health secretary points to progress already made

LOUIS SULLIVAN'S job in Washington, always a hot one, has become positively torrid. As secretary of the Department of Health and Human Services (HHS), he has the responsibility not only for attempting to keep the costs of health care under control, but also for telling the public about it.Now the Democrats have chosen to make health care an election issue - with great success in the balloting Nov. 5 for a Senate seat in Pennsylvania. And President Bush has promised his administration will offer a health plan before the 1992 election campaign. In an interview, Dr. Sullivan outlined the efforts of his department to keep costs from escalating even faster than they have for the past decade: a 7 to 11 percent annual rate in current dollars. Congress, he notes, approved in 1983 a prospective payment system of reimbursing hospitals for inpatient services covered by the Medicare program for senior citizens. Under this system, the government pays hospitals a predetermined rate according to the classification of a patient's diagnosis into one of approximately 470 groups. "That did succeed in bringing down the rate of increase in hospital expenditures from the prior level of around 16 or 17 percent to around 10 percent," he says. "That has been very helpful - and with indeed no evidence of any decrease in quality of care received." A second major effort is to control physicians' fees. These, Sullivan notes, have continued to go up 14 to 15 percent a year. "We were spending $8 billion in 1980 for Medicare Part B for physicians, and now we are spending $31 billion in 1990 for the same." On Nov. 15, HHS issued a new fee schedule intended to make payment to doctors more uniform and predictable, with a single price list covering all services with some geographic adjustments. Up to now, payments to physicians were based on factors such as the doctor's customary charges and the prevailing local rates, resulting in considerable variations in fees. A major goal of that change, Sullivan notes, is to redistribute income among physicians toward those in "primary care such as family doctors and pediatricians, who deal with 85 to 90 percent of the problems of patients, and away from medical specialists, such as surgeons and radiologists, paid on the basis of various procedures. "The physician payment formula will try to close that gap, although it will never really close it," says the former dean of the Morehouse School of Medicine in Atlanta. Sullivan expects the new system, which takes effect Jan. 1, to result in more "continuity in care and more prevention, and therefore both increase quality of care and work to control the cost." A third development was the passage by Congress last year of a drug pricing bill in relation to state Medicaid drug purchases. Sullivan says it is "too soon to know just how effective that will be" in trimming health-care costs. But, says Sullivan, "significantly more" needs to be done to cut costs. "There's no one answer. There's no magic bullet. It's really an aggregation or a combination of a number of factors." Sullivan says that the medical liability crisis adds "at least $20 billion" to the nation's health-care bill. That sum includes the cost of malpractice insurance premiums, the cost of litigation, and the extra costs involved when doctors practice "defensive medicine" (such as asking for unneeded tests). The administration, he notes, has proposed tort reform legislation, now before Congress, that would provide incentives for states to legislate measures reducing the cost of liability actions. One key feature would put a limit on the size of awards for pain and suffering to $250,000. "The system is now sort of like Russian roulette," he says. "A person might end up with one of these quite exorbitant awards that may not have a relationship to the actual damage that was done." Another department goal is more "effectiveness research," that is, seeing which medical procedure or drug is most effective in accomplishing what it is supposed to do. As an example, Sullivan notes that drugs differ widely in price. In some cases a cheaper drug might mean better care and lower costs. Other efforts to trim costs and improve health at the same time include expansion of community health centers and the national health service corps that provides primary health care in medically underserved areas; encouraging more healthy behavior by the public, such as reducing smoking and alcohol consumption, eating better, exercising, getting more children immunized, discouraging teen pregnancy, and so on. At the present rate of inflation, United States health costs would rise from $666.2 billion last year to $1.5 trillion by the year 2000, Sullivan warns.