Health care policy: lessons from the past and issues of the future

Liberal distributional values, the increasingly powerful capacity of medicine to provide more and better care, and concern about the health hazards of an industrial society fueled the vast expansion of the health care sector during the last 20 years. That growth was facilitated by a growing economy. The current health policy debate at one level reexamines the distributional bases of entitlement programs, and at another seeks alternative resource allocation mechanisms to reduce the cost of health care. This article has two themes. First, distributional and allocational policies are shown to be intrinsically related, so that the health policy debate is fundamentally a clash between liberal and libertarian values. Second, the inexorable social forces driving the health care system are shown to be the aging of the population and the rapid expansion of technology. The resulting dynamics imply the further growth of the health sector, now in the environment of a sluggish economy. Future policies will have to struggle with how to ration scarce health resources and how to reorient the health care sector to the problems of the aged.