

Every employer that provides health benefits is intensely sensitive to costs. The federal government is conscious of Medicare costs. The state governments are acutely aware of Medicaid costs that eat up a colossal portion of state tax revenues. Private companies fear escalating medical expenses more than any other item in their budgets. Individuals fear they may lose their health care or at some point be priced out of the market.

Costs, costs, costs how to contain them? The health care system is inherently uncompetitive. If you want a new car or a new refrigerator, you shop for the best bargain. Patients do not shop price-wise for health care. Only to the extent that employers get fed up with exhorbitant health expenses is there any downward pressure on prices and to the extent that some corporations exert some downward pressure, the hospitals and physicians seek to pass along higher costs in other portions of the system where prices are not monitored.

The only way to control costs is to have a total system. If you have loopholes and escape hatches in a patchwork system, health care costs will continue to escalate beyond inflation. Whether its the Gephardt plan or the Mitchell plan or a blend of the two, health care costs will go up.

By the year 2012 the country will be forced to move to a single payer system where health care inflation and pricing are regulated. Thats the system in every country in Western Europe. During her recent visit to the United States, former Prime Minister Margaret Thatcher proclaimed Britain has the best health care system in the world. During her lengthy tenure as Prime Minister, she made no attempt to do away with the basics of Britains health care delivery system.

Why 2012? Thats about the time when the Social Security system begins to feel the avalanche of the baby boomer retirees. More retirees, greater life expectancy, more drugs, more new medical technology, all mean that Social Security and health care as we know will collapse a joint venture in disaster. When things hit rock bottom, Congress will have no choice but to act. Even Harry and Louise will cry out for help.

~Tom Eagleton is a former U.S. senator from Missouri who is a columnist for Pulitzer Publishing Co.