Section 8 attempts to control health care costs: The united states experience

Abstract

Abstract This paper presents a review and evaluation of efforts to control health care costs in the United States. Health care costs have become a major concern in the United States because health spending has been rising significantly faster than expenditures and prices for other goods and services. The first section of the paper documents the growth of health care expenditures and summarizes some of the contributing factors such as increases in health care utilization, public financing and insurance coverage. For several reasons, including multiple sources of payment and organizational independence of providers, there has been no comprehensive policy of cost containment in the United States. Nevertheless, there are a multitude of separate efforts aimed directly or indirectly at controlling costs. The most important of these are identified and discussed under three general headings: health care organization and delivery, planning and development, and reimbursement. After reviewing a variety of cost containment approaches, it is concluded that overall they have not been very effective. However, there are certain types of approaches which have proved effective or promising, although not yet widely implemented. These are identified and discussed as (1) programs which encourage increased responsibility on the part of the individual for his or her health, (2) attempts to set limits on total resources to force decision-makers to choose between alternatives and (3) certain structural factors illustrated by Health Maintenance Organizations, particularly peer review and methods of reimbursing providers which create incentives for efficient medical practice. Last it is noted that care must be taken in designing and administering cost containment programs to avoid dysfunctional side effects such as reductions in access to services.