Controlling health care costs: An evaluation of strategies

There has been much discussion about the factors underlying inflation in the health care sector and the means to moderate increases in health expenditures. This paper identifies various costcontainment strategies and synthesizes research findings that may be helpful in evaluating their effectiveness. The review demonstrates the complexity of the issues and relationships that must be confronted and understood in cost containment. The delivery system is shown to be not well-suited to improving efficiency and restraining health care expenditure. Any single strategy, whether it involves restructuring the market or more direct regulation, cannot in itself accomplish the combination of expenditure control and adequacy of services that is socially desirable. A number of mutually reinforcing strategies are required. Finally, more empirical and analytical information on incentives, provider and regulatory decisionmaking, costs of regulation, and the dynamics of negotiation, is essential for the design of an effective costcontainment program.