The American health system: a contentious environment in the 21st century

Physician Executive, Jan, 1996 by Thomas P. Weil

Enormous advances in medical sciences, almost unceasing economic growth, and nearly insatiable demand for medical services during the past 100 years has resulted in the health field's emerging as one of America's major growth industries. The first quarter of the 21st Century could witness a more contentious environment as an American health system with relatively fewer resources strives to meld a properly structured competitive design with a minimal number of regulatory safeguards. Of particular concern will be cost containment, protection of the public against fraud and abuse, and assurances to all Americans of reasonable access, equity, and quality health services. A few of the more critical societal trends that are expected to impinge on the delivery of health services during the next 50 years include:

* Growth in the number and the percentage of the population with chronic diseases.

* Number of nonwhites exceeding whites by 2030.

* Increasing gaps in income between the old and the young, and declining number of persons in the middle-class.

* Rising number of homeless; the uninsured, now totaling more than 41 million and growing at an annual rate of one million; and possibly half of all children living in poverty by the turn of the century.

* Large and expanding number of citizens addicted to drugs and alcohol.

* Slow improvement in demographic factors such as infant mortality, teenage suicide, unemployment, and poverty among the elderly.

An Economic Backdrop to the 21st Century

The American economy performed well in the 1950-1990 period, with some minor negative fluctuations, in terms of total output and unemployment. What is worrisome is that, in terms of output per worker, the United States performed through the 1980s consistently below other western industrialized nations, although improvement in our workers, efficiency has been observed in recent years.[1] A troubling example is the number of paid hours per discharge in Canada and Germany being considerably less than those expended in American hospitals, which traditionally have had significantly shorter average lengths of stay than acute care facilities elsewhere in the world.(2)

America has done better than Europe or Japan in providing additional jobs. This increased number of workers in the labor force, however, has been accomplished at the expense of real wages (i.e., purchasing power) per employee. America experienced a lower ratio of investment to gross domestic product (GDP) as well as a significantly lower growth rate of capitalization per employee than most other western industrialized nations. Contentious labor-management relations during the 1960s and 1970s were often cited as particularly harmful to America's long-term productivity growth.3 The leaning of the United States toward more of a service economy foreshadows further decreases in average take-home pay and more difficulties on the part of employees in meeting out-of-pocket costs for medical care.

The United States, record on poverty, which affects demand for health services, has improved. According to official definitions, 33 percent of the population was in poverty in 1947, dropping to 11 percent by 1973. The percentage of those in poverty rose to 15 percent in 1983 and in 1994 was 13.5 percent, a total of 34.5 million Americans. A greater percentage of Americans experiencing poverty compared to those in other western industrialized nations may result from greater inequality in pretax incomes. Whether it is mainly the rich getting richer or the poor getting poorer, or both occurring at the same time, is a subject of ongoing debate. Whatever the reason, the increase in the inequality of incomes among Americans in the past two decades should be regarded as a negative factor when evaluating our long-term economic outlook and our ability to adequately finance our nation's health system.

A small but growing number of economists argue that this inequality of income may be harmful to long-term industrial growth.[4] A study of 56 countries found a strong negative relationship between income inequality and growth in GDP per capita.[5] In economies with less income equality, concerns about social and political conflict are thought to more likely lead to government policies that cramp industrial growth. America and Switzerland, nations with high income inequalities, witnessed much slower productivity growth in the 1980s than did the more egalitarian Japanese, German, and Swedish economies. Societies with wider economic inequalities were also found to have more ill health, social stress, and crime, which hinders the development of the economic underpinnings that would allow health industries to continue to grow.

Given the economic, social, and political imperatives that face America in the 21st Century, we can expect to struggle "harder" and "differently" to implement effective and efficient delivery of medical care, particularly where excess capacity of physician specialists, hospital beds, and expensive sophisticated equipment exists.