Assessment of the effectiveness of supply-side cost-containment measures.

Abstract

This article assesses the arguments and evidence concerning the likely effectiveness of four supply-side cost-containment measures. The health planning efforts of the 1970s, particularly certificate-of-need regulations, had very limited success in containing costs. The new and related tools of technology assessment and practice guidelines hold some promise for refining benefit packages, but they are inadequate for micromanaging complex medical practices. Payment policies, such as hospital ratesetting, have enjoyed some success in limiting hospital cost growth but are less effective at controlling total costs. None of these measures alone is likely to address fully the fundamental issues of equity and efficiency in health care resource allocation that underlie the problem of rising costs.