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

Physician Executive, Jan, 1996 by Thomas P. Weil

The 1994 elections and the congressional debate during the fall of 1995 reflect a shift to the political right and provide further credence to the view that, for the foreseeable future, the American health system will focus on competitive concepts, as the S & Ls did after 1982, without concurrently implementing any safety and soundness regulations.[15] With this oversight lacking, most state governments will be slow to respond, as they are inherently more reactive than proactive. In this case, state regulation will be particularly tenuous, with elected and appointed public officials being confronted by influential lobbies on any major decision.

A highly contentious environment will surely result as consumers demand health services as a public right and providers are faced with significant fiscal shortfalls as a result of cutbacks in Medicare, Medicaid, and HMO reimbursement. In this mismatch, the S & L debacle of the late 1980s is unlikely to be repeated in the health field during the 21st Century for several reasons:

* Federal and state governments would reluctantly appropriate additional dollars by raising taxes or increasing budget deficits, because access to high-quality health services for all Americans is considered by most public officials to be as critical as guaranteeing the repayment of savings bank deposits insured by the Federal Deposit Insurance Corporation.

* The health industry would find ways, at least for the short term, to curb costs or to use previously accumulated surpluses to tailor the delivery of care to available resources.

* Administrative costs of and consumer-provider resistance to continuing micromanagement of health services will result in less public hesitancy in allowing government to set global budgetary targets.

* Fiscal incentives of managed care plans discourage replacing existing and acquiring new, expensive tertiary services. Reduced reimbursement will hasten centralization of tertiary services and will force queuing of patients on the basis of acuity for tertiary services. Significant savings will be achieved, received although patients and families will be inconvenienced and additional clinical risks will be incurred.

After the health field's predicted downnizing, some outstanding indebtedness will be in jeopardy, and some of the weaker networks could witness shattered financial statements. What will be of particular concern is that the fiscally weakest health alliances, often in underserved areas, will be among those most often fiscally pressed, and, in some cases, they will seek bankruptcy protection as a means to restructure their long-term debt. Under these conditions, the federal government will be required to step in with a highly politicized "health care delivery relief fund," as President Clinton proposed with a Medicaid waiver for the Los Angeles County health system. Government funds will be used in the 21st Century to bail out failed alliances and HMO plans in a manner similar to efforts in the S & L debacle, in disaster relief, and in various subsidies (e.g., floods, farm, tobacco). The short answer is there will be far more bankruptcies in the health industry than in the past decade, but no major S & L-type debacle in the 21st Century.