Monday, July 4, 2005

High and Rising Health Care Costs

Thomas Bodenheimer has a very readable, balanced discussion of rising health care costs, "by a non-economist for non-economists," in the Annals of Internal Medicine.

The United States has the most expensive health care system in the world, with per capita health expenditures far above those of any other nation. For many years, U.S. health care expenditures have been growing above the overall rate of inflation in the economy. A few experts have argued that high and rising costs are not such a serious problem. Most observers disagree with this view, pointing to the negative impact of employee health care costs on employers, the government budgetary problems caused by rising health care expenditures, and an association between high health care costs and reduced access for individuals needing health services.

Several explanations have been offered for high and rising health care costs. These include the perspectives that high and rising costs are created by forces external to the health system, by the weakness of a competitive free market within the health system, by the rapid diffusion of new technologies, by excessive costs of administering the health system, by the absence of strong cost-containment measures, and by undue market power of health care providers...

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