Liberal distributional values, the increasingly powerful capacity of medicine to provide more and better care, and concern about the health hazards of an industrial society fueled the vast expansion of the health care sector during the last 20 years. That growth was facilitated by a growing economy. The current health policy debate at one level reexamines the distributional bases of entitlement programs, and at another seeks alternative resource allocation mechanisms to reduce the cost of health care. This article has two themes. First, distributional and allocational policies are shown to be intrinsically related, so that the health policy debate is fundamentally a clash between liberal and libertarian values. Second, the inexorable social forces driving the health care system are shown to be the aging of the population and the rapid expansion of technology. The resulting dynamics imply the further growth of the health sector, now in the environment of a sluggish economy. Future policies will have to struggle with how to ration scarce health resources and how to reorient the health care sector to the problems of the aged.
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References
1.
1. P. L. 89-749, the Comprehensive Health Planning and Public Health Services Amendments of 1966.
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2. For alternative definitions of the public interest and a discussion of the role of social values in defining what is vested with sufficient public interest to justify public action, see Peter O. Steiner, “The Public Sector and the Public Interest,” in Public Expenditures and Policy Analysis, ed. Robert H. Haveman and Julius Margolis (Chicago: Markham, 1970), p. 21.
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3. Bureau of the Census, Statistical Abstract of the United States, 1981 (Washington, DC: Government Printing Office, 1981), pp. 445-446.
4.
see also Avedis Donabedian, Solomon J. Axelrod, and Leon Wyszewianski, eds., Medical Care Chartbook, 7th ed. (Ann Arbor, MI: Health Administration Press, 1980), p. 21.
5.
5. Statistical Abstract, 1981, p. 69.
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6. Robert I. Levy, “The Decline in Cardiovascular Disease Mortality,”Annual Review of Public Health, 2:49 (1981).
7.
For a discussion of the achievements of Medicare, see Judith R. Lave and Herbert A. Silverman, “Financing the Health Care of the Aged,” this issue of The Annals of the AAPSS.
8.
8. The most up-to-date discussion of these issues is found in Jack Hadley, More Medical Care, Better Health? (Washington, DC: Urban Institute, 1982). Hadley found that on the whole, “a 10 percent increase in per capita medical care use is associated with about a 1.5 percent decrease in mortality rates” (p. 169).
9.
9. The largest increase occurred at the federal level, from $5 billion to $64 billion, with the result that the share of social welfare expenditures in the federal budget doubled, going from 28 percent to 55 percent. See Statistical Abstract, 1981, p. 317.
10.
10. The arguments are set forth in Lester B. Lave, “Health, Safety, and Environmental Regulation,” in Setting National Priorities: Agenda for the 1980s, ed. Joseph A. Pechman (Washington, DC: Brookings Institution, 1980), p. 131.
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see also Clark C. Havighurst, Deregulating the Health Care Industry (Cambridge, MA: Ballinger, 1982).
12.
12. These arguments are most explicitly presented by Cotton M. Lindsayet al., eds., New Directions in Public Health Care (San Francisco, CA: Institute for Contemporary Studies, 1980); see also Rita Ricardo-Campbell, Economics and Politics of Health (Chapel Hill: University of North Carolina Press, 1982).
13.
13. A comprehensive discussion of this view is found in Clark C. Havighurst, “Competition in Health Services: Overview, Issues and Answers,”Vanderbilt Law Review, 34:1117 ff. (May 1981); see also Fred J. Hellinger, “Perspectives on Enthoven's Consumer Choice Health Plan,”Inquiry, 19:199 (Fall 1982).
14.
14. In discussing the problems of pricing and resource allocation in the not-for-profit hospital sector, Weisbrod, for example, clearly separates the allocational and distributional issues. Stressing the advantages of marginal cost pricing to all users of hospital services, he states that “The case of a patient with great `need' for care but insufficient ability to pay is an income distribution matter that will not be discussed here.”Burton A. Weisbrod, “Some Problems of Pricing and Resource Allocation in a Non-Profit Industry—The Hospitals,”Journal of Business, 38(1):27 (Jan. 1965), n. 21.
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15. Stone, from a different perspective, suggested that by its cultural acceptance illness has become “a convenient administrative device for managing a need-based redistributive system in a society whose primary distributive system is based on work.”Deborah A. Stone, “Diagnosis and the Dole: The Function of Illness in American Distributive Politics,”Journal of Health Politics, Policy and Law, 4(3):507 (Fall 1979).
16.
16. For a clear and accessible statement of the relationships between income and production, see Edward J. Nell, “The Fall of the House of Efficiency,”The Annals of the AAPSS, 409:102 (Sept. 1973).
17.
17. Allan Gibbard, “The Prospective Pareto Principle and Equity of Access to Health Care,”Milbank Memorial Fund Quarterly/Health and Society, 60(3):404 (Summer 1982).
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18. Blumstein and Sloan, “Redefining Government's Role in Health Care,” p. 924.
19.
19. Gibbard, “Prospective Pareto Principle,” p. 421.
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20. Ibid., p. 427.
21.
21. For a detailed discussion, see, for example, Lu Ann Aday and Ronald M. Anderson, “Equity of Access to Medical Care: A Conceptual and Empirical Overview,”Medical Care, 19(12):4 (Dec. 1981), supp.; Leon Wyszewianski and Avedis Donabedian, “Equity in the Distribution of Quality of Care,”Medical Care, 19(12):28 (Dec. 1981), supp.; Rashi Fein, “Social and Economic Attitudes Shaping American Health Policy,”Milbank Memorial Fund Quarterly/Health and Society, 58(3):349 (Summer 1980); Amy Guttman, “For and Against Equal Access to Health Care,”Milbank Memorial Fund Quarterly/Health and Society, 59(4):542 (Fall 1981).
22.
22. Addressing a 1980 conference on health policy, Caspar Weinberger entitled his talk, “Can Anything Be Done about Health Care Costs?” Putting the blame for current problems squarely on the legislation of the 1960s, he suggested that had we left well enough alone then, “We wouldn't have health care cost inflation, and we wouldn't have Medicare, and perhaps we wouldn't have a great deal of the problem—maybe not even enough to have a conference about.”Weinberger, “Epilogue: Can Anything Be Done about Health Care Costs?” in National Health Policy: What Role for Government? ed. Isaac Ehrlich (Stanford, CA: Hoover Institution, 1982), p. 414.
23.
23. Lester B. Lave, “Balancing Economics and Health in Setting Environmental Standards,”Annual Review of Public Health, 2:183 (1981).
24.
Samuelson raised this issue sharply in the context of evaluating the efficiencies of different forms of social organization. “It is difficult, however, to compare the efficiencies of the two regimes until the problem is better posed. Efficiency in terms of what? and for whom?”Paul A. Samuelson, “Understanding the Marxian Notion of Exploitation: A Summary of the So-Called Transformation Problem between Marxian Values and Competitive Prices,”Journal of Economic Literature, 9(2):429 (June 1971).
25.
An insightful discussion of the interrelatedness of allocative and distributional issues and their implications for policy formation is James F. Blumstein and Michael Zubkoff, “Public Choice in Health: Problems, Politics, and Perspectives on Formulating National Health Policy,”Journal of Health Politics, Policy and Law, 4(3):382 (Fall 1979).
26.
26. Albert O. Hirschman, Shifting Involvements: Private Interest and Public Action (Princeton, NJ: Princeton University Press, 1982); see also Odin W. Anderson, The Uneasy Equilibrium (New Haven, CT: College and University Publishers, 1968).
27.
For a more optimistic forecast, see Louise B. Russell, “An Aging Population and the Use of Medical Care,”Medical Care, 19(6):633 (June 1981).
28.
28. Charles S. Fisher, “Differences by Age Groups in Health Care Spending,”Health Care Financing Review, 1(4):65-68 (Spring 1980).
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29. Mark S. Freeland and Carol Ellen Schendler, “National Health Expenditures: Short-Term Outlook and Long-Term Projections,”Health Care Financing Review, 2(3):112 (Winter 1981).
30.
30. Lave and Silverman, “Financing the Health Care of the Aged.”
31.
31. Duane M. Kirking, “New Horizons in Pharmaceutical Technology,” this issue of The Annals of the AAPSS.
32.
32. H. David Banta, Anne Kesselman Burns, and Clyde J. Behney, “Policy Implications of the Diffusion and Control of Medical Technology,” ibid.
33.
33. Mark C. Hornbrook, “Allocative Medicine: Efficiency, Disease Severity, and the Payment Mechanism,” ibid.
34.
34. Kenneth E. Warner, “A `Desperation-Reaction' Model of Medical Diffusion,”Health Services Research, 10:369 (Winter 1975).
35.
35. James Lubitz and Ronald Prihoda, “Use and Costs of Medicare Services in the Last Years of Life,”Health Care Financing Review (in press).
36.
36. Hornbrook, “Allocative Medicine.”
37.
37. Gibbard, “Prospective Pareto Principle”; Blumstein and Sloan, “Redefining Government's Role in Health Care.”
38.
Luft also made this point, saying that “It strikes me that the last thing many people want when they or their family members are ill is to have to make economic decisions on the value of an additional test or procedure.... I can't imagine many people relishing the prospect of deciding whether a biopsy to rule out breast cancer is worth a $300 out-of-pocket fee.”Harold S. Luft, “On the Potential Failure of Good Ideas: An Interview with the Originator of Murphy's Law,”Journal of Health Politics, Policy and Law, 7(1):45, 46 (Spring 1982).
