From PATRICK BROGAN

Washington, Tuesday

THE American health care disaster is growing worse by the month. The

Department of Commerce has just concluded that in 1992 the cost of

health care came to 14% of gross domestic output, compared to 13.2% in

1991.

The cost was $838.5 billion last year and will hit $1 trillion, a

million million dollars, in 1994. Health costs are rising 12 or 15% a

year, according to the commerce report, and will continue to do so for

the next five years at least ''unless significant changes in the health

care system occur''.

Simultaneously, the Blue Cross health insurance system in New York has

increased its premiums by 22.5%. This is the non-profit scheme that

insures small companies and individuals that the large insurance firms

will not insure. The result of the increase will be that scores of

thousands of people will lose their medical insurance.

There are several forces at work here. Medical technology is expanding

at a dizzying rate, and doctors and hospitals always give their patients

the best treatment possible. In the process, doctors, hospital

administrators and everyone who provides health care, becomes very rich

-- except, of course, the nurses and people who do the grunge work.

At the same time, the cost of medical insurance is so high that firms

that provide insurance for their employees look for the cheapest deal,

and insurance companies oblige by offering much reduced rates for young

and healthy people and refusing to insure older people.

This is fine for the young and healthy until they, too, grow old and

sick. Even in America the young know that their turn will come, but in

the meantime they seize the advantage of their youth, and join the cheap

insurance plans.

All over the country insurance companies are refusing to insure people

who might actually need health care. A third of Americans now have no

health insurance and the percentage is rising rapidly.

When they fall sick, they cannot go to a doctor so they go to hospital

emergency rooms. This costs far more than a visit to a doctor's surgery,

but they have no alternative, and most states oblige hospitals to treat

everyone who presents himself. This puts up the cost to paying patients

and speeds the cycle around.

This effects governments. Pensioners have their basic health costs met

by the Medicare system and indigent people by Medicaid.

The federal government has tried to shift as much of the burden as

possible onto the states. State governments, including New York and

California, face budget crises every year as they try to balance the

books while paying Medicaid.

Health care costs are now the largest item on the federal budget,

bigger than defence or education, and Mr Clinton has no hope of cutting

the $320 billion federal deficit by half in the next four years, as he

has promised, unless he can bring health costs under control.

It is his greatest challenge. The lobbies pushing for greater

spending, led by the serried ranks of pensioners who want Medicare

spending increased, not cut, are the most powerful in Washington. But

America now spends more than twice, proportionately, what Japan, Britain

and many other countries spend on health, and half as much again as

Canada or Germany.

The only spark of hope is that Mr Clinton, unlike his two

predecessors, recognises the problem and proposes to try to do something

about it.