ments, the competitiveness of U.S. industry, the productivity and health of the U.S. work force, and the health and financial security of tens of millions of Americans. In one analysis or another, all parties—government, employers, insurers, health care providers, and consumers—have been held responsible in varying degrees for creating "the cost problem" and have been assigned some role in solving—or, more realistically—mitigating it. The structure of health care financing and delivery and its consequences now rank among the most examined aspects of U.S. social policy.
Although two decades of public and private cost containment initiatives have produced considerable institutional, administrative, and regulatory innovation and some successes, the rapid growth persists in real expenditures for medical care relative to spending for most other goods and services. Both public and private decisionmakers have viewed this result with intense frustration and a shaken faith in medical professionals and nonprofit providers of health care and health benefits as reliable agents to keep costs at "reasonable" levels. Judgments now abound that health care costs are out of control.
It must be remembered, however, that concern about rising health care costs is shared by countries with quite different health care financing and delivery systems. This suggests that the forces behind increased spending may be less related to institutional structures than to other factors such as advances in biomedical science and medical technology and changing perceptions about what medical care is appropriate.
This chapter analyzes key trend data, examines the rather different cost containment paths taken by the public and private sectors, reflects on the nature of markets in health care and health insurance, and presents a reformulation of the questions that should be asked about health care costs. This reformulation recognizes that the health and well-being of the population is the yardstick against which the cost and provision of medical care must be assessed. The key issue is the value received for health care spending compared with the value that could be expected from other investments in population well-being.
Fortunately, U.S. employers, government decisionmakers, clinicians, and others have become more interested in the question of value and are supporting efforts to improve its measurement. Unfortunately, there are at this time insufficient data to reach clear conclusions about the overall value associated with this country's high level of spending or the value added by current increases in health care spending. Many efforts to evaluate the impact of various cost containment strategies focus on dollars, not health outcomes. Some data suggest that certain strategies may reduce particular kinds of spending, in particular, spending for hospital care. Evidence is, however, sparse about successful methods to cut overall spending or control the rate of increase in health care spending. There are also inadequate data