Constraining National Health Care Expenditures

GAO reviewed the factors which contributed to increases in national health care expenditures to determine: (1) what efforts have been attempted in the public and private sectors to constrain expenditures; and (2) what methods could be used to minimize the costs of the health care system without reducing the access to quality care.

GAO found that: (1) national health expenditures have increased from $27 billion in 1960 to over $387 billion in 1984; (2) spending increases continue to outpace the general inflation rate; (3) the impact of health planning legislation to regulate bed supply showed that efforts to control the number of hospital beds have had little impact on costs; (4) the rapid development of expensive medical technology has also contributed to increased expenditures; and (5) alternative delivery systems could prevent costly hospitalization when community-based care could minimize health care spending by controlling access to more expensive specialists. GAO also found that: (1) the emergence of a profit-oriented health industry may adversely effect the quality of care patients receive because of the providers' concerns to maximize profits; (2) a substantial amount of care has been either medically unnecessary or inappropriate; (3) extensive health insurance coverage has encouraged patients to demand more health care and has reduced concern about the relative costs of care; (4) prospective payment systems increased provider efficiency by making them operate within a predetermined budget constraint; (5) payments for capital costs have also tended to increase health care expenditures; and (6) cost-containment efforts that encourage the use of outpatient services may obviate some of the expenditure problems.