Some Reactions To Business Week's Health Plan

Many of us in Rochester, N. Y., found your proposal for health care to be particularly interesting because it closely resembles our community's very successful regional health care system ("A prescription for reform," Social Issues, Oct. 7). In particular, the role you describe for a health care purchasing corporation has been performed effectively by Blue Cross & Blue Shield of the Rochester area for years.

For example: With a market share of about 73%, Blue Cross & Blue Shield is able to negotiate favorable rates with local providers on behalf of all of its members. More than 90% of health insurance policies are community rated, which means that the corner gas station owner pays the same premium rate as Eastman Kodak.

More than 50% of Rochester-area residents are enrolled in health maintenance organizations that employ the "gatekeeper" concept of managed care. Blue Cross & Blue Shield provides case management services, directs subscribers to "centers of excellence," and works closely with local providers to establish quality standards, training programs, peer-review activities, and clinical guidelines on treatments.

This approach has been effective. For example, local health insurance costs-per-employee in 1990 averaged $2,082, compared with a national average of $3,217. Our rate of uninsured is estimated to be about 8.5%, well below the national average. We also outperform the nation in hospital admissions, hospital days, and average lengths of stay.

Raymond A. Savage

Senior Vice-President

Blue Cross & Blue Shield Assn.

Rochester, N. Y.

You assert that "no one is arguing that technological innovation should slow down." Unfortunately, that's not the case. Slowing down innovation is exactly what some voices in the health care debate are urging.

But this focus on innovation is misplaced, for the real technology issue relates to its utilization. The purchase price of all device technologies you can think of together add up to about 5% of U. S. health care costs, while utilization of these technologies constitutes anywhere from 10% to 40% of the increase in health care expenditures.

How we define the problem of rising health care costs may well determine how we fix it. Those who blame the fruits of innovation -- that is, health care technology -- for the sins of utilization, will never fix the incentives in our system that lead to overuse and waste. They will only stop the medical innovations that offer patients longer, more productive, and higher quality lives.

Alan H. Magazine


Health Industry Manufacturers Assn.


The article offers a solution to the health care crisis without getting to the root of the problem. Two-thirds of medical expenditures are now controlled by government, yet government intrusion was largely ignored as a cause of this mess. The solution is simple but requires major surgery: eliminate government intervention, let the consumer make the decisions, and give the free market a chance to work its magic.

Kevin Duffy


Your outline for a future medical care system for the U. S. is well-thought-out and comprehensive.

As you pointed out, waste in the field of medicine is rampant, with estimates of 30% more diagnostic tests and procedures than we really need. Many of these resources are spent in the final months of life and in sustaining premature infants. In many cases, procedures are performed out of fear and ignorance on the part of the doctor -- fear of possible lawsuit and peer pressure and ignorance of benefit vs. cost.

In the medical marketplace today, patients and their families expect more, and their requests are infinite. Few incentives currently exist for the physician to decline or moderate their demands: To the contrary, they earn more for doing more in the current system.

What is missing is the ability to form a consensus about what tests and procedures will be allowed: Government mandates may be part of the solution, but precious little thought has been given to inventing ways for physicians to keep their patients well.

Graham Bell, M. D.

Oakland, Calif.

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