Cost-containment scenarios of the future.

• Author: Olson, Merlin I.
• Position: Employers' part in health care costs - Chairman's Agenda: Managing Health Care Costs

How the coming decade of cost control is likely to unfold -- with employers being part of the solution rather than the bearer of a lion's share of the problem.

Health care costs in America appear to most observers to be out of control. Government, employers, and the public at large are increasingly critical of these spiraling increases. The rates of increase have been so steep that even routine health care has become unaffordable to an alarmingly large number of Americans.

Historically, health care consumers demanded high quality but also expected the health care industry to monitor and contain costs on a self-regulatory basis. When these expectations were not met, federal and state government programs were mounted. Unfortunately, though these at least slowed the rate of increase in some areas, over all governmental efforts have not been much more successful than the health care industry's own efforts.

No discussion of United States health care policy can occur without reviewing the facts about costs. Facts cited in the 1990 Bernstein Research report, The Future of Health Care Delivery in America, seem to support the assessment that health care costs are out of control: * Health care costs have increased about 9% annually in the last five years, whereas the general inflation rate was about 5% annually. * Health care costs are projected to rise by 11% to 12% annually in the next five years, with inflation in the total economy averaging about 5% annually. * Health care spending, as a portion of the GNP, has shown a continuing upward trend -- 9.1% in 1980; 10.4% in 1988; an estimated 13% in 1994; and an estimated 15% to 16% by the year 2000. * National health care spending totalled $540 billion in 1988 and is anticipated to reach $1.5 trillion by the year 2000. * Total health care costs doubled in the '80s but will triple in the '90s.

Now, in the decade of the '90s, new initiatives are being formulated to control health care costs, and these focus on the role of American business. Against the combined backdrop of spiraling costs and a distressed industry, American employers can become part of the solution rather than the bearer of a lion's share of the problem.

The government, employers, providers, and customers agree that the increase of individual responsibility is an important strategy for health care cost containment in this decade. The extent of individual involvement varies from plan to plan, but, increasingly, consumers are making...