Health Care in Crisis

As the costs of health care increase, the quality and availability of services are diminishing. Despite recent innovations in the way health services are provided, the health care industry and consumers face a showdown over what services will be available, who will provide them, and who will pay. The health care system in the United States is in crisis. While the cost of care, health insurance premiums, and deductibles continue to increase, the quality and availability of care are diminishing. The n umber of uninsured Americans is rising, widening the gap between the nation's haves and have-nots. And looming on the horizon is the long-term care of the biggest demographic group in the nation's history - the baby boom generation. As they begin to prepare for old age and its accompanying infirmities, boomers and the health insurance industry are eyeing one another warily, each wondering the same thing: Just how expensive is this going to be, and how can I avoid paying for it? "Some people feel that as long as there's someone to pay for it, the cost of health care will continue to rise," says Kyle Grazier, director of the Sloan Program for Health Services Administration and an associate professor in the Department of Policy Analysis and Management. "Up until the early 80s, there were no controls, and whatever was charged was paid for. So the industry has tried to backpedal and impose some constraints on the payment side and achieve more cost sharing on the demand side. But then we've also constrained the supply side by putting more risk sharing on the part of the provider." Grazier studies health care costs and the factors that influence people's choices of health care programs. She says that in the salad days of the 70s, people had as many as 16 options when it came to selecting a health care program. Today, the 150 million people under the age of 65 who are covered through their employers have only two or three choices. Still, weighing the various offerings of each plan can be confusing. When making decisions about health care coverage, Grazier has found that people tend to be influenced by several factors. One is their own assessment of their future need for care. For example, a young couple preparing for parenthood will likely seek a plan that provides the best coverage for childbirth. A middle-aged couple, on the other hand, might be more interested in a plan that provides the best care for long-term illnesses. Another factor is access to care. Does a plan allow visits to physicians with whom a family already has relationships? Are the physicians who are included in the plan located nearby? Can appointments be obtained easily? People also are influenced by their previous experience with a plan. Dissatisfaction with a plan's administration or coverage will cause many consumers to move to an alternative plan. And, of course, almost everyone is influenced by cost. Going with the cheapest plan, however, is often not the best idea, Grazier says. "It's difficult to sort through the data, and some people just look at the dollar amounts and change to plans that charge small premiums," she says. "They underestimate the amount of care they're going to use. "In general, though, I think health care consumers are better informed than ever before, so employers are feeling the need to make the choices clearer." Many Americans, however, have no choices at all when it comes to health insurance. According to the Government Accounting Office, the percentage of Americans under age 65 with private health insurance coverage decreased from 75 percent in 1989 to 71 percent in 1995. That 4 percent drop represents 10 million people, half of whom are children. Because health care providers have been found to tailor treatment to the amount of coverage a patient has, these people are almost certain to receive inadequate medical care. "For a long time, researchers weren't sure whether providers based their treatment on a patient's coverage. …