Treat the causes, not the symptoms of the health care cost problem

The design of the American health care system is guaranteed to create an inflationary spiral. A third party payment system combined with cost-based reimbursement of hospitals, fee-for-service payments to physicians, tax deductible health insurance premiums, and a litigious society that also demands more services have created a growing sense of urgency that something must be done to control costs. Medicare's experience with prospective pricing and use of coordinated care has helped change the incentives that lead to higher costs. Greater use of such approaches shows promise but proposals to impose rigid expenditure caps could create what is tantamount to a pressure cooker unless the underlying incentives are changed.