INCREASING THE SUPPLY AND IMPROVING THE UTILIZATION OF HEALTH MANPOWER This study has not examined the demand for or supply of particular types of health manpower. Detailed recommendations will be made by the President's Commission on Health Manpower. It is clear, however, that the demand for physicians will far outrun supply unless ways are found to use physicians more efficiently. The need is particularly acute in child health. About 15 million children in low-income areas are receiving little care. With current methods of delivery, providing comprehensive care for these children would require the services of about 15,000 doctors. However, many functions now performed by physicians could be performed just as effectively by less-highly trained personnel supervised by a physician. The use of physician assistants would reduce both the number of additional doctors needed and the costs of providing care. Recommendation Federally supported health care programs should be used to train physician assistants, evaluate their performance, and dissemiante the results. Large-scale use of assistants in actual care programs will be necessary. Training programs alone will not suffice, because jobs will not be available to such medical personnel until their usefulness and acceptance by patients and doctors have been demonstrated on the job. Legal obstacles to the employment of physician assistants should be examined and model State laws developed. Recommendation Federal funds available under the Health Professions Educational Assistance Amendments of 1965 should be used to support and encourage innovations in health professions' education and training which promote the efficient practice of medicine. At present, medical educators are considering a variety of innovative changes in both undergraduate and graduate medical education programs. Although improvements in the quality of medical schools and teaching hospitals are of paramount interest, the rising prices of physicians' services can be moderated through innovations in medical education designed to: (1) shorten the length of training programs without a reduction in their quality; and (2) train physicians to utilize ancillary personnel effectively and to organize their own medical practices efficiently. IMPROVING THE KNOWLEDGE AND THE FLOW OF INFORMATION ON THE EFFECTIVENESS OF DRUGS Although drugs are not contributing significantly to the rising price of medical care, there is evidence that they are higher than they would be if there were more vigorous price competition in the industry either at the manufacturing or at the retail level, and more knowledge on the part of doctors about the costs and effectiveness of drugs. Recommendation The Department of Health, Education, and Welfare should undertake an intensive examination of frequently prescribed drugs to assess the therapeutic effectiveness of brand name products and their supposed generic equivalents. Doctors often prescribe costly brand name products when equivalent drugs could be made available to the patient at lower cost under the generic name. Requiring generic prescribing under Government programs, however, will not be possible until doubts are resolved about whether certain drugs with the same generic name are actually equivalent in therapeutic value. Recommendation The Food and Drug Administration should provide doctors with authoritative information on the efficacy and side effects of all new drugs. Doctors get much of their information about the efficacy of drugs from the manufacturer. There exists no official compendium which a doctor can consult for information about the efficacy of a drug. Preparation and distribution of such a compendium might reduce advertising outlays of drug manufacturers. It would make it easier for doctors to prescribe the least expensive appropriate drug for their patients. A CONTINUING NATIONAL EFFORT TO IMPROVE THE EFFICIENCY OF MEDICAL CARE DELIVERY The rise in medical prices is not a temporary phenomenon. Upward pressure on medical prices is likely to continue for many years. Measures to assure that all citizens receive good care will increase that pressure. Their success will depend in part on a serious and comprehensive national effort to use medical resources efficiently. The Federal Government can contribute leadership and offer incentives, but it cannot make a major impact on the efficiency of medical care de livery without the cooperation of the medical profession, the hospital industry, insurance carriers, State and local governments, and many - other public and private groups. Recommendation The Department of Health, Education, and Welfare should call a national conference on medical costs. Leaders of the medical community and concerned public representatives should be called together to discuss implementation of the recommendations of this report and cooperative efforts to improve medical care services and control medical costs. Recommendation The Department of Health, Education, and Welfare, in cooperation with the Department of Labor and others, should continue to monitor and attempt. to explain medical price behavior. The studies undertaken for this report revealed many gaps in our knowledge of what has happened to medical prices and what determines their movement. Statistics on medical prices should be improved; indexes of medical productivity should be developed; and the search for an understanding of the determinants of medical price and cost behavior should be pursued. II. Medical Care Price Trends The Medical Care Component of the Consumer Price Index This section examines the rise in medical care prices through the years and in the recent past. The main source of information is the Consumer Price Index (CPI) prepared by the Bureau of Labor Statistics. The BLS obtains prices on a wide variety of items customarily purchased by urban wage earners and clerical workers, weighting these items by their importance in a typical city worker's family budget. Among the items for which prices are obtained are several types of medical and surgical procedures and hospital services, as well as a variety of drugs. These medical care components of the CPI constitute the major source of data on medical care prices in the United States. Some limitations of these data should be borne in mind in interpreting their movements. First, there is the quality problem, common to all price indexes. A visit to a doctor, or a day in the hospital is not a homogeneous product. The quality and effectiveness of care received by a patient in a day or a visit varies tremendously. Since the quality and effectiveness of care are undoubtedly rising over time, the medical care component of the CPI overstates the actual long-run increase in medical care prices. Moreover, the average consumer of medical care is not as interested in the price of a visit or a hospital day as he is in the total cost of an episode of illness. The cost of a particular illness may be rising faster or slower than the price index for medical care, depending on the amount, quality, and price of the medical care provided. Medical Care Prices and Total Consumer Expenditures Consumer expenditures for medical care reflect both the quantity of care purchased and its price. Price increases reduce the amount of care that can be purchased for a given dollar expenditure. In 1950, consumer expenditures on medical care were 4.1 percent of disposable income. By 1964, the ratio had risen to 5.7 percent. Demographic factors and changes in consumer preferences (in part, the result of the improved quality of medical care) undoubtedly contributed to this increase. But a major factor in rising expenditures for medical care has been the rise in medical care prices. 83-481 67 pt. 1 22 If, in the period 1950-64, the Medical Care Index had increased at the same rate as the Consumer Price Index, instead of over twice as fast, the quantity of medical care purchased in 1964 would have cost $19.7 billion rather than $24.8 billion. This would have represented about 4.5 percent of income after taxes. The relatively rapid rise in medical care prices has resulted in an increase in the proportion of income devoted to medical care and a probable reduction (over what would otherwise have taken place) in the quantity of care consumed by the public. Trends in the Medical Care Price Index Both the Consumer Price Index and its medical care component have been rising continuously for 25 years. Their rates of increase, however, have differed. Since the end of World War II, medical prices have been increasing considerably faster than consumer prices generally, as the following decade figures show: |