Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, February 7, 1992 TAG: 9202070380
SECTION: EDITORIAL PAGE: A-7 EDITION: METRO
SOURCE: THOMAS L. ROBERTSON
DATELINE: LENGTH: Long
WILDER'S STOPGAP
THE FINANCING of health care in America is a mess. The public's appetite for high-quality, accessible health services and the responsiveness of health care providers to such demands have outstripped the nation's ability to pay. Medical miracles, not even dreamed of 10 years ago, are occurring today in Western Virginia because new technology and biotechnology-engineered drugs are available to superbly trained physicians.Patients want the best medical service available and, because of the lack of restraints on demand and minimal personal financial liability, give little or no consideration to cost. Providers know that if they are going to survive in the marketplace and avoid potential disastrous financial consequences because of medical liability tort claims, they must offer the maximum range of services and the most modern technology, often without regard to cost effectiveness.
There have been very few efforts to curb demand; indeed, entitlements and enrollment in government-sponsored programs have consistently expanded. When efforts have been made to introduce cost-sharing with beneficiaries, political revolts have forced a return to unchecked benefits and minimal cost sharing.
Gov. Wilder's proposal for a $60-million tax on health-care providers is the latest effort by government to put a finger in the dike against the competing forces of unchecked demand and reasonable, predictable costs. The governor's proposal does nothing to control the costs of health care or the Medicaid program.
Instead of a stopgap measure such as the proposed "sick tax," Virginia should lead the nation with health-care reform. The cornerstone of any viable health-care reform package must guarantee access to basic health care for all and provide effective cost controls. Cost controls can be achieved by restructuring the health-care delivery and financing systems so that government pays its fair share (not the approximate 75 percent of the private-sector charges now paid by Virginia's Medicaid program), and healthy lifestyles are promoted.
Gov. Wilder's rhetoric about excess profits misses the point when trying to solve the health-care crisis. A more thoughtful approach was proposed by the state Board of Health in December 1991 after a six-year study. This board is capably chaired by a resident of our valley, Cabell Brand, and its work brings together in one document the commonwealth's priorities for health care and suggests the resources to finance it.
In lieu of a "sick tax," the governor should propose a "health tax" as proposed by the state Board of Health that would encourage healthier lifestyles and provide incentives for people to take responsibility for their own health.
Tobacco and alcohol abuse and diseases related to such abuse account for 40 percent of health-care costs; yet Virginia has the lowest tobacco tax in the entire country, with a rate approximately 10 percent of the average tax charged by other states! An increase in taxes on alcohol and tobacco to the federal level would raise $250 million a year - more than four times the proposed "sick tax" - and provide the additional benefits of curtailing consumption of these dangerous substances.
The governor's populist message is that health-care providers are big businesses and he will not yield to pressure from such groups. Eighty percent of the hospitals in Virginia, including those in the Carilion Health System, are not-for-profit community-based institutions owned by the citizens they serve.
The designation by the Internal Revenue Service as not-for-profit does not mean that operating revenue and expenses should balance every year. It does require that any excess of revenues over expenses ("profit") must be used in attainment of the objectives of the organization, such as the replacement of equipment and the purchase of new technology.
Competition has been introduced in health care in the last 20 years and provides a safeguard to ensure efficient management and responsiveness to local community needs. This check and balance for not-for-profit hospitals is provided by approximately 20 hospitals in Virginia (including nearly half of the hospitals in this newspaper's readership area) that are owned and-or operated by investor-owned firms.
The community's interests are also protected by local boards of directors of not-for-profit hospitals, who are usually the civic leaders of the community. In many instances, they run businesses that pay health-care premiums for their employees and have a personal interest in holding down health-care costs.
A "sick tax" on providers will only accelerate the cost-shifting to those with insurance and increase the number of Virginians who cannot afford insurance. The promotion of a "health tax" that would impose higher taxes on alcohol and tobacco is a much better interim step to major health-care reform.
There have been many quick fixes applied to the health-care system in the past 25 years, but major reform is now needed. The status quo and trendy ideas are not acceptable. Bold, innovative leadership is needed; not finger-pointing and political expediency.
All participants in the health-care system - providers, patients, payers and politicians - have contributed to the current health-care mess. Now all must sacrifice, and be part of the solution.
Thomas L. Robertson, of Roanoke, is president of Carilion Health System.