Future trends in the economics of medical practice and care.

A revolution is taking place in the American health care industry. The basis for these changes is the rapid escalation of health care costs to nearly 11% of our gross national product. The changes have caused a controversy regarding whether cost containment reduces the quality of medical care. Our present system was built on the premise that the highest quality of health care could be delivered to all fairly and without any form of rationing. This has led to a massive growth in facilities and the number of physicians. In simple economic terms the market factors in the environment should have lowered the cost of care. However, the cost of care has increased even more rapidly than expected. It seems likely that older economic principles must be abandoned to control costs. Price competition, preferred providers and more efficient hospitals must all be encouraged. Overutilization of care must be discouraged by proper incentives, and overpricing by physicians may require fixed cost reimbursement. Two-tiered health care delivery will develop and small segments of the population may receive a lower quality of care. Rationing of care may be a simple alternative.