Health Care Costs: A Primer

Policymakers face significant challenges, short and longer term, as they think about how the nation will pay for the growing cost of health care.  The health reform legislation enacted in 2010 (the ACA) contains provisions designed to achieve health care cost containment.  But there are so many facets to health care reform — expanding coverage for the uninsured, reducing health care costs for individuals and employers, controlling entitlement spending for government programs such as Medicare and Medicaid, and reforming the health care delivery system, to name a few — that it is unclear how cost containment provisions will prosper in the dramatically changing health care environment.  Successfully improving the efficiency and quality with which care is delivered is an enormous challenge, one that will require substantial investment in research, new information systems, performance incentives, and education, with the hope of transforming how health care is delivered by thousands and thousands of providers dispersed across our largely disaggregated health care system.  Coming to terms with the potential of medical technology and its long-run influence on costs is a different type of challenge, but one that is also important.  The advances in health care that have occurred over the past half-century have increased how long we live and have reduced the burden of disease for countless people.  Developing the philosophical, ethical, and political framework necessary to balance the benefits of future advances with our ability to pay for them is one of the next great challenges for health policy.