Spring 2000

Fall 1999

A Message from the Dean

Cities at the Horizon
Communities at the Horizon
Eastward from Our Horizon: U.S., China & Russia
Beyond the Horizon: Innovation and Technology

ILE Lecture: Charles A. Heimbold, Jr. L'60
Profile: Richard E. Rosin L'68
Profile: Pamela Daley L'79
Profile: Professor Jason Johnston
Profile: Howard Chang
Profile: Robert A. Gorman
Oral Legal History Project

Snippets of History
Faculty Notes
Alumni Briefs
In Memoriam

Penn Law

In fact, we could probably spend all day talking about the life-saving advances in science and medicine that have taken place in the last four decades: beta and calcium channel blockers and ace-inhibitors to fight hypertension; the unlocking of the DNA code, with a resulting revolution in biotechnology and genetic engineering; the advent of large scale clinical trials; the pursuit of landmark epidemiological studies like the Framingham study; increasing awareness about the dangers of cholesterol; chemotherapies to fight cancer; new generations of antibiotics and psychotropic drugs. The list goes on and on.

All of this was happening within the framework of Medicare, which was enacted in 1965.

That’s just some of the good news about improvements in health care over the past four decades. Now let’s talk about the bad news. Certainly we continue to face major health challenges such as hypertension, cancer, infectious diseases and other maladies. But equally serious is the problem of costs.

Spending on health care has soared over the last forty years, from $27 billion in 1960 – a little over five percent of the nation’s GDP – to more than one trillion dollars in 1998, or nearly five percent of GDP. And it will keep going up.

The bite it takes out of the federal budget – largely in the form of Medicare and Medicaid payments – has grown from a paltry $5 billion in 1965 – the year Medicare was passed – to more than $370 billion today. Altogether, health-related expenditures consume more than twenty-one percent of the federal budget. Compare that with four percent in 1965.

It is interesting to note that in 1964 the debate over Medicare centered on how well the government could forecast future costs. In a long-range estimate, the total expense for 1990 was projected to be $10 billion. Actually it was $110 billion, eleven times as much! And eight years later, in 1998, the Medicare bill nearly doubled, to $216 billion.

With spending rising so quickly – and budgetary pressures intensifying — politicians have moved just as quickly to assign blame – generally, as far from their corridors of power as possible. In the 1970s and 1980s, when healthcare costs were accelerating at a double-digit rate, physicians and hospitals were the targets. How many times did we hear about doctors ordering unnecessary tests and charging exorbitant fees, or hospitals with staggering daily rates?

Today, the pharmaceutical industry is the bogeyman, just as it was 40 years ago. Some of the polemics haven’t really changed. Once again, we hear that prices are too high and even that the industry is too prosperous.

Certainly, it cannot be denied that spending on prescription drugs in the U.S. has increased, particularly in recent years.  In 1998, it exceeded $90 billion.  Still, it is important to note that eighty percent of this growth has nothing to do with price – it is primarily a result of the increasing number of prescriptions being written, more new products coming to the market, and more older people needing medicines.

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