AN ICONOCLASTIC VIEW OF HEALTH COST CONTAINMENT

Calls for medical care cost containment are all around us. Although the evidence that costs are too high is strong, the evidence that they are rising too quickly is much weaker. The principal cause of increasing costs appears to be die increased capabilities of medicine; the scant evidence available suggests that to date the public has wanted to pay for most of these capabilities. Effective global budgets would address the rising opportunity costs of health care. However, they would threaten ongoing innovation and probably would increase distortions from pricing errors.