Our Government's Helping Hand

By Peter Sciaky

In 1965 concern for the aged and the very poor prompted the United States Government to enact legislation that created Medicare and its stepsister, Medicaid. At that time the American Medical Association (AMA) spent over $7 million to defeat it. Now, the shoe is on the other foot. In the past decade (1985-1995) the health industry gave over $50 million to Congress (in the form of PAC and soft money contributions). They do not want a major overhaul of the system that has worked so much to their advantage.

Congress talks about saving Medicare, turning monies over to the states to administer Medicaid, and upping the rates (and slashing the benefits) to "keep the system alive." Yet the truth is that the government itself caused a great deal of the problem. It also knows how to fix it, but pressure from the health care industry does not allow the simple solution.

After the passage of the Medicare legislation in 1965, the government carelessly issued a blank check to hospitals and healthcare providers to scam billions of our tax dollars. The bills were paid by the government on the basis of "usual and customary" fees. Not only did the government pay the patients bill, but it allowed the hospitals to include capital costs (like expensive hi-tech toys and even hospital construction). Hospitals over built, and there was an enormous duplication of medical services and devices.

A direct outcome of all this was the amazing growth of the hospital corporations. Investors took control and ran the medical facilities not for service and care, but for profit. Today, the king of the lot is Columbia-HCA, its revenues exceeding $10 billion a year.

Physicians, too, fed at the trough, since the cost of care for their patients on Medicare Part-B was covered. By 1983 the problem was recognizably out of hand and the government instituted new controls, known as diagnostic-related groups (DRGs). This proclaimed that the government would only pay a prescribed amount for a specific diagnosis (ailment). This caused the hospitals, HMOs, and insurance companies to rethink a great many matters, such as what diagnostic tests should be given and how long a patient should stay at the facility. Before the DRG system, patients were encouraged to stay as long as they reasonably could; now (since pay from the government was the same), patients were dismissed as soon as possible. We've all heard the stories about how many women after normal vaginal births were sent home after twelve hours.

The DRG program led to another scam. If there is a more complex treatment for a given illness, one that brought a higher payment from the government, the for-profit care givers invariably chose that route. The Rand Corp., a Santa Monica, California think tank, researched the necessity of certain types of operations performed in the U.S. They concluded that of the 386 bypass operations they considered, only 14 percent were necessary. Value Health Sciences continued the study and concurred. They also concluded that 27% of hysterectomies,17% of tonsillectomies, and 50% of cesarean sections were also suspect.

This system that we now have in America is unique. The blank check that we have written to doctors, insurance companies, hospitals and other health care providers exists nowhere else in the world. It is little wonder that the recipients of this government giveaway fight tooth and nail to preserve the status quo. And Congress, which truly knows better, allows itself to be bought off by the industry.

Consumer Reports (July, 1992) commented that "our health-care system is so inherently wasteful and inefficient that a complete overhaul is an option worth contemplating. It may be, in fact, the only option that makes sense."