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American Hospital Association

Arizona Health Care Cost Containment System
American Medical Association

Congressional Budget Office

Coronary care unit

Civilian Health and Medical Program of the Uniformed
Services

Civilian Health and Medical Program of the VA
Certificate-of-need

Congressional Research Service

ABBREVIATIONS

ADAMH
AHA

Alcohol, drug abuse, and mental health

AHCCCS

AMA

CBO

CCU

CHAMPUS

CHAMPVA

CON

CRS

CT

DOD

DRG

EPA

ESRD

FACS

FBI

FEHBP

FTC

GAO

GMENAC

GNP

HCA

HCFA
HHS

HIAA

HMO

ICU

IHP

IHPP

IOM

IPA

NAEHCA

NCHCT

NMR

OPM

OSHA

OTA

Computed tomographic

Department of Defense

Diagnosis related group

Environmental Protection Agency

End-Stage Renal Disease

Freestanding ambulatory surgery center

Federal Bureau of Investigation

Federal Employees Health Benefits Program

Federal Trade Commission

General Accounting Office

Graduate Medical Education National Advisory Committee
Gross national product

Hospital Corporation of America

Health Care Financing Administration
Health and Human Services

Health Insurance Association of America

Health Maintenance Organization

Intensive care unit

Institute for Health Planning

Intergovernmental Health Policy Project

Institute of Medicine

Individual practice association

National Association of Employers on Health Care

Alternatives

National Center for Health Care Technology

Nuclear magnetic resonance

Office of Personnel Management

Occupational Safety and Health Administration
Office of Technology Assessment

PGP

PPO

PPS

PRO

PSRO

SHMO

SSI

TEFRA

VA

WIC

Prepaid group practice

Preferred Provider Organization
Prospective payment system

Peer review organization

Professional Standards Review Organization
Social HMOS

Supplemental Security Income

Tax Equity and Fiscal Responsibility Act of 1982
Veterans Administration

Women, Infants, and Children

CHAPTER 1

ISSUES AND PERSPECTIVES

The nation has made a commitment to provide all Americans with access to high quality health care. While this commitment has afforded innumerable benefits to many persons, it has contributed to ever-increasing health care expenditures. Today, the federal and state governments as well as the private sector are focusing their attention on ways to constrain spending while preserving the quality of the health care system.

This report explores the debate over health care cost containment, examines the options available, and directs attention to the key issues facing the nation in containing health spending. Rising health expenditures were the impetus for the development of these issues; of equal importance, however, was the potential impact of cost controls on access to and quality of health care. The issues we identified relate to the impact of the supply of certain health resources on expenditures, alternative methods of delivering care cost-effectively, ways of reducing inappropriate utilization of the system, and more efficient methods of paying for health

care.

OBJECTIVES AND APPROACH

Our objectives were to develop a comprehensive overview of the factors contributing to increases in national health care expenditures, discuss what efforts have been attempted in the public and private sectors to constrain expenditures so far, and identify issues in need of attention to constrain future expenditures while preserving the quality of the health care system. Many alternative strategies are available to policymakers to deal with these issues, and virtually every alternative has advocates and critics. By presenting the available alternatives, including a discussion of their pros and cons, policymakers will be able to consider a wide choice of options.

In developing this report, we focused mainly on methods to improve efficiency; that is, minimize the costs of our health care system without reducing access to and quality of care. Much of the debate in the cost-containment arena, however, suggests that improving efficiency will not be sufficient to deal with the crisis of rising expenditures. If this is so, then it will be necessary to confront broader issues regarding the allocation of resources to health care. Such issues, which are beyond the scope of this report, will require value judgments and encompass controversial ethical, legal, economic, and political issues. Specifically, decisionmakers may have to address, as a matter of public policy, the priority we ought to place on health as reflected in the percentage of the gross national product (GNP) that we are willing to spend on health

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