Soaring Costs

U.S. health bill jumps 15.1%

The U.S. Government confirmed last week what everyone knew: health costs are soaring. In fact, according to the Department of Health and Human Services, the nation's health bill shot up 15.1% in 1981, outpacing the 8.9% inflation rate for the year.

Overall, medical costs, both public and private, rose to $287 billion. The sum represented a record 9.8% of the gross national product, averaging out to $1,225 for each American. The HHS report noted that the rapid increase in medical spending was caused in great part by the routine payment of two-thirds of all medical charges by Government programs and private insurers. "These disturbing figures," said HHS Secretary Richard Schweiker, "are the strongest argument for reforming the existing system of health-care-cost reimbursement."

Medicare and Medicaid expenditures together totaled $73 billion, accounting for 29% of all health spending. The two programs last year paid for more than one-third of all the nation's hospital bills. Since Medicare serves the elderly, and much of Medicaid is spent on long-term care of the elderly poor, these programs will continue to increase rapidly as the U.S. population ages.

The HHS statistics showed that over the past ten years:

P: Expenditures for hospital care, one of the principal causes of the huge 1981 increases, quadrupled to $118 billion.

P: The costs of physicians' services more than tripled, to $54.8 billion.

-- Nursing-home expenses increased more than fourfold, to $24.2 billion.

The Reagan Administration is considering proposals to increase competition among health-care providers and place limits on tax-code provisions that permit excessive use of doctors and hospitals. The White House, however, has not submitted details to Congress, which has been unable to agree on its own plan.

Some states have decided they cannot afford to wait for federal action. California, for example, has just passed a bill that will require state officials to choose the lowest-cost health care for Medi-Cal (Medicaid) recipients. The law will permit private health insurers to do the same for their subscribers. As a result, next year California Medi-Cal patients may be restricted in choosing their doctors and hospitals. William A. Guy, who administers the Medi-Cal watchdog program, sums up his task bluntly. Says he: "Hospitals are a major part of the cost. The issue is how to hold them accountable."

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