THE ISSUE OF
HOSPITAL COSTS
The passage of Medicare and Medicaid initiated the explosive increase in hospital costs
that has occurred over the past three decades. Hospital reimbursement is Medicare's largest expenditure, accounting for about 70 percent of its total outlays. For example, between 1966 and 1982, Medicare payments to
hospitals increased at an annual rate of about 20 percent, in large part because of the growth in the number of elderly patients and the increased volume of services provided them. With continued growth in the proportion of the elderly relative to the total population, Medicare costs continue to rise, despite congressional attempts to reduce payments and services in the 1990s.
Cuts in federal health entitlement programs and tight fiscal pressures on state and local governments have contributed to an increase in the number of the
uninsured. Almost all are under age 65. (Medicare provides coverage to nearly all the elderly.) Many poor people are ineligible for MedicaidÑwhich in theory provides for the "medically indigent"Ñbecause of variations in state income and eligibility requirements. Thus, over 15% percent of all Americans have serious problems of access to adequate health care.
Although some public and voluntary hospitals provide charity care, most nonurban hospitalsÑwhether publicly or privately ownedÑoffer little to the indigent sick. If public health-care policy does not begin to cover the cost of care for the uninsured, perhaps one-third of all public hospitals will have difficulty remaining in operation. In addition, the growth of the for-profit hospital sector will make it even harder for the uninsured to find treatment, and public and voluntary hospitals will be forced to take up the slack, something neither can afford to do. They, too, may eventually be forced to erect barriers to the poor and uninsured.