COST-CONTAINMENT IN US HEALTH-CARE

The author explains why supply factors, particularly the overdevelopme nt of the nation's medical capacity, are more important than demand fa ctors in explaining the high use and cost of U.S. health care. Yet suc h costly care often does not translate into better health for American s. While market forces, especially the efficiencies fostered by manage d care, may clear some of the excess acute-care capacity and foster th e use of less-costly generalist physicians, such forces favor the stro ng over the weak. This makes vulnerable those persons without health i nsurance or on Medicaid only, inner-city and rural hospitals, and acad emic medical centers. And when health care is treated as a market prod uct, the relationship between doctors and patients is endangered. The author urges that the effects of managed care be watched, particularly for possible neglect of the underserved and for diminished employment opportunities for all health professionals, especially nurses and cer tain specialists. He thinks it is likely that much of the savings that market forces will create will not stay in the health care sector (wh ere they could be used to expand services for the uninsured, for examp le) but will go into the business side of health care (e.g., to pay sh areholders' dividends). And he stresses that issues of adverse selecti on, risk adjustment, and outcomes measurement will have increasing imp ortance to persons with chronic illnesses, who may be neglected. The n ation's rising expenditures for health in conjunction with its aversio n to raising taxes or increasing the deficit means that the challenges to contain health care costs and to prevent the widening of the gap b etween the more and less fortunate will remain.