Health Affairs, 28, no. 5 (2009): 1259 doi: 10.1377/hlthaff.28.5.1259 © 2009 by Project HOPE	New Online   Senate Health Reform Bill   Rewarding Providers   Public Option Policy Brief   Health Reform & Abortion   Delivery System Reform

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Overview

PROLOGUE

Health Spending: An Overview

A litany of factors is to blame, the authors conclude. Growth in U.S. incomes has been a major driver. So have advances in technology (although, Sheila Smith and colleagues calculate, by a smaller share than earlier research suggests). The generosity of health insurance coverage, much of it tax-favored, adds fuel to the fire. All of these forces contribute to prices higher in the United States than anywhere else for the vast array of health care goods and services, even as the volume of what’s provided has in many instances soared.

It’s unlikely that the nation will want to tackle any of this by scaling back incomes or health coverage. If anything, federal health reform efforts are pushing in the opposite direction, at least on the coverage side. So will we do more to regulate prices, as Jonathan Oberlander and Joseph White suggest? Curb the quantity of outpatient services through such means as episode-based payments, as Kate Bundorf and colleagues argue? Cut into monopoly profits of providers and strengthen the market power of payers—such as through a regulated all-payer system, as Bruce Vladeck and Thomas Rice propose?

All of these approaches may be needed to reverse what Vladeck and Rice describe as "a massive engine for the redistribution of resources from employers, taxpayers, and individual households to the organizations that provide health care goods and services, and the people (including us) who work for such organizations."

Yet Henry Aaron and Paul Ginsburg pose a philosophical question: whether the "cure" might in some respects be worse than the "disease." Granted, the United States is buying less health for the money than many other nations. But high health spending also buys us a lot that we like, including increased life expectancy and quality of life. There’s ample risk, Aaron and Ginsburg write, of a grim trade-off: that payment reforms and other changes would slow the advance of medical knowledge at the same time they reduced the growth rate of costs.

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