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Appendix A
STATEMENT - CLARK C . HAV IGHURST
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STATEMENT - CLARK C. HAVIGHURST
Appendix A
My views on the use of federal guidelines to limit the discretion
of local health planners and regulators do not differ greatly from the
committee's. If anything, I believe that for health planning to have
an appreciable effect on rising health costs, we must allow the federal
government, as probably the most cost-conscious participant in the
entire process, an even more dictatorial role than the committee con-
templates. Planning-cum-regulation, as it is now conducted, has no
chance to work by itself since it lacks the incentives, the tools, and
the will to be tough. Even when employed in conjunction with regulatory
rate setting for institutions, which is inevitably geared to covering
costs, the existing planning mechanism will give the system more
resources than it should have, given society's other needs. Federally-
imposed arbitrariness would seem to be the logical next step if we are
to make planning "work."
I do not share the committee's view that the results of health
planning should not be too closely scrutinized because the process
is well-meaning and in some marginal sense "democratic." The bench-
mark against which planning must be measured is whether it improves
the allocation of resources to and within the health sector. We must
now face the hard fact that only a vastly more centralized and arbitrary
planning system could possibly achieve improvements in efficiency. We
must also face the hard fact that such a system would improve efficiency
in only a haphazard fashion and at the expense of other important
values, not the least of which is individual freedom of choice. Only
when we have confronted this reality con we appreciate the need to
reevaluate the entire regulatory and planning enterprise. I think
that Congress rejected the Administration's hospital cost containment
bill in 1979 precisely because it found its arbitrariness objectionable
and realized the time had come to explore the nonregulatory possibili-
ties for cost containment.
Despite a common tendency to view health planning and certification
of need as noble undertakings, I see them simply as attempts to make
the best of a fundamentally unsound arrangement for providing and paying
for medical care. Planning-cum-regulation is in fact a method of
managing an industry that is noncompetitive with respect to price and
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eliminating costly forms of competition that develop in a poorly organized
cartel. By promoting monopoly, planners have sought to control the
pressures that flow from institutional imperatives and from the residual
competition that exists among physicians for patients and among institu-
tions for both patients and doctors. I see nothing inspiring in this effort,
whose main effect is likely to be to legitimize the cartel's poor per-
formance.
Health planning would not be possible without the support that
comes from the beneficiaries of protectionist and anticompetitive poli-
cies, and it is not likely to perform in ways that are more than margi-
nally offensive to these interests. The appearance of confrontation
serves the interests of the regulated as well as the regulators by
creating the illusion of effective control. Moreover, health planning
has been a politically convenient way of letting well-organized consumer
groups get a piece of the collective action so that they will not
agitate for more fundamental change that would destroy the cartel's
ability to function. It should thus be clear that, despite all the
rhetoric that is advanced to glorify it, health planning is a highly
conservative enterprise, accepted by dominant provider interests as the
best defense against both competition and other government-sponsored
forms of radical change. Some may believe that the planning effort is
the best our overpoliticized society can do, but I think we can do much
better.
My own preference is for restoring competition to a dominant
resource-allocation role. The committee acknowledges the existence of
this point of view but minimizes its realism. Nevertheless, it is an
idea whose time may well be coming--if one judges by, for example, the
references to competition contained in the National Health Planning and
Resources Development Amendments of 1979. Those amendments and the the
accompanying committee reports, together with Congress's resistance to
the proposed hospital cost-containment legislation, reflect a dramatic
reversal in the unquestioning drift of public policy toward reliance on
heavier regulation and other forms of centralized decision making. A
number of innovative legislative proposals are pending at the moment
that would give teeth to the new Congressional interest in relying on
competition and consumer choice as an alternative to trying to make
existing monopolies and cartels both more efficient and more accountable.
This committee's report gives none of the flavor of the current policy
debate and, instead makes it seem as if nothing has happened. What has
happened is that Congress has reversed itself and declared competition
to be the mechanism of choice, where it works, in health services.
Aside from the Airline Deregulation Act of 1978, no other federal regu-
latory legislation is nearly as explicit concerning Congress's preference
that competition be allowed to operate wherever it can allocate resources
reasonably well.
The reason the committee believes that nothing has changed is
probably that they sincerely believe that competition cannot do much
and that, even though Congress might wish it could be otherwise,
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planning and regulation must inevitably remain the dominant methods of
allocating health resources. Many others in the planning community
are unthreatened by the legislative change, however, because they
recognize that, whatever the merits of the question, it is the planners
themselves who, under the law, will have the final say on whether
command-and-control regulation or market forces can better allocate
resources of a particular type. Powerful ideologies and conveniently
shallow analysis, which stops just at the point where it should begin,
may therefore combine in practice to defeat Congress's initial attempt
to change the orientation of national health policy. It is an
interesting commentary on our governmental system that it frequently
takes much more than a mere Act of Congress to change the behavior of
well-entrenched regulators.
I would have liked to have assessed the merits of competition as
the allocator of particular types of resources, but the study did not
do this. If it had' an interesting discussion might have been launched,
although I appreciate that the questions raised would have been unman-
ageable in the context of this report. While I accept this choice,
I am not happy with the text that was used to gloss over the competi-
tion alternative, or with the report's description of the market
failure that arguably necessitates health planning and regulation.
Although a superficially plausible case can indeed be made for central
planning and regulation to offset huge defects in our current health
care financing system' the only interesting question to my mind is the
one the study neglects: how did the financing system get that way
and why doesn't it change to serve consumers better? The explanations
for the market's poor performance have to do with the tax law,
private restraints of trade, the purchase of health insurance
by unions and employers rather than by individuals, the design of
government financing programs, and regulation itself. The striking
thing about this list is that every problem it ider~tifies--and
all others are, I think, de m~nimis--is remediable by legislation,
regulatory reform, or antitrust enforcement. Moreover, none of the
relatively straightforward measures required to unleash market forces
are incompatible with maintairing improved public programs to subsidize
the procurement of care by those who would otherwise be underinsured
and underserved.
The committee e S view of health planning and health policy is the
one that prevailed generally until quite recently, but I do not think
it has much relevance anymore in light of the 1979 amendments and the
new Congressional mood. Certainly, it is no longer the case--as had
been said so often by so many--that the political system has so firmly
embraced planning and regulation that to talk of deregulation is
irrelevant. Indeed it seems to me that the time has come to encour-
age health planners to assist in building bridges to a world in
which consumers would have a chance to choose for themselves and
in which providers would be accountable, not politically (which they
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usually prefer), but in the marketplace. I fear that this report will
serve more to confirm health planners' preference for business as
usual than to alert them to their new responsibilities.
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Representative terms from entire chapter:
health planners
