HEALTH PLAN: The Only Practical Solution to the Soaring Cost of Medical Care

by Alain C. Enthoven ‧ RELEASE DATE: May 15, 1980

An economist's clear and systematic view of where the health care system went wrong, and how to fix it. For Enthoven, the issue is reduction of costs, and the solution is universal health insurance with rational economic incentives and fair competition. Drawing on his background as former president of Litton Medical Products and former Assistant Secretary of Defense, be discusses some causes of increased spending on health: general inflation, greater insurance coverage, new technology, an aging population, the increase in malpractice litigation, overuse of services (excessive hospital stays, duplication of tests). But the main cause, he contends, are the ""perverse incentives"" of the present fee-for-service system--which rewards doctors with more revenue for providing more and costlier services, regardless of whether the patient benefits. The public acquiesces because of basic misconceptions about the nature of medical care--equating it, for one thing, with other insured situations (car repair, fire, theft) which have a definite cause and cure. Enthoven then looks at some existing alternatives, and finds that pre-paid plans (e.g., Kaiser-Permanente) have been able to cut cost without reducing quality of care. On this basis, he proposes fundamental reform of the health-care financing and delivery system: we should shift from one dominated by cost-increasing incentives to one in which providers are rewarded for finding ways to give better care at less cost--in the private sector. Enthoven specifically proposes that the government help people pay for the private health-care financing and delivery plan of their choice, through premium contributions based on financial and medical need. Free-market competition, he maintains, would then bring about the desired changes in the system. True, competition would not work quickly or perfectly, and special problems--such as the handicapped--would require special programs. The main objection to this model, however, is not addressed here: the use of cost analysis, rather than human processes and outcomes, as an index of adequacy in health care. This has brought Enthoven and the economic model under attack before. But the book itself is a level-headed explanation of that particular approach.

Pub Date: May 15, 1980

ISBN: N/A

Page Count: -

Publisher: Addison-Wesley

Review Posted Online: N/A

Kirkus Reviews Issue: May 1, 1980

Categories: NONFICTION