Panel, Citing Health Care Crisis, Presses Bush to Act

By ROBERT PEAR

ASHINGTON, Nov. 19 — The National Academy of Sciences said today that the United States health care system was in crisis and that the Bush administration should immediately test possible solutions, including universal insurance coverage and no-fault payment for medical malpractice, in a handful of states.

Administration officials said the report would probably become a blueprint for pilot projects to be proposed by President Bush and Tommy G. Thompson, the secretary of health and human services, who requested the study.

"The American health care system is confronting a crisis," said the report, from a panel of experts appointed by the academy's Institute of Medicine. "The health care delivery system is incapable of meeting the present, let alone the future, needs of the American public."

The report cataloged the problems this way: "The cost of private health insurance is increasing at an annual rate in excess of 12 percent. Individuals are paying more out of pocket and receiving fewer benefits. One in seven Americans is uninsured, and the number of uninsured is on the rise."

States, suffering severe fiscal problems, are cutting eligibility and benefits in Medicaid and other health programs, the panel said, and tens of thousands of people die from medical errors each year.

The tone recalled the alarm and urgency of President Bill Clinton, who in 1993 and 1994 asked Congress to guarantee health insurance for all Americans. In its report today, the panel proposed a more modest agenda, using states as laboratories to reverse "disturbing trends" that it said had worsened in the last two years.

The panel suggested that three to five states pursue the goal of affordable "coverage for all citizens and legal residents," by providing tax credits or expanding Medicaid or the Children's Health Insurance Program.

"We learned in 1993 and 1994 that you cannot be prescriptive," said Gail Warden, president of the Henry Ford Health System in Detroit, who was chairman of the panel that wrote the report.

The 16-member panel proposed pilot projects in four other areas: medical malpractice, community health centers, treatment of chronic illnesses and information technology, to computerize medical records and reduce paperwork. The panel, which included doctors, lawyers, a nurse and several professors, did not estimate the costs of its proposals.

Members of the panel acknowledged that health care was not a top priority in Washington at the moment, as officials worry about the economy, terrorism and the possibility of war in Iraq. But the panel predicted that health care would soon move back to the top of the nation's agenda.

Secretary Thompson welcomed the report. He could start some of the projects on his own next year. For others, he would need legal authority and money from Congress.

Administration officials said they wanted to take bold steps next year to rebut Democratic assertions that Mr. Bush has neglected health care in his first two years in office. Many of Mr. Bush's usual allies, including the National Federation of Independent Business, have been pleading with the administration and Congress for help in getting health insurance at affordable prices.

The number of uninsured has been climbing for more than a decade and now stands at 41.2 million, or 14.5 percent of the population, the report said. In expanding coverage, the panel said, states should allow all members of a family to enroll in the same health plan, and each state with a demonstration project should set up an electronic clearinghouse to verify eligibility and to enroll state residents.

The panel also said that four or five states should test alternatives to medical malpractice lawsuits as a way of compensating patients who contend they have been injured by doctors and hospitals. Patients who waive the right to a jury trial could receive "faster, fairer, surer compensation," the panel said.

"For the first time in nearly 20 years," the report said, "the United States is facing a broad-based crisis in the availability and affordability of malpractice liability insurance for physicians, hospitals and other health care providers." For some doctors in some states, it said, liability insurance has become prohibitively expensive, and the market for such insurance has become extremely volatile.

Sally J. Greenberg, a lawyer at Consumers Union, said: "There's no credible evidence that pure tort reform, with strict caps on damages awarded by a jury, brings down medical malpractice rates. But a fair and equitable no-fault compensation system could conceivably be beneficial to patients."

Under the proposal, states could limit payments for pain and suffering and other noneconomic damages, and the federal government would subsidize insurance for health care providers who promptly compensate patients for "avoidable injuries." Alternatively, state agencies could adjudicate claims and decide the proper compensation, using a schedule of damages or other benchmarks.

The panel acknowledged that there might be constitutional problems in compelling consumers to accept these arrangements, but it said that patients might be allowed to opt out when they enroll in a health plan or enter a hospital.

Other pilot projects would try to create a "paperless health care system," through greater use of computers; beef up 40 of the nation's community health centers with sophisticated equipment; and test new methods of managing care for people with chronic conditions like diabetes, asthma and heart disease.

"The time for change has come," the panel concluded. "The country that put the first man on the moon and invented the microchip is surely capable of ensuring that children are immunized, that patients who suffer heart attacks receive life-saving drugs" and that smokers receive the counseling and assistance they need to quit.