NATIONAL-HEALTH EXPENDITURE LIMITS - THE CASE FOR A GLOBAL BUDGET PROCESS

The health reform cost-containment debate has set up a dichotomy betwe en market and regulatory approaches. Expenditures are excessive in the American health system because there is no effective constraint on ag gregate demand, and the rigid limits imposed by sectoral global budget s in other nations do not effectively use supply side forces to achiev e efficiency. The case for an intermediate option is presented, a proc ess that can flexibly encompass both what buyers are willing to pay an d what suppliers are willing to accept. A negotiated contracting proce ss for multiple payors and multiple providers could constrain aggregat e demand and harness provider incentives.