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In 1991, total U.S. health expenditures reached $750 billion or over 11 percent of the Gross National Product (GNP). Health care spending grew at an annual rate of 13.4 percent between 1985 and 1990. It is expected that the cost of health care will continue to grow at a rate between 11 percent and 15 percent through 1995 (above statistics from Sheeline 1991, p. 58). In addition, the United States' health care system is about one-third more costly than the system provided by the next biggest spender, Canada (Dentzer 1991, p. 50). What these statistics indicate, and what is readily apparent to nearly everyone in the U.S., is that there is a major crisis occurring in the United States' health care system. Employers have attempted to address the problem of rising health care costs by employing several methods of both cost reduction and cost shifting which are essentially aimed at short-term results only. Examples of these techniques are: higher deductibles (the portions of doctors' bills the employee must pay out-of-pocket), required second surgical opinions, and health maintenance organizations. In order for the health care problem to be controlled or managed effectively, society, especially employers, must look beyond the obvious dollar-based symptoms and instead address the structural problems of the system and view cost containment as a dynamic process. The United States' current health care system did not evolve into what it is in a short period of time. Consequently, getting it under control will not happen quickly either. Solutions designed to remedy the problems in our health care system will require a society-wide effort. This article will explore the fundamental reasons for the present crisis in the American health care system and present ideas for comprehensive cost containment.

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This issue is also considered v.9 of the initial publication series of Major Themes in Economics.

Mislabeled as v.9 no.1 on the front cover; labeled as v.8 no.2 on the title and contents pages.

No cover/title page date shown on piece.


©1996 by the Board of Student Publications, University of Northern Iowa



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