Setting Limits on Medical Care

November 23, 1990

Report Outline
Special Focus


Over the past two decades, the federal government and private industry have been trying to hold down medical costs through a variety of cost-containment efforts. The results have been disappointing. The cost of medical care continues to rise at a faster rate than overall inflation. Many experts say the only solution left is to “ration” health care. The idea of withholding certain medical treatments from certain patients is still very controversial, but some forms of rationing are already being tried.

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For more than a decade, government and private industry have tried to get a handle on skyrocketing health-care costs. They have looked over doctors' shoulders to make sure hospitalizations are needed before authorizing payment. They have set a fixed fee for each procedure. They have instituted or increased copayments or deductibles so patients will feel at least some of the cost of the care they are receiving. But nothing seems to have worked. Despite all the cost-containment efforts, health-care costs have continued to soar. In fact according to one recent report, total spending on health care more than doubled between 1980 and 1990, rising from $230 billion to $606 billion.

“Not a single serious observer that I know of has shown that cost containment has come anywhere near reaching its goal,” says Daniel Callahan, director of the Hastings Center, a medical ethics research institute in New York. Among the signs that cost-containment isn't working is the ever-growing share of the nation's resources being devoted to health care. In 1965, health-care spending accounted for about 6 percent of the country's gross national product (GNP). By 1989, that figure had climbed to 11.5 percent.

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