In response to the medical crisis, the government has unloaded its standard fiscal arsenal. Through programs like Medicaid, it has hoped that it could give people money and let them buy their health -- as easily as hungry people could buy a loaf of bread. But the money does no good when the medical care isn't available.

(This is the first in a two-part series. Today: the explosion coming in American health care; the plan Harvard has devised to head it off. Tomorrow: the Med School's scheme for helping the sick in Roxbury; the public's role in running the health plan; Harvard's role in shaping a national reform.)

AS AMERICA has slowly worked its way down he roster of internal needs that demand quick solution, one previously-overlooked trouble spot has worked its way up in priorities. The impending crisis in America medical care has become too blatant to ignore any longer.

Anyone who has spent time in a U.S. hospital recently knows part of the problem. The astounding increase in the cost of hospital care shows no sign of slowing down, and it makes the much bewailed "rise in the cost of living" look trivial by comparison. While the cost of staying alive in America has jumped some 21 per cent since 1960, the cost of staying alive in a hospital has zoomed up by nearly 125 per cent. Drugs an physician's services haven't quite kept pace, but they have both risen by about 45 per cent in the last ten years.

But this mushrooming cost is only the most visible part of the medical crisis syndrome. Taken in a long-term view, it is also the least disturbing part. Much of the rise in hospital cost comes from inevitable--and desirable--sources. The ceaseless stream of marvels that medical researchers produce certainly save more lives. But they also gobble more dollars in the process. And the other major component of the hospital cost increase--higher wages for cooks, janitors, and the other prosaic workers who help care for the patients -- helped solve another obvious social need. The semi-sweatshop laber practices of the 1950's hospitals had to end; unfortunately, ending them meant hiking hospital charges another step.

If this price rise were all American medicine had to cope with, the solution would be easy. But the cost is not the whole be problem. More disturbing than higher hospital bills is the fact that many people don't even have a chance to pay those higher bills. While American medicine has surged ahead in some areas, it has still lagged in one of its chronic trouble spots. The distribution system that is supposed to send medical benefits out to the public is hopelessly inadequate to its task.

THE CAUSES of the distribution breakdown aren't hard to trace. While the groups of Americans that live near sophisticated medical centers can tap the full bounty of medical technology, those trapped in isolated areas aren't able to share. The traditional social hierarchy operates in medical care, too: white Appalachians, black Alabamians, and slum dwellers of various tints all have disease and death rates high above the national average.

"It is sickening, pompous, and criminal," an unpopular speaker at an AMA convention in 1966 said, "To speak of the United States as having any kind of medical care when many people can get no care at all. Until we can give everyone some part of the product, we can take little comfort in the help we give a few people."

Faced with the pressing demand of healing its sick people, the Federal government has responded with a standard tactic. The government has unloaded the federal fiscal arsenal--through programs like Medicare and Medicaid--and hoped that the poor would be able to buy their health, much as hungry people could health, much as hungry people could use government money to buy a loaf of bread. The simplistic analysis, however, ignores the root disease of the medical system. The money can't do any good when the care is not available.

But by their wallowing fiscal deaths, Medicare and Medicaid may have made a valuable contribution. Many medical administrators regard Medicare as the final piece of argument needed in the case for a new system. As the government's programs have shown, money is futile unless coupled with long-range plans to improve distribution.

INTO THIS medical morass, the Harvard Medical School has stepped. Harvard's role as a healthy spawning ground for medical talent as well known. But the Med School's attempt to soothe the medical crisis has now involved it in a task more typical of the Business School. Led by Robert Ebert, dean of the school, and Jerome Pollack, an experienced medical administrator from New York, the Med School planners are working on a scheme that may offer American medicine a way out of its current welter of ills.

At first glance, the plan that Pollack and his Community Planning staff offer does not seem too revolutionary. It is called the Harvard Community Health Plan, and in essence it is just another kind of insurance system. People pay money into the plan; in return, they have their medical expenses covered.

But the similarities between the Community Health Plan and conventional insurance end at that simplistic level. The plan does retain the insurance ethic of prepayment for guaranteed benefits. But the new system the plan has devised for dispensing the benefits adds up to a totally different approach to mass medical care.

The "totally different approach" comes in several segments:

* The Health Plan's theory of "prepayment." Standard insurance systems eventually pay some medical costs--but only after the patient has paid by himself and applied for reimbursement. Once the Health Plan patient has paid his entry fee, he can get almost any medical service free at the health center;

* The Plan's emphasis on preventive medicine. Patients covered under the plan wouldn't just be invited to come in for yearly check-ups. The plan requires them to go through a series of initial tests and to follow up with also hire a staff of recruiters who will spend their time rounding up patients for preventive treatments;

* The plan's increased use of non-hospital medical care. The real burden of medical expenses falls on hospitalized patients. The Health Plan will try to do as much out-patient and ambulatory treatment as it can to dodge the high hospital rates;

* The plan's reliance on group treatment instead of the traditional family-doctor technique. A core of specialists will man the center and treat Health Plan patients.

The cumulative effect of all these changes may not be instantly clear to the layman. But it certainly is clear to Pollack, who is now in charge of deploying the plan in Boston. Citing an impressive set of figures, Pollack is able to show how the health plan can offer better medical service at a lower total price.

THE Health's Plan's coverage will be far more complete than average insurance plans; the Health Plan will include doctor visits (at $1 apiece), complete hospital care (virtually free), and many other services. Few insurance plans come near that, but insurance rates are still high. Pollack admits that the Health Plan's fee might be slightly higher than current plans like Blue cross, but he adds an explanation of how each new element of his plan will save money.

The shift to pre-payment of medical costs is part of the Health Plan's drive to get healthy people to come in to the center. Knowing that the visits are paid for may knock down some of the psychological barriers that would keep patients from coming in for examinations. And Pollack sees little danger in this new influx of patients to his health center.

"We hope they'll come in regularly, get to know their Physician well," he says. When people join the plan, they will have a thorough examination. In the unstructured way that most Americans guard their health, five or ten years may elapse between exams. Under the health plan, however, the aim will be on constantly-supervised care. The initial exam--accompanied by a barrage of "screening test"--may be able to pick up many potential problems long before they erupt. From the beginning, health plan physicians will emphasize nipping illness while it's easy to nip instead of waiting for the kind of full-scale disease that requires a trip to the hospital.

From the basic plan of regular examinations, a series of baroque innovations is possible. Pollack says that the health centers may develop a data bank with vast amounts of data on thousands of patients. "From this data base," he says, 'we can get a reading of the tests end eventually use test results as a predictive medium."

Another important aspect of the plan is its firm emphasis on group practice. Ten years ago, a subcommittee of the AMA denounced the trend towards creeping groupism as a danger as great as "socialized medicine." But the group mode has won reputability since then; and more important, it has shown in practice that it is far more efficient than single-doctor treatment.

Medical statisticians have run studies comparing group practice plans with normal family doctor care. What they've found is that patients who use institutionalized groups practice facilities -- like California's private Kaiser Plan clinics--spend much less money on health care than do patients of single physicians. The saving may come because each doctor can see more patients; or it may be because the cluster of specialists make preventive medicine more effective. But clear. Each medical care dollar goes farther when spent in group-practice clinics.

THE FINAL part of the Health Plan's drive on medical costs come with its elaborate plans for "outpatient" services. Since hospital care costs -- the "impatient" expenses of medical jargon -- are easily the most expensive component of medical care one good way to trim costs is to keep people out of the hospital. Coupled with the health plan's drive for prevention will be its attempt to treat its patients in the center, instead of sending them off to the modern--and costly -- hospital.

Pollack doesn't contend that outpatient care can be a complete substitute for hospitalization. The health plan won't try to perform surgery in back rooms of its health center. But Pollack claims that about one third of the patients in a hospital on any given day do not medically need to be there. They no longer need the 24-hours care the hospital provides; and if adequate outpatient clinics were available, the patients could recover at home, making occasional visits to the clinics.

But few areas have decent outpatient facilities, and so marginal patients fill the hospital beds. By providing a center with intensive outpatient and ambulatory care facilities, the health plan hopes to clear the hospitals of the people who should not be there.

As some liberal observers se the health plan, however, all these efficiencies still leave some gaps. The plan's new benefits seem to be aimed at the same middle-class consumers who now buy medical insurance through private agencies. The similarity is no accident; Pollack says that the plan was deliberately contrived to work within the existing private carriers. But some critics have charged that this plan really doesn't solve the distribution dilemma: it offers better service to America's insurance-buying suburbanites, but it seems to turn down the urban an rural who can never scrape together insurance premium payments.

This is where the health plan's projections for enrolling Roxury's poor become important. Tomorrow's installment will discuss how the poor will be covered at Harvard; why Pollack thinks a mixed middle-class/poor clientele is better than a program aimed only at the needy; how Harvard hopes to set a precedent for the nation; and how the Harvard Health project came into being.