Health care spending: can the United States control it?

Abstract

Health care spending in the United States has continued to outpace the growth in national income and the growth in spending in other countries. And yet many Americans are without sufficient health care. Since the failure of national health care reform proposals put forward by the Clinton administration and others, the United States has had to look for other solutions to the problem of how to control spending in this sector. Can the new competitive approach of managed care succeed where other cost control measures of the past have failed? This chapter begins with an examination of the problems facing health care today, outlines recent trends in health care spending, and details reasons why spending is rising so rapidly at this time. The historical context of health care reform proposals and government attempts to control spending are described next and the reasons why some of these plans made no progress are explained. The health care payment systems of other industrialized nations that have seen some success in controlling costs are analyzed. Comparison of these systems with proposed plans for reforming the U.S. system provide insights and lessons for the United States. Finally, the chapter describes managed care and managed competition and makes the argument that managed care has the potential to respond to many of the health care spending problems facing the United States. However, more data on this subject are needed, and the authors call for a national monitoring entity to assess the progress of managed care in meeting the health care needs of the public.